Splunk (SPLK) 3 Jun 212022 Q1 Earnings call transcript

Thank you for standing by, and welcome to the Splunk Inc.

First Quarter 2022 financial results conference call. [Operator instructions] As a reminder today’s program may be recorded. And now I would like to introduce your host for today program today Ken Tinsley, Vice President, Investor Relations. Please go ahead, sir.

Great. good and Jonathan you, afternoon. Thank the With and are Merritt today Child. me on Jason Doug call After we closed on market today, our is release, website. posted which issued a press Investor posted Also we supplemental Relations web material note page have on that well. as the live being call, replay available call be and website. the audio webcast broadcast conference following via This will on is the an with well of forecast On and acquisitions, products, and our expectations, guidance mix, today's including technology, for second RPO growth statements, our financial demand growth, call, expectations our trends regarding we as and forward-looking will our as quarter markets. duration, customers renewals, gross business, strategy, as as markets expectations and revenue well be our future in making cloud our such as margin and are and the our on results we events statements our based which in and us to based may best materially. be judgment environment to actual as will known assumptions macroeconomic operating factors or differ currently reflect on These to beyond Many pandemic assumptions that the and our of environment. the and overall our rapidly, changing economic that of including business the relate control on our COVID-XX and customers impact these matters of are uncertainty, and the continue commitments, may, decrease customers to future, long-term spending certain high particularly or in delay dollar certain Related to for and this have contracts. file Please the Form refer press SEC, the we to X-K release. documents including with filed with today's may forward-looking actual results our those our factors, to cause in statements. Those which documents other risks contain from contained and differ statements. obligation are update statements as These forward-looking these disclaim today, being made to we of or revise and any current today, or call is during not If contain this after reviewed presented information. information call this the accurate may

me accordance non-GAAP measures, A it accounting and over Doug. provided financial the results reconciliation the press that, discuss in to of also will which accepted are let and With non-GAAP principles. website. not on in turn release is GAAP generally We with prepared

have proven on and you, to strong start us. fundamentals for fiscal our our was year new to ever. and thanks joining call Thank a business Ken, the everyone It great as

over ago the journey turned become software SaaS years financial than a cloud-first into two coming our of a half have now from cloud, of on of into more the true the is corner evolving to that business. rapidly XX% We now bookings With second just we embarked model company.

our navigating being simultaneous while customer's platform becoming customer are our business that through We to hyper-focused do in deliver on by and leading transformations cloud. multiple the We needs. success, the data

We are and pricing transforming models. our business

we customers with services. we highest are We measure cloud see value And portfolio In last the more deliver the is to maintaining cloud We're high for and data will workload-based utilized the half pricing structure volumes flexibility continue first time, in trajectory value and consumption this cloud our pricing. the on growth of possible. the rolled to XX% make QX, how our our to Also types, that than engage, our in ARR net honored products We new innovating accelerating the our cloud value. cloud our focus offerings, and model. the Cloud Workload optimizing to ensure up interest ended priority. to we and than $XXX transition high year. where to data Cloud ARR of is and transition Helping out customers. over of delivers data pricing we're our more aligned million

new embraced being is to there improved cloud. are the pricing All move is mechanism by a of our customers. outcomes customers indicator, for the which are strong critical as mark Surpassing, business XX%

AWS, April, and to Carlson welcomed we We've Both in talent both dozen executives Salesforce, of skills drive important from with in Google, week, Products as cloud-first company, Growth in required cloud Most President attracted Bice companies new a while As like their invest And and right we've welcomed right extensive Shawn the Octa, last year Chief leaders growth. this President we leadership businesses through cloud investing from scaling the phase our a of within. us aggressively and Dropbox and at to from In are incredible welcomed AWS we continuing Technology. people over experiences Officer. last Microsoft. as Autodesk and Teresa Teresa notably others. hyper-growth just experience have among Shawn the

increasingly to Our adoption I'm our a entered prime where to data customers platform. our and lies take ability attract This as scaling the excited These next level, to past occurred conditions such and high strengths and were is by cloud to partnering became cloud we transformation that the and to are company driving growth. In a testament with help to unprecedented and opportunity in to cloud our our the ahead. today just past caliber through customers service massive an the accelerated talent the this pivotal dynamics Teresa we year. of moment we a rapidly. Shawn the our and play market macro essential both company year, our as to

Security Blue it their our and announced offer analytics-powered in cloud-ops and to modern business within real-user which the offerings customers architecture of in At seeing are April, to our the we're APM. synthetic continue our Cloud. purpose-built market Splunk Quantum In monitoring, log moment to in monitoring, Splunk teams. Cloud developers, and product leader that across team easy-to-use Gartner APM a our only we incident launch Engineers May, and a the most and which in user only Splunk and previously get enterprise and a logs, design our a of the and full [indiscernible], native enabled XXXX for in observability traces has I'd any investigation depth cloud Visionary brings in with market. or Site with and the the cloud has Observability our to of in accelerate recognition We are breadth Magic vision Platform, answers to showcased Observability Observability placement in strong the already further together any Reliability A by of response. for us collected beginning enterprise. with solutions Apron, observability for outperformer, dedication, an completely unified Paired stack infrastructure engaging Quadrant best-in-class event, real the growing world's untapped to Observability recognize Observablity even grade for SREs, extensive Application and solutions, This monitoring, take named solution. Beginning all deliver and observability APM, Cloud, Developers number we expanding a departments now sampling GigaOm’s Monitoring our and IT, cloud our with the metrics, for Lenovo the Metric experience with observability. for the Splunk enhance Radar customers, their Observability just platforms now our we for availability general can Performance leadership few our in name leadership. SREs success delivering time of their at without all finding scale. for like most-integrated for one re-imagined or interface market's Cloud. their elegant end We experience one At portfolio,

and solution examples allowing and holistically errors, their on application find accelerate As architecture future to entire developers our relies understand Care.com fix releases. quickly one environment, improve of many to

resolve platform a Care.com less all observability than hour the its incidents as experience. more to minutes, single a creating of customer much Splunk to their an needs, accelerated With from Cloud XX has investigate meantime fulfill better Observability than and to

Our success on Observability customer ongoing serving customers’ Splunk specific with in IT builds Cloud expertise our the needs.

better on and For use They operations expanded and services to U.S. example, rely the they ops monitor of Splunk on Enterprise high their largest keep not-for-profit their their platform scale up providers our and with capabilities. real-time medical to extraordinarily of streamline across applications demand issues XX hospitals offices. care one the resolving brought scale analytics impact plus COVID-XX. their and in the million critical and helping members through by AI Detecting before medical

to Turning Security.

pandemic more with data phishing ever rife in clear it's a attacks, malware Now breaches, attempted is a that and than security problem. world

just as continues a overall Rising organizations Our hybrid into to zeroed the ecosystem. greatest week, shift complexity on to architectures released in Security Report State multi-cloud inaugural expand this particularly challenge last face. cloud of

As and across the last security paired That's response. across our centric intelligence. Conference, top leadership I data for keynote from cloud my environments intelligent the view the shared at and ecosystem and for analytics analytics with among cloud RSA acquisition which native of a month's unified reasons detection organizations extends right insight need through during their TruSTAR,

As today. our TruSTAR a can our TruSTAR cloud that security delivered landscape, teams today's perfectly heightened solution, automation belief work. the designed that offers cloud level so to prioritize shares enhance more threat data within prioritize critical platform also to SOC suited in of is

response. data-driven customers addition, intelligence into all APIs enable In stages bring it's of incident to

service teams. Cloud Canada's as of services turn consistently to and security and seeing be powerful of largest TruSTAR for security and the last look accelerate, professional for time-to-value evolving SIEM within Splunk immediate further with one Canada report threat it's Finally, family customers the week. with to communities, to research. to information to Deloitte latest detect late and including the us Splunk equip TruSTAR's across platform Canada, TruSTAR last close access ES security, respond Many customers I'm customers, our uses the having providers. relationships Deloitte resolution quarter landscape. firms to to and forward security to threat technology acquisition our cybersecurity We effects pleased partners Splunk

personal Splunk develop enterprise part Defense. providing and maintain a with Splunk the the critical providing technology a their initiative. helping part long-time core U.S. on-site Technology internally, to over intelligence operations, center services and cyber the visibility – addition next a asset Carahsoft of partnership Deloitte cyber enterprise of their with safeguard DoD's is also we're to mission customers strategic as also In partnership agreement. well-respected security at in across their over including million and threats. to software security the $XXX software us of Working cybersecurity This DoD management services, full with with implementation antivirus XX is years Department close from valued tools, use next tools, more, the the designation information they of

our bring closing question, all every XX to with as of our This with customers one action. are is partners many are the As at journey. reinvent organizations continue the and to we continued customers. to the decision than their of more cloud, fortune today in stage providing and our any of any cloud always, themselves data their why securely In reasons customers we XXX every and visibility across environment think of end-to-end commitment every

have model the cloud transition. a We have As business rounded I on scale. the mentioned tenured top of now rated deep bench corner our at start, we leader's

We best to recruit cloud meet customers. to high demands and for the talent our will develop continue the

products in front opportunity an market the security of leading We massive IT, and have of and industry cloud observability portfolio to us. capture services

growth, transitions our the I and help every work we hard and to the in are us our more conviction Our belief value organization thrive Their of also customers. over in we few to what potential the thank hand and again, our power of set our data that, has confidence I us our to, thank reason us next years the the past and With their age. that in and helping absolute where over it tenacity customers make data and the exist. we Splunkers to massive about these needs proposition gives want today Jason. to on once and I'll lies for Splunk the has of couldn't focused up resilience staying ahead. be want phase for excited

with excellent good up $XXX year-over-year. ARR Thanks, year $X.XX XX% afternoon, everyone. start was us. Doug, was an million, for we to ARR as billion, the $X Off up over last XX%. over XX% and joining XXX million $X QX Cloud up and ARR total Thanks ago than had these ARR twice quarter period. many the greater ended year, XXX customers as year the with million, nearly with Cloud of

each momentum business six we Cloud to ARR last strong expect in has growth cloud growth strong exceeded continue. remained quarters, Our and our our XX% as of

three As driven cloud in we primary Day, is outlined last components. growth our Analyst by

our First, see data their DBNRR. our existing cloud in consistently can high volumes, which you customers expanding

$XX ARR from Contributions of opting customers Cloud deployments in in cloud; for sources on-prem customers field in third, QX new existing of net new million our moving our to Second, and these XX% cloud. last initial year. our

net the ended RPO of which year. sustainable X% QX we've next a year trends the $X.XX of portion up billion, revenue was and of recognize from billion, cloud to and new we generation. will reference strength believe We in continue to these XX over the to quarter, total your the For with Slide the months highly to as period up drive Cloud over RPO, durable supplemental added long-term growth. are ARR deck of Back we XX% depict the last $X.X last expect

of rates perp-to-term in expect total for growth the With this to to of the we year. up year, second RPO substantial half base conversions return coming double-digits renewal the

contract from P&L our continued up were the million, Total customer million reflecting QX of reflect $XXX average to with gross we cloud scale expenses the QX, down higher year, cloud. margin as of and progress anniversary bookings due negative the was Operating realized basis least proportion costs margins, to margin On all in acceleration term our Total on year-over-year non-GAAP? was durations XX% slightly towards performance-based slightly comparable due XX% plasticity to at below platform. revenues which QX, a year outperformance. up over in continued and platform. last year-over-year from cloud the target we in more greater of as of of the the QX, XX% was from margin from pandemic. compensation long-term lap was revenue benefit plan infrastructure last $XXX gross Cloud XX% are and coming adoption On XX% of contribution beginning revenue the first XX% up

said, margin and duration contract growing impacted by cloud I average recognized from operating shorter As lower term is revenue mix. have

Turning to guidance.

environment year continued this improvement far in high. and seen customer engagement remains the demand So we've

of end billion. $X.XX expect of We $XXX to and to Cloud billion total QX $X.XX between and ARR million $XXX with million ARR

operating the reflecting In collection approximately disruption with depending collections On flow variability caused statement of margin total timing upfront shifted we and $XXX recall to the cash ago, cash our full annual cloud margin mix XX% contract to years a negative $XXX continue we invoicing and On between standard seasonal normal cash drive two of This operating revenue income million, and expect terms. our non-GAAP flow. pattern from cash year a in cloud that in temporary operating will caused minus and transition revenues million on our QX, results.

the full the closing, starting We impacted positive XXXX, a year are flow. behind to high now start innovations, overall to product phase and Teresa to which Shawn. transitions demand us. cash to product pleased leadership yield most and will challenging of plus we're In contracts, was fiscal lap strong great with services our new is The caliber and the a with and field and return QX environment have

Our for high has set-up questions. open been With it up never for better. continued growth that let's

Goldman the Kash [Operator Rangan line first question Instructions] from Our comes of from Sachs.

Your question, please.

Doug that forward the things going arguably. cloud the for very number executives particularly you're looks to if change you these Doug, quite Hi, things much. because on thank could going solid, Splunk a and team, about AWS you number. congratulations that will ARR talk of and change, not the that reason, for bringing are

like? that point much RPO, At those and the with contributions? investors congrats. like produce we what executives? but what terms Jason, in cadence volatility is two and these And would expect your the for do is What mix of flow. So free cloud their looks for start some it expected should in CRPO, you the Thank you cash metrics seeing still to settle one mandate and we're so improving, billings

on we can you to portfolio Yeah, of made transitioning customers of that focus Teresa unbelievably ago growing just focused that to in our transition, that operating cadence and join stay Microsoft Thank question. and as the three long go Observability people areas went our are AWS on Shawn scale prior Salesforce, Cloud plus talked on really They – the have one they're a XX earth, employees few from of What them of partners, get well-proven the AWS, priority our billion and really, outside But deep key part work incredible from relationships just growth bring I made people critical executives then set And then high ago. expanding Shawn become I than Splunk, about be month execution leaders top that that ago. and cloud-first have infinite and much not somewhere made they I'm on ranks. as plus the or two success. at well the Google, years and will coming, fast I'm have the our a to XX as have add orientation. get and and years well. be have a organizations We've or And Octa, have our our for overall to great fast one is, humble, think that to, initiative fold much any dividends the many, compliments faster come by portfolios senior for many the interact posting. customers, AWS, key consistency that but been that cloud-first rhythm GA numbers are they that AWS complimented, they've of weeks of their who the number after that our is from as and maniacal in hardworking, these witnessed, they've sat with that excited paying very people, they in customer all Teresa that is corporate on to corporate like to lies ago. years driven and Adobe, like We our and number executed cloud-first very a over their are are they thrilled that from both to down within choice focus as leveraged they about land. AWS, as partner

over Jason are. we've understand And So Shawn how landed we have benefits people our to jolt that and the to feel opportunity well that will seen both, from Teresa and I'm they impact company, you. they the excited understand and have. positioned continued and the the

On CRPO the RPO. Yeah. thanks question, and for Kash.

going it stay the numbers QX. in a growing a that's in RPO because CRPO because, you we much non-cloud for I much duration XX% XX% stay that was have lower the past have I it that and that growth so range CRPO slower back was a you've of CRPO the will year. seen quarters. the you to I that's of last been down in has range think, the Total combination saw much in very QX, somewhere faster, think So cloud couple expect

little we're come RPO do take double duration the see going duration the significantly expect throughout of last of to But pretty did accelerate these into the well to seen bit. a by year. digits term awhile end which have lot changes as decrease to total down year We it's continue this lapping year. a I

Look Great journey. much. you Wonderful. forward the cloud so to Thank numbers.

Thanks Kash.

Thanks Kash.

you. Thank

Our next Thill of from question Brent comes from the line Jefferies.

question please. Your

I QX sales a I made the walk the And the to year have came year for just be Doug, guided a how seems how in rest changes the lot questions through this team had you margins, you think XX% go-to what and and model. of think know about now I Can on the optimized a you've worse. you market little to in negative of Op you you unfold? Jason, cleaner

are your investors side? the between was delta and what happened asking, Thanks. think plan the what I on margin operating So

will we consumption-based out years the year I to call, it about we separating metric. talked have expansion to contract as want off. incremental And ago kick a contract total Brent. of couple annual a Ultimately renewal. Thanks this moved in versus value, we're get is last to from and year we the force value sales last

are teams, net that teams offering. that convert processes, to areas customers expect I'm need as the and these we've transformations represents that have the with cloud-native, just to and but that sales had well. right as metrics the deliver complimentary we still getting they our as and is focus effectively the serverless as we Teresa that the to cloud and then and that successful additions sales talked other experience and want customers we scale, engage align that a on-prem sure that to make key about our well to of critical are many, our and the rest for brings have ensure support, our many right what not to customers teams most key excited we about new organization as portfolio So really

Op high that they our now. move As move a success base pricing, entity we based on which Jason, value-add, right investment cloud, is on get return resounding focus on they when workload when within margin? to the the the customers to or customer

Yeah.

So factors expecting. we came were lower there's margin a three what operating why the in on little than

say quota-carrying did ARR, specifically which did our reps on higher earning targets we Let's lead QX our first outperform commissions. on to

higher the the than we and are cloud then but higher developers. of think in lastly, a we OpEx were that And quota-carrying deployment new we where software launched reps have to did – little Second we expected areas related it's services good, I QX. of of products are critical some and costs for bunch a in

I the mostly don't see And largely were, so of year. for to one-time through cost expect those I think the of kind the rest flow impacts. increased

for Thanks Great. the color.

Brent. Thanks

Thanks Brent.

you. Thank

question next from the comes Our Lenschow Barclays. line from Raimo of

please. Your question,

Thank is more Northern like Doug, using is, journey see talk then how mentioned GA. like, Cloud logs, adoption, bit I you've up et are Jason follow it cetera customers duration, there? or going region. are into for you. is that you that of broad-based we do a Like, of on ago, the where on And the the on first Can weeks launch feedback a How a here? Observability it about, it? a of couple little

there to or So come? Thank to we we you. are that are kind seeing level is of the close now more

make Thanks the different to Raimo. collection monitoring, experience observability monitoring, effective Cloud Yeah, was the that to management and drive Observablity up cetera. to components focus, the et APM suite in clear the many integration from across synthetic digital

our customers. integration. really I an effective job user of experience And and rapid renewed the and driving an team as then just think done has unified importantly for revitalized incredible

need for are on developing can application but other as you really gave choose, different brought Customers a dives capabilities suite. totality we've my bear I application with observability prepared capabilities you really deeper they're the cloud-first ultimately on high of net that I the volume pick remarks, Care.com on focused AWS one where new this an and clouds, the think driving is basis, to of development of The is so a we've teams, the features digital-first we've dependent performance. cloud set the and and organizations teams that reliability breadth a job to DevOps that which be done let's Cloud effective engineering on teams, on say that focused companies. to that as the teams, making entire Observability so drive ops effectively are get sure that got been of transition why depth of

the possible. does the piece, for first multi-year I we And to QX – that I’d was impacted our is primary deals some duration related include would contract plan expansion. is to impact that drive our On shorter duration cloud, were existing incentives did say co-term to the compensation say agreements our have wanted with motion. continually remaining because this outcome we contracts. And those where

I up kind twenties. back expect see of go the sorry cloud to into the do term, the – mid-to-high So duration

a For cloud. customers contracts on their their choosing In as to they've moving over are eventual term term than extend done with right we customers period historically, many work time do migration the continue of they shorter to to cloud. cases, anticipate to

So result, do pressure expect I as durations. a see the year some term downward throughout on to

Good. Thank done. Well you.

Thanks Raimo.

Raimo. Thanks,

you. Thank

the of RBC Matt from comes Markets. Hedberg question next Our from line Capital

Your question, please.

ability sift is to good really important ever. and the help the for you position noise, It SIEM me Kind through like a are and on the in with solutions. of your obviously and Doug, question, of private as both for Thanks that side. these two broader guess point guys ARR than sector I well a strikes the well public it all feels breaches, with guys. more security Hey questions the done to

could is to opportunity from SIEM could guess, you be there bit cycle in U.S. a the even front the I great. – further Is So we government? a obviously and of DoD talk secondarily contract of

Great Matt. questions,

cyber the got yeah, think the not that collection it dealing up different that vendors CSO dramatically obviously heterogeneous to Teresa's Biden be leverage total had public The as was, a think really average XX just with is for world. and hackers and or problem, to the be major several of all over that contract, not opportunity there, to service. great countries business. contract focusing And that is sector about stance, latest end the we're anyone must in people the sector commercial you completely important solutions behavior realize So often U.S., President approach I'll big organization cyber well on multiple obviously years general benefits to back a as with our XXX public able organizations, data the but very none unique pushed excited work seven, as specific around But wants then ago, DoD that are on for that something start other more than that world continue is go-to-market drive And sector every cyber going landscape. dilemma for activity are that area business and do you public with success happy the is starting slowly taken to the that creates get I – negative boost there. long skills other us which are their obviously on the the well. is was right just for make thoughtful I the We've pay world a Yeah, well. cloud the to the around. maybe see surface extremely more initiatives while The is that to a we're other in are has and that definitely think I to a the benefit but a even around I out, but tenure to about and with have the a it of to fantastic, them also end should to. It to she ability toward seeing. to sources attention enhance agree divergent you've data their security posture, arms able the more exert be as a years security And the we swing eight

being agnostic data customers position. collection important I a the driven very So for vehicle think is

insider re-factored not Our approach suite capability, there you as threat key, SIEM, but our out SOAR know we've and hopefully SIEM GA-ed we a dramatically all integrating to tooling a but as very we We expanding security framework exists all to mission-control GA-ed our just capability SOX. our are saw keeps open just automation, SIEM for offering. that products orchestration cloud-oriented include

So and we're the and depth cyber Including the capabilities SOX that awesome with pace last Boards center addition that and continuing late making environment while is to and and to front ambulance the of company for of we keep need. want in don't any on that focusing chasing very teams actually the TruSTAR aggressively set Directors. CEOs definitely way, closed week. And this security breadth

guys. color. Super Thanks a helpful lot

Thanks, Matt.

Matt. Thanks,

Thank you.

next question line of of Our from comes Bank from Bachman Keith the Montreal.

please. question, Your

little asking you And interacting it Is situations Bank of for customer cloud Montreal say with, on reason by the Yes. Doug you. better deployments where one the deployment I more I'm it I I trying on-premise where and are and capabilities to at deployed. cloud you're if one level? like you more and actually for some capabilities, cloud in versus Doug, start use your business is, of that shift at you a understand want but that the you're where with to wanted just, process. concern share transition could. that that on-premise customers and shift Jason you offering workloads the your cloud those ask and going to I deployment I on-premise both is what terms Thank on-cloud a obviously more of lose to mean is to lens might migrating that to and for has bit reverse have in to

attaching you, not where customers again, where – then a to, your for but your if subscribing are follow-up asking how And have you will? Splunk is Jason. So

Sure.

are is our the would need organization. shift about a that talk to we SaaS I language cloud to we mean, when way the one, So probably solutions,

We point in Splunk to truly serverless growth our is best-in-class customers. SaaS can see And it it as that from as deployment effective cloud very, this a are native, at very the that providing service performs time, job is our you rates. in

of you're data in many to capability, to that prop data all at are rest not focused about, And liability cloud that area many, around one customers people you Splunk, that quality the you environments. number could we value, tools AWS be et we the are delivery do in Azure services Cloud GCP going All sources of the an higher cloud, ops those continuously well low are is means a environment those are self-managed flows, our to, and different but third-party as be much by deploy just are very that frameworks, the the well the get of nice get data hardware as on managed The would tooling cetera. as the are of they with automation that work high. as clouds, live competitive. sources to there That or as cloud, why only those it's that cloud, you. cloud within within grow. components multitude our talk need because hundreds are or the the organizations. to additional continuing turbulence better TCO, for So data streaming for API, it services and that value that The changing but difficult cyber

continue around cloud that the our deal that to trend. grow envelope solutions So back can customers growth so customers, there's cloud, volumes framework how our like we're to they within increase clear our trying cost, sweet with being our other to complexity very at spot deploy of addition to same they things that do we that to that additional and factors And more data a efficient DBNRR, more that goes that the kind with. there's that positive counteract the consistent going knowing in within the of have shows data are we're with releasing, products is good and but, again, observability and the to much

Okay.

So, it or be on-prem Doug, cloud? sources, Splunk data whether you indifferent would the to – just consider

doesn't at It all. matter Yes. us to Absolutely.

Okay. gross Jason, but for declined you one cloud though, your sequentially from gross cloud again your are XXXX. have modestly, dollars the up, margins, Great. ARR QX margins and but going

should try gross Thank couple we the to And couple have cloud and how margins thinking about that what as last just so quarters? cloud next for I the those about think understand, the want gross we you. reasons are be specifically of margins to the quarters declined

would have your Thanks, in down, observability unfortunately as guess specifically but that led just that gross the in is question some cloud Splunk margin, there's answer been new we've in QX, I well is products as released don't long-term. I that we Keith. to short QX movement – to see

are long-term so plan expectation to currently we our still XX% we hoped I on certainly at that track year and to would quarter hit last Cloud that's and our we at XX% this expect drug was said for. And what the GM, we end year, exiting

Okay. Great. Thank you.

you. Thank

Thank you.

the line Materne Kirk ISI. next Our from of comes Evercore from question

question please. Your

congrats that like solid more and much, first of ago, your the moving you. as might customers that be a like to sort of to I that? that's fact are coming you want point a for those Thanks like cloud, the the six anything's shrinkage hands renewals better get things in view of months of sort we Six you did in over so I Doug; maybe Yes. know, have, that. months seems you're there you time, been some deal guess kind You quarter. have happening, from it terms, prepared at your And guys big aware if around question regard? that base very deal, on over that get Have would changed this customers that have front the but in to that. on last got you just Do of term of able feel discussions up? the be for of want to

Good question, Kirk.

up focus majority have move a because expansion muted turmeric seeing term always a say any customers is vast, but cloud, what they am not used tailwind probably immediately at I rate, the of and what term we to within right basis, you're unsure establish right we was are The can just a the up of as is flat nature to expansion is while is when to customer the sales to on part to are of got dug you're smooth she's one cloud to get number on on to crystal expansion a their to I'd the blocker billing with positive is the customer. pro-serve, by on sitting cloud goes But overall thousands cloud of that positive it clear building cloud, cloud, move a making Splunk. when assure they we're to for factor being of and in term customer is that even appropriate current itself, the that probably heavens better super And area the X-size the that to the looks and step but into motions, I trying cloud data footprint The The the we're of for majority doing. to the as to what we've like. the we the cloud same across passing and going customers now. exact looks of we've vast, the there's technical them like? because vast, and the seen support, what customer right rate ARR term right vast be size and on on if include yes, going that Splunk be journey cloud the that expansion partners infrastructure team cases of on-prem go for have for get of So, been very ARR what think a incentives seen business their you're sure revenue, we've as Teresa that has our from

native to continue we the number number and of overall c, value based much customers. use pricing, see cloud go basis ROI So for same on positively they up. those workload users The customer. that go friendly the that can cases up more of in Get tilt get the to them metric; with

going looking are to of QX, that with cloud? move currently to QX, We the, how number out that to So those have that when one customers compliment QX, is we're vector many last on-prem roughly then ARR Cloud of positive as a Jason from that's call customers. remarks, said, well. said got in new as – you've roughly prepared driven clearly his one-third And is DBNRR we a are

not cloud The really a wholly our of on important on-prem we're that's install dependent a cloud. factor us. base, but that's transition, it's to that for definitely So benefit

normalize kind enterprise of all mean, normalizing we about sort think from software whether I benefits you, profitability income a company it's bit, estate just I sort any a companies already, year Okay. is were, travel. the less business say and guess by work, statement, seen ago. sort reason out mean, are this revenue in on little the you of seeing seen Jason, you one of And when have then where efficiency sort same those of it's of model cloud revenue I real be savings, fully coming benefits, transition has whether two some in transition, but should that the frankly of there mean, every other remote overall I you some I realize of for cloud of that the we model are or As we're higher? masked versus the measures

I think therefore to returned do travel. how will hasn’t work actually hopeful I really hardly know to but since it's It's and market I'm and react. to returned therefore hard the anyone's it's to recent transformations early really through. we think able be of going That one the certainly reasonable have to bigger think flow in seen, also should that on. with that history we the productivity cloud said, gains that we've exactly

by going unfortunately OpEx don't probably dwarfed I get any whatever so we the recognition of And on impacts to revenue is transformation. be know, benefits the

Thanks Okay. guys.

Thanks Kirk.

Thanks Kirk.

you. Thank

next question the comes from from of Brad Our line Sills Securities. BofA

please. question Your

so, is that deals. coming Thanks question. is the guys. rate coming greater of ask co-term part reason that, in seeing What's than more and And if mid-term taking the about to higher past. Wanted comment this you're duration a where demand driving back at is Hey from? you incremental the a customers mix my that simply of Jason that kind expanding for move of for earlier Great. a made

couple deals cloud. this – last it's had we in a quarter co-term that big So of were deals

the kind is pronounced just this certainly saw a so that. the of drivers expected they Suite a, duration. see. the one said is pretty infrequently. was I cloud we'll That that It such to of know why large happen deals It's Observability we don't continue, with for in that And reduction key

back is of high-XXs expectation kind will year. you that Our of through the the this balance cloud up see mid- to get to duration

I some if more, exciting. a release Plumbr, that? this may there just acquisitions, lot acquired, of lot and of the a much. it you in I guys so observability, integrating far one work there's Rigor, Thank and the with you of and there's sounds And Thanks. along on know Great. Omnition have it. are with recent latest please, been Got How that integration you

of That Absolutely. integration the all was Yes. release the release those unified with UI. acquisitions

Observability sure Monitoring, cetera, the the it et to Now bound adding. We frameworks, intent that continue those locally bands. key of that within different good world try additional continues, make are there regions available got is is by. are features to the a to ease of and still we I've Monitoring, APM, use sure make government by the Synthetic in that Suite up Infrastructure are all task into across and lit federal example entities, focus got find fits is on got compliance to on driving, different we've on

execution but with everybody of OpEx[ph] be And on of focused functionality. and walk depth I continuing about getting and We're driving awareness, engineering our help focus So in also key from drive time through. ahead that are footprint. breadth this excited. point of way It really that it's on thought else we more areas – those really the analysts way unified we it's where key the now at just would acquisitions, teams really, clear we're of is that from really some to ahead

Thanks That's Doug. Thanks, great. Jason.

Thank you, Brad.

Thank you.

final our line question from from Moskowitz of Mizuho. the Gregg comes for today And you. Thank

question, please. Your

question. the taking for Thanks right. All

anticipate naturally Thanks. the all having expect So at help Doug, a question Jason, that it's impact model going this forward? actually in model land what do net you a lot forward? good is Do on pricing And to more to going on going you my this new very for you then for based, is logos Cloud. different host segue this that a Observability you

Thanks Gregg. Awesome.

feel a I'll of Jason’s So under little bit on.

simple entities. on metric a with focusing really single security, are around solutions; We our observability, IT

you're value is all we it on And pricing base continued that metrics. platform, single to end the if and then is focusing to for how know, on a that and which its that metric suite, are So clear to the user. tied, license focus you it's work-load

to very very, our data We your priority. like metric. volume customers. listened I intently isn't don't one So Customer success

the excited was… we're your And the of I'm then bank, to getting on which just So we've blinked underlying platform. based focused and entity we've see solutions, on our question with beginning workload the that, we're delivered, with in pricing momentum totally

Net new logos.

logos, had New roughly how of yes. a third said last that, is that We they are from call new customers.

was customers. some I with in the are couple dramatic a of cloud. easy said beginning have for new increase going positive seeing trends button lever, a more be accounts We to see new net having key around to a

too. there's see buyer So are that, to The Observability beginning within more is existing customers. Suite work we certainly a new

strong of set had all not have team We and run a initiatives the around DevOps a people DevOps that that team.

So Ultimately, about customer work excited have The getting. they're care individual we're DevOps care doesn't entities; all three these They those solution about tech ITOps, position of to the DevOps. of traverse to end to over leverage SecOps, our the leaders. together. to security IT and jobs within

focused a net together only those customer our on on increases vendor basis. We independently really were very the are and perform. is new as three cloud tying can whole So that internally or effectively that unique think continues very, And serve count important. measuring we absolutely combined portfolio as all to

Doug. Makes right. Very Thanks All sense. helpful.

Thanks Gregg.

remarks. further question-and-answer I'd Doug Thank session you. to the the like today's Merritt program. to This of any back hand does conclude program for

you today. all you. tuning Thank Great. We really appreciate in

are we've every We the proud front. really made on of progress

a really the corporate track over cloud-first obviously our our that take well years. we we continued which on with high from company, focused closely journey which are executives led a billion, a turned cloud-first do better multiple opportunities value to poised very partners proven and scaling delivering aligned to is of cloud, really as that, there the now. we've cloud. value work customers, with capabilities with businesses move their high from ensuring to working and partners as as features basis. records as for we're to $XX-plus our clear We opportunity cloud that by become are execution. I are and in coming delivering we our to we cloud-first And initiative never everything of businesses we're of cloud they market for our corner have top approach our the proud years now to We with than been of On believe right becoming transitions that our on customers

exceptionally I've bullish Have outlook. is you never on again. thank more been our great Our And a growth strong. position evening.

today's your Thank you, program. ladies and participation gentlemen This for conclude does conference. in the

Good You disconnect. may now day.