New Relic (NEWR) 9 Feb 222022 Q3 Earnings call transcript

Good day and welcome to The New Relic Third Quarter Fiscal Year 2022 earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Peter Goldmacher, Vice President of Investor Relations. ahead. go Please

had questions. thanks call call. and line we'll Relations your our fiscal from earnings Mark. hope XQ about letter and read Hi, with Bill begin together published for up with a open for earnings today's everyone's we and We hour release. Investor then chance letter 'XX the to an our Today's everyone, press ago, joining a will on And website comments our prepared

During will and including which today. predictions we this our we about as expectations our statements call, looking forward make on business of strategy, outlook and based

Our actual financial to measures. with will the risk of the factors non-GAAP number results and this discuss SEC. our certain Also, be a filed during XXK could call, XXQ materially to most we and upcoming including due risks uncertainties, recent differ and

its to release. our call our those measures are our We measures website. financial have most replay turn from audio over to an intended in there I'd a GAAP reconciled Investor be Bill. that, is directly entirety finally, These this non-GAAP to available With results. And a comparable will being in And be it Relations like to substitute earnings the not GAAP few in hours. for webcast

hand everyone. an I Thank I before want call. earnings for update you, with join taking three on and our good things third quarter Thanks to us financials. to Peter, over afternoon, the on Mark the time to you it share for

of year-to-date. quarter and summary a the First,

road ahead going key five priorities. plan. And Second, my into an on 'XX themes third, our the update the outlook and our FY on

we that we revenue expectations I'm set last to quarter. First, the pleased beat share

now increased earlier a exceeding improving the consumption model amount year quarter nurture QX, reflection than consumption in a of We the is commitments We model. of the our the in improved ability the vast business growth for have XX% majority and to the revenue committed the planned. our in quarter. revenue in Our and both consumption increase of target

annual These customer commitment drive last, in plus margins, are this who indicator increasing of previous in level the and saw very quarter plus go commitment, for improved consuming run efforts grow. those more marketing accounts product and a Data of XXXk steadily at how customers we to in the company XXk ingest who on also as to We accounts revenue X% revenue the in million commitments. plan accounts after more the QX year we of from revenue results ended second taking that XX% consumption growth is the hoped, although it grew increase successive from growth adding XXX our to and future improvement a particular growth. XXXXs perform reflect are on Total quarter. and expected XX and about renewed those working. year practices our continues to to customers, in view XXX a XX only decline have the impressive of revenue as Consumption customers adoption account Not and the and the strong continued with guide eight better quarters and users. the their of faster six in of to XXX pressure guide than original growth. according hard work to growth and path. We from even as over expected, strategy accounts progress we And gross steady as year-over-year rate guidance overall users in pay to a converted and of XXX of only and continues We growth year-over-year consuming the are customers paying on will by execution that, grew our above short-term where are developers. If to in end puts versus just up our above out annual execute at both XXX deceleration guidance, customers had today. significantly and QX, than we million we are not X% their started the added particularly the started rate reflection XQ run paying data. we revenue updated of planned fiscal we're It testament

brief our on five a update priorities. provide I'll Next

in for our top is to rate this that year. year. growth last the row, growth see highest in of Our And This New to in two posted and third making growth last we've past validation market quarter the turnaround X% from up a reaccelerated last has and quarter progress we've accelerating and priority return continued quarter in fiscal growth. fiscal revenue at beginning rates. the that revenue quarter, as to to we toward exciting moved over It's million pleased share the the third growth growth growth of a is year. year-over-year, XX% the are XXX market representing last quarter Revenue year, of quarter last XX% Relic fiscal revenue approximate in million year-over-year to priority years was the of compared XX% XXX shared the I'm rate third and

business was year. year more for XX% the to by than the fiscal of our Our of this second end priority fiscal migrate

highlighted that exceeded QX, As of this ahead to share in quarter remarks, as we've pleased I I'm schedule. already opening of one goal my

now XX% of the We business the are at consumption in model.

driving These of customer self-service partners our product to with our increased and reported as primary third XXXX sales is to provide grow we paying of year way the we starting is entered already for since one through have introducing quarter. XXX% the customers credit team over of XXXXs excellent tier. signed an more and higher and last Relic Relic one New qualified to nurture Our this for lead growth of levels one XXXX, ago, XX,XXX. direct free priority of accounts growth. the increase growth are developers The funnel, number than cards, an number up have offer we New Since funnel to active customer customers mentioned,

platform customers. Our fourth our priority to methodically deliver greater innovation and value is to

was new quarter a a hallmark IO of Code about monitoring Code release Stream, IO quarter, along last product product and XXXXs single earnings infrastructure and in other brand We Relic a from another four New releases Stream spoken our the organization. call. innovation of We've introduced This MLOps bit with smaller improvements. marquee

and capabilities little in So cohort new platform. more releases. with other in assist share about Stream users let along the me other this Coinciding a Code the the launch to monetizing bit with of

to ramp new into priced lower who crafted have are new purchase specifically already code related a debuted and to announced don't core The user an user embraced This In to occasionally user experience, it] private reinvent a early and and serves also [ph] on will public, pulled for love performance time. have at and and modernize ability to solution and time for world-class full yet One. compare and scale. a cloud type, including a a January. saying monitoring for they or [GA it infrastructure graph of new incidents at lead now cascading paid monitoring watch infrastructure user brand No preview, hybrid relationships incidents Relic only code of time. even We not as core platform observability type as with is go the We observability offer, one does New new entities topology experience view customers in AWS select to and are entities developers quarter across multiple focused their like in available back license. to this metrics, over view, impacts and over golden plan users individual the

few and modern brings power platform. scientists with capability of new and collaborate adopted market in Comet, seeing first and TruEra. into is telemetry proud This SageMaker, XX key already an solution the than partners in this monitoring -- as events new including with to our have this flowing the services, in category. including months, customers with our And partnerships that first with and each we're were to and Datarobot, first an adoption. the Mona solution the engineers, new users Aporia, be data solution platform more early We we're MLOps to space also with other build Superwise, DAGsHub, AWS they to market to both In build

quarter. we also continue execution strong Our to internal improve fifth past retaining we recruiting, enjoyed and year-over-year efficiency structure. talented and able continue cost Fundamental talent to make rates quarter. both motivated and another lowering do top employees, We our this of strong to everything a and we team to priority our final hiring were developing is having a sequentially and is focus and attrition

strong a employee internal survey and in improvement Our focused fostering culture. morale, remain engagement we on shows internal

growth On drive balancing that with and value the creation. investments discipline we're profitable efficiency financial will front, cost long-term

resulted we significant margins, quarter, we ingest data which long-term quarter, believe continue prioritize This Similar as data enhances margins was from believe in initiatives, I here. to lower a out positive. should and satisfaction view expected do gross last higher gross but which long-term growth to prospects. our our we than customer bottom

ahead. continue our thoughts me been to Relic we to put few off and the in and quarters ago, full an It Let serve customers CEO strategy now honor worked quarters and close place for pay has hard business. the as so now the two a for see on road with New six to

filled I'm journey, immense to and our how we've employees with how pursuing able been respect the bold fast our on gratitude reflect I progress. and have strategy, As for been make

a customer-centric Relic focus. strategy truly live with New straight things then can and day, we and values, our amazing how do as relentless a every employees company,

team 'XX I As our to as biggest and I'm now the the these to working themes three There to Business targets. plan to quarter the momentum. to primary of simultaneously beyond, on And of we're our that past month focusing our thought continue QX. which and into future, We're interest and would continue plan, we quarters hard you. the land FY book and of few I this plan look part on a locking of are build successes to year be Year,

strategy our business building and drive inefficiency operational rhythms and overall growth. in, a uncover sharpen friction highly are must point to and engine sound, disciplined on our eliminating every consumption execution, and is continue higher driving to First, systematic model settling our established. is we we excellence. But The focus

operational of short nothing is excellence. bar Our

research our now our and that model. and a leaving the process rate, new and But reaching challenges marketing business and understand lift all are increase be capacity rates. more our required consumption much Second, 'XX FY our of available final variability that revenue. marketing the us migration We're capacity consumption. go-to-market to done, and we value across heavy to increasing apply away stages capture help focus that that R&D with on improving And can and embrace the to through more will growth sales with development consumption normalized the going automatically of model. associated sales customers the of to and and recognition of conversion nurture organization is

Our seeding the research year, focused development across was new of ground a for large number heavily this and launching team new growth. initiatives on innovation future

innovate adoption the and consumption we products market FY While team introduce already of portion in focusing we greater the to growth new to against will opportunities continue unlocking will a many be have and underway. 'XX, on

objective playing we the FY our game. as We're that on profitability. support year full metrics year and to our fiscal we're only a bar ahead plan I margins. opportunity you the modest 'XX, raise fiscal New but continued plan. in We're guidance, to growth as top in Relic. next we how not continue should set against and will the lay focusing building earnings that the well take long key revenue continuing of improving early call, year And our next a sharing acceleration look revenue of as Third, of to acceleration we're new observability. with of strive forward also next still in in I'll for priorities days the at achieving we out did the

saw you for each over strive we quarter to guidance you, journey. same right, pursue XXXX. and being Mark. our the You to as mission continue can exceed All to our in us passion the with part of to Thanks boldness expect

our Thanks, Bill, discussing to financial then recap good spend some briefly evening time on and like the business. and results, call. everyone the good and afternoon I'd to

million the million EPS 'XX with the the loss was operations XQ and of was a of XX of $XXX provided ahead between guidance For guidance our loss low revenue $XXX from non-GAAP $X.XX. loss million. XX of GAAP between at we million, a year between XX line million and fiscal $X.XX loss for end GAAP of XX was $XXX of of a and million. and for loss and $X.XX, set in million we loss quarter third of in non-GAAP $X.XX our guidance EPS was from reported operations

again pleased are acceleration our results our to year-over-year beating of guidance, We quarter excited quarter once another top-line revenue with this and in growth. see we're

full rates number on We'll basis. our accelerating in full was priority to fiscal be you model reasonable there. provide one growth to here, that intermediate full a a XQ modest continuation get to 'XX 'XX fiscal fiscal on revenue to in as continues call and profitability of year 'XX But to from QX XX% the guidance specific growth expect May. the expect for Our back year term. to show for And more us trend business get is non-GAAP year a we

excess their renewals both by driven and commitments. Our by of top-line customers consuming in was result strong

deriving to residual in Also, effects normalized renew data a at one we're QX in deferred bigger this million quarter of to starting as coming in and see to start is with QX a and But growth and settle each expect to customers longer levels. will consumption. as is data revenue the of in. metrics we This revenue may this few over implication We'll more meaningful great anniversary margin and a a expected stronger QX from are term that was the view the commitments as indicator gross it was diminish. larger in continue pattern. coming changes start quarters, more in slightly QX transition in to non-GAAP renewals platform. the trend cause growth variability trend consumed higher between and to new we is encouraging. moderate GAAP such this model from see commitments growth We than dollars generally excess of get the from while their are down customers As trend behave the more business revenue QX. balanced from on model, likely XX% that And Meaning of revenue XX%. due ingest, gross margin value another point on QX. renewal potential in

investments of cloud. to initiatives that we our the that long-term. the specific in growth public gross customer acceleration We of to made number in low we bottomed over this and them satisfaction will believe drive contribute and in move to QX. believe margins these non-GAAP a We expect profitable investments Additionally, and trends the be XXs improved have quarter

our We next gross the to are confident to worldwide in over our ability move improve cloud years. margins as we couple complete the

non-GAAP So high high investors in margins the low long-term XX% goal a range. the expect in with should XX% gross intermediate XX% term,

growth, profitable team's reaccelerate growth keeping operating improving top-line growth while and expenses In eye operating but expenses. of near impact we to we more to across the over result term, terms proud creation. I'm the But very This efficiency believe results. are our our attractive bottom-line focused top-line can this prioritize long-term on of margin, over watchful in continue costs term we on and organization. ability near approach will may value a

made point significant and to operating marketing commission by expenses discipline million was the also back have declined our business you model, expense million our Revenue expense. in We total expense prior X which we letter. the quarter sequentially, sales X out want marketing expenses the commission out while model in I investor OpEx in flat expenses in this million and sales specifically. and non-cash X of if related generally, detailed prior to that over is grew quarter-over-quarter, quarter pro approximately forma strides and

expect going As forward, can and profitability investors going of improvements we cost goods discipline steady our expense turn forward. to

heading our including more of rate. new variability are the stages our 'XX the of some some toward be the that migrating final tailwinds to business headwinds But There the reaching comps. transition, going and we're subsequent growth modest are term as we near away. initial a are process model, anniversary that fluctuations normalized of of conversion still Now that our

'XX. Now new to of team product customers in process, heavy has mostly lift innovations many the that the and migration through our for adopt fiscal sales initiated is

the about our to good ability to continue feel We grow business.

Now like our fiscal XQ to and I'd 'XX guidance. share

fourth between XXXX, million representing XXX expect of year-over-year fiscal we revenue the XX% growth year For quarter million XX%, to between XXX respectively. and

operations and non-GAAP XX expect between from million. We loss million of a XX

diluted non New loss We per between $X.XX GAAP expect a net Relic share to and attributable $X.XX.

the For million XXXX, fiscal of representing XXX and XX% year-over-year year full we XX%. revenue expect XXX between and million growth between

we $X.XX. and operations million loss loss non-GAAP from share We XX expect net and $X.XX between million a and attributable per non-GAAP New a XX to Relic expect diluted between

let know questions, stack Before future Thank go have everyone Vegas. your I our call on with intend it I'd to in and Day ahead it conference in for please an on to the to XX Las Operator, like investor May operator turn up. we open conjunction over that user the you.

begin Crane question first now from will the We Instructions] Our with question-and-answer session. Berenberg. will [Operator come Kingsley

Appreciated comments approaching, about far bit it? year how more achieve a can you you so to little and With expect fast on what plan April speak 'XX. fiscal your that you

Yes, thanks, the Kingsley. ahead as take Of and to I'm And is really new year course. I that. Bill go look ahead. forward This fiscal I'll excited

lot touched a on in me look of to my click. team remarks, As themes on a given to. sort our give of to essentially I as let bit more three them focus there's create little we I've the forward a little plan. you I bit mentioned a opening earlier, double

excellence. matters. model, expect a that you is theme really business efficiency can real from In first operational consumption The us really,

in initiatives growth and the word to XAnd few that aggregation XXXXs that in across get calls. factors words to investing you in super from I earnings heard is or me that it where times past to that products, important. to 'XX, marketing. discipline even systematic internally company and a I over over, whole because have the we're hundreds, from our ability methodical FY it as heavily gains You our cost into well of sales And our order marginal of that use goes, happens span use growth. those see initiatives in our continued revenue the execute probably efficiency nurturing

it's the platform. transition, market on theme, and towards consumption, new it where forward in of help is we're second continue organization migrate innovation, we last to team understand The this shifting growth, create about that in value new the business year shifting helping accelerate that helping product in we important a will of customers theme real I've customers the model new we're the capabilities teams our initiatives, 'XX, new all go-to-market well. launching plan. business on given in full and believe resources most go thing resources focused FY focus, an realize where the focused on with how And third from our the the to was platform. seeding us new full the were understand are nurturing believe I the and is focused most Mark as to I the to mentioned as embrace of model, which shift year And

'XX believe improve FY guide, continue we that, XX.X% to QX is meet modest growth feel ahead. if achieve in that we'll about confident and we guiding expectation that year can enough Our profitability acceleration. and be in the we to We're on able to revenue our

ahead we're number QX all don't is priority be said we'll years. will growth one pursue including are happen. on it it toward it for rate striving the I continue we today. results in next XX% until which and when We quarters have that But will to we're reported in two we have solid our a term that the to showing still or and making intermediate within progress our signs really it, we crystal and that year-over-year our returning achieve sights exactly the set ball

Okay, thanks Bill. really helpful. That's

So just as a quick follow up.

square Thanks. investors your next enthusiasm should flat how year a with guide for QX? for So sequential

over quarter-to-quarter including a wonder customers? we sequential saw believe managing not year. what quarter we new for the consumption I for a to to the the the we we seasonality calendar up some annual come delivering look But you'll other growth sequential the and year. revenue are are It of seasonal at that is what year. rate for as the And strength QX, of that most Good hangover value the question. about growth tend at patterns many to each see holidays of the is, business well really, in renewal, commitments full increases, this who as better the the them versus that the rate revenue at nature, measure for is to is for make we And customers really business? what carefully effects guide grow fiscal And And these that. reason But for in our incentivizing in their just if you the we're as presents some every to this as renew best enjoyed with always nice entered QX set over question year look unique share of us growth for XXX XXX annual customers and is a better we even with look important relative and XX%. reported the same an the X% you how we've of rate exit see view year year-over-year guide XXX how growth a the with year as versus XX%. million. above steady like the will with growth year, year-over-year Consider we'll we're the the on as guide improvement. and X% beyond And guided, And of to said improvement we've And delivered with of over forecasting We revenue entered expect XX of you as business. XX% million improve about of to the we'll how enough I we that to if we XXX course reflects believe the exit of rate and seen 'XX. on original ended the we growth growth full business that, our profitability. strength the added year-over-year for feel growth. last business more year, that health a achieve it. and year year delivered than pretty next substantial have of to and we've more And position at performing. the to into this Last earnings incredible increase the fiscal at getting last That's getting QX to a growth that their regarding a year-over-year FY confident overall year, qX, If note guiding in minus we is this can higher And of better and level? going to call at in this that XXX, year-over-year we year momentum quarter XX%

So business pointing are towards all healthy is growing. signs

the Thanks for the continued on great context. success. Congrats

question next with Our from Shrenik come Kothari will Baird.

Hey, Rob this Shrenik standing is in for today.

the So pretty also letter you is accelerating CDK multi-year the paid figure is business deal than about well. existing in with XXX,XXX which account the mentioned customer an greater and seven investor

you when would of XX% So competitive in strength target year the your outperformance model at here. by look the suggest to consumption relative end, that some

backs? greenfield like bit can well both as events talk competent win transfer about little a So as you

Excellent question. Greenfield. the We bulk see do opportunity our of as

started become tons consolidation position have deals win plays But And tool in prominent. also to I the yourself read the in the investors rates no letter. consolidation got strengthening competitive that tools lately recommend CDK all example. great churn. and data that example to our doubt with. stories not only demonstrated that's it's also But like familiarize the in more competitive that's CDK way, of and Although investor By you mentioned and improving

We had their read all of a with full their customer them. quick. and seven CDK with consolidate really This outcomes their New standardize as They've they of One in platform, And deliver experience dozen want letter, operational other business deal around from and which open existing helps it their we their customers the multi-year just really to chance observability, as on customer to that state. increasing forward. closed to they access all practice in the a when achieve while owning everything and is is to their a what increased their is us vendors want, I'll the The to platform driving example together highlight the to one drive employee those customer, goals haven't ultimately partner efficiency strategy an them the saw them a to our been a a who investor in for of significantly. of but commitment And all gives automotive believe one For and just that tools Relic figure source standard us value different customer well us great digital the they a platform. is with business productivity space.

Thanks.

Just one here. up follow

sequentially to about the You dynamics. a and in of flat related mentioned conservative you renewal some to mentioned seasonality about the And kind of modeling approach guide consumption excess commitments.

trending So as Thank conservatism degree it or your like to just are now, lower, wanted the data some get same points coming is more in, sense about of levels? you.

to And can sure or meet can Yes, to exceed But we that guides. quarter. that We we it's ourselves. of also, we each make a expectations with we want as ahead accurate don't set get good we question. strive to be our the as want

into We we into for in And see and saw I they seasonality saw. model, the business gets we in decrease might growth don't earlier. by those it's holiday some it the the they and the if the customers, with of financials. a pay of the makes unless actually, then in think consumption that's critical. seeing And the our significant proposition two last in because think, last December, think if the with a XX% you in totally sense. holiday they for even and it are closed weeks that reflected not consumption trends, model. brought have can that up it very seasons It's user weeks mentioned for a trend overall pretty that saw the year, New you QX. the to more we we the of out in as was strong. but Christmas strong time engaging business we're they some what it. And holiday it, in data would you strength And January. engagement value the a little of lot quarter got And be use. speaks the we've swing very of hangover that of to And what end saw to So as week seasonality that's But of data right interesting of overall bit we December, actually, employees at effect Year, that need impact QX pay overall numbers season, well of minor of for absolutely as last you an two it, of work, ingest now on down digital about part terms seasonality relatively slows don't

next will Sterling come with Our JPMorgan. from question Auty

guys. Yes, Hi, thanks.

So question, comes specifically, faster? So confused for kind I it? I'm slower? that just you especially getting as implications those talking the want ask there's well as one does about comments back You balance think at mean the revenue you guide, overconsumption. in comments to about a about higher I'm it look renewals the of at and to renewals I what on grow and in? grow quarter-to-quarter? go least the higher just when in coming between the letter And going the better that Does to balance confusion, that as mean growth, What's

revenue report good me The remind And us. for revenue made up question. components. of Yes, everyone, let two is

that over the top we on that the commitment annual each or their commitment, consumption multi-year the commitment of First, customers and commitment in of quarter. then terms the report us make

As saw a QX. uptick you in in considerable both noted, we

how would market platform, to On who've year, platform. work, brand didn't out while, you new for those been if this would consumption us use customers, the a introduced model new know a whole last we back play might business side, they think and new pricing how model that that commitment how with the to even brand

just their it, previous is getting data the top increase above continues And how base their the with a telemetry increasing observability commitments with commitments believe QX. for consumption, data help And observability We see they're and of conservatism We we to so and them begun that engineering we opportunity on were on lot consumption of user, they this the more who population. or their to consume in quarter reflected were saw This renewal about how way. think most overall started a new first reported reflect we with and the works customers had we some what consuming platform user teams total relatively at our a last in migration this going relatively it in especially who the conservative We in of those driving the And commitment is understanding more large make of QX, On their the the commitments. use with year had level, are of practice. throughout of increase. emerging also decisions. versus to that, space. driven that considerable opportunity year.

and to see consumption expect to increase go-to-market the ability to embrace improving product driven of our continue consumption to nurture with as so companies And in data approaches we organization, the engineering. more

So the short increased believe answer we is and to commitments improving consumption is increase. continue drive our will to ability

Raymond James. come Our Adam next question Tindle will with from

the expecting same this kind on have QX revenue sequentially. near-term, it start did to worsened I If quarter in sequential of modest growth, but afternoon, more I loss a 'XX zoom fiscal I look basis operating of reach guidance, profitability wanted at implies to that profitability you're metric Good trend. your non-GAAP the where Mark. thanks. operating on Okay, If

would to some maybe changes or So double I incremental profitably, come guess 'XX the the data of enable expense and key more over question buckets? growth you on commission fiscal Thanks. what in click could center be costs, to

improvement. our come going from I to think the big improvement is COGS

we As made customer we long investments. forecast. than side a other are the the incremental some term, some And platform. that's of growth right? good need And Customers about, we we in taking advantage talked stronger had data thing we've seen --

be some or So it pressure investments. up but to gross not and as we continued definitely this quarter migration will on to margin had those up finish to continue the cloud, quarter continue next finish

improving out guidance around from so it margin. and then next into we've And bottoming gross given quarter, feel XXs year. like low into We the there next some this is quarter, up

the line our have continue think at that'll bottom-line from and gross doubt laid the our plans. at to summary I that more quarter, there, and So 'XX you we past talked margin before take folks his look a look efficiencies to letter in no the large you quarters, the that. look that, expenses, When a investor to in about slow will operating we when strive out for down. we we of even Bill But encourage of couple do work part improvement have come will this still

yet the We And pro we're actually marketing you we quarters down re forma accelerate have that number from went if years. model and And down $X and customer QX, out our also our and a quarter a this we're in that million took sales of QX. And we around transition customer quite add turn amortizing count prior commission best that to expense incurred able commissions to had that in were where revenue. expense we expenses hangover is sales the our year-over-year. where in we and a marketing

think we've can want efficiency line. on the and success there demonstrated to some impact this expense have So that focus had operational where we've continue I -- that, an improvements we've We on been already.

sure to want confident we the able the to turn from between feel to modest discipline Now COGS turn -- there. build and then we'll and line make we be profitability we two, achieve that

Okay. the goal of And on other growth. accelerating on the side

saw out the drive think point. business drivers it incremental to now you this right, be I of on as the if that growth. guess metric really I is did go question the what I be this a perspective of here revenue think needs to about I incremental And which And million run kind with to would north recently. more the that accounts the get XX at new posting been math, to key acceleration, rate from above you've quarterly

that the consumption can you've customers of that read, are this most kind conversion drive you. rates so about some things key I to that help I the improvement account and think you seeing? driver, new would think efficiency point, kind modest conversion letter the of other and of been you expansion consumption you've what incremental over did the for And to the model, growth, what see improve to the declines the move over in quarter, above noted got incremental do Thank to on growth? run additional drive

year. or over, And which then start us -- Yes. and a number commitments continue at added, can comes commit. consumption can account new And customers. drives their the over we for look in and when of from we're with going patterns, growth and dollar talk our quarter the upticks growth customers have gains translates that to three new we those last from foundation about really, lays grow amount, build And next Most now existing we our quarter what consumption consumption time. what confidence the changing. a And period to is that. year and of next come of at growth incremental accounts. which of our we've We're with want very over consumption certainly look of our our revenue to revenue revenue a fundamentally, the quarters you performance. their really And ultimately, beyond. are how on accounts see, growing. pleased the And of at by we our that given We looking a behavior combination how four couple growth is is we existing majority the to But relatively low accounts our most new vast help that a quarters

going consumption do in could more There about do. transitioned leap And faith their do, got him on things that comfortable much point, model, data they customers historical forecasts bit understand can moved how that's I can a a I'll in talk about at also would minute. accounts. with they're model, a And am of that, the lot point, the of they to we am I probably go forward. the can they I this as use? analysis? of they've different So lot have and kind What At of value think into have a over. this But it And grow that say do first to when we let the with I luckily, our make, was to initiatives, numbers. which all we commitments to going behind of didn't little are year they I and Bill more a history a lot their and estimates a the

Singh Our from will next question Sanjit with Stanley. Morgan come

And XX up magnitude sort renewal run relative into renewal as the again, March the can Thank relative similar quarter, questions revenue any you in renewal, we the contracts, of prior sort that will also for quarters. QX, expansion congrats up looked color for they taking the been to the in really growth you that question came sort call, that that that additional price saw, you then, this us underlying the cohorts past at about December rate we've cohort of couple or of the on of on strikes about if along core things wanted focus to look days? the December on for up have give heading even come are of maybe of coming what into for when big to you the their their assumptions the lines on quarter. accelerating My and the cohort you talking

coming increase, that of obviously annual to aggregate, Most their their Each that model. in in renewal we color you where the customers under any take the they are renewal. set their and past new consumption, see their I'll up we've have model. shared watching first our And a to the consumption first Yes, consumption see we've their the relatively And as commitment. as to quarter, continues And QX were quarter I Mark up first annual annual to contract. original their accelerate at crack was been can add came of as commitments the in fit. since an we over overconsumption. said entered customers continues year And exceed to proportionate pleased we before,

have or to we'll in what continue the model. were commitment their we into terms year rate their at at And that And more anticipate, And So that's much success now given likely we consumption the were customers into new, had we we'll was. in above, to this a of in familiarity what hoped those new QX, entered that business. getting the or of cohort customers our with that model thought in increased the biggest have consumption quarter what get consuming increase to above who and another look fact, see. in QX at commitment

to ability earnings for about a and forecast that quarter's That's then going dimensions seasonality and as a a to follow it from seasonality considerations? last taking also year. guiding quarter comes how of do super those when guess, call. theme are along is you this trend as two helpful. just two this factors, the is quote, And about about, which account a in or feel to comfortable I How that And variable quarter terms up, consideration, variable thinking fourth

things go every seasonality a the may every that. some this certainly we're be and be front, others fairly customers, we modest, offseason, still of seasonality hard, on learning But through quarter, like that. as with think we On better we'll we the large itself data when are beyond year get cohort get driving will consumption

modest. same that. or like fairly quarter-to-quarter, consumption million So and I seasonality dollars could couple think a time trends be the from macro things on will the quarter another depending one go At

some growth linear, will be in being completely And that. there think fluctuations we're don't I so at looking

would terms us I terms, made. more just trends, think expect as as for approximately and urge closely term This To excess the each I in In we going the to variable by in forward over which don't due more models on actual a and of progress than this, pleased feel consumption. And should their as we a mentioned happens, now what look to take process, 'XX confidence evaluate we're shape exceeded point, quarters. beyond. the and consumption with we what be a than consideration. fluctuations the do commitment we every on growth the lumpsum to the have a step income of level our to multi changes. about to it's gives their back in we are number we've guess in this set customers commitment. as forecasts of it our of models statement, talk the consumption expect quarter a rather complicated I after complicated in as growth method contract. VC and We've our accounting simple at in we significant But you want It's growth forecasting At that revenue model VC, been bring of honing you topic. very fit And and month, customer approximate that's means consumption, when like good we their

next RBC will come Rishi from question Our Jaluria with Markets. Capital

NRR above, the XX% NRR, should see growth targets Wonderful. side. How kind to as your NRR? the see should continue that we on improve. one rates to my going execute drill be getting about nice better lines market down And continued what improvement you and questions. see for we shareholder forward? much thinking of between nice And continue reading letter Thanks Where of growth so back [indiscernible]? is the you as that continued should about to to me, of for think taking questions to on and acceleration Two of from firstly, the number of target your looking

Yes.

metric. backward So NRR a looking as know, you is

lags couple the number so And generally latest it revenue XX-month quarters in the to end. by

bottomed down revenue be our inflecting, growth and quarters expect So, accelerate, see started that. starting to said, NRR, would we're as we talked we there, we couple about and later,

overall in we our mentioned, driven contribution at come follow from that And I When the And is get top-line customers our will customers. modest, and because revenue existing generally new as trail times dollar the new numbers. so it's you of customers couple I new forward. low number think most customer a relatively of we mentioned go growth earlier trail that we and expansion by think growth,

$X,XXX the is million get the plus first from we whole So next customer new, expansion. the a is

so And how we most expansion. grow is of from

number closely So pretty I that quarters. and NRR trailing number the couple revenue think, would by a time, over would follow just the but

pay maybe have to large then as on you got And I go That's us, customers that Okay, think the metric with you about accounts. wanted started it. shared really helpful.

are and just are maybe customers the effectively on about platform, the Can that large new XXX consolidating a can under to of you Relic? and talk have you versus XXk customers getting function new those maybe there helpful? growth and more customers Any onto about talk what's Can above. of is more dramatic function ingest net provide Is paying model? data be a other Thank started you that as vendors leading converted? talked of color you. that are models it under New new the XXXk out that you more and So XX your above about, especially would

already then credit are free seeing in operating mentioned, show tier you year excess threshold Relic ago, And now platform expanding customers of that what came Mark, looking last those XXXk that New and our I'll customer tend for in as we nurture more New APM. see though our annual in customers I'll from channel, for of free tier run customers self-service above take experience put to rapid above this all-in-one you to the observability they're into consume that ago, in the with key from started the their is overall rate, that really a XX the one. at active to Relic we're that say, come through quickly, the XXX with is platform they breadth the for metrics run in And the point card. more XXXk also that customers that capabilities start. Yes, growth which a rate. years just ability And out and or improving. decade traditional five to accounts who XXk versus, annual

XXXk press I the customers than more in XXX last the alone, pool. the quarters into run two you think we've can above investor well, letter in as release see that

customer above a with new new both quarters, So previous from that last quarters. the versus which existing XXX coming pretty that's is and as increase well XXXk self-service, spend expanding to that just in as few customer customers pool significant our base, base

Our come next JMP Erik from will question Securities. with Suppiger

taking if Yes, fiscal this, commission are for you've what for you apologize expense said assuming but for my non-cash I thanks question. 'XX? the

we year. put this We laid think we that got that's go But haven't -- expense the letter the out Generally incurred investor guided year. speaking, an that's prior though, of periods beyond an in the prior we this from this beyond year, amortization 'XX. fiscal in a we in amortizing getting that I QX letter And charge did that through that. was we're not

pretty probably estimate get you So over it's and you next think years. of how the I estimate, off a couple can going those numbers take to good trail can

The says is assumption. per QX, X a in letter in 'XX, it QX, assume that through fiscal in it down that comes a we qX, right, reasonable X million nine was quarter

Well, that's probably not bad.

Although three We annual I think enrolled commissioned expenses amortized of it more years. as commissions on an basis. historically model over

about third And a of each got so, you've amortize year, this year. to it

Okay. that I revenue you've the deferred have have the looking consistently reason good deferred grow, at with growth The had thought up revenue? RPO the growth revenue any would had are at given pretty would I than slower and why deferred, customers RPO just good RPO. the but growth, that commitments, was didn't got taking their deferred RPO least the

year sync but generally two multi-year those consumption think for our I point, at contracts this but I annual with The at longer vast the customers go accounts horizon, of commitment, in got our a of We've term biggest most say is, one deals. change with RPO at there we're would look model. the majority customers. time And looking some

have one the you light consumption model? in year to Did of customers shifting

And a as to you some year We standpoint, three about to give can commitments grow assuming is off with that. thing frankly, have our from fair we of And friendly. have consumption, amount we're shorter we better The that generally term. look customer seen up at a get them.

in a by deal. getting of deal value, year a one, but be maybe actually could lot customers they assuming so incredible getting good they And year three

one the better that can recognize do value. and I -- continuously can commitment in be think could And then long-term. in our we're customers And so business for that assuming short-term, us of we actually year providing the is

from will Company. question Our and Wood next Cowen come with Derrick

higher people thanks the QX be the three wanted taking trying way go was of understand are But last I to point, being I variables as Great, that QX that some as knowing few just of kind an resulting end kind the would one [ph] And cohorts. it you be on on variables to consumption Yes, and rank guess but my the the there [Redrack] I holiday those is certainly are commits have be of I in belabor those Two, more on mean, to quarter? not quarters, renewals, be the just of? from is an the revenue, three sorry how really of to those outperformance kind think seasonality that revenue, what could overage. would strong because catch And near back term question. variables the impact the around I'm right that the would less periods. in coming for to up the early hearing anomaly. in thinking

are the three I think those variables.

terms don't In tough contributed each all they amount. them, explicit have of some ranking an But of we one. breakout say, to

give just you I I et cetera. firm -- So or that this was guidance on can't percent

Yes.

shifting new guys you it, mean, Bill, about on clearly installed focus been thinking and the the base to you I have for I'm enterprise question on focused glad Well, right. the Okay. on new platform. a customers,

fiscal how about of through touch customers? into in more high to done new be the as funnel touch customer the focus be channel? low thinking would this enterprise on 'XX? lower are end look built sales invest new acquisition You at especially you market. you this Or low the sales looking touch the you But Can

our year. do to three obviously are that product with Continuing evidenced to self-service launched in last to is is funnel those Yes, our think the to we that And numbers by new question. channels investing accounts lead good head, about we as real grow long-term business. I refer that strategic

want forward increasing start making channel, out in investments there. look of to of build more to is we're sort that, of to addition first there capability 'XX, we As there's to we which efficiency terms partners the in two more FY

existing go-to-market, 'XX second, is acquisition factor also more accelerate our and can as components, that that of and of capacity landing sellers, account time well plan. into then with And their new sales inside who help our our so And will as as think FY sales portion logos. of new some

Company come will Our with next from question & Needham [indiscernible]

guys. thanks, Hey,

consumption and back know wanted this in talking effect of help or come to a we're we're us final the the Just you on six QX, we're to you're talking relates in hangover out this now played it in that effect couple how this curious how belt slowdown the about? quarter? seeing what that we about that two QX, to seasonality. could about as has think seasonality I'm for talking saw in front just the under weeks have weeks hangover I you our weeks seasonality the to

I'll little saw drop then we it. as December, bet. a steady describe last significant to ingest side, my off since You The best two of weeks data do and I rebounding pretty those mentioned trend provisioned then. downward again, users, but throughout month. of bit the slowly, rebounding see with engagement Similar user year. in We that last of of terms pronounced less a the did

model consumption advantage the wasn't the model customer think that from a it more last consumption complete surprise between And although of taking an our pricing customers customers difference we model differentiation see our about proposition to to And long-term So customers. now, year, XX%. optimize in benefit effect. and this the in year consumption you some say their as of value spend, the perspective, the XX% strategic terms in of have versus benefit business value did overall and that of of works

have And just the if those could and been you churn And real here, but then questions, typically, X% had you pay guys. quick an But then churn XX% with top-line as accounts. accounts, I'll growth growth, better accounts pay you currently algorithm quick the on maybe year provide layered that for first this going think towards those two see And market the guys if the this driving that. sizable? about of to you for X% the you guys in XX%, to up as those I Thanks you there? what's the that the go XX%, become Maybe on go disclosing zip target wanted a and could we're leave I churn Is looking letter, that as for over it? out clean up at? in that then assume the have. guys to can second you the grow these you're think strokes course a that was Is to to code. more just I really get that XX%, in accounts, I to newer but to it update driving broad XX% you thing, in maybe the growth to for you year-to-year growth framework guys you more accounts That's be way that fair fair missed for

And think, I to in many low critical very while the then nothing, of it's our new our end and from win it's as and they the said a the card free paying, from tier even growth really Yes, of long-term way had before, mature our enter customers, does the there. customer we existing base. come -- most spectrum, revenue credit to

individual it who based So when acceleration. that's of platform, mostly contributes talk year based we revenue majority and one or again, applications of the customers that in upwards about expansion Previously, model. this rate, a all so customers on the And to revenue have components. XX% really that or have on embraced buy growth is would year-over-year and reaching

the think the growth now has advantage way built go-to-market pricing or past is about we've any they're experienced familiar literally And to take to user and one teams, driving we and of data types expansion customers maybe from the how data about horizontal with and two the is around our that add model, account an thinking And every the within access to platform the that free, horizontally, having platform the versus the days. source. expand help experiences it. breadth they teams can that any friction all-in-one product all from of of of full really that platform thanks Now, had driving that

page And thanks. Great, – any confirmation on the

strong pay before Thank to the in reported yes, acquisition. continues to the the range, go you, and still X% not be a makes we new as has for that X% on churn [inaudible], changed. customer It's channel

to over question-and-answer any to Executive like concludes for turn session. back This I conference closing Officer remarks. our Staples, Chief Bill the would

conference everyone, take And business look the questions. to our hope engaging you Thanks, we with this throughout read you, the Have for investor trends later day. you yourself investor everybody. good you the seeing your of letter some to We thank and and time at today for spring. details call and quarter. familiarize joining Hey, a the forward with coming to you all more

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