DigitalOcean (DOCN) 21 Feb 242023 Q4 Earnings call transcript

Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the DigitalOcean Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] And I will now turn the conference over to Mr. Rob Bradley, Vice President of Investor Relations.

begin. may You

are Good Financial today Abby. a year thank for will Matt call call you financial Chief the newly Thank Officer; open After Executive review afternoon, session. prepared DigitalOcean's question-and-answer us and today the on to With our full to Srinivasan, fourth joining our results. joined Chief you, Steinfort, me and Paddy Officer. quarter up XXXX we and remarks,

made me management's our Before refer call you full on remind on we financial XXXX. statements forward-looking reflect this discussion expectations may certain which currently let our and regarding best year outlook considered be of begin, beliefs specifically to I today the that for quarter based and available statements information. judgment first

projected filed may forward-looking SEC to Factors that contained Our any differ these your to forward-looking report and those release those to annual with updates revisions referenced XX-K today. posted company's from materially undertaking or on or any the in publicly in attention DigitalOcean release results Form any to statements today's is the in Risk direct disclaims obligation expressly statements. I our actual press made the website.

is also like our call financial the I'd outlines to the on discussion in today's today's on discussed investor in the available that measures conference are as over an updated call webcast in presentation Additionally, today's well in measures will also press comparable section. With turn GAAP non-GAAP financial A be the call. website to call. to available that, directly IR Reconciliations Paddy. this most financial release, as of

call to very you my on here joining Rob. of Good you, afternoon, Thank CEO the with for thank you be as DigitalOcean. us I'm today. excited and first

appreciation technology the start the is to art my to bit sharing thrilled for spans I XXXX the positions, will at a a have our the that an by my full and I company of to opportunity worked I its talk deep believe my be a today focus well-positioned, with leadership like in for that DigitalOcean here reach the Having team, was I the company. To background, you, career and opportunity, bring drawn us, has I'm help to DigitalOcean. DigitalOcean potential. I engineering, strongly and along started to developer-centric overview team. in am first my I as of a products developer, including professional DigitalOcean of before start, priorities and in why highlighting C-level and on technologies, about Microsoft Office As companies, the distributed career Server having where would I of providing finally to worked management my spent career Microsoft, to opportunity entire Windows various product years formative and variety a that at front my Server,

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explain quickly. me Let

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fund the the and development. bets will application investment We leverage core help in strong our long-term cloud in like business strategic margins machine AI DigitalOcean to learning-centric

flow on creating increasing our a maintain focus margins, leverage will We free long-term return attractive for investors. operating cash compelling delivering and

quarter at I've but to meeting now I of many be excited turn busy can got months. With really to I'm you Matt. the forward to that, looking As upcoming will very very I you ahead, it over tell, here a am DigitalOcean. in

on net working our had to It's revenue, with to entire you team you and Revenue will have allocation all the up end adjusted my was good million XXXX and solutions. Thanks, income provided. DigitalOcean's This we're potential. In net very and and to exceeding outlook. contribution the cover that highlights, strategy. QX year excited outlook recently we achieve front, as $X our $XXX a are the forward XX% I financial finish QX was CEO year the revenue forward Paddy. business and DigitalOcean our machine-learning sharing full was our the stabilization great tell to AI the dollar full and acquired year enormous was you by strong on can I joined you looking much the XXXX above and of year-over-year XXXX performance that we driven high I share, million outlook board. core go capital review quarter was got of our which financial and results before comments, per with Cloudways and within retention execution from and our some first EBITDA

we per share investment of of quarter. Non-GAAP $X.XX, in growth, We which our investments, in year-over-year balancing XX% business, increased our was our also million, revenue, Adjusted in with XX% diluted operating investments free cash which while to $XX successfully continued a efforts fully to AI/ML was representing leverage, as to program. manage executing capital efficiency working and flow EBITDA due timing profitability, as appropriately margin. for delivered in improve we up capabilities strong core strategy $XX our operating the to continued XX% was our resulted fourth million, income net repurchase share ongoing implement of increasing adjusted

persistent in was was XXXX mentioned, of and Paddy slowing players the it the face a many as year challenging industry, for As revenue growth in macroeconomic with headwinds.

in pressure revenue line steady half, year the we growth in revised outlook. had Cloudways bottoming we exceeded top XXXX and stable into net we of second While the dollar lasted a saw full than headwinds longer QX, originally with and in retention expected, the

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As core usage increasing well. With the DigitalOcean customer financial platform, will an share and this saw of progress in and as outlook now are early month-over-month in indicator trends context, growth year. quarter I that February seeing front, we the our January, our growth in for usage the on higher for we on similar

EBITDA quarter $X.XX to year, For with adjusted the income of of margins per XX%, of million net to $XXX share project this of revenue to $X.XX. XX% million and first we diluted $XXX

recall, As supply by guidance provide heavily not critical influenced given mass flow our free capacity. quarter-by-quarter you is do cash we that a capital as constrained plan chain and build basis, our may we said, a navigate XXXX in on it's on time. With capital loaded front working AI/ML

to expect So, dip balance in then cash flow and over the of increase the we free year. margin QX

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operating value like Before goal for per pursuit, shareholders. remain Growing repurchase allocation concluding to committed I'd free to my stock to primary growth and a these driving Together, is create profile remains flow remarks, regular to ultimate investors. our share while execute increasing cash leverage, strategy. to our shareholder continuing return top a that what creation compelling a lever. believe reiterate line capital program priorities we our we we In with long-term believe capital return

an XXX we today. million year-over-year. With leverage from target, believe leverage, materially shares. to approved from million generation net share and the progress made will have to the Stock-based the million end we million compensation years, repurchase $XXX.X Xs by diluted in our the of XX% execute the guidance by repurchasing on expense respect strong of on that X.X non-GAAP low average cash is authorization We fully XX% also and next our has reducing front, in revenue XXXX, the authorization of based full long-term XX% buyback that continue XXX to shares with buybacks X that XXXX. On we end being repurchase flow the over anticipate $XXX free to Board in provided by our stock XXXX Xx utilizing weighted the program year-over-year appropriate declined to strong

in deal flexibility can free company in and increasing potential, $X.X of and remarks, for leverage growth have the to continue capital December company's of well-positioned We share advantage levered over per mature XXXX. With to our will great debt our instrument X said, ensure flow cash profitable not the net at an that does steadily rates. To that convertible billion achieved attractive and the XXXX, XXXX. that we reduce is from close zero-coupon manage growth a years remaining take until my benefit we structure appropriate while

for and plan the time strategy the to tremendous over opportunity I'll and an actionable again our now investors. Thank turn results your market a seat, have questions. now We operator to in it strong we're and capitalize With for your today, on and the Paddy for execute you expanding deliver to eager it.

first we And take with question our Jason William Ader Instructions] from [Operator will Blair.

I Welcome the just so business ask lowest know, and where hanging aboard, been for to the far few do perspective but weeks, and you've, from you, the a company? only Paddy. seat the folks, talking as fruit your see in Wanted observing for you to

Yes. Thank welcome. the are to the you and taking Last for on is with day low comment Boulder, Yes, my where just team, this of Yes, X I spent week management for whole we I week hanging XXXX. want my and on stock Colorado in job. the the plan fruit. ahead don't

looks For product our like who to was really me, it solving challenges. think starts remarks, saying prepared roadmap. And targets in our everything accelerate and understanding with customers all great as their I are I my

So how have, excited is much we I'm by -- given our the customers, product of the the super community offerings engagement. our loved breadth

and several fortifying Platform-as-a-Service, straightforward, these to aspects on X of the exciting there network there delivering everything and I great on in our terms capabilities, between. world is and it's are AI/ML foundation things to it priorities. One and are of All infrastructure is our product accelerating of my for of really priorities, the outlined, buckets innovating as build of roadmap, in us are core innovation and on. that, whether And

super-exciting. have we be think to do. so to I much going super, innovation It's

a engine has exposing really that with where them I be all that the building is, by top to experience the that teams DigitalOcean in is to augment is gotten our going drive can exposing product-led thousands The platform growth establishing positive second NDR out. a our and product great only have them terms thing relationship great to the we from of how them we but and other that of which of GoTo our places, breadth rolling with are offerings capabilities in our it and great not already, of customers, drumbeat engaging bring in

in course, initiatives very of of So ensure a all driving one looking I'm energized all by to these operational to by And at we across are that these feel and going all I series of execution all, be mechanisms the board. one building opportunities.

Jason. super-excited for be So to Thanks the question, here.

One quick follow-up on that.

you do to just some Just think think impact give later Do kind XXXX of initiatives? this that you're how long think a now? you could that us take right these the actual we thinking you timeline on year, sense of like see some return material of see the will it's about to it

Yes.

initiatives long stability, with running, to enhancing I right? never performance or fortifying innovation, done will We security of think be a be of many our kind these are and going thing.

a of are So initiatives. I think things evergreen lot these

terms to you're going of later. hope rather is I it In when sooner seeing results, than start

In Matt year, for on very a absolutely coming it the off is that laid think terms out, the and I outlook we of outlook the laser-focused appropriate will that given of year execution. we are be

you be there's us, opportunity and can us great count of and a So, on ahead execution. to very disciplined be on laser-focused

our Borges Goldman with Gabriela next Sachs. take question we will from And

pick about growth exiting up XXXX. made comment that generating a on to higher I Paddy, Matt structure want the To

for sustainable that? sits and how for or the So Matt, sustainable this Paddy, do about of that for what you business growth rate the either is profile think you margin alongside

Yes. thank for your you Gabriela, question.

balance is My right. to value put don't with I price, the believer Matt you And driver firm profitability. an find and concept absolutely want a between the of right a exact rate. trajectory in long-term I'm talk this, to being of philosophy you're for at right? growth growth So reasonable growth the overall about all heard ultimate growth us. exit

going make think a market is investments tremendous developer growth opportunity it and us into our and core the responsible I market to going, our where do of in where right, in our there's and think help for terms given are the too me accelerate is customers of I that. But AI/ML front beyond. year us to next early participating in

in us auto the few I on scaling Autonomous. front, think announced last will Cloudways the busy product capability roadmap, in but you very active also we saw not called the be just find our AI/ML of you just and days,

You will announcements, core start and Platform-as-a-Service our releases seeing a and infrastructure on string offering. of string of

that luxury foundational right solving. And very have think investments opportunities customers. problems start And do make our we so think at to I'm I I able disciplined really super-excited we calibrated focus up once then care for lay help we shortage itself. I quick, is There's developers face thoughtful, on today delivering become different no And and I the for is of that, a financial profile take next beyond. to of such us year many to be strong future. setting growth think that going right? to of job our the There's the it's just for foundation rest to think, developer having that, the So to ourselves doing and here,

and fits where classic straightforward And reconcile then about tied were is the the simplicity customer a much value I I you AI/ML? developers ground and proposition much participated? and with usability. be ease-of-use, me oversimplify the could the that bread-and-butter different I arguably to Help getting AI offerings, follow-up how on proposition, traditionally understand DigitalOcean's do perhaps set value of and more of a with and question configurations that? the off so where the something from it ML into strategy you've SMBs have about is to sophisticated How think If target, think

as because I'm hey, very last a talking that firm building that's at be about, to lot to space. in of than of for come, market believe developers, the market there's this that sophisticated is of well early of at training work the one models point few like I to main on very them, was GPU the believer so years, lot a And AI any complicated had a of Yes, right? I've than be. making it's ML and are to the And just need the come and development that in feel the I'm large about everyone that's and a DigitalOcean, going question, just reasons and and more background to this it the lot and as kind that Amazon, this excited the because we innings is a to a in GoTo your the great at I application rest language you LLMs. why believer Gabriela, it is a more fundamental needs both years cloud for is future forms centric but to power here I

the rightly long-term from? durable buzz competitive mentioned hardware software. is there's or where is to the for magic where be And -- my model? Should at extraordinarily again the in is think build you to in part that software layer. to but today. hard What us is application default say, And believe to going happen. I this going so is development we What the finding many a to I it, DigitalOcean back that of going a a it differentiator firmly Should do I So, the AI/ML power words obviously I train do okay, model? RAG? Just start developers market believe are where I fine-tuning? That's to

which do for DigitalOcean's computing that they the world. principle to going about about opportunity was, and founding phenomenal so developers experience what a can that have is forget the change We is, infrastructure worry cloud best deliver to the the software

a in unleash We have different same that exact the of AI/ML, domain are going we to to and playbook opportunity in AI/ML. it do

I to that, it is have last phenomenal. Gradient played integrate DigitalOcean today, is So Paperspace to the the strategic I Gradient around But us. is we with over few and experience market feel very what work doing the we in hype is a exactly weeks, This busy and and The to lot personally despite I experience, having the the this the acquisition do, missing said world said, that is very the innings are between super AI/ML, of early integration Gradient all cycle. offerings. and core of as

consume this is world in build sense make an to and and application, the today DigitalOcean. AI, exactly complex to developer are the the in cloud landscape a to the opportunity machine app learning of, that's wheelhouse super-energized will in have we us and of feel going opportunity early value of this is And to is every think add them. great that I that very a I So for that innings

our take Reback will from we Brad Stifel. And next with question

especially faster, never Paddy, or given around opportunity, more people the the why seen everything some you you're investing, not that some given for of just laid on we've before? there yes, and against, out competing invest

you, for really question. a Thank That the question. Brad, is Yes. important

So little color then well. for give a as I I'll start, bit love to would Matt us of and

how think right balances hype innings, responsible I long-term Brad, be being provide have our in powers of we become investing our are along have I've are the we experience. to as we by the said, am -- to we to hardware focused investment -- that and be our on I our it But and Matt at developers, not very that hardware getting early that the said, believer away provider, week, a today. And proposition, to the as I services, going for right? have firm ability not only absolutely future the we our strategy. be the to the is going software while developers strategy a to of a try very responsibly and go carried cycle competitive very invest is differentiator this right careful is As so experience But in value have the that we for calibrate not mix So -- to we we and to which the consuming year. long-term find -- here balance. And X looking been I strategy is have the

So that you don't chime -- but early are thoughts, Matt, why in. those my

versus seeing I and Yes, budget that model footprint a a It's similar have the model very we capital we of small very hyperscalers I very locations completely the mean, have level small sophistication different hyperscalers. to today. any -- what to require market a relative that it's agree. scale. And the at of of that some companies when because see of lot a we the of these doesn't I you a just for we in investment. model renting structure the to the to bare in software have the compete is renting providing and we cost is just devote Paddy That's we're It's have case going we ever have differentiation don't described, What where our in what that and the that's scale. layer, we that. do market, target basically in have differentiation not GPUs, solutions they're dollars, and a that X raising you're we'll mean, of level hyperscalers. metal or target massive

in taking given of we're perhaps, slightly in a in I alone that angle a layer, million durable, big from that long budget. And of -- GPU long-term think we we're of that a is our strategy. different I to And but is we don't $XX more spend the think software it's legs a year GPU we want an we perspective, lot -- I lot capital growth say as need X/X appropriate XXXX, more amount, a and capacity. and that see certainly that's R&D, we'll in our said, which this potential So, got a in think -- investing and clearly

think last Matt. then of at And just one it the put to next quarter splitting said for Cloudways contribution, X% sort may I It believe I follow-up, X%. quick be you hairs, X% you year. but

any So specific just it or there, is rounding? changes

that kind Brad we're Yes, any to -- just were can be of there. expect to as We would tried the and of we've a the and on on, rate everyone in not real count and coming out we're build it's growth we that it's expecting recoveries rounding. baseline year, establish we to clear -- you major wanted And from market. going

is year. that's that in exit part any assuming to won't much. is, in above till discrete So have, It's what NDR improvement which kind have, the you various initiatives the baseline XXX of of NDR plan the of not improvement the assumed NDR driving. products you again, and that's the latter at the all We the not we -- businesses macro get we're that guide growth and the tied when we products all that get. And -- rates still we're to look

message little say rounding So, it's rates based just the seeing. in we're it's exit and there's a no on December-ish of known that bit run that I'd number,

question next our from take We'll Raimo Lenschow Barclays. with

how cetera. new please? that kind et you've I expansion of having quarters, of over and into mean, at outside. about at of you Like get balance you the about you if talked been with -- last Can AI more look you Microsoft few to more that, Cloudways, ask and kind and that? from how do And to development? talk internal wanted the you expertise think Paperspace speak was AWS that buying to about versus product into think areas you just it M&A I

we evolving quickly. And think is do Yes. it And AI/ML. my all have about I make in I to philosophy like sound both market this that to want is is don't a

as I as have innovation lot our left, our both hosting well think core in in Cloudways a infrastructure, we Platform-as-a-Service, of offering.

still between innovation the the DO offerings. I also core of a and bridge Paperspace within we left building Gradient DigitalOcean, experience I have core the think and the are lot we as mentioned, at

we in buy many So, whether appreciate, as very keep very talking will we capabilities inorganic to which that is we have busy expect, landscape, customers our new geographical footprint organically. offering. from you the buy or a into our enough capabilities, you're diligent would to us perspective. There's dimensions But scanning expand are about, it so as could talent, add

the responsible and our the accelerate I'm the have, gives make growth. having So, super-excited, financial bets opportunity to we to that right, structure us

no for geographies the And in out quarter plans, your mentioned assumption been about think has this different in linearity the about think well, you the you and one and the observation what as if you, there's Matt, if environment you better. your of there, things But getting quarter?

Yes.

how again, one the So is industry, have or of of business or things case, any in in concentration we -- this the about country. it's vertical, I use any or -- love lack

any which to of we was the the And the that their seeing of on continued platform. core so, over saw continue we're improve And growth of to we like seen -- one the different performing pretty fourth has good at kind leading said, been into of diversified We increased seeing on are say itself, we we January, while kind we that I XX% or up haven't in region NDR what expect last sector it's the still into this would seeing than rest. But on several DO over quarter, NDR materially activity February. And front. point, course the quarters. pick usage of core the is, real platform are starting we're the year, and as the signs DO customers headwind indicators are

with JMP. question And we Walravens will next from take Patrick our Citizens

congratulations, Let Paddy. add me my

leadership? is really what philosophy question basic, of is So your my

question. your for you thank Patrick,

serve. customers my with philosophy all starts leadership in So, the we

which problems, of well, I of couple needs purpose me excite customers. core at our and is are the if we are going brisk of existence large itself. And those we their developers, emerging the very a and that have and things I think market, as as problems understand worth rest very a for. care foundation It's their it and mentioned, we are here. market really an think, I solving is pace have think of set I very, is if complex serve a in to customers, that strong which And a our solve the take that company already our we a and to do deliver

have starts with we business, so So philosophy -- are we world-class. has to need that. Number my is, technology tech two leadership a to be our

at right going be on. And world-class I've caliber and something has -- super-focused work, the from to A, customers. DigitalOcean, to CEO of us our world-class the to, that people care is, here to help to we take as that's our get talent to job from and deliver the of number are and I'm three we innovation, the people. deeply, come right have really impressed help excited technology put come in So is should jobs with been to technology very my B, customers very understand

but which next So, you'll several that up delivery the back principles. things gives my and product hopefully backs not these will quarters hopefully, up that -- you high level, or over with is fluffy, an innovation answer, leadership I super

our question take Morgan We'll next from Stanley. Baer with Josh

update Welcome modest products. at contributing masked -- revenue adoption bringing And of customer, per I'm average sort that Droplets average some XXX%, the is overall, lower Like what wondering more is give customer Paddy. I between products growth? consumption of multiple revenue Infrastructure-as-a-Service versus are looking could Platform-as-a-Service, guess, of in the like an I with retention by or -- products per the if below net keeping was hoping you revenue platform? that much rate most on how mix if composition the

PaaS Matt. It's the you faster Infrastructure-as-a-Service kind is and We tell PaaS to of core solutions don't are the than I'm going but the of what mix solutions, IaaS growing disclose offering.

that's and core products clip than and of other all the rapid -- growing Droplet rate the so of are some services take database and more of those kind healthy. Kubernetes So compute very is is the business. And at a

you the think year in businesses was been churn as contraction right? X the a multiple X its just where or elevated, The bit NDR over little and is that in big the weren't that times around growing changed. even as the we've The has see, X last year was when said ago. most has customers it but now the over challenges again, slowed, been last It's I've several -- saw had owned it's months. Where we expansion was expansion year-over-year driver is stable not I calls, fairly pressure last expansion, fast. right

And kind so more the of they of Droplet didn't growth core part as the much in see business. need so compute, and we didn't

Paddy compute. -- think the core roadmap headwind seen, product driving increased have. we've with on, take base. by just so, rate existing excited of the in adoption And I'm I that though, Droplet, kind of products and focus of that core into Most our the of even that more kind on we ability the been very has coming the installed to And

contribution drivers breakdown pricing those you're different the potential Matt, categories? wondering future in the about of of just pricing you your any all in you, you, growth front is for all just if And the Paddy, wondering, thinking increases are embedded over And for from thinking how the to about year, there opportunity available in levers growth medium-term?

but things different that, in new we we'll and this nothing continue part innovate and which packaging baked try to lineup my like have changes no is will we have our There's of is my changes, we price will like philosophy capabilities to and and things year. And premium new for and is philosophy introduce And outlook -- and products increase and into just packages our factored continue as that. already outlook. thresholds

customers with are attention So pay our and any it's technology we close asking for. vendor, will as ongoing what an to thing, other

my that's So philosophy. overarching

from take will question we our with And Bora JPMorgan. Pinjalim next

IaaS the the question side on they customers? of IaaS X-part, MLOps of of Welcome, more the things? of platform kind X side Are with Paddy. landing adoption the the understand Is MLOps using to just versus versus And that Paperspace. Any platform Paperspace? way

understand, Matt, did Paperspace And I help point us year. you from are, Was that it -- $X million, land $X that about about at was maybe think, assuming more? this that or million

was start basis $X we came in Matt had with Thanks, million, came it's us growth We year, that. business that -- entire think that, around for That year. points latter on X last around clearly should again than the exactly in the the think signaled, X give $X an I we had right, And on -- business. just we Pinjalim. months the of that, million and of what we I'll the It's ARR and higher expected. question. Yes,

So on this ARR over year. it's basis the doubling course than more an of

MLOps go as Yes, a year, a we Paperspace your think consuming answer mix as our question, this of start both, of together, X customers the we steady into or it's and a as capabilities AI/ML closer -- first to DigitalOcean right? the to more the I expect of bringing infrastructure, platforms platform part start your compute well. needs So lot of dose and we of

a compute other very bit on workload. customers in needed basis, are inferencing still users it's and then heavy but -- AI/ML are of there stack, the who It's an so use of are are So might there of that steady-state days. type little they as early customers little a

what expect, to still are and to text customers those generation, video image of So generation as little you to training our kinds in the customers is are core things. trying use do a given like it text cases nature heavy, AI/ML. And many would with of of or

AI/machine where lot side stage. more just happen now. But to is training of we is very their seeing and a data mode lot the it's to once steady to learning heavy you marshalling of spillover compute ops, a the get organized, training-oriented the So what where a in -- set is data, about a getting is data set it'll more are inference state the it

ready So of that's infrastructure. integration the why our core we're with getting DO

next from our Oppenheimer. take will Horan Tim we And with question

you year, this GPUs it's $XX on said think few I a Matt, X/X. clarifications. million Just

the that for So how can just for the free And to year? does $XXX ], us the cash outlook demand you adjustments. flow can margins? confident with square million are you CapEx Maybe closer give some that are If GPUs? utilize just you How GPUs? million so, $XX on some in XX% to I'm color guiding that missing you [

Yes.

free ability -- guide so it, for XX% hit the to CapEx. of not flow general the can XX% guiding with pretty the free we're in this XX%, that cash So in we consistent you as parameters for It's year to we're of to The demonstrated cash -- margin out. kind XX%, is year. so to you gave confident middle. the flow it of But kind sort XX% our I

the that, GPU you distributors, get these we to that CapEx core have right the guarantee then, And the time right We that did all all leverage we kind and the kind order this exceed all -- be gear what can is, before, do not the business. From advance and of supply making standpoint, you can't that X able have in of would use which parts. get drive constraints, to vendors the so in it AI/ML X, platform. we get all Even get there's in material it -- gets with you are investments major thought this and think, they it demand even to opportunity we're to X to I kind you of Tier to small DO OpEx capacity. And a we Pinjalim's at in shops. Paperspace in the for do months when XXXX? of is offset in back and incremental you both and question the Part revenue

between more And integration with challenge our up -- it more get It's we now, honest running? And things, we're software also, very an we is supply platforms. than again, a of be get a installed? so of and to focused -- can that we're there's with side you, it's on doing of which it like, the challenge. right demand a Can

worried why the worried to But the small can when get and that we're, how that's the on in-year at X later that we that in which we're demand, -- big again than when in about we're available. And XXXX. that months capital so, something from not we turn you we're being going the revenue hit all think turned Paperspace about. up starting, a it you're And month conservative anticipated, size, business amount quickly you this I that's if we're not in acquired about off had of revenue, terms a of fussed drive up

talk you -- all can R&D and you or do And in it to think Paddy, competitors be the on to more enterprise think expect Akamai focused Do you you about they intensity due primary you then, And you acquired you is and can who it are? SMB. your diligence did, seem do Linode expect decreasing, -- competitive and or to increase?

observation. good that's Yes, a

have all founders' yes, you we when looking competitors the -- dose I So And competitive right? at are paranoia. a of are I I'm can I always our healthy guess, feel of think who very posture,

be be So, to customer like every dollar to has I feel every earned. has earned,

So, our we all are fiercely coming that will go competitors with after customers. our the assumption of

in impress and innovation, to push way I that competition our of ability customers. the platform our our make operate our delivers So think I our to of to sure like its out use, terms on and also and teams and of stand own ease the that's outpaces A,

not quarters. change said, next in have So just also what might that's the that I yes, strategy few you not Akamai-Linode, their heard say to they but

operate to I -- that like with like we So operate to philosophy. or

differentiator problem. the for So going sink our repeating is -- we'll and means It's be yes, been everyone -- AI/ML. stack. over long-term the kitchen to on same an an focus ourselves is But on end, the to this have essential Matt hour, as software throwing at hardware but is -- last durable I thing and

Piper question Jim And our take we Fish next Sandler. from with will

relationship. to in going customer is with maybe working Jim mean look the augmenting rebalance existing you. investing Paddy, headcount resources for Is of that's increase in for motion, of focus Fish. Paddy, more sales more Or Quinton to sales talked self-service a a something the XXXX? within And that I the team? direct about we to on the rep you on This you, forward a as further is require this look

Yes.

it's that So into the Matt all factored gave. outlook

of world-class and customers And talking their to philosophy we need it yes, developers, be understanding we customers really about be are to my building is we our again core -- to reached. in So, our and So a salespeople, are going and army this preferences back an rebalance. how right? have they of, not to is want

since -- are sure their and A, us. And I'm customers started rich. be that number customer two have requires not so, getting how journey going the that is tasteful many success of customers all. don't and they're platform we're sophistication, call But talking platform. And at to to much are of best dialing of evolved And start relationship value with in make our day-in reaching platform which, and from certain or we ongoing the the what customers time to our from they our even breadth requirement a dollars know That's day-out. not our and for there point about

if with I relationship you don't an set So, actual on add and scaled make know color manner of a them the flag -- itself. also opportunity a that so raise the tools, engaging needed are wanted we we establishing for on the time and at it's that are right offer outlay great us technology with I expense as wave that them basis. Matt, make sure right and in think any to to very sure the to the help visibility to using

guidance. plan part No, in engine. refactoring, the and the investment of marketing you of have factors already in sales, kind The the nailed we That's it, Paddy.

vertical? to a of crypto line. We've you. the in from sort I that maybe headwind talked return seeing a of on the you the past, underlying platform, Then it's follow-up. quick improvement to that usage We've any correlated being Matt, is little pricing. about what a specific maybe bit seen or for top How in think are and

we coming platform, had from we of past seeing, was revenue. seen reasons we disproportionately had and kind increase that surge of -- in said, crypto, we in exactly the patterns at that the nearly we in saw are but usage haven't the on you we described, as that that and for not increasing Crypto the kind X% to of Yes, usage looked that seen more as seeing year. down January. it's February, We're said like last previously, I

So it's this mover not by itself at point. a needle

we Mike Company. take Cikos And Needham with our will next from & question

that of attach better of I to to these in, as talking you you customer is customer them the serve looking or through know are -- time in these to increase some and taking to wanted guys rates, here, reps? to can And also get profile solutions that investments for the what's first success. invest Wanted a those to customers? remind start you're direct what us as sales I these the maturity far sense

So, first not are it's yes, so all, we a starting that of from clean slate.

on already So in side success perspective. we customer and do are have that the sales customers engaging with both roles people

from want scratch, So, time this signaling in I new what ramp the start inadvertently is question far but company. nobody just to make so thought and that up has not about your answer reps, sure terms I'm that of for be to in going the to have new I'm we to too

types an it's want the at would customers after, nod the the terms we'll have platform with more you top of the the implicit provider. consumers fact consume, go just So more relationship of our to that trusted of with both looking to platform in your a you a biggest

hit building of be we are we gives we that's that in So two invested that have with. get about us threshold also of technologies visibility that and that investing one. Number and usage certain proactive in, relationship a a into -- are ahead to we have can consumption already customers is, great in

top will, reduce augment drive more customers. to that's So building our to of consuming a relationship, of technology-enabled you engagement, if churn this expansion some with and

month that sales customers of millions bigger X that figure of which and you sign kind shake have come are of which our they motion but add would with I there's as bit later, on only it we they're viable ones every ones as could of they taking of and dabbling a -- is is customers little kind platform, is up customers, which site of leg are And get bring. -- out they that as a ones get growth to that company spending bigger visitors months And be a the X, customers growing. of potential. And of out part tens may those those our as third part might trying workload and they and and to be thousands

that through prospects their then out ones making is so, what the which potential sure of that customers figuring helping trying value the and and those to part triaging higher is. onboarding are go-to-market you're them And understand disproportionately motion and

then you had quarter around were today, to retention. And I that on follow-up, had Based contraction and that us XX%, XX%. is had the relatively ties else for and overhang to stable seeing quarter, on it the your know expansion comments -- last assume XX%, XX% to Or net parameters stable fair consider? contraction we're some today at rates? really big exited there churn at anything given the improved is the and Matt, you the I been at remember September entering great churn quarter

Yes. No, no.

I I -- June, frustrating, this you improvements the like much It's look -- mean, appears July averaged improvement we than it if all actually it's X is way over it's think we months. because over define problem to actually course a the rounding, you've in got it's the saw better part at of but is January. of NDR, -- it. the

we X if and steady So the because it's modest. at It's average months, still you more you third of actual the the is quarter But July don't average that, the disclose can't, number actually number progress. the July, September, which look there's of the quarter fourth of and was kind months. -- August the but

period. that And So rounding on we I the terms was is each X modest is of and over massive January it's dimensions in month of strong have for improvements. But usage the issue, well. not February an a good clearly and NDR -- it's month said, as looking as progress if

will go what it clip than that did confident continue a in clearly I at faster third expect fourth steadily the And it to up. I'm to go quarter. to So it would up

well, forward as to with you Paddy. Looking working

question final America. And Wamsi Mohan we will with of our take Bank from

forward but the focus congrats product customer you you're to role. Matt mentioned, as enhancing well. on as Look developer base. Paddy, on working very innovation, with Paddy, diversified experience, mentioned you

area across So bunch e-commerce, a a or intersection product cases? there use end storage, that you I you how roadmap you are web the those. out et including about first? that thinking is that Or jumps specific or development, security, game know prioritizing of you with maybe that several, back or as would of about how tackle resiliency, stands cetera are you've the these? between mentioned out, really And And mentioned thinking these prioritizing SaaS networking,

that think might diverse, the in I yes, most need the fairly are finite. right. be capabilities of terms core workloads of themselves, these the you're workloads very But workloads

workload. So capabilities you finite language right curation it's machine infrastructure. AI is have right large you right it and pipeline figure AI work the of classification compute, or inference very have about the or out making and sure the in they type you and that to learning. Again, a is number and data core type of different whether need core learning any have and power, storage, model a data training a of It machine types network, the workload other even of

confident feedback dug have for. customer the some been and asking that customers platform having going what bulk capabilities looking spent also fairly week have. And So our of I into at my the we last a feel us of time into

I are these the think workloads. priorities very between overlapping

actually super-busy we over the be So the product and I hosting us the keep I enough next think most universal, of are sophisticated prioritization Autonomous -- for of quarters or web released going an customer, autoscaling innovation e-commerce I most terms store, to to of doing -- of if of mentioned of we you're and more we like what roadmap. And the in and less. think what and functionality, any have have think several kind example, or other configuration Cloudways I are rules-based whether regardless

that different our innovation across customers fairly feel going I confident impact to is So, multiple workloads.

I year. specific So, that that confident fairly we go we ways functionality. which as roadmap that I'm set find feel the as a get we broad pretty have into robust addresses workloads by accelerate this But we can later will along, sure we a of part of

have the bit of seems Matt, thinking QX. the maybe? the builders follow-up, in the quarters, quarter-on-quarter over of in learners decelerated few growth just next How a of year, the a over incremental you customers directionally trajectory As to and about are growth course

churn about factor. Yes, a good one is that's is of I'm Wamsi. question, I'd customer things worried that paying attention a And count have. I've I'm broad the a less we it's of ARR. because such set customers not that customer looking incremental the Clearly, the at to say count. been again, the

of $XX got of levels. At the kind $XX we That's million us to tons it's more. we optimism it's million fourth when around have usage tons terms Paperspace go the of growing market light these into So have ARR closer opportunity customers us I And into look -- seeing, driven excluding and we new suddenly beginning the we in feel platform, -- up third ARR, assuming third starting quarter, back not and more by the the to we customer that like we platform, in customers. not into customers growth is there's we to the new are then of for base. And increase where from, second this in as in and not accelerate spend we're from the drive from third it's you existing the the quarter, on and of we're Paperspace But ARR that at the a clearly, year. take what really of first that's the in it's -- growth. tons the drive incremental But growth incremental the quarter. the being out more as again lot giving comes growth new capabilities customers, picked fourth and quarter, the historical in our quarter because to were what of with you

this for remarks. now questions And I turn closing Paddy there the will are time, call at no back to further Srinivasan Mr.

your engagement. for time and all excellent and really you Thank great questions

many can our product innovate, you forward day. our really of As the few meeting roll Lot and the sleeves to looking enhance of to tell, you, up all with great working my I'm offerings, Thanks, and super-excited have I'm over and to motion. good get a growth months. you of work. great opportunities augment of and to rest next product-led

thank this we gentlemen, call. And your participation. and ladies for And today's concludes you

You may now disconnect.