Sumo Logic (SUMO) 6 Dec 222023 Q3 Earnings call transcript

Greetings. Welcome to the Sumo Logic Third Quarter Fiscal 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. conference Investor your Relations. the Senior Bryan turn of Director now over host, to Liberator, I'll

You begin. may

Thank you, and third quarter good afternoon. Welcome XXXX conference to earnings call. fiscal Sumo Logic's

President Financial Officer. the are call Joining and me Chief Ramin on Sayar, Grierson, Stewart and today CEO;

question-and-answer will a format followed today Ramin Stewart, prepared include Our by remarks and by session.

expectations our our A the results forward-looking for subject actual growth, relating risks intend our be this our our update and with forward-looking XX-Q solutions, overall statements our expected by and filings to of discussion to that inflation on performance will expense our future statements, and report our economic will risk Securities Exchange our platform discussions and expectations is statements. regarding to factors guidance, uncertainties, our and may responses our investment be your in the Form to the risk not our factors Sumo strategies, Logic results and differ business of comment our market efforts, including contained filed or in uncertainties Some recent and law. quarterly related call, are risks on assumes except no recent Form questions as statements and does materially opportunities, prospects. contain from to regarding business, future statements made this These forward-looking will go-to-market and the downturn, on and our that financial obligation Commission, included subsequent filed XX-Q including the most call. to with required

could addition a Relations for on Form of to with furnished which GAAP non-GAAP Information release, in historical at filed measures was as non-GAAP reconciliation investor.sumologic.com. results substitute isolation from X-K website should found non-GAAP SEC our our include will with to non-GAAP Our or Investor discussion today our our our be in These today earnings measures. GAAP regarding results a financial be not in and financial our including the results. considered financial

reconciliation GAAP available, the earnings financial over Ramin. detail website. a certain our corresponding in of non-GAAP me is the to now guidance, let on posted call that, turn the Relations guidance to For Investor release forward-looking With as discussed our in measure

today everyone earnings third for Thanks, joining our quarter us on call.

We $XX pleased of our end all and continued with We again delivered the while or metrics. we million, are million, exceeded these guided the In and achieved progress of our revenue business. high XX% operating revenue strength growth. of QX, outperformance across margin. ARR of total both margin gross once with We the strong ended also quarter results, growth year-over-year XX% demonstrating year-over-year $XXX.X or and in

optimization, margin Our this a improving count remains remain about by operating throughout plans. our sales optimistic opportunity productivity, of area key driven head continued improvements improved driven We've a it our combination efficiency execute sequential our is against operating cost ability to focus. as year, of rationalization. and we and Moreover,

we We are plans efficient our to profitability. continuing cash look to flow as to and deliver growth, committed to more achieve breakeven accelerate

less is in climate. certainty and there the While term, more in the near noise macroeconomic

In business digital than security continue And their seeing a services Companies strength, modernization. ensuring play our strong that we the the increasingly operate reliable a Despite in and by in representing how experiences early to path $XXX,XXX still of well to role business. quarter to in results. transformation, their macro have are uncertainty, we the QX, accelerating are and with we the over to migration growth these control multiyear and cycle ended that of growth drive with both our driven to more our We durable secure. These platform. are committed contributing long-term and increasing and business as trends customers XXX our We are our help growth in see adoption usage more a XX%. we profitability. cloud win grow manage ARR, of our digital and year-over-year we delivering critical are remain customers rates with innings on relying

wins, Before I make our I would to world's share to experiences like some reliable that the is and secure. key vision customer reiterate digital both

cloud do three platform native Our uniquely helps things. customers

First, reliability. application ensure

are straight security and Second, and further secure year. strength gain modern and fact was our Information infrastructure. that insights a into by third, in for This Security visionary Gartner's protect Event for Magic a against we threats. vision, second the recently And named validated Quadrant, cloud Management

vendor as SIEM native for only for unified observability cloud offers analytics a Quadrant both Magic Additionally, security. application APM are and and we reliability that in the Gartner well the as platform

business reminder, risks to at infrastructure. a remitting and analytics. disruption best-in-class for platform root security end-user applications cloud This detecting, are as log and minimize or our issues. the critical compliance is scale security is essential is troubleshooting core both to analysis and Rapid and and As logs essential of cloud reliability cause diagnosing,

with usage. to fueled wins companies the well as the These using their unified by native wins Given and of by these expanding the key required to created some are the We well of are wins customers effectively to logs scale industries. at like how these cloud companies digitally cloud the some from of the and we I'd in digital traditional to examples for about like as and that, reliable application our platform and share volume services. quarter. talk migrating modernizing platform of this data new logos that will to architectures our security, within help as and our positioned increasingly the cloud, were platform apps. to cloud overlap landed Many significant challenges I'd as share analyze footprint customers modern market first important. ensure in delivering disruptive a logs to and gain highlight believe, ability technology quarter. address new companies, With reliability leveraging The we quarter uniquely become secure the

existing who from stack. its We during were integrations logo by was a with identified online figure team first ability brick-and-mortar be SIEM technology a work proved seamlessly remediated. retailer, the they scale its modern newly The could immediate that time their quickly spun-off company. our business value. providing parent and solution security POC a native new because entity The needed value Ultimately, six of cloud easily large with new the two it's Cloud out-of-the-box to was deal with process, a threats deployed ongoing selected we easy and to our that

costs Their a to a scaling those had with their the landed security use their needing difficulty digitally solutions for XXX by we deal the use companies see made licensing with by them logo adopt generated maintaining wins specialize to having six their to continue and of Kubernetes to is customers, cloud their creating expanding in-house existing Besides the represent are our cases, of data without additional new security existing technologies easy architecture. excessive cloud flexible architecture, Therefore They to manually company expand developing, and personnel requiring Kubernetes thereby These time solution. verticals to less a our it. and Sumo solutions time different that wanted new Fortune configure select to Next, they easy businesses, model. larger their microservices transforming Sumo new use their reliability themselves applications adopting of more the configure in that healthcare or moving issues. offering for products ensure of use which maintain to many solve troubleshooting figure and with and platform and Logic run, our observability microservices and reliability skills. to analytics is team customers maintain SaaS-based credit-based and we Logic our additional and spend

Additionally, focused over with cases. unified growing platform like of use our benefits platform telecommunications native to seven and our via a of landed the enterprise example us. exciting faster who is of deliver data than variety This significant platform cross-sell cross-sells. a our data cloud tears. is company, a economic with customers and seamlessly highlight few already is a supports and budgets We these great security spending $Xmillion to can I'd observability figure a cross-sell how tech

they for the and issues months their in three wanted standardize Sumo of time. Logic real acquisitions and because last in troubleshooting First, logging on remediating their analytics log made have six to best-in-class

to reduction versus in XX% on open because our telemetry, Sumo across our identify to of experienced vision to observability. competitive have standardize of for shared reduction they a According to teams meantime standard in remediate chose customer, meantime Additionally, and their DevSecOps the solutions.

environment. our application our reliability Second, and for data in FedRAMP the their and they their be benefit saw complementary platform environment also Moderate will a using single security. of to due similar and FedRAMP And log both wanted they using SIEM for production or the Authorized application SIEM

and remediation media the mid-market Another segment case reducing similar and six originally with classic a a technology failed. Sumo They mission security or cloud use figure when with ensuring win for using from monitoring to time application for applications. APIs company. building of practices our identification and and troubleshooting logs, They're out cross-sell payments benefits SOAR single SIEM the they as platform critical vendor, and for of a saw a and adopted reliability having the single providing security our their came

their Sumo continuing than upgrades quarter, figure to couple our growth. because companies, more the chose to data drive continues natural we tiers, due data value. are With lower a are expansions. a to In data analytics with volumes, seven ingestion time XX% there costs to had is consumption data the increase their and volumes outpace XXX helps data While Fortune continued of out to box further budgets. year-over-year, grow help opportunity of of They increasing

think with to More our strategy. Lastly, focus and the this for up, both we traction as number than can the continue see we and in our I'd we continue our to continue business first shift our highlight partner of like two-thirds we went channel through to quarter that drive channel security new strong deals. to observability partners

the future from to highlight up the cycles opportunities, we growth. cloud In direct our reach for it will observability an sales native organization. well sales addition, security. traction, These is unified shift market as our our core platform of sales opportunity improving channel efficiency free channel This differentiators for sellers, continued wins, larger of sourced and important and lever our for as as underscores our fulfilled

customers platform to needs their to Our and bigger and meet customers opportunity contract. expand scale customers' needs. that data scale volumes has even as to an platform for able there's by environment An unparalleled are our budgets, breadth eliminate business required scrutinizing our the moving modern unified expenses is and to where handle

a is highly for platform to product variety audited HIPAA like PCI, would With and share our compliance quick I of that, certified Additionally, some security and highlights. industry, and including FedRAMP. regulations

to our practitioners with our to experience. providing and measure value reliability announced and QX, full significant the distributed We by user applications, stack observability focus new reliability and approach management, the greater on During a we announced shifting functionality the of improve reliability continue capabilities which and is insights better security strengthening usability. towards

experience provided app AWS we've cost. to some strategy manage and user user entity exciting unified Additionally, a our a enhancements updates with monitoring, real our model, performance develop new intelligent and practitioners alert grouping and help to their and

to we markets security continue enhancements well to in For routes developing open new invest and order levers platform to for security, to in as the up capabilities as growth.

is became our our cloud presence. available SIEM designation to Helping on-premises the our sector Logic part of insights and Moderate Logic this first This Sumo environments into sector continue Cloud efforts deliver quarter, to organizations. public native we cloud FedRAMP announced expand in Sumo SIEM the to public offering. that With as for now

on Additionally, we end-user commitment community our and focus practitioners. DevSecOps continued our and

free we best community in and user and together annual event operations, and This customers security global delivered more. that certifications with a quarter, a and operations practices premier education training, our leaders brought Illuminate IT content we the that development conference thought Besides hosted sixth Illuminate.

differentiated continue open I'm stronger. via have to been extremely customers industry platform never we that to in is telemetry that have support highly our of solutions experts portfolio source the open also a broader offerings the by feel and single contributions to offer alike community and recognized proud that We initiatives. I

we're organizations efforts with to a Before, Tim understanding deep welcome Board. Timothy of and digital concluding, have Directors security we migrations. CISOs excited transformation CISOs of and further as of increasing experience and challenges has our the help cyber extensive to to challenges him all our to sizes cloud address faced I'd join Youngblood Board like cyber by and fellow super his the

Stewart both quarters drive the over cloud who in have native we our never provide fiscal continue to line significant on achieved financial efficiency our initial year. and and the our With continued first The guidance stronger our thank leading for dedication results, results Now like towards we in commitments drive Officer, flow. as impact of will now been operational would passion on to improvements as positive cash continued and profitability to our like three on deliver so industry platform and extremely I'm help of our Grierson, rigor. to strong for beginning that, fiscal we to be the can Financial lastly summary, us bottom efforts path innovate, through progress continued Chief far and proud more to the top their to our I outlook has we've improved employees the all made and collective our as throughout QX, year. and the fiscal of turn QX I'd year. these our in efforts improvements results commitment it our details well the of go-to-market at from our seen increase

And start with into quarter like and topic. on brief of on more everyone for thanks detail financial us for call. to summary highlights Ramin. Thanks, then joining each a the I'd the the go

First, as revenue Ramin of deliver ARR mentioned, we've XX% growth XX%. growth and year-over-year QX top strong of results line continued with to

sales, our revenue the deliver the of margins and combined cost to to XX%. a reduction efficient In in quarter. drive to efficiencies some from of resulted focused continued in in our cost initiatives in more executed commitment infrastructure in efforts, prior strong we quarter have we cloud Second, resulting These with the gross of revenue operations, growth.

a of gains are strategy, starting growth. in pay and go-to-market sales performance. force, talent leadership, productivity model, driving model. a up-leveled our team channel brought maintaining leaders off sales Doherty's to executing fit our To recap, in In this rationalization hunter the prior to revised strategy result resulting a are addition, implemented as we farmer actions operating we these Lynne under improved first segmented discussed calls, in new sales has better our The and and on while been into

more The overall hiring on improvement of organizations negative a reduced in of our driving XX.X%. to our September commitment our results to our consciously plan. to order line have and was from guidance efficient negative reflect shared operating in bring QX XX. execute you result discretionary as with path structure at Investor These midpoint profitability, X% of We our cost significant spend the the growth, on across with margins of operating we all revenue, we more Day long-term

the growth. As We of last best the we call, XX% $XXX.X growth million, in on SaaS our ARR indicator leading is mentioned the believe of year-over-year ended business. ARR quarter with representing

number total Our driven ARR changes the we have by reduced organization. the ramp is impacted the sales sales and from reps in reps of sales

will to organization efforts ramp sales While reach it efficiency, and time these productivity. delivering better take are the sales full for

linear into FY and these greater As previously changes be in of impact we discussed, 'XX of will beyond. progress nature as benefit not second half the with the

plus, year-over-year. ARR Our of $XXX,XXX customers $XXX,XXX QX, In ARR grew our customers foundational number plus the to ARR growth. are XX%

prior consistent to count their to customers quarter. this as customers ARR was larger as the contribution incremental these in relative the significant as contributed not was growth quarters, significantly of our While

for downsizing As driven at rates. reduce points was This a expected, environment. rates uncertain to remains our the by QX expansion given known row. improved our as look some a some prior We dollar do retention spend retention consistent significant pressures year net the be improvement as retention quarter percentage this a and to third lower, expect customers few QX macro based budgetary both we from net in XXX% in

can billings was fluctuate at Recall renewals the quarter-to-quarter this year-over-year. from particularly some for at representing up schedules, billings Calculated calculated period, obligation million, XX-month of trailing billings. in as healthy to and XX%. variances over our a or timing of performance which true Remaining period our this was we that quarter for customers. billing $XXX.X of year-over-year increase metric XX-month the due $XXX.X trailing to look Turning a larger remains million, RPO XX%

statement detail. Now, the I'll income in review more

all As non-GAAP. noted, are a unless metrics otherwise reminder,

the the positive We a As revenue million, quarter, $XX saw and to than in organization. up of stated, total QX the indicator linearity XX% discipline expected once in previously sales better increased rigor improved again year-over-year.

there were acceleration margin upgrades revenue which was the prior driven in addition, with quarter resulting lower in in percentage few several than initiatives to was XX%, associated The moderate some the cloud the focused gross costs. quarter. quarter. In revisions points QX contract a improvement largely was better by infrastructure our

the regards range as in be our as cloud these Longer We XX% the range gross to XX% original have hiring initiatives. plus efficiencies expenses. we mid-XX% expect to the By from margins term, With eliminated continued year, this our have scrutinize in or infrastructure margins we expect X% sustain we expenses, discretionary fiscal operations. approximately in QX we to the gross from drive operating and roughly savings million in $XX to plan. and end expenses we of rigorously will

As previously expenses we mentioned, quarter. operating across QX, all functions from prior in the reduced

capacity operating of as While we'll cautiously. also the the to and by environment, and modestly sales, increase macro caused cognizant we expenses in QX we uncertainty our invest we add remain expect greater

average stated expenses. previously, per the margin by negative quarter improvements operating negative management was loss diluted gross X% operating outperformance, XXX.X QX or based $X.XX diluted and on in million our $X.X As negative was approximately margin shares in share revenue Net careful of outstanding. million driven weighted

the and in negative to $XXX.X well no our with remain capitalized in revenue. securities was balance quarter Free and quarter or the debt. and of million cash Turning cash We flow XX% negative and sheet million cash ended marketable flow. $X.X

flow cash annual previously, flow we on margin variability at shared looking recommend from free quarter-to-quarter, and free cash cash given we've basis. flow of As free the an

negative flow free to XX%. expect end with year margin cash approximately the of We

in expect flow as improvements growth. future more driving we continue efficient to free focus in margin also deliver on to cash the We

to Turning guidance.

we a As to macroeconomic continues a of that relevant is reminder, environment to on growth measure uncertainty. variability potential quarter-to-quarter. from our full business higher year believe more The the it degree a given basis of create

While buying we decisions. scrutiny we our QX, did not increased material are experience seeing impact in and business to over budgets a

a more believe work this will offering fiscal more environment mission-critical efficiently, next we customers need resources. The that most digital also allowing uncertainty experiences deliver market. to the as We teams continue to be with more and associated backdrop, reliable and applications progress and and priority fewer them enable than broader believe this secure to will into for is accomplish year. our Despite to for the QX we our top through resilient

fiscal full on of the margin For million, to outstanding. $XXX approximately shares million representing of growth. weighted negative million negative to Non-GAAP negative year negative we loss $XXX per $X.XX total revenue XX% XXXX, XX% and non-GAAP expect of $X.XX operating average share $XXX.X XX% to year-over-year

margin weighted on the total outstanding. bottom expect For and pleased negative to of summary, to efficient we are $XX priorities. loss to million XX% million, as line uncertain growth. operating to XX% environment. our our In remain both Non-GAAP per share strong of negative of accelerating we quarter, XX% $XX this top profitability committed XX% while $X.XX XXX.X growth shares path We we with navigate revenue approximately continued fourth on average representing $X.XX million macroeconomic (ph) negative and execution our non-GAAP negative delivering more year-over-year to to

I best-in-class their to Our more that, any Operator? users. customers security to Ramin resonate of unified take your platform provide for our happy are to to as digital cloud-native with seeking end reliability are experience customers and questions. continues and With

Kamil with a with line At comes Mielczarek [Operator will first our conducting And question. session. be Blair. this Instructions] question proceed William of your Please from time, the we question-and-answer

to thinking strong adding Are detail sales Several more have the and be forward? peers Can Thank down you headcount on playing announced Hunter-Farmer on given of you you quarter. initial organization? plans of the more hiring. you're structure, or slow you about going your how then rationalization the changes provide the to congrats would

continued the I year-over-year. in Obviously, want to our capacity to is capacity prepared the we down remarks, made we'll have the expectation be always view We're so looking add we're to right organization. will actually, in changes, the people Yeah, as the Kamil. in we the But to as organization, balance sure gains. hiring But productivity sales work. add to sales with we've said make we

and on, it. a Got is there you revenue, but billings and help gap I that strong That's Can to ARR driving And bridge between growth. of is right metric these focus what's revenue the acceleration? us divergence helpful. bit a the realize metrics between ARR the

Yeah.

you're right, best as at of think indicator we've the terms kind leading of metric ARR to growth. I think So in shared, look of and is the I

changes the sales And numbers. in particular and a that org in ARR, have what ramp indicator And capacities seeing down, the we a trailing in an revenue so and down you're as in that's impact have capacity in made SaaS then business. does is is the

so getting strength of the quarters. prior the And we're the in benefit

seeing. some I were dynamic sort touch which mentioned, this that about we perspective, you're We've that's were regardless, to some there talked revenue helped with acceleration, was past. From strong the moderate of glad -- this billings but one. of on impact the As strong the very that on although, just in a beat, quarter we the beat

We variability quarter-to-quarter. from will have

that's And some schedules. got do of with billing to

that one larger one the of one we were the this they see were of quarter, of our so while number less comments were had contracts, billing some or schedules made in -- I billing deals year did a schedules was And duration. than multiyear

they either billings that So so impact or and growth quarterly of can were semiannual year-over-year. the billings perspective

Got again. very it. helpful. It’s Thanks

of Capital with Hedberg proceed line Matt question. the from comes question next with Please Our Markets. your RBC

like consolidation the challenging really that seeing your Matt. Do Matt onto this Thank platform your heard as for macro macro, it's think quarters the well? one we've guess, is trends how both Could you what actually platform? but given expand, customers been. seeing the you, the is on guess fewer consistent then the see about to be And to Yeah. quarter feel lot this about of kind of you you a you're just DBNRR of challenging I given means would This vendors. for of for are how has hold kind this I impressive you. three Swanson on

is This I'll and start. Hey. Ramin

the think answer that part is pretty of I first simple.

that We very in are are both security. markets two and growing, really reliability the large on well side positioned

think we're technology positioned this in so also requirements, meets well that of not but unified and platform, circumstance uniquely, only the uncertainty. because I macroeconomics needs that single more the even business

with a specifically, to lot more model. do the analytics licensing tiered So and

Now of consolidation. the out question of a other elements a that. part see breed your But best of platform single there's in Yeah, that's we lot lot and terms just of honestly, other and of of a needs there, homegrown by commercial economic scale, alone are solutions. for And Sumo. products then of still let that a lot ripe the displacement meet that don't replacement

you super just congrats Do SIEM, FedRAMP on how the the on again then Cloud the federal for a little quarter? was certification. bit general That's helpful. commenting in And mind

there, more sector we've go-to-market something our SIEM. public for that. we've as So We've now expanded investing and now on had we've side logging for is our in obviously, business been Cloud capabilities FedRAMP the achieved, moderate

means so And and that only we're cloud-native channel. the now available that's solution through

so And will partners effort public that business. of driving lot a channel on our sector be focused

All right. you. Thank

the Our question. with proceed Wood Please comes Cowen. line Derrick of next from with your question

main I sequentially? the would Great. up that acceleration normally the some QX revenue that beat Thanks. largest was beat the the Congrats of, the is be quarter. and your $X sequentially, would kind there, quantification which for of strong called was down driver I if think there guide what on think Andrew then be beat out Stewart, of of helped on great. but drive It's one revenue that you not ever, And million any Derrick.

Yeah. Sure, Andrew.

is of the QX, beat, overachievement. So the million the $X.X not just impact to the quantify about but the acceleration of

definitely beat -- irrespective saw. point, look think that helped we early a was that nice -- that, it And beat as than to will be at last QX, your of as going smaller. signaled we the that there larger usual number obviously, be as was quarter but So to with that clean you I

environment from in cognizant But ago. $X have guidance. were raising where being effectively have, think with We by the raised the of visibility and but months -- we're obviously we uncertainty. also that's we raised the three we guidance million I And

Yeah. Great.

we've think and just always is the on to as what talked -- quarter-to-quarter obviously, And I annual we've variability just well lastly, focused about growth. folks

And growth were we're -- we guiding versus XX% now to XX% last the annual at year. so

Yeah. APAC in Europe pretty strong Great. Thanks. last And were then Ramin, quarter.

there the how Just performance quarter QX? this was are for check wanted to looking and pipelines

business as International disties, with as was to business seen our direct are new again. well direct Yeah. And the as segment perform. strong lot partners continue as really then as time capacity or coverage that side. business. that there VARs We've saddle combined on the of of It's we to about a MSPs partner the in and well look grow

a that's going continued So effort us for of investment forward.

international it more for I was which of north XX% or growth contribution last think XX% quarter, was than XX% year-over-year.

Awesome. Nice guys.

Powell with with proceed your Our next of BTIG. question comes from question. Gray Please line the

the of question set on the numbers here. and taking Thanks guys. good for congratulations Hey,

side, just couple I and So square comments. revenue the on hoping a really yeah, to and was ARR my

to you customer guide QX It in can how run then downsizing. So no in close ending QX we I And QX. about rate? get specifically, sequential a pretty AAR to mentioned little growth, you your with the growth just ARR like should the revenue think seems probably know

those So I'm trying think and just here. I’m math that to just things just doing the through verify correctly basically

this Sure. take one, I'll Gray.

think continue being year-over-year which have and we impact ramp board talked about in get and greater ramps the from Obviously, reps as gets FY perspective a absolute I we with capacity near how both this into perspective. down kind That's what 'XX, as the So -- to is particularly don't those term, just you has on point. I impact maybe sales ARR why at But half. little as to ARR and in of at be the on give back guidance color I give Stewart, then right, the those look ramp, we also would reps the think we obviously. to a

in we So we but this revenue conviction that on. think have philosophy you in numbers on that how ARR. revenue remained that's given build guiding the high perspective, little I think From Obviously, we that we're a think guidance. our can have uncertainty we about how consistent is put we environment, that's a deliver a and how to has to revenue about out

your Okay. terms macro are Do That's of a assumptions really helpful. what you And like of assuming then think QX, environment stable sort curious worsen? like you of the the in QX? for world. Just underlying kind versus of like view

QX. more and budgets, Yeah. buying I seeing discussions than were even as we're saw Listen, we think around right, in decisions we

definitely seeing we're So more scrutiny.

was say, QX. it that next so year. into from And to we and we've expect I where seen up into I And that, think in tick continue would QX

much. Very very Understood. Thank right. All helpful. you

And our Singh Morgan the [Technical question comes line Difficulty] Stanley. with next of from Sanjit

three sustainable? five and that gross OpEx, Thank in and Stewart, be up. investment think to forward, within the solid seeing over as is that the heard guess quarter. been guess great materializing down to the I need look of G&A of sort I efficiency operational two question on we OpEx, go-to-market really loud we sort of in taking as I efficiencies and realizing sort G&A. marketing sort this sequentially have the Should you structural product. for to assume of my I is around the on guys the Then marketing quarter-over-quarter. it's that, and sustains slightly and clear needs you're four down of the Sales I you lines at quarters, and sales this sales you of are efficiencies year-over-year. my going you question that look congrats marketing. of think R&D are there pace sort I ramp was is, more on broader question really business. margin, invest next execution and R&D, these How If

Just going forward? long-lasting of margin these improvements sense want some be a get of can to how

Yeah.

as flow that work we still to loss a to got done and that company driving So first to out our scale. breakeven profile. expectation, as cash we're going Sanjit, trying accelerate op listen, as the needed capacity our of are is sales obviously, obviously, lower invest in We and laid we're said, be across we I towards picture in breakeven operating margin we need path. improve We've there, recognize to -- to business invest we the we given

It's that's it's big impact we're expect into at do going business several think to looking quarter hire. so growing quarter-over-quarter, evaluate take a We like thing at next relative to certainly, scale should as quarters. better quarter. had we for hiring to be able and But ours have pretty plans. you we we expenses spend, look discretionary down ongoing unusual a an continue to and we're we I this and look that. obviously, this We over to at efficiencies this expect while leverage every so And where revenue don't the the where

of picture, big revenue, more case is mantra the been is years. behind to so here in And versus which had revenue that the of ahead past team of going the invest couple the

evaluating those. think the that's it's so say true. the is that dictate well the at that I most there we're right? Obviously, in sales that force, we're as which And would important environment in seeing capacity. I the constantly And pace productivity as we thing sales both the all we invest will evaluate in operating

maybe digestion is might Understood. enterprise these large the sells, And then, that's happening, more this some versus in you, a of rationalize for the the or is there indicating going where some industries forward. that be customers a you to that question a Is patterns market of significantly there versus that may any may That's past mid-market expanded up are of through particular extent -- Logic period Stewart, as or spend have the their that may years, be be On really some looking segment, to Ramin, whether in they of they with of or couple SMB down customers picking a less, of that profile customers that clear. Sumo it's now. very well. customer occurring in on going are sort

that Sanjit, I to as if going if I a in And they are, that think think out immune they're don't right? to tailwinds, at is companies right? similar but they're before. tailwinds I macro And we anyone some investing pace those invest, on I have continuing also the how what's are don't look know there's just headwinds, not there. operating know at business, macro the

than the no right contract, right? of of now, better another one may size be or length honest. be is particular I the upgrades the temporarily the vertical no So to reduced cross-sells think -- or

everything in I invest. with kind we the continue dictate our and as I and that don't budgets think of enterprise in how on thought, persist, that. that stronger demand how is war internationally GDP, to macroeconomic will is to as originally we've see mentioned, going long moderate than as investment progress the seen given continuing we all the the contribution uncertainty, segments. mid-market probably we'll Stewart know business we And

Thank make of very it. Got very That’s much. ton sense. a similar. That’s you

Thank you.

next comes with Please Abernethy Rosenblatt of from Blair with line question your our And the question. Securities. proceed

to Thanks just and little bit guys. channel more in the want on a nice side. Ramin, dig quarter,

of service terms the last cloud in just providers, Just providers the sense you've this been of in performing closely how so. now year macro last get environment? and or channel you the of with they I performing is over that the a -- are in couple more working want managed to the for service how

hear to good voice. Blair, your

a First, first let to this or in in to whether a that's that channel that through or VAR, involve you're new trying in we sure an me of an start a we're to right, partner, are meaning a transacted by our MSSP strategy, channel opportunities a disti referring all transition cases, make lot actually saying MSP.

a because forward, play that managed they're going and of of that the to up we risks well service to up concerns services to to labor and particularly us quarter, I Last shortages, technologies breadth I increasing great mentioned around MSSPs. think Now there role specifically as are opportunity question kind your sign of about security as the go an insufficient businesses. ones from We differentiate and providers, contribution attack the did continuing the going of channel, as expand are new some sign saw new their out gives increase. continue earlier,

as increase being to other the Sumo seeing versus the from to opportunities edge around. brought the we're solely pipeline being well way channel Now as start deal

So those are all great indicators.

We have a lot more work to do.

just do Okay. is we Any and of this on margins us gross quarter. be the you should the on were cloud gross on the other what Great. thinking margin, Thank can margin new you. this level? color the as -- this able give cloud -- the that you And Stewart, to

Yeah.

specifics as there's what infrastructure things you I'm not Blair, of terms as did. you do costs I lots So optimizing run your and mean can to going we a into operations. get the SaaS service of in

-- have we, signaled margin current we of you that number as for QX the looking XX% initiatives gross a team, And so in a at opportunities, results I XX% saw looked quarter. so those to and we're at. and

Some savings road. of down investment them further in take will the drive order to

And over so plus obviously, range our goal the is time. to get XX% to back

think do And we're things quarter. going different towards that so I build and level can that up to every evaluate we yes,

quick last one And Great. Okay. one.

Just any of note? line the top on quarter impact this FX

No. U.S. We price in dollars.

I cost having internationally, So mean, impacts could for we impact obviously, that dynamic point to we the do have at obviously, of any the -- point. folks but meaningful the solution that this

Thank Great. you.

final our proceed the JPMorgan. with Pinjalim Please with And from question of question. Bora comes line your

rep on the the Thanks. for how quick our maybe for the quarter. on taking follow-up is quarter? trend in questions Could and productivity congrats Thanks the reps. you guys. the about Maybe just Hey, heading third that's talk a Noah just And fourth into Pinjalim. sales This on quarter.

not it gains levels. that say, And just we going of sort bringing we've when for gains. board. talked Day, at to see, about of to specifics, I'll on our productivity been give productivity on I'm Yeah. same Noah, Investor the folks the we're continuing

we've able we line. games the So sales we direction. organization like month-to-month to down be and to be as this results. move get in we the the obviously, right it we're by quarter-to-quarter moving encouraged the we'll And moves -- in further to track I a feel expect made very -- better drive

with for year? And you on take it think just question. then based the think down think Maybe they'll be do conversation do CIOs, will Do growth your trends you resilient? follow-up it. or how step a industry you Got next a more

of honest, there's over CIOs, planning A a them of of conversation. now. of it's the in be we're security, place. are you demand lot staff, reality of CISO right? concern investment budgets still around back so can MSSP lot there's and going also through and the well the that a of all continued but for, shortage tell our positioned I And which finalization to To lot

So that's area. one

migrating is slowed effort The the think the down. second area workloads of I cloud hasn't to around

of process of piecemeal savings. positioned having that, and drive upsells great percent than can cross-sells consolidated is as that CIO looks to well parts think and conversations we're how really as homegrown agility portfolio I stitched traditional do the spend leading comes question decision help the down with well think their because people, that to every as we're to some continue replace were I as the growth. Other we some innovate and technology can across well X they opportunities. some them it together is save where new we and as of a and and platform money And drive

Got you. it. Thank

management for of reached have closing we the now session. the And over end question-and-answer I'll to back call remarks. turn the

line platform from Wonderful. bottom the I our today quarter this in call. very Thank year well as the flow growth results completely want take once that, holidays. as year. dedication us to towards profitability. control breakeven Thank again deliver and on We're humble our a you, joining of and to of has again, happy stronger. event as never my you the improvements, hard everyone past on accelerate for we summary, and of on cloud-native line their the course, and thank employees for based plans in earlier joining much, cash and their everyone all particularly moment work, both efficiency deliver improved guidance We'll industry-leading us top continue today. to our efforts the opinion our been initial and, In efficient for With to for

participation. your your conference, and lines disconnect you at time. Thank for this concludes may you today's And this