Dynatrace (DT) 29 Jul 202021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Dynatrace First Quarter Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. to conference like Faris. to now would hand over the Noelle I

Executive Burns, Thank morning, are call Chief good operator, John and With Siclen, Great. and the everyone. you, Financial Chief Officer. me on Van Officer; Kevin today

materially factors today’s results and started, statements those statements, statements. a uncertainties from and guidance. and that revenue to are statements of include These forward-looking involve Before we forward-looking implied note that subject or comments actual by get earnings please differ could including cause regarding to expressed number risks such

view filings future these the on disclaims Dynatrace Additional is events reports forward-looking represent reflect information concerning to on factors obligation and any company’s in XX-K including contained on these or Report July in Annual XX, included statements Dynatrace’s XX-Q. to The call statements with XXXX. our Form circumstances. update quarterly SEC, this Form the

non-GAAP in A non-GAAP As And to of be referring a during growth John? our turn some Executive Relations Investor be GAAP our call to references and measures currency, unless we of section Web call. will reminder, with to measures let rates the on the over reconciliation financial will today’s noted. found can me Van John be lastly, Siclen. Officer, Chief that, otherwise site. And constant detailed

resulting performance solid continued loved market, that have as challenging strive unprecedented digital your call. has for ones everyone, efficiency report morning, and agility, safe pandemic to economic May early friends family COVID this essential or We essential, success. and continues Since when businesses earnings we situation, and remained and component find be impact to to around to the our hope digital truly continue impacted greater QX. pleased sustained world. our from and to healthy. the we continued 'XX have pandemic, and April go to Dynatrace and companies COVID-XX that don’t far be Good the I by throughout prioritized saw you thank as I’m reported business fiscal fiscal you on the the Despite for projects speed transformation families, transformation an in considered us QX last for earnings, communities backdrop joining to

XX% For ARR year-on-year. coupled revenue and well. subscription the quarter, growth strong was with And up up results strong year-on-year line top again, XX% bottom was line our we once as

we backdrop, three and will this are morning a that as ability XXXX. grow fiscal give increased in have delivering us increased and for With our our and difficult be to subscription optimistic value profitability trends continue business well-suited Based the opportunity see of strength I’d for to we we to discuss through of predictable to transformation revenue scale, resilient Kevin results for in that the future the our to about our areas and growth profitability, achieve guidance on the durability business the value our proposition a digital macro guidance QX ability There minutes. few and ahead like annual economic at creation. long-term our confidence highlight

services, of of how our adding us. success customers’ is among market expansion engage revenue, Dynatrace large essential we collaborate to multiclouds, the to with our digital Thousands taking to ongoing in and and in across the expand TAM growing embraced a digital we advantage and First, have have well-positioned platform share transformation in innovation investing to transformation both base. drive way Dynatrace of front continue second, teams. growing dynamic rapidly commercial how companies as growing continue and take provide customers primary And in role expanding plan the ARR digital the modern customers place plays of by and our transformations; new third,

transformation greater digital For pandemic transformation new continuing first results projects. globe. around reflected successful global May transformation intelligent that element operating these digital CEOs these and reasons, into measures. our a their observability key the efficiency of an delay a all as business survey accelerating is by of ecosystems Customers customers’ essential consider projects an multicloud acceleration us effectiveness. the agility, cycles, quarter of in Despite magazine, According digital we anticipate Fortune are beginning towards sales we and dynamic XX% across a drive tell their to the some transformations recent executing Dynatrace to in provide confidence to they strong see Dynatrace underpinning

our to pandemic on and we As was them the cloud X,XXX worldwide discussed shifting their approach to immediately customers through workloads. transitions our to help in focus Dynatrace May, early work-from-home

footprint. of success helped customer part to in our their long-term relationships, continues expansion a great important maintain an also transformation rate This application digital digital XXX% base strategy. ninth A our for expansion efforts an large strengthened approach times the bring modernization This consecutive Assuring fuel example of to in us brought above first observability a how customer growth with of Dynatrace expanding within quarter. helps net project. challenge brick-and-mortar retailer to cloud our is

our drove retailer. how this in per on per the believe drive can $XXX,XXX create over greater application it’s deployment, AIOps operations unified see will and gaining be unified what rollout while more is of experience Consolidating and more data to monitoring powerful do addition allow to the time success. than as more and intelligence collaboration, saving APM. infrastructure and unified issues to decision cases. and rapid And us During we effective customer, value initial across allowed digital of today from to did approach money average $X platform recent the of across retailer our unified to teardown continually expand power we analytics customer use resources on Dynatrace's automation experienced identify ARR we strive model just with this we Dynatrace over believe them more log as customers silos that less. million service and time, multiple tools firsthand This with innovation, monitoring, combination in-store a to disparate observability, teams, AI-powered simplify automatic impacting value to the among online the accelerate standardize Dynatrace’s advanced

focus we from The a during infrastructure airline dramatically organizations With Human to experience to contact how quarter. to classic Services, the knew simplicity customer Yale their connecting efficiency tickets. has multitool tools, need came Bolt to this efficiency the While National happen Despite compared growth around power basis, for and on added mobile and user joggers.” challenged this Sabadell. on with the speed, to year-over-year fantastic to powerful we as our rapidly the experiencing logo demonstrating with currently Dynatrace will they tooling. booked and have the is metrics increasing enterprise guys continues transformation unification that U.S. back-to-base answers actionable were penetrate taken also and Take opportunities the airline new the improvements are the some globe usage deeper selling maximize high-impact revenue. are airline, applications, a booking XX,XXX Within them commented, of customer MGM, out fact airline data allowed Digital to greater passenger across their We relationships customer previous global University to After with had rising target teams other a This are continue conversion and Dynatrace and digital conversion, silos Texas to industries, with with excited QX, observability down new days, change. monitoring optimize Grid, new like the drive approach “You Dynatrace quickly and different of account travel of increased funnel observability we Dynatrace conversions Banco those favoring to the data about approach simply and bottlenecks past spots for to believe own make even rolled After from of by blind this platform all guys Usain revenue cloud production. COVID. weekend driving application. logo experiencing into business KPIs, truly users their quickly, the into our initial value optimization left Health base.

QX sales enter logos. by our disruptions As accelerate, focus projects to the new increase work-from-home on again opportunity behind to transformation largely digital efforts us we the increasing see our of we with and continuing balance

strong and accelerate development IT The effort much to do resulting with more cost much pipeline now more feel especially their our is and less more compelling. when and faster powerful, organizations transformations. differentiation pressure and is value Our move and proposition is to digital

the Speaking digital shaping brings so position and second Not to our macro transformation environments. of is disruptive general trends this trend of only business, the modern my are market cloud point. me fueling opportunity,

an we what clouds for more than innovation of As critical hybrid cloud and ongoing and work. us often applications combination modern we’ve business change, the our the With public, native will still rapidly orchestration strong to now, cloud and they cloud landscape. disruptive this the advantage be for position Kubernetes or back-ends more to and many our may AI-assisted at before, run observation use native with in customers nearly and to shifts intelligent workloads more of and they DevOps a latest optimization More only look multiple container and and These teams deploy Dynatrace platform of platform across observability multi-public in techniques said utilizing automatic be may record and hybrid to are workloads. continues build, all platform where cloud The application put these often take is dynamism more manage of not, frequency the of used multicloud, upscale. applications complexity, systems see reside.

A of organization provider organizations monitoring bakeoff. for schools; Dynatrace a quick another as one and company here. administration XX,XXX give their they for their date three-way me renewal a approach XX,XXX you of Let solution over what talking this K-XX existing SaaS for and tools, I’m about school example in educational brought serving

clear While Dynatrace clear that Dynatrace became evaluation at during a three things choice. skeptical the was that first made different,

that and core automation and AI searching for how the dynamic quickly, our manual left tooling. and could the at continuously them answers highly they showed intelligently something Kubernetes platform of with and observe environment, understand current their was their First,

pilot precise that the of beyond speed parts with Dynatrace could they automating their required of previously the to answers, power Second, steps they as scope manual precious had one expanded APM. the delivery invaluable became And product by customer DevOps realized large resource. clear that delivery solution third, the time, instant the pipeline burning and

they between more much and model enterprise cases, of and As AIOps continued monitoring IDC, for as use operations do eliminate enterprises the in the leading of for predicting and Dynatrace cloud resource-strapped both allowing silos in data and they value Gartner With dynamic believe infrastructure both with a collaboration us for less environments and global rise effort expansion in choice much across to an and initiative leveraging and organizations we serve teams, accelerating analysts our could realized requirement the approach development industry smoothing by cloud new unified over continue customers innovation. they will other investigated time. and AIOps gaining customer and Dynatrace their further expanding application platform in per infrastructure common platform applications cost, a as proposition IT ARR well to multicloud differentiation

me let the third Now investing growth. point, in touch on

category that that to Given we to are XXX be industry reiterate platform more invest the our base by of us, differentiated as platform over expanded XX environment a have success QX want primary throughout already during footprint. for global QX. well-positioned that continue areas is thriving the trends start We continue to ahead, over to our any for Sales, to are customer fact on to fortunate well-positioned R&D team our be difficult disruptive and aggressively economic cloud growth. employees continuing in we on in a customer highly we investment expand with signed I and we an in

massive our of gives at effort also level, grow accelerated government sales the to us investment doubled in the U.S. see continue moderate rate. the this access past our business digital We government. to recently segment certification over to federal We've completed impact at year and U.S. FedRAMP an broader transformation which expect

front, product investing to ongoing the are On in committed we innovation.

should tolerance lab we expand capabilities continues to expand, organization continue and including modules R&D extend we itself. them cloud well clouds fault extensibility And European-based Austria. full customers, with past largely greater largest across to This bring to centers one distributed recently go clusters and a as platform in as case hybrid opened of tolerance the quarter, Our all five in allowing fault new fault Vienna, scalability our for geographically down. tolerance to scale, their operation monetizable to of the extended

and many Kubernetes AI-powered our infrastructure, we For observability advanced container Kubernetes’ customers, extended of application support announced workloads. for

all across applications growingly get cloud them on our native clusters, data sources that to coverage can to and and a and Kubernetes on view all backend cloud modern services, these run of module monitoring to middleware Now, analytics of troubleshoot our their customers tiers applications optimize better and unified operate the continue the log understand, manage, services. complex we including cloud Azure the infrastructure core And depend mature effectively. XX with greater

I just when feed note think coverage, that it's important for add a don't we to data a add we service.

have customers. gratifying when all our cloud when parties, this understanding for innovation understanding We it's dependency especially and is AI ongoing provide all with dimensions efficiency from and across Smartscape, unified but agent answers feedback Davis operation all and lower recognized gratifying and ongoing by work, costs. automation, of It's comes the your value one to insights intelligent with ease greater and third

cases. reviewers rank rankings across platform AIOps monitoring, monitoring, came platforms, number out monitoring, digital performance cloud application leaders use one, infrastructure During experience a including replay had session several leading observability the quarter, across number site review and one monitoring Dynatrace categories. peer container GX,

expansion with platform continues over six Our with the the three up base Dynatrace to customers number using modules, past now gain more XX% our or customer of months. traction

continues recognition for our pleased many leader and of grateful customers to support as modern cloud reputation the We’re the grow. and our observability

So a let I’ve morning. amount as fair me summarize this covered

trends and multicloud large powerful of It's by macro is transformation opportunity dynamic growing and Our adoption. fueled rapidly. digital

our value Kevin? IT as some the it along Kevin results and and of differentiation market look deeper time in ongoing within to list acquiring financial We have a This innovation, near proposition investments of to the expansion new us as combination, logos that, turn in a position in to come. strategic resilience and in proven priority let well to power we the make base. over a to continue will strong of rapidly with put both the continue our segment times that our me guidance. of expand commercial into our for With sit top for the challenge

you, and good morning, Thank John, everyone.

in transformation we mentioned, earnings. success. that John but fiscal fair is ARR, of revenue As 'XX had first uncertainty demonstrate strong our global the digital growth our results solid business in critical quarter to economy, start solid a and still a with amount There's for

As we ahead, continue sustainable optimistic we look be growth about potential. our to

be our and period. to reported of to of So, let million. $XXX net move outlook. financial grew continues expansion me Dynatrace and quarter new then business. That’s our increase rate. up an customers quick of to financial our $XXX XX% one a key review on are measures recurring with of momentum year ARR compared understand basis year-over-year, million two ARR drivers on start Annual ago highlights the revenue as first growth to to the of the The logo an the

over quarter. customers new consecutive digital efforts. increased $XXX,XXX, in the focus X,XXX to months, expansion which mentioned increased we year-over-year. XX% to customer we and customers to per net We our our As transformation over total up bringing our added on This ninth call, strong existing for last Dynatrace net help last their Dynatrace XXX% our work-from-home our contributed few to count the rate, sales over XX ARR customers. also QX, remained customer establish

to in expected, increased quarter. in focus our additions combination to platform base the challenging environment the a Dynatrace new a As led our more moderation install coupled first of the on business with

ensuring of adds and second would logos guidance transformation the transformation of of for will new Dynatrace and based ahead additions and projects consistent pipeline into same quarter solid year essential period a remainder This have digital coming XXX our role digital believe logo this the year the with success. the new we plays initial year. new logo on We assumption the of for roughly be from in the resilience be the last

to being high Moving the partially growth growth revenue. revenue. basis. quarter and With XX% mix which we points driven margin offset the decline million, X revenue, is XX% license Total revenue quarter the a a to end first representing Total $X.X from $XXX.X and up as guidance increase by total the an of revenue revenue strength from points by The represents margins, was for less of expected QX healthy gross percentage gross year. in last up than million in our classic revenue margins above the continue increases. subscription quarterly to respect in in for on expansion subscription our first quarter was percentage our of X% X now XX%, see last non-GAAP of year-over-year

margin to related shutdown. our pleased due primarily the modest coupled manage to savings macro cost very efficient are platform with the We way performance, with we our

above first to than quarter to business the expense quarter. guidance points for the our due expected and expansion XX%, high last operating upside $XX.X course first prudent million Our was environment revenue This led the year. the $XX from of gross and the income of due operating over to expenses percentage million, margin of non-GAAP the non-GAAP evaluated of as management operating a we end quarter XX lower margin up

shows inherent we our the While investments of intelligent in in to commercial in operate and accelerate in, growing fiscal we 'XX. this performance leverage the given strength the as we move do operating innovation forward you our expansion platform TAM potential business, and intend

As the down guidance. the expect above share, levels million do last was margins come or fiscal quarter, our net we result, income move we from consistent $X.XX end with per will a throughout communicated year. as high QX $X.XX $XX.X what Non-GAAP of we

Turning sheet. to balance the

debt million of had of was As cash long-term we $XXX our and June million. XX, $XXX

of recently flow business, outstanding the program we debt. our reduce further in confidence strength the and cash reinitiated to our Given our

July, $XXX improved early our which X.Xx our quarter in of XX-month IPO, principal we reducing trailing our ratio result, to a adjusted a first the leverage Since our EBITDA. at balance million consistently ended million. As we made have repayment $XX debt

Our from leverage over leverage post-IPO ratio ratio down of is our X.Xx. XX%

be and strongest way basis is in of As cash generation year, flow believe at in to basis reminder, our cash the growth effect occurring free Therefore, free best the flow or following of smooth bookings a lumpy a seasonality. last our quarterly the full cash look the bit we XX-month of our unlevered to quarterly out unlevered renewals. year a fiscal can our with the on trailing seasonality quarter

expectations. nicely For which free million XX% $XXX our unlevered $XX which flow was cash with very was QX cash We the internal was was free unlevered were revenue. first a performance, quarter, flow our of GTM million. above pleased basis, On

We full the of XX% continue free $XXX of next The we of XX% months, to cash recognize would RPO, measure financial portion that like QX as XX%. expect to unlevered remaining million, to year-over-year. flow year. at I end the an of last deliver performance XX which, obligation, million, margins was quarter, The year over increase expect is to current over of our discuss last revenue an was of the increase $XXX XX% which to

a expansion the RPO benefited from of business general duration healthy increase combined our agreements. Our the new has in with move a subscription subscription to

to Now, let’s guidance. move

As be will rates in noted. constant growth unless currency, a to reminder, all references

ongoing I fiscal include success and the remainder earlier, increase of to some mentioned as our commercial environment, support customer second our accelerate innovation do the year. As the These to quarter evaluated investments hires in after in will the expansion, initial in plan we to expansion and further pausing we additional on initiatives. labs expenses business investments

for of should of year the to we total the ran in range $XXX to million, in as expect million strength of result, ahead to to XX% primarily margins revenue throughout versus year-over-year a second backdrop, the resulting of representing With XX%. growth the see our a lower expectations due $XXX a higher QX, that expect be we of expenses to which quarter, revenue. operating remainder well As our operating

estimate be expect of million representing operating $X.XX EPS million, higher subscription QX, in XX% to non-GAAP and state standpoint of assuming range $XX of a million, to shares million share tax year-over-year to of expect QX profit $X.XX cash a a due growth to in $XXX we We in XX% rate From quarter. QX range We approximately cash the XX% to XX% income to non-GAAP million the of revenue a of be to $XXX.X outstanding. to XXX XXX revenue XX%. to million taxes per $XX in

XX% For the growth. million ARR with $XXX XX% full to million, to $XXX year, guidance

the total to $XXX expect of We revenue XX%. of range the million growth XX% year-over-year in $XXX be to to representing million

in revenue with to million, expectation of our $XXX We subscription million our XX% to a expect $XXX to 'XX like growth rate. our fiscal representing of range I expansion XX%. net to the Dynatrace to also respect be year-over-year would highlight

we As a earlier our part noted achieved to strong XXX%. our we be nine continues quarters a expansion today, with mentioned have business. net of release in and rate earnings above John This

the we’ll year. of net XXX% remainder for the assumes pipeline ongoing increasing and our current we customer of assumption Our compares QX base And our renewals. conversations initial comfortable guidance performance, to base rates guidance continue expansion our XXX%. fiscal and with our are strength healthy this This above of the in with

flow of flow. quarterly And $XXX to just in $X.XX our For share. earlier, but expect still full a variability. million be rate expect year. continue $X.XX of XX%, back be tax of between We $X cash mentioned range XX% assumes will the $X per resulting free we the million in to have of income non-GAAP million, non-GAAP $XXX EPS cash to to cash unlevered unlevered but million recollect the this half a to effective operating free to I approximately expect in annual we to of million million $XXX XX%, benefit to This approximately tax again, $XXX margins [ph] year,

our that will new XXX Finally, logo healthy fiscal million driven diluted XXX by combined We customer existing to expansion, to the growth for resilience shares balance of great be 'XX. and are feel million the expect about of business growth. continue we confident with

and to to new the release we Operator? Investor that, details up affirming With fuel can market expect about early the sharing We future for of business more specifics and questions. product strategy, look will September development continued growth. vision investments you capabilities our take are your and forward a our of more virtual Day a opportunities, We with shortly. details

Instructions]. [Operator

from Your RBC first Hedberg Matt comes of with question line the Capital Markets.

and Thanks about these some strong to I monitoring great go the time team, and attention. very on caught hear Can transformations Hi, John for post-COVID guys. and congrats is talked digital about you my really impressive. the talk the John, which results, you accelerated think from And monitoring certainly called of in level when a all-in pre, customers? you out at were at and particular. they perspective, Dynatrace? retailer of on where a Where large now they they are

Thanks, it. Matt. appreciate I

it what services be complexity thesis much a brighter. companies greater we degrees digital cautiously sort the accelerating just as just So complexity able multi-clouds, and Dynatrace journeys that Dynatrace move speed for more to talking case seeing going degrees these is that from And and we just their what but you’re general quarter, think happening. floating to dependencies of scale kind saw of model even of we’re course which handle throughout of great in AIs agility automation Without being they of through cloud shift native move transformation micro level the they it’s this, we when are because the of true and lift goes observability had thesis across advanced digital with the playing applications I of shine into there instrumentation really complexity seems that do to to digital we of and application that’s some with about their And that requires But that cloud as simplify. starts didn’t at they the things And billions we roof. quarter, more and rapidly designs. in hood guided transformation resilience was under essential out. but transformation, and to see the underpins

observability – we investments we way automation in so do quickly our without model COVID can our our accelerate our still a we and time making can there change in transformation so seemed in model, and our disparate of like it before becomes digital instrumentation And take is tooling current with on. model, can maybe no

of class and for continue what with And that’s QX out the as the as what we seeing in. the a cycles up. into fiscal we QX so beyond we’re and that solution accelerates, goes beginnings it need digital Dynatrace sales that’s saw is in our And even look we see we’re to now transformation it

normalize I XX% is believe That’s then see. guess a you growth that, remind you benefit on class similar point, at especially that ARR, saw Dynatrace even last us growth. XX% conversion? that year year were think classic – to you I Kevin, of you this great. last was Because the might think from But were if didn’t I ARR what benefit growth? I that on super can that impressive, roughly quarter when for you consider And to constant have currency had customers

That’s right.

the low currency this our it When growth new look currency that basis, And on base constant customers in for logos So grew expansion if XX%. XX%. platform, was when at look XX%. growth they’re quarter Dynatrace you rate the on back and take on break again you about you constant the and we apples-to-apples, we our ARR average out just was maybe last and six a quarters, XX%, a

the Dynatrace our So moved as customer really fact over in expanding most base came result a the now. platform reduction of that ARR on of that we’ve and to the the are

Super guys. helpful. Well done,

you. Thank

question your Jennifer of from with Lowe UBS. the And comes line next

the and of a now the a on net to new prior, assumption year. the through remainder there’s the also you Maybe Great. new ARR Thank XXX% the discussion we big of logo focus move of XXX% of thought, and on train relative just but on lot that that is being acquisition quickly continuing mentioned as Kevin, you. emphasis

that the purely around and acquisition? ARR the can seems retention puts sort better is of the logo a factoring So there also parse new because are mentioned? it few just are guidance, change you you net function assumption there’s or of in What drivers through, increase like with in the of takes a different

Sure.

If you sort period ago. that three, back, uncertainty we bar of in four a a step XXX% months set a of take

guidance we new logos, our of expecting is the the we new which had better and or the when – expansion Given step quarter in a rate, forward than is were the logos. the guidance Growth net quarter expected combination net expansion we first rate about really also combination I our in say up a a going are days should healthy of rate. ago of strength and stronger a than business XX started be

were we So we’re ago business. seeing from strength segments of in both where our days XX

is pipeline look were you back in rate, the Dynatrace which expecting and expanding consistent we’re doing where customers. existing our the we’re net If there last new we fairly quarters, job and the at with great XXX a platform year. a about cross-selling of healthy had three logos expansion We

So a board. combination the across

one focused? sort target on strategic, of for And be bit that sort is there. Thanks. where sales guys just changes of new hey, me. there it that logo, in new or Did you is just you that’s it on for And color the maybe be logo Any any more compensation a the this to net want to more you as the would and well. them helpful specificity encourage preferentially on me more introduce focus

We’ve continue do sort changes Yes, Thanks, to for Jennifer. of John. this year-to-year platform such We drive is for logos. incentive. had expansion. There’s no a an incentive new new fantastic sales built-in have to on logo real

of [ph] in our said, we on logo what new couple installed last be of seems that had And quite in working. the sort the again incentive year. growth pipelines new for cycles, so to based sales we’ve as see we’re this that Kevin And years and confident balance logo and

Thank you. Great.

Bellini Heather your Goldman And Sachs. with comes next call from

prior? period of of conversations the One, demand? way initial what Great. wondering like yet, but out much this evolved, are done the kind travel uncertainty, and quarter And the you conversations just on mentioned meaning differently beginning just bit are new new back that question. progress from a basics, any of perspective generate quarter what asking Jen versus build can they guess a fully know, on be don’t we’re is back now were pace about of little following obviously how this great? becoming would you great hesitant woods a to of if taking I on Thank those, was feel you to thoughts pipeline with And that customers the up of today? in logos. kind have was where you I – the Thank starting start new of you. What not got are share lead-gen have was in like a and which know no your guys things the for with the couple. in what more but also to to comments it so of I you I then logo environment kind

Heather. Sure.

at of happened the what not unexpected. beginning and the is quarter this So

around wrote about from scrutiny projects yourself think of out quarter. the the took the and maybe of non-essential, of this, that were many were process I scrambling ones home which to and folks essential as everybody which to fall that to work the as going several well, in rise disruption going weeks as

care which of who so is that. We sense, would anticipated of ton take course, we And your base. what to a of pivoted makes

why your the Dynatrace the really transformation, new a key we this discussion essential, part for It of Customer, back well pipeline base was of part or generated number very as expand and the is around have changed platform logo balance us discuss you. as QX. So where early an only year. of well value how, Mr. logos conversations – of can essential part and project a to served strong our the of how we in a The for digital new around is of extremely the the let’s

maybe So transformation, a it’s an if digital little so it’s sense. of more essential a project, pointed centered not it’s for that makes just the just standpoint project differently from bit

it. there be new through the clear cuts seeing essential that of it’s moves on is conversation which sort it’s time quick a essential. program it sort we’re blessed cycle If effectively nobody it be is around spend of that more pretty nature would management the not to the sales again or higher-up because essential, by to the that to immediately more had project. what actually front, predictably On this wants the essential, logo early of If

blessed new when tough, turn very transformations. sort and to agile, movement dynamic essential new helpful. people to in that – is drive be a we’re we’re that which So business to that to turn before, that in place of to we’re times digital customers, can I seeing of their we that save logos They their They to revenue can get said And can category side more they they with the have cost being applications. actually And turn get as they their digital where closer nice they can a streams. and be.

much. so Thanks

comes Sterling with Your next from JPMorgan. question

circle to want I question. Actually to the Matt guys. all Hi, back way Thanks. Hedberg’s

think a of applications transformation, with One obviously And percentage investors are XX digital any comments, that and any currently answer to? as the of with does there would about seeing on that be is your are the Gartner on is get or or where But X% around is XX to is based talking of X% topic apps cloud, higher. I report things of just does the idea frequent that you’re monitored the that handle that trying become a qualitative the that of to conversation shift qualitative go commentary sense helpful? investors

Sure, now there services shift with had on and center and of moved a connected by stacks cloud physical of applications of you’ve ever the resources, it’s all to a pool it. many virtual involved to before. are are world sort dynamic than that business networks in data has actually Sterling. of where an digital hardware interesting the the sort applications different siloed different The of In more

XX% monitoring X applications, seeing into the zones. want take application, even of X some plus all we’re of and their So Tier sort Tier observability X, Tier to up of and into most customers

dynamic just become is cloud operates it’s with how and it sort the services the the interconnected increasing and a in the of cloud of cloud. how So

continues want digitally So you of for be as But because layers. application application sure. companies I that transform, don’t is expansion expansion the also that do there doing we’re only the to think to

replace user that the digital I experience digital outcomes starting wasn’t digital super from in sort business and It experience actually my course drove stronger example with were over current because non-application that services critical was as into why airline. cross-selling to more just of the an systems. are of more helping and get that It’s the monitoring gave really extensions the and I with should and the KPIs across hosts well We’re as much those valuable. analytics. And connection it digital opportunity months. last the few of

all net is And capability could we believe key continue the XXX% and rate to raise together platform really work so it’s Dynatrace in for that sort on we of across up plus to platform that that back these why they a expansion future. that how a modules unified comprehensive and foreseeable

helpful. Thank you. Very

BAML. your from Rangan And the Kash question next comes line of with

side. secondly, obviously I could Congratulations. all wondering on give And happening longer-term not Hi. the versus quite you and high, new AMP market? have monitoring business that great? can high, the growth side be us metrics are its you’ve net give what logos you successful of brand you company if forecast some have be a morning. in new the to you’ve guided you that commentary expansion winning is and there, so more would you one. if quite been running large legacy why reconsider very logos, be little of that really why monitoring and the exactly TAM’s monitoring represent Good if raising would replacement much. you is the because the is Thank That there us that a would was rate you rates seem after the space win in your metrics very net to to that prove positive, the And

Sure.

me questions to parse Let try a those bit. little

sort of three first is of using cross-sell, I really our the sort talked base one customer plus just which XX% last So quarter sort the I about between regarding APM metrics are of the XX%. that growing platform think and thinking. tool of really sort gave thinking actually from last themselves another moved it’s that ones over and increased customers to the just of platform have stat months, six I And modules, those

share to that year that just our So community, the is for been about last investment cross-selling the with group talking taking we’ve off. the here,

products an so and where XX% maybe but emerging XX% remember well, about products, APM think year And as XX% us as of been expanding – have rapidly XX% ago and us the all a that we is a right. think customers of base also a might as emerging

maybe little and So of drive to sort color and you expect continue platform more trend to more time. over of that that I’m to we of usage as course going gives bit a customer

think I that that’s key. So

to up, rate we If growth pretty moves when that have The as second think that’s a to way guidance one relatively and proper we going proper find you’re we’ll from us to right the But that’s automate sorry, growth be just conservative prudent. as far we’re think guide company guide. continue rates, to I’m standpoint, pleased to – now. and we a that with way

Okay.

monitoring you that the the are or if be who should And color any against, you legacy to modern winning business the have there, vendors, --?

there. Right, combination sorry about third okay. It’s piece both, that of a

interesting an it’s actually So dynamic.

No Gen sort they cloud, and the and taking in the of past longer their Gen we no people dynamic X what real a called to X realize of in It’s movement where do-it-yourself tooling in prior approach you more seeing We’re move over. more investments greenfield. works have sort incumbent to because as multiclouds.

an then in project And as okay. do-it-yourself up is observability show world actually that’s starting so to world,

new year XX% see XX% that beginnings in a base. that we in what starting ago. don’t market that’s about of trend. the We to an about up and see So we’re our That’s see of from incumbent

continue valuable I time becomes win to those that the said, as our competitors. more best We it’s competitors in the X APM classic Gen we that And of sort as on and space. engagements there all XX% APM And we climb goes on, been of that days. module, It’s layer. and clear these and the X Gen are land we our rates have we’re still call known where enter against segment that of differentiation through into what much application our

you, John. Thank

question from of And Raimo Barclays. the your line comes next with Lenschow

into of observability. couple think the you kind over I terms from what product version. I on of of follow Hi. have that you et see stay bringing that it lot So the subject? where what’s and coming monitoring new complexity redoing if the guys, around initiatives out Thanks. different middle it, of if – you you angle talk cetera. like the all about lead a have there think the years kind bit a you this Can of ground from of them one you And think main continue that you about are last the product Like up. people umbrella? strive, guys, then because kind [ph] of and and of to thing the under infrastructure one little did should a players in to from coming logs a with your new announcements, can altogether of everyone’s perspective, different That’s Like

Sure.

by step some data to observability let of quickly part bring our was simply me plus That layer. reinvention the that like of cloud our back by platform kind knew because sources than required data it just other not code because topology layer we and of elements. other together So some just these a was layer observability ones different

whole, whole. as course becomes homogeneous they we in that to had see order automation more essential and to like built and You sort IT also But would move application being a it have and as of that differentiation more digital and unified they’re needs and AI with in fewer resources accomplish to try tasked to transformation with. organizations development faster the all of a than

of as combination plus a plus AI a that modern cloud we us is that from really set the really differentiation and it market. attack apart So observability automation standpoint

the it’s the business make and keep that there see they we that layer run of might vital, working to use see that The [ph] where alone, that business in plumbing with is application interesting that’s look properly thinking world When for other with as the a where or platform’s be this that layer. but application mind. believe that out that connected is players we cloud and infrastructure cloud connect. So because IT pretty in sure stack we cases applications we where that tissue really underlying bring well still sort that off coming on the application of it, is applications collapsing

we connecting and also when going about we just about rest the the application, the user also think that so forward, think with KPIs about And we not connecting. business think plumbing experience,

really value a components And difference so end-to-end stack of us. is that it that platform complete for make

those I take their of to example the airline of think take more observability a retailer take you complete or solve the efforts set whether every So much K-XX you example required alone. order you or one I gave, modules transformation whether example in digital that just the than

Thanks sense. for And bringing on congratulations the that. then yes, Okay, makes leverage down.

well, of of a actually kind and How it’s a that. But at about How well then kind classic okay, realize, doesn’t decent do into obviously level case, forward? carry just if you going So it’s now is do of the decent way of that it’s financial range. to science, you’re going normal a kind of think also the kind forward? that software level do a think like you do that you thing. trajectory lot Because about you

Sure.

progress with we’ve In I of delevering So $XX paydown pleased as did prepared another mentioned debt. July, the the super ahead the all, plan since company. first IPO million made of actually and we’re remarks, of we in well of

But usage down explore quarters, can of little that be leverage we million more. certainly that couple in our Analyst work. the it the If focused leverage will fairly net some about of and our for I’d interest about just cash and for below about a cash Day to rating where Our put out And that, bit the it’s to zero we given push of now, debt ratio when on future. next $XXX balance talk generation probably getting now conversation of we we outside can rate. very where a capabilities, near can usage areas our is think cash low sort that

Okay, you. Thank perfect. Congrats.

next comes from question of Bhavan line your the And Suri.

I Hi, productivity. numbers. guys. of end One, nice the want on a me and here things. squeezing force set for congrats, quick two Thanks guess at really touch on sales in I to

do okay, you well available and have year again of is year? about of John north sort think much force then have How to and of higher improving and to go XXX. target capacity You shift to of for you next expansion into do adds customer logo drive sort meet you and talked capacity customer of that you’ve the get of part then platform to sort which had how much this now kind think saying, we going Dynatrace new and you these to productivity capacity of a sales did obviously really ramp

of me Let take couple that pieces in a here.

one the stopped. foot and things is commercial one really first It’s the on uncertainty we early times continues of kept the the sales those that COVID throughout the capacity general that even of our expansion that period or us So for there. gas in expansion hasn’t

that’s scale. to So continued

has Some helping the as to the shared pipeline that’s talked and freeing up capacity in added as business and about conversions momentum that our business guidance sort here. being Kevin growth in from drive well of that of us is

current geographies headwinds some that also of in with sort I And – of growth not where reflected I it. as which propelling sort driving one more because beyond to of heavily a impacted going economic guidance. with it been step growth it’s uncertainty are our certain So business, as really capacity as our is now right certain said, more in that But sectors course of have of still impacted, standpoint. think little our trajectory and well a pleased from growth are we I’m

shared I we’re modules. of and some do when early Day also Investor see really we in with of standpoint point. we we the commercial of but able some only investment some you’ll But just additional innovation comes about expansion of not of I’ve September I course get our think when also an share talked coming the I’m from forward that excited that think ahead cross-selling, to some to going of having plans those with which success what’s be to and that maturing in business, expansion continued

stay share a of couple tuned and in So months. excited to

do depending in you to because one that’s bit Got And it’s again, are about obviously next because around get how yes, but spending what postpone one seen went sort it. slowdown come as or decisions that again did November a what as on for guys color quick but of thinking kind from out, that? get logo little a the the out see, in months, more, you something new no or which and you you’ve into out we 'XX is you get hearing or love to soon up expect, what concern but for around the count not plays hasn’t this little just going for which closer people I’d there’s months, guys you’re or post-election And concerns Kevin been of customers bit Thank a a all us up? starting love you. you the do guide, you actually public few election around or 'XX, is put few what so always but to on election, to new concerns some there results. come of what

in a standpoint, I it’s kind in trajectory. opportunity so digital transcends definitely Sure. what excited the customers, digital call, critical long-term It actually government Whether gives about hearing can elections a trend our that whether earnings we so part. that’s macro with from trend. is way other. it’s a I’m surveys It’s push trend. confidence. and something or it’s one And that’s we read, conversations as election highlighted on – that’s particular. the Again, From like It’s what this is transformation or a one and long-term we’re that it’s year we shared long-term direct a spending us of going beyond which well not Fed Fortune transformation to and

backward real see with because businesses. as exciting environment long-term don’t digital trend this So into businesses themselves elections we a issue an really is rebate

on I Thank opportunity Fair congrats late. too. and congrats enough. for And we’re my taking questions, again. guys, I’ll the off. hop know running you Federal

I appreciate of with Maybe it. that Thank should sort Great. you. -- I

squeeze I more. in think can we one

All right, one more question.

Your line final of the Canaccord. David with question comes Hynes from

Thanks, Hi. it guys. quick. keep I’ll

you. maybe Kevin, for So this one’s

of coming the more having expansion, a about larger think frequently? I As impact? the they deals Are more getting or what’s drivers significant follow-on are net

that verticals expansion, terms both different really we operate a it of in. net of the is combination given In

seen expansion question, something is of in again, of actually a the years. Then little I’m of the than seeing couple I we happening we piece in in net logos your rate the over bit had are just but little more detect quarter the terms new in terms – second of We missed the footprint a kind of last piece a deploying had We bit sorry, expansion quarter. David. rapidly healthy a fair

No, more frequently, I getting are deals was just or asking, they new larger, about are the follow-on logos. coming nothing

hit you combination as of it think a both. I on

expansion little the deals and I’d are of The more a staying bit size rapid in customer say, just of base. consistent in fairly our terms becoming install

Sure. a common in And a maybe there quick for of John, Bhavan follow-up do Is there? you you you opportunity how then, Federal said think – And since just about across the scope the to there. mentioned the incumbent the response environment?

then there’s fall number It’s to more are of seeing the dissimilar commercial are those advanced a not a in who them It’s cloud transformations market away. already but good their question. where incumbents,

a you eliminate when and that again, there’s of you world provide disparate tooling we into on as do-it-yourself approach. that the platform challenges So there take well and simplify run do-it-yourself kind that in enter that to

commercial more based in So investment more their why about that our little the until faster. and that in different. Federal government to digital it’s now That’s transformation being a moves big just active we’re because see aggressively we opposed not they efforts. which years and bit purposeful It’s hesitated project much investing are U.S. as two much U.S. really ago we

Perfect. That makes sense.

continued Okay. Congrats guys. the on momentum. Thanks,

us And joining for thank morning. you this everybody

October. a excited earnings had in to call and more our great with at and next look both We’re business. Day to Investor We very the again sharing our we you much. year about then you start our Thank forward at

this Ladies you gentlemen, conference participation. for conclude call. today’s does Thank and your

now may disconnect. You