Dynatrace (DT) 28 Oct 202021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. And welcome to the Dynatrace Fiscal Second Quarter 2021 Earnings Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today Noelle Faris.

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

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

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

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

you Thanks, XXXX on earnings Noelle. for call. And Good morning, our everyone. thank us joining QX fiscal

and to strong First, the remained prolonged and how additions to balanced add of logo by with a earnings environment. XXXX, subscription which continue and extremely continue up and Dynatrace by the talent had platform of the $X.XX profitability sharing shortly. ability combination top and let rate. We existing customers. strength of another in revenue strong non-GAAP attitude to to details per team growth the of more quarter a year-on-year navigate bottomline and of start Kevin the remote accelerating the results at fiscal me on visibility an new into pleased the raising to expansion I for our team’s will am quarter Based our back Productivity and work we we share. the guidance up XX%, year, of resulting on are was provide continued for was QX half our ARR fiscal XX% driven

Investor at driving two Day are macro our month, trends discussed our last there business. As

service has transformation and into well-known technology the felt agencies XX% accelerated digital the are is accelerate transformation, their success providers, is of global first the acceleration brand dynamic financial The are would for digital about digital others is realize platform target the in talking These to typically it transformations, are transformation not digital especially second of the the XX,XXX the we and account these the and in base multiclouds choice around companies digital $X commissioned agreed XX retailers, just and of the of serve. future. We place companies, and businesses months forward. across enterprise recently study these globe will sector every Digital you public transformation, XX% billion a plus continue of consider almost transformation from primarily who CIOs when manufacturing the last is industry. names essential to them taking and XXX moving nearly

which so accelerates, Kubernetes, are complexity as microservices underpinning and such same and of CIOs XX% the platforms does transformation containers. digital As modern programs. said these the of In dynamic using multiclouds study, architectures, and technologies cloud scale they native include

too their complexity rapidly flawlessly exponentially, our technologies importance has size now these much team ability complexity, and time and dynamism these increases say and velocity massive been frequency them is grow customers the growing market. has these the to produced data never rapidly, to manual change. variety manage CIOs a of in As the the The of surpassed of of interestingly, by on the them said that are are surveyed, spend of environments trends and could ecosystems human’s their run These use be and applications And automated. cloud seeing XX% doing volume, that expanding XX% of greater. that the is of tasks clouds forced function

our at I’d market, markets expansion in points morning, make three rapidly As segment this from XX,XXX we the TAM by expanding for see billion believe $XX as we ahead. a shared billion growth market our the continue the use bottoms-up no macro I help will fueled Investor our global not reason see in and support. Day, I this With opportunity months which backdrop, and $XX grown trends why like targeted long-term just illustrate XX sustainable past cases to to has TAM we should

is our pace, scale the and customer effectiveness platform First serve, segment investment is second positioned is and modern in for commercial third cloud go-to-market is and observability target and our expansion, our the uniquely that advances innovation we ongoing and engine. approach continuous the to of

platform approach. Let simple me all-in-one powerful our with start yet

complex, know, more of new to of old we movement, are approaches opportunity. monitoring and days now has approaches Though modern rise a many realization the a modern world. the cloud the are this observability This to we clouds early get as the led as dynamic seeing As failed. approach three to observability, to in

multiple increasing engineers approach engagements. open applications at regain to DevOps this work. frequently, see unsustainable. be quickly a The this best how call cobble with what get They to This quote-unquote first do-it-yourself tooling not manual their and number and easy begin old will and modern is on visibility infrastructure proved growing more and number teams but software, source an diverse together it realizes to to control. their and to and out of complexity throw scale cloud figure more needs, growing of the we tools, companies seems Company in We database larger innovating do-it-yourself. an and first, of number native dashboard

integrated, the than to UI quote-unquote data a them. with single Second traces is dashboard tools observability often that loosely query advantage approach. vendor over suite script, all and little much and own with tool but of vendor. analyze, consuming, The language metrics tooling time and structure, do-it-yourself it more very Customers on, checks single configure from resource to digital holds a advancing comes transformations. still the unify unproductive approach baseline, manually their the a troubleshoot and intensive so and logs from Separate gather fact a consolidation, boxes in not all each silo a vendor

matrix, applied innovation cost. we they It’s here actionability had it and The note, to, continuously in are analytics lot efficiency, proper is traces and here Through It’s in regain context time customers in start how real-time, understanding, and are unique where of transform subscribes with dependencies and a a which data advanced on and to in one lower do ahead third they are easier digital we at predictability scale. we unified where common case speed, all approach And data approach base. what’s and in Dynatrace and top. unified work. dash faster advantages for boarding We more a the logs, a transformation customer a in believe our automation growing relationships. and platform model us. platform and all this our unified a gathering important automatically to for intelligence just currently massive do is sustainable We approach data, most make in with leap

a Vail three in our customers climbing. of can us and on ARR the as platform, XXX growth, or continues logo ago. growing up nearly for new customers new to applications workloads to more Coles, new Dynatrace with gain our a we module brings year. expanding customer been majority Resorts. XXX quarter, to more our net climbed for see fact second per we nearly are customers our we from clouds, our new of Diagnostics, customer the modules. last further land has Quest are ever momentum. cross-sell to only ARR mobile hundreds well. are third user was we above continue the of for of XXX% the logos in Music quarter, of exploding year reason And healthy we a platform scaling than Pfizer, number Application deals expansion Not fiscal XX% of A to experience In XXth our consecutive added landing customers is expanded add before, customers rate many and or $XXX,XXX, the X,XXX half including our This with and the Along confident Universal infrastructure

analytics Our alliances. which the the adding role in AI is platform cloud platform commercial built advanced I’d new our the This partners topic discuss, our second our of me strategy expanding and customer including and to cloud into brings and a core within automation, like base growing module our the partner network. power of expansion, with traction technical to of leverages gaining

I and XX% have XX% to about say we our organization year talked on We at are track. to growing am pleased sales this

extremely that is is approach leverage sales direct This around XX,XXX offering highly the trial-led to free our for that companies and reach. integrators believe system there the growing to targeted and modern regional continue we global said, We provide a also global for believe cloud place largest well-suited world. a differentiated

digital dynamic As much digital savvy system journeys. simple advising set their across companies environments, transformation role move wider to larger accelerates multicloud a transformation in from are infrastructure of and cloud cloud through early integrators more them playing companies a

our both piece is in big to system and the partners to why our the customers. continue embracing as success have their mutual This strategic Dynatrace expertise base integrators Partner program launched awareness, go-to-market are a we customer As of solutions. market and assure reason grow we cloud in of Cloud Competency a

other In with IBM VMware Azure well as addition Cloud ServiceNow. as major to cloud to cloud into platform Platform, Tanzu hyperscalers, technology Hat, our and system the alliances and Google continue three we players lean AWS, as Red such integrators, key

broad with broaden joint making market clients. for aligning Dynatrace Our by to enterprise customers teams by our co-sell easier to and our and tight find technical to platforms and relationships co-selling sales access it these integrations

in friction relationship close In A of committed example and announced Delta relationship draw IBM cloud and DXC, alliance as we With for system and down growing these accelerating recently a partners seen Azure such can connect our great to increasing our addition, to their with removing with platforms customer sales value. cloud ServiceNow. of our deepening integrators common, opportunity cloud of and customers set purchase is expanded an customers AWS, have Dynatrace, spend cycles. Experian, hundreds

value. both over mapping, smarter For entirely Dynatrace Dynatrace. This in platform plan allows Smartscape organization, number together, the coordinate entity sales combined free direct intelligent reduce change closely with this We and Connector. to with from our we combination in joint of cloud lead and increase leverage autonomous partners clouds, is ServiceGraph trial-led aware for partners year, of to We powerful automation a expanded our Dynatrace the well customers expansion like brings and customer believe the see that transformational save increasing the per the with to time, CMDB a ARR growing and of third the ServiceNow future. efficiency, through cloud accelerate worked to innovation risk from bring our growth logo opportunity to topic This this into workflows to I’d of both new industry a morning, solid ServiceNow push ServiceNow AI level drive cover engine. and will and new an we me strength to the have

As in many engineering we do majority our Spain. Austria, and of of Europe, vast you the Poland work know,

we able a or we firewall. with are attract retain innovation with year. and delivering where DevOps, SaaS a cloud into continually. talent combine this across advanced preferred components And releases their tethered of an of The employer, and all and data minor stream releases combination steady customers, in customer’s and a platform to platform behind development modules process, XX major is our hybrid hundreds the maintained As fantastic all NoOps the a is talent

old. Our release whom a on more Over innovations of of than no this and XX% rapidly. releases stream customers steady days run adopt XX compatibility

cloud of advantage this innovation modern the change environments rapid model an us. pace With is in important ongoing for

is alone and we This GCP one over AWS, has maturing coverage have module. have XXX of for gathered added services. in they targeting, scripting, the bigger and Azure We discussed this new market number quarter portfolio. our our truly module automatically, big configuration, This the focuses all instrumented hyperscaler and growing are and we As gaining no service before no a is widest been infrastructure the coverage year services a of across of automatic. in this reason expansion now momentum our past the best-in-class no

as Davis past In continue heightened important application detect of experience a mobile invest understand and and optimization. continuous errors source to and traffic This our digital we the especially remediation the to speed automatically pandemic. is enable XXX% over in mobile seen AI we since year, strengthen module. to the have digital addition, This help which past increase advanced has leading teams monitoring quarter we

complete steady visually handle user cases, XX% to and feature our DevOps teams module recognition. proactively innovation ongoing care as This of only well. module, that also Gartner’s this end-user inside into spot customer that native behavior is continued but adoption choice the customers see session we performance real understand continues our extensions Dynatrace digital Our monitoring and we as I cases the peer well of user cloud earned future our expanding use observability allowing replay well. garner over expansion customer’s into pleased quarter is experiences analyst past not use am And better and ISG’s monitoring. earned in DIMM for using application With quadrant to and top

provides markets time same it strong, covered to me value our that critical course, even a customers here summarize. the more We are significant journeys. from leadership consistently modern is me technology cloud was lot of transformation proud important in of advancing our a what it’s hear this, that let and is the at I in Having

a We leadership multiclouds to have given position early shift dynamic environments moving growing massive the in is cloud a the from we toward market us. market, fast believe

unified commercial and our engine of of approach our continue as quicker advance to portfolio easier unified time will lead, we growing a well. through highly as be see enables organic platform sustainable expansion, add than intelligence emerging. with advantage talented, continue and cloud platforms. efficient in and And highly continue advantage the We and opportunity today modernize in apart we rapidly cloud cost like lead aggressively as and a to more partner including differentiation innovation to value it us alternative. our observability tighter, a and sets to companies To automation to our lower value, leverage platform, we advance collaboration and that’s ownership any invest us for take this technology Our

that, Board drive over for pillars me Kevin look multiple and to and into we Kevin? growth a deeper results advantage investing in market With aggressively let have are the this turn We exciting it leadership sustainable and driving across category. financial our to guidance.

and guidance quarter. third morning, increased outlook will I the and John, strong I full results plan everyone. QX review and Thank good review our our Today, you, for our to then year

XX% both end goal are $XXX The an was Rule the mentioned, year-over-year, is the increase deliver of the John bottomline, expansion best-in-class revenue two As drivers delivered a or continue at we recurring of logo a and scale. That’s net to $XXX an what This on million consistent growth ARR up million and million great with of the combination at quarter. top is customers believe growth and quarter $XXX our to on we our new Annual delivering basis. as against profitability of rate. XX. reported

of our puts logos fiscal in this new As finish logo achieve X,XXX new additions this end to adding to plan quarter previously shared second the the QX accelerated XXX we quarter customers customers. logo with Dynatrace This we new XXX by about on expected, of track us year.

use expanding This aggressively the covered our a modules rate, net to we expanding quarter. existing modules ARR Dynatrace beyond remained has for functionality to XX% consecutive the which the by up invest and platform, $XXX,XXX, We per offer XXth our broadening led to cases customer of over increased year-over-year. expansion also today. continue the in XXX% consistent

a our our of second being increase revenue, growth. Classic high basis. a XX% makes in ARR license in for total the offset reflective focused perspective, million, subscription revenue, year-over-year XX% the revenue growth million of and are to by total $X.X we subscription of partially revenue, is above strength driven driving From decline guidance by on end the topline in Moving an representing of quarter growth revenue total was revenue $XXX.X up XX% The which and is expected on on growth revenue.

will of we As our services revenue fact I the through be will work model, more percent with mentioned total Day, compounding during increase believe to of that nature revenue subscription we done that our Investor the anticipate as cloud due a partners. combined the

continue non-GAAP gross subscription the with our continue in respect result, view see we increases important most we as to revenue expansion margins to the cost XX%, as line as macro the a to revenue from revenue QX with some our was environment. well we quarter mix manage way and of for X metric. quarter savings in Total subscription platform, growth margins, points combined as an gross the to As second percentage margin year. last up related last With the approximately

of our overall the was efficient above business. our last to end of led income margin the non-GAAP Our $XX.X and operating the quarter points expansion million, margin operating guidance up X $XX percentage XX%, high an second This upside, focus non-GAAP the second of year. for operating due well revenue on from to of gross million, quarter

very operating performance We in inherent pleased shows business. potential our leverage the it are with this as

of was September, in quarter, or that million the investments in more timing QX. a place step-up Non-GAAP we in balanced the incremental that prominent have delivers reflected that support net Last the cover and ramp areas topline but in believe level operating we these given income consistently place quarter, begin per to I However, will in QX within additional with were programs spend put bottomline. in strong shared $X.XX the would will we initiatives the both in long-term to targeted in growth guidance more a I mentioned current our an share. of that $XX.X approach This increase the minute. business. be to to in is the performance by business, Many of the the on spend one

this the with or you $X.XX there the $XX.X As tax the of net have been above $X.X income end high was of excluding press release, our second in item non-GAAP adjustment spend guidance. in see million and a per share, associated our one-time $X.XX would will reorganization, quarter million

Turning September had as to we the $XXX sheet, cash. million balance XXth, of of

the As building, the to to I to to Day, scale our the debt support we over we are mentioned mid-term, of business. and de-lever expect during grow position Investor while appropriate reduce our we business our cash short- the continue

the QX. Our long-term That’s early of quarter. end principal million due debt at that in sequentially made repayment was million $XXX the the we $XX to down

flow outstanding to free our million. principal million a debt, Following million. about $XXX $XX commitment our On month reducing on made reduce October repayment cash basis, XX $XXX trailing during our we our debt to was of unlevered

the had of we of variability with to and strongest quarter our in As tied year. to the seasonal bookings generation renewals last our our is mentioned timing flow subject before, cash cash our occurring fiscal

to continue deliver free full to expect to XX% unlevered cash year We XX%. margins flow of

Before note the guidance, references our like from that at currency look presence please move otherwise as all R&D global footprint, European out be to we that noted. I’d P&L will to and perspective. rates Also, in growth our generally constant call I unless a hedged business with

have we months, XX top-line. seen last two impact of points from the Over currency on and negative

the currency for mix the and the FX which the year. revenue to impact an will half, expect business drive essentially of We tailwind neutralize second in

hospitality reflect continue represent hold strong. as include like as in of our also The in about to customers Our remain and quarters, to areas previous energy affected our give business QX, transportation, renewals outlined to and well outlook. COVID-XX minimal which our XX% up retail existing business. of and such how is highly I’d we to pose update guidance risk impacting changes industries continues these should a on brief

automation transformation more ever, the recognize and intelligence Dynatrace can the in of and that all digital Now customers importance deliver. than industries

One about model is of it our that resilient things predictable. and is the business great

executing feel into attributes pipeline, With plans. our visibility about and we these our confident the

‘XX. As a for raising are guidance fiscal result, we

representing $XXX million, to XX% ARR We are XX% raising our to to growth. $XXX guidance million

representing to are XX% of XX% We And million, to $XXX to of XX%. $XXX year-over-year raising million our we are XX%. $XXX revenue total to million, growth to raising revenue $XXX million subscription representing year-over-year our to growth

in EPS $X.XX For share. $XXX the $XXX our of a expect we to income be million million per full of non-GAAP $X.XX year, non-GAAP to operating to and range

are building well-positioned leader. growth believe discussed our a a As us. ahead our prior runway with against of at are to Day, category We on deliver a multi-billion we lot calls we and company dollar of goal of Investor

ran plan platform year, support the healthy accelerate commercial to be are of expansion in that also the be note second revenue. $X expected million the well such, which of to to expense half QX, As we the to million the and of we to ahead investments range but to fiscal would anticipate due in continue back Operating very lower to ongoing innovation than of expectations efforts. primarily strength our tax in half. our $X margins I

cash resulting flow be previous reiterate, to year guidance flow. Our includes our cash to $XXX X%, rate free XX%, continue approximately margins approximately effective full of unlevered of $XXX cash of unlevered guidance we to million annual tax an to to XX% XX%. expect compared free And to million in

of Turning expect million, in to XX%. to be range the the revenue we total $XXX to of to representing third million $XXX XX% growth a quarter, year-over-year

we to We in are the and committed profile believe we range profitability Dynatrace’s front and to $XX company to QX growth growth, highly the non-GAAP performance XX% questions. expect believe unique, million, strong very is in to goal we be continues cash with including With in Operator? be $X.XX meaningful a a We operating dollar financial XX second flow. to scale, $X.XX that, us to our summary, leader. healthy $XX year-over-year and position, in With of take a becoming subscription pleased of a we standpoint company. leading category of to large your of million, well-positioned operating market and In per business will multi-billion Rule TAM as our a are of achieve income share share. per the EPS a range XX% of revenue very representing quarter From revenue the million QX, to $XXX to non-GAAP million XX%. of to $XXX.X profit expect be XX%

with question you. Suri comes [Operator first Your Blair. from Bhavan Thank Instructions] William

I for what why sort have about move transformation wanted One, small even have about more taking may not that but the guess for congrats complexity company of the I companies sort midsize businesses, to at not the to there. not service midsized TAM, of a on website Day, through, go solid TAM, a why and digital may going I John, strategic pieces. a and so the then -- the that touch talked quickly my multiple website, multiple set obviously look questions think Thanks TAM more little of to as really increase you about you guess, is two the of than the market really of Analyst through at that even a in every you going how Fortune products, that that applications, should to below maybe serve? expanding down but idea we XX,XXX, further the businesses sort numbers

Bhavan, appreciate question. the

believe our will remain focus is time for some enterprise we business digital and that and build Global transformation We to complex as the customer more matters it’s survival their also where extremely well environment, base, that for well. a So been products it’s XX,XXX. has profitability

also should pretty a with that… this billion So at point. I TAM we $XX say are happy

Understood.

is you pricing from are going accelerate business There I that us nothing in product you my what in more that no when the is market. precludes think There range. and down usually is There experience. a And that’s seeing faster focus of numbers. of our It’s in issue. …that no issue. focus you nothing

something a to bit helpful little I then, appreciate up I on and No. times. That’s want brought touch of a couple And just you that.

talked you digital log you to customers piece piece. experience attached about the in X% the talked strength So about it, of being

are products new are customers these Just what land is Thank you initial landing, the some and of are rate rate. pattern sort seeing of customers products the newer newer on there in -- attach the with the you. customers? Is the a with sense multiple attach as for some them

we rate are attach modules new multiple Another customers question. of the And increasing. with yes, good seeing

a But for landing I definition Day, three kind are think a days. sort It’s Analyst our observability footprint day in data sales at still by for looking to we the have observability year that are see about a what APM about platform now. almost logo and landing more is zone a early it’s landing we an modules. from the talked I we gradual customers of shift for seeing still wider to starting very to well-positioned landing our zone And So come And shift zone. through or and of where value with past starting one. we are of being sales thinking think of is that, are new small. we It’s it. gradual And cycles XX% talked customers

We have starting it anticipating like Again, been it’s it to it’s are said, and I but we days, happened. early beginning. see

No. and color for thanks, That’s for great. Thanks question. my answering the John,

Appreciate it, Bhavan.

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

Congrats John, talk about Hey. module. well. uptake from me infrastructure increasing for mentioned as bit about, the can you you a little the

follow-up terms you In where I that you in see for do for starting point a terms going kind forward? And understanding module customer of, had like, and Kevin. of being of crucial being a potential

us all infrastructure that impact as anomalies take infrastructure then the AI alongside the tools surface The and really And to And it, understand, the impacted. before that module, topology we analytics it a gathering continually log working in its folks time. across module algorithms all proactively is module where of in you infrastructure it wide Sure. you module is someone from Dynatrace DIMM into the versus applies to like of module. in across are an start those users more to It’s now. series to From engine things mature given all else, it on usually real of cover maintains map, as covers. and there have own for immediately context can last the XX data with of place that, aggressive into landing been action the a immediate what map -- business well expansion and to APM those an and incumbent our to happening well, the some and side kind knowledge as when much handle module that come it’s in allowed that be are know, Yes. that services automatic. months consider place to to But which that, SmartScape, that’s

You inherent more enterprise of value days as of innovation most given realize valuable AI them like driving back assistance platform and and time, is these them and strapped pretty given the is that resource much meaningful consider teams these outcomes in that are huge. IT resource business hugely things back automation better that for you time

of that’s rapidly it. from that I what’s driving increasing expansion in driving still ARR are within but the early we would and sort adoption a our module So standpoint, of is that base. say customer infrastructure

Perfect. Okay.

Kevin, How investments pretty you, Okay. increase are this in in you the you going John because think are do you way clear. sales doing about think the guys a And if you and grower about about for forward, kind capacity. Thank to out That’s you. talked of a then but further XX% be from should an also hiring, in that. like into like So as theory growth, increase of there well needed you kind drive a coming as have grower? productivity moving obviously in XX% gains of that the

but the long-term already about that you little So, think medium-term in the investments, here? a you Thank do of mentioned bit to like how you.

Sure.

investment next we you are to get is to go and ‘XX, to if types a our at what those two levels. fiscal I on trying So look really to and work margins back in take of the think back historically business quarters model

our incomes a investments of result off area, progress QX So what in and innovation is and things on terms never we But and a and look well, in sales as will made had travel step-up as we our in our as some low standpoint a pauses that. significant of sort took operating which say in XX% range COVID September at from operating of I hiring, if the XX%, as and like both the and XX%, foot gas. you the R&D levels, QX organization in in an were well we

are we get down So level. margins to going that to

We said. and have growth ARR trying about about we as maintain we to the that at north over line. when top And balance Day, talked Analyst what to we want that Analyst Day. that We as XX% to at is investment continue communicated longer so term, do we with are grow think of

there’s bit opportunity. the little a there step on going So products because here a gas and the is and market lot in to and there we QX, we QX are the of think

Okay. Perfect. Congratulations. Thank you.

Thank you.

line next the Hedberg your Markets. question with comes RBC Capital from And Matt of

will Hey, environment. again. guys. not my easy congrats is morning I This and Good an offer certainly

years? John, call system doing that important, are even Can checks. are in influence and percentage either what or you which what partner really several hear remind our good is we go well. on cloud You you more the to partner-led, up where of guys in picked noted maybe to deals becoming and perhaps, might us have are mix integrators similar

Sure. Yeah.

the deals the thing. So -- direct moved share, we starting still is organization opportunities, which of partners and the on along And us help source partner happen. that run is and doing means of sort finding the more to or sort your what partner that influence sort of then into which working sales are lion’s and development, are is,

of from APM of of We sort that as the these have but of customers. sort you of That at boutique this we is cloud opportunity resellers a integrators for for system transformations move a us. digital for partner really over new driving think sort platform to program had said wider years, Day Analyst

is a the would today We I sort opportunity in wanted what partners. to for as source the other up we to billion of year-on-year and push considerably. is pace a will say, are starting is through of to that. still What plus sourced consistently movement. of percentages And cloud companies, see we it becomes the big see see now. opportunities we it that I when share growing start We sort are right of sharing capable that some more But partners. through it XX% so of

into leaning are it. We

sort more will We become our aggressive to it a with augmentation and adjunct in our go-to-market. of more meaningful it are getting

That’s great. Analyst to Day, a again it And talk about circle security then, sorry, of the here? enter on for back bit up think, I but today, wanted customers soon remind of a wanted this about It to I -- come opportunity, your Can to sense, more up at and the this it came given makes your SmartScape timing lot market. especially application you you intent technology. and but didn’t the maybe from asking us are I launch Davis

Matt. Sure,

looking that have multicloud months at XX for as the We stick probably environments Investor did have months it. you the the on talk figure we market. with that dynamic that that security preannounce know platform for a I’d But we where today we security, modules to I there, have data last anything. sort to especially So XX spent phenomenal than environment, are ring out we of rather can’t about ought Day, fence

themselves. into to it applications have build the You

It’s announced. far get sure module will to not it’s capability, portfolio, our make abreast we go. as add we that but we as be that so, to ready into not keep everybody ready away, we that And

Got it. Thanks, guys.

Lowe, And question state please company line name. Ms. next the from your your Lowe and of comes Jennifer

Lowe Thank Great. Okay. from UBS. Jen is you. This

current the a digital bit and on maybe environment, John in at uncertain more ask an transformation transformational outset projects to up pick about to very particular, about is but conceptually so in and necessary in demand time. the in consensus Board, companies sometimes only little talked a the that But wanted our this we I fieldwork to you environment. that So commit are reluctant little big growing

in it’s a macro not maybe curious on on commentary terms clearer you but happening is get just are I outlook? So next being hearing more more versus roadmap, projects on the am what maybe year. business but starting roadmap nuance things for of that their today, the XXXX actually those today little in it’s when

we consider what transformation standpoint are digital Well, would our not from Jen. a Sure, massive project. I

and in figure the how efficiency out lower to digital they committed how already greater I can transformation how the I and project reduce speed Someone’s can create I it trying are can risk efficiency doing a of am driving itself and I and And kind makes that that speed while XX-month it. reducing a combination window. pay within gaining practical of it’s very costs this for choice up, risk

And So these rapid our that’s practical clear payback are years. return I about -- That customers a aren’t get their over success they my more a years and projects said years, experienced quite actually. think that it return number on of XX than over with to I secret four peers. will They that. and talk much three maybe is on investment

more one Maybe me. Okay. for

kind are away think your that of might get you I the seen announce if at a or to some something point? are it their or plans on and space curious roadmap from new focus observability on a that’s host low designed to model. around easier pricing they some that hearing adjust the players really for have data point from asking We am make based at bring plans other price that in pricing of be customers you are anything

What with and after surprises At we predictability customers are hear the hey, of in then a is sudden level, models of all idea No. getting They come be transparency. chief They hit the based enterprise month overages want? month. after they they they surprised. want don’t like want want consumption they don’t of, month where and would

off precision they auto-remediations for issues everything of in So cases, use within of they the around build are Dynatrace getting understanding them pretty and our they so are is the them. actually and data. you and those need not is actually they predictability model bottlenecks that built collecting system to modules can the the action with getting at with value the pricing enough getting modules, arising, where get much look a you are are They data, just take

is which and of different market a here by data to all change -- extremely our adjust of value way, to think the kind for proposition kind I sort any this point in I value the, the moves reason propositions well am it see working that the at our just time customers gathering our as don’t moves it’s really and and of enterprise So there time. I hey, we than pricing model,

Okay. Thank so much. you

And Auty the with JPMorgan. your next Sterling from of question comes line

the touched to advanced capabilities least you revenue to capabilities, kind is most I the guys. base kind inside curious thought. customers automation, from level? get spending am my penetration automation John, Hi uplift Thanks. of Yeah. what the what kind advanced at AIOps those at of just mind customer in brings upon the when which of your remarks, AIOp moment prepared or go you run and rate that of

Sterling. Built a platform the It’s the into question, capability. is good AIOps

platform that and enjoys it customer Dynatrace different range But looking Dynatrace beyond our some that sources for actually one environments think, I have the that it, been from the the is every The sort we much take It’s at we see AIOps in charge is extended I level. we automatically data stream, So probably, you AI of were how go come monetize Davis of at time. many agent. But broader doesn’t meaningful and as somewhere AIOps to they more will the think third-party ones way us of in ones, large are over amount data environment, pulled via work sort additional into pretty XX% obvious of a becoming of data, where extending and a much not a revenue more with ServiceNow a of connecting some ingestion broader are as footprint. work other wider like on for more footprint. but dozens do in we of beyond, it’s customers them XX% dozens more

some saw You it’s up and going recently was few specifically you other a were that see that things put where the in a quite to sort we the on quadrant and AIOps number focused forward are together choice observability come are ranked ISG where moves that here we going make the you to high market one of will be see growing aggressive in of segment. more to us going anticipate

question line And Montreal. comes Keith the your with of of Bank next from Bachman

Hi. try to ask I two. Thank wanted you. to

about competitive years, the Relic providing I some First, Datadog with New want medium in talk in particular business and to disruption. ask disrupted two landscape. last category small about has the the over or been And observability probably

around of one the for staff think concern your larger I disruption. is overhangs

the SMB or won’t follow years? in that Why rock a my category you next question investors of say is have couple your over can observability leader if though think been the about enterprise? up. faced has solid And then disrupted spaces the increased And What competition. within so get I I to

the being just space. are disrupted. we already It’s that that disrupter It’s in

to been that are the have years. enterprise modern four that for segment bringing We observability the ones last

-- predictability was the ability We data immediately, predictive are understanding the ones about thought the analytics, more platform. was with to the the take data, of the just that it precisely. We that action full-stack it than the thoroughly quickly, the it

you space, the We is fewer simpler, kind are environment, get of what to application, enterprise. works a SMB when which gets less space. in that the disrupter in complicated And the of sort very change

different feeling So that’s and to are there up my to enterprise, there. a folks it’s from pretty SMB and already that we try world as move

Yeah.

Okay.

Okay.

on question ARR second growth. I had is The

previous So you to the previous say, from I are guide and guiding guidance. for XX% a your XX%, which constant of currency from growth increased, year and up your is in should

you but north level this what year, as a just as the is guidance why suggesting to XX%, reach at not unusual But see de-sell see to say end of is, of a speak. it’s holds that. de-sell it are a time, term longer Your you you over normally you so

longer So those if hold you XX% rather or think off than could just speak levels why tailing you some term? below to at address see perhaps you

Sure.

couple a So there. things

to some of headwinds ARR the So the will on will be run-off facing the be we quarters as thing are to is, Investor we four as headwind say to our growth. and growth I would discussed six facing a currently those quarters licenses due next and first we perpetual again at Day, we over discussed ARR

Yeah.

of side ARR we growth and as ‘XX, fiscal those the So, that negative will headwinds of to on out disappear. come sort

optimistic about However, -- very the us about if sustainable think that’s the that we today and investments future are you makes making growth. that ARR was what

and year capacity sales by sales Our goal grow is this to XX%.

a Things on track very do to from are going standpoint sales well We are there. that.

a in organization seeing as nice We rep are also shift our sales well.

mature We we have months XX months, more ago. than a reps did XX lot

is, So base from our well. working third before no the converting I’d Dynatrace on that should is, we we provide the talked a are say about longer to platform. classic tailwind And as thing

capacity. productivity. free about help the probably of should that capacity. time talked That around up additional frees over gives that XX% So We

longer So sales be to you Those capacity conversion well should programs. on working growing three things about all sales organization, sustainable the growth a and as combined of think those time. ARR maturing over no tailwind as

thanks. Many Perfect.

next the Citi. your from comes with And question of Walter Pritchard line

Thanks. me? hear Hi. Can you

Hi, Walter.

Hey.

sales of about the are big customers your out, are trial motion How activity? most on free much part Can pipeline you half. a of through the coming traditional the where building just in it? you second the or for in talk just XXX big trials the not those coming starting -- So added not trial through in

the involves whether we way in trial already or which investigated The even or suggests comes free investigate customer and the accelerates we the own and that from trial, way in. in that they have the prospect touch they whether that come homework investigation free Almost them. matter stimulate everything way their done a cycle their and customer before sales no comes

In their to stage. fact, it’s colleagues in way facts, you on expansion, because accelerates that ought to look it pass they other also to accelerates easy for something customers the applications here’s at investigation departments early an and or other

that’s involved of we So in engagement. almost why that enterprise is every trial call it free sort program, a because frictionless of kind

year? would sales you all help And talked and you for you you in see your capacity adding customers. add work to progress Do still converted that still look think around already in into face customers. be you do able And have you and next like is to as of do quarter somewhat new to converted you quarters us think or Can XXX kind there forth. you you think the is XXX from then XXX talked improvements and think about it. in think ago about, two the understand, some you How macro headwind half. much past second I about last the headwinds if the Got so we that

Yeah.

things. of a So, couple

harder customers it’s the face-to-face. people used and to it. that at involved getting is Zoom there a same decisions, than At enterprise to better time, are in it’s and relationships it, where is it question over build complex we So customers more no with usually making sale getting trying are multiple

then being advance that. they advantage figure a know us. remotely, to XXX% free number they remotely, do can’t they still out The to able trial big have having for So of a work our and do that make to competitors way proof-of-concepts it’s so a have and to

are And sales confidence range. a we Customers year. half have in learned move second the see So cycle us the back to have and lot. normal a learned cycles of to a gives starting lot we the that’s what

things sort new and to future in I the into go again, will muscle our driving productivity. we back we normalize opportunity, our continue believe increase As of

steady sales as think segment. We if to percent about keep increases that see, of will increase new see go of a it in sort then year-over-year rep, you account, to ARR per And want that continue we logo we should and way. new

good Got hear, it. Thanks. That’s to John.

Canaccord. And line our the comes T.J. from [ph] you. Thank with Hynes of last question

one results. the Hey. guys. John just Thanks me. Congrats from on

that sense from given try the know whether infrastructure model, competitive But maybe APM why the easier is APM, So that’s question. get could right? I answer one think to you I you will the of from make just landscape, they infrastructure from and it’s the how investors to expand And your about to you of case? talk questions is or

we about doesn’t to so, CEO that It’s talk layer believe application business is by of value. the They the A business all, Well, of want outcomes where layer the continue first strategic to IT to that are driven meets business. applications. about infrastructure. want talk

So that’s sort of the first thing.

the the There’s hundreds people difficult very frameworks, have in to you all and figured the is, observe automatic virtualized of challenge. thing cetera. all at very have with hundreds out it’s a And second everything et compatibility actually because cloud how languages, application scale. to at do layers, The the software. environment, idiosyncrasies That’s all means once that few observability all

of it Quadrant. doing Gartner in sort be APM you of So and the everybody upper quadrant Magic people been Otherwise the always see barrier. difficult of right that’s dozens that would

is, it’s months said, infrastructure to uniquenesses, to has then level we XX view that still its to have and said, So get that us, our do own segment. peculiarities mature I and work a taken our as and infrastructure more module in

we segment So cases thereof. fully you when application to addressing one is the easy. goes and enterprise a logical view use that glove But capable observability and Infrastructure the with extensions of are hand extension in the no layer, that and we segment as get

Yeah. Yeah.

Okay. That’s helpful color. Thanks guys.

Thanks, T.J.

of of time. was sort are last That out we think I the question.

and front just product. with us So fantastic let have say a massive believe We you. market thank me of we well-differentiated a a opportunity in

can see. great balanced a business you that have We

to and Thank said, forward to which up again. January, results. has look us served we well again in Enjoy your February late in continuous QX and Kevin as going are to invest, commercial We early our you cover continue to morning. innovation, catching expansion

call. thank Ladies this you. participation. And for conference your you today’s and Thank concludes gentlemen,

You may now disconnect.