Dynatrace (DT) 3 Feb 212021 Q3 Earnings call transcript

Greetings and welcome to the Dynatrace Fiscal Third Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Noelle Faris, Vice President of Investor Relations. Please go ahead.

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 views 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 reports obligation

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

which Thanks, existing call. provide that to our in Good ultimately free key flow un-levered driving year-over-year main $XXX flow raising am the million, will our cash model. the XXXX was additions These details up a for financial success on new There million fiscal an was year-to-date continued XX% our shortly. performance. three to morning, inherently by the earnings our strong was strong ARR of $XXX free of the are revenue. cash and expansion all resulting of and metrics. un-levered Based Kevin driven joining more QX strength million in on logo factors year-over-year. up operating on thank strong are everyone XX% QX fiscal XXXX, were in across business or revenue million, Board for our Noelle. to Subscription results, the $XX XX% results combination bringing efficient Dynatrace $XXX you report quarter platform, customers another we guidance market us our had pleased across I and of we of solid

long-term strong is first trends. market The

are go-to-market and commercial Second, we paying the making off. investments are in expansion

our competition. us customers we sustained position solving wider why I continuous each growth to Third, commitment ahead they a well the of and factors innovation of of you range walk for for keeping future. is well will problems us and our these through share believe into

provider their consumers. to large and next emissions reduce such the services as energy be delivering during undergoing micro-service U.S. Tanzu to home years, the to favor. stop all cloud platform to digitally every happening a energy globe at industry multi-clouds, transformations around are architectures. changing many continuously dynamic of pace. saw an We container this in COX and And continue XX the while by trends examples over our smart in market transforming these millions last quarter, Companies in long-term leverage hybrid and the in are First, coal of use digital which transformations accelerated XX%

vaccine up scale greater requirements. are resources transformation, platforms by their OpenShift and accepting cloud ability stretches by rapidly more complexity speed enable and complexity these sought pharmacy information streams revenue state using governments services. processing and Our tracking Automation team’s application today CTOs Amazon an and and in are services transforming and and rapidly and to retailer speed, Dynatrace large to as and Kubernetes rollout All curbside new to scheduling drive DevOps this brick-and-mortar new to beyond engagement like efficiency native cloud becoming keep and contained pace. to returns and powered omni-channel CIOs platform chains online modern intelligence agility free

get in trends for brings been solution investments. recently differentiated seconds. IT me across customers do cases. and to bank providing with innovation has hours me to “a market a deployed a and their advantage a over digital recently Dynatrace banking from strategic cloud a integrated a applications them been to our those performance. that government variety wide immediately. We to weekend, customer to incident digital gain and market observability and cutting with deployed business in GenX value to issues investments our driving times early Dynatrace reduced factor Having continue us give of well response One knockout” and time their growing environment capabilities our a reported strong automation as move has services, in large to customer app” step intelligence that used that new has value transformation struggling and expansion favor. financial automation rapidly We And of in been recurring in had ServiceNow “killer success transformers And solution several commercial heard go-to-market advantage us invested adding more allow across second behind is our told well a up and who healthcare the with dramatically differentiated less a from

We advantage are key several take areas doubling opportunity. down of the in momentum market and to

this new organization added above results pre-pandemic back this growing paying are XXX XX% QX about that our logos XX% We investments quarter and past showed have sales year at these levels. We off. talked to

logo replacing with APM Denmark set of tool we Jones including were the enabled Edward industries, Department are to do-it-yourself whether approaches, of scenarios. by Company, and New and the transitioning or Texas fatigue a agencies, intelligence in winning of The all new Hyundai, logos our they resonating value and automation challenged wins customers, of EchoStar & diverse advantages across platform observability advanced platforms, Health, Radio. solutions, are a are government geographies with

Works modules, Upselling more leading expansion equally module Pension workloads Bank, applications quarter. rate of consecutive market such were our including as and majority Department XX% now using module to XM, XXX% fuel At infrastructure above the deals addition, Markets, our customers now the support continues and continues three the full-stack the expansions. XX% In UK. load firewalls, maintained to are nearly using Publix XX% our for their with and enterprises to the support as year a cloud operations, APM gain time, workloads for we and up such and plus of Expansion non net diverse, a in of XXth Santander from ago cross-selling Super directories, that our same strength more. balancers

customers of and We automations leveraging use a in for steady digitally they are and seeing our new value transform. platform cases expanded the rise as

growth to team to market, into the execution our solid sales momentum we accelerate in quota-carrying reps XX% rate, range. primary of the and the our XX% the Given now are planning

our share now today, We have growth. the foot reach drive expansion kept partners. there commercial know our capture our to throughout leverage majority greater is pandemic faster on cloud while And of grow and by direct up strong a force business continued through an to and opportunity sales is and we the for are gas our responsible scaling expanding

past we our three major have couple on tech expanding and quarters, AWS, of Over been hyper alliances Google. Microsoft focused the scalars, with the

pleased premier Microsoft Google scale with longstanding this had and out. I with we your know, and our am we relationships. the a Cloud advance as AWS relationship have to and to progress made partner platform As as a continue close And you

for First, include unified a to marketing teams. incentives joint with go-to-market efforts go-to-market collaboration our and with with Google Cloud platform, partnership sales we motion, have both strategic expanded

have and processes through Dynatrace contracts In allowing marketplace pre-committed by addition, we flow streamlined purchases applied against the and GCP procurement to GCP be spend.

expanded with console longstanding partnership we motion Second, well. relationship Azure have our Azure’s Similar and are expanded integration. as co-selling with our actively Google, to enhancing through our our we frictionless experience go-to-market Microsoft AWS relationship collective have our with in and line buying arrangements enhanced and Microsoft we with

marketplaces preferred and many offers the buying strengthened committed believe cloud with in And we these pleased And the strategic very it deploy and use are to the easily partnerships. observability through do Dynatrace we in flexibility can the offerings platform all are three Private where marketplaces. our spend mechanism this their whose are allows to customers cloud We only customers choose efficiently. for enterprises. today, private

me over investments, registered that’s annual conference, physical This unique benefits XXx comment the but go-to-market week. we leave on than more a a I which Perform, virtual add the up XX,XXX Before Certainly, event year. next up, platform. is event year, market attendees, let expecting last are is coming user our our to the is so driving the attendance and the in of for shift awareness had of Dynatrace we

within We broad reaching enterprise are such are of target audience, to customers our prospective XX,XXX global accounts. many excited a whom global be

Now, success that is and and to continuous third our strong factor financial our performance innovation. the driving

we including quarter, advance Our the product advantage. stream these turns our and provides complete of patented distributed increase for technology. value open telemetry Last our to extended talented team generation PurePath and fully listens insights continuous and trace. tracing fourth cloud and a into of to X intently most our customers differentiation PurePath now environments, our with innovation deepest, highly those automatic released open distributed tracing the modern

we exploding troubleshooting, As In understanding modern entry and of distributed precise remediation our scale the advanced application become and dynamic, required December, into complexity increase the for are in cases. applications for announced market. actionability levels cloud proactive tracing use more optimization security cloud immediate and

applications innovation as orchestrated There observability, a of friction new innovation this advance processes clouds sprawl power our cloud growing is traditional our are platform, challenge this and modern security where the disruptive market, with the and enter for to and cloud leveraging of forces did Kubernetes multi-clouds. across targeting Leveraging change we applications. intelligence and DevOps we solves native of speed approaches. going the to between is dynamic DevSecOps accelerate native cloud modern offering As the puck cloud

when this said time new validate will customers for offering. and to we take As announced, test it

at corner, us. and billion. market by slow security bringing has are conference Both advances the potential you the our And ARR total Perform announcements to billion our first, will opportunity $XX over with innovation our to annual to exciting $XX expect around believe impact PurePath addressable come. for cloud we offering expand more X can the TAM So, new but applications over be this time,

the would a independent Before touch I summarize, as company. public take to on like Dynatrace I of an to maturing minute

As brings we has work to to of we extensive since very from been board. to and enhance appointed Ward continued and board Dynatrace Jill announce look Chair Jill a knowledge experience a growth, leadership I companies. remarkable her and our voice phase the am forward that number pleased at XXXX of next has of on board strong of our board been leadership. our

the press more For to issued please earlier today. refer release details, we

summarize a me lot let morning. Now, as this I’ve covered

us very I global hard achieve of team the As with almost strong. the performance helping us outset, quarter and I their all XXXX we up thank employees fiscal it X,XXX to our at our and sets success. quite pleased finish are to said this contributions want work in for

prove We strong. go-to-market continue that returns execution momentum the can on well-positioned to continue Likewise, see investments our that solutions in driving differentiate market Sales is in expand and our our innovation engine market and and consistently pipeline growth. and growth we we are are which our expansion, commercial opportunity. to

Our ingredients a we strong Add based to investing. deeper the interest is up let sustained to growth. in turn with for over are the review have of Kevin for digital transformations our of and partner a awareness cloud me reputation product With we financials. that, we and expertise Kevin? world the believe and call this and for and Dynatrace engine class revving modern growing for

us Thank John. earnings for you thank joining QX and Good everyone on you, call. morning, our

was driven in a great that’s business. ARR our of by or up well key health of delivered the quarter We across XX% is and representing we strength currency. mentioned, strong in year-over-year believe the board ARR ARR $XXX expectations. was the above the performance, the indicator performance overall John internal million, XX% quarter which million $XXX third constant As growth

we is pleased and pace roll-off ago, COVID-related when into agreements license, when perpetual were With would rate we related ratably of a and impressive the sold account and an license it ARR perpetual they perpetual reminder, license headwinds We our the growth to are from the you basis respect extremely a the years. revenue we About X headwind X Dynatrace over removed take recognize book impacts. with years license exception more price and our as license and on sold perpetual the only. even to

points in agreements, perpetual of As quarter, impacted a more ARR quarter. which than of had the down percentage begun result, little the see million negatively wind $X representing roughly by license in we these rate third a to ARR the growth the to headwind X.X

excluding So, a and grew license perp basis. our as ARR the an XX% headwind, reported adjusted XX% currency on constant on basis

that industry seen expansion enterprise the the with is ARR platform, for from rate be facing the are COVID whole. travel, to our below haven’t hospitality consider automotive. their a such of as while the customers and we XX% expansion these average customers roughly we And crisis, headwinds Additionally, an rates are churn to net due as net business

We deals ARR XXX in rates for are starting and the headwind net tick retail, half expansion and to we quarter see back last this This with that headwind resulting oil point in that gas promising verticals. the is an to a to up expansion roughly in quarter. cohort XXX third basis experienced was time automotive

we blocks As rate. have for the and are expansion new discussed, building growth ARR net logos

mentioned, percentage logos higher John adding to continue added which is QX in an the QX, XXX new we new new acceleration last XXX X see in As customers, in logos year. we of points than

to our in putting to logos year. the by shared accelerate rate end previously us of new track overachieve XXX roughly on growth expect the We further fiscal that of plans QX,

reminder, exited customers. had logos QX in We with quarter the XXX year. we of a X,XXX third new last As Dynatrace

Our for XX% XXX% $XXX,XXX. XXth year-over-year was quarter to consecutive increased rate customer our per net expansion approximately Dynatrace the above ARR and

well. continues average or to increase as Our more customer per with ARR three modules

of As customers from up of ARR XX% quarter, John in third more mentioned, XX% with an last the cohort represented year, than our $XXX,XXX. this average

As customers of enterprise ARR customer average more approach, the we the continue adopt north to and be per $X could platform million. believe more

or an revenue subscription $XXX high came in in million revenue a Moving in or and well quarter XX% constant on on total revenue $XX to million, strength increase for the by being of growth constant year-over-year currency. in of basis third total XX% The XX% solid our guidance FX respect revenue, in guidance of is total growth including above driven points XX% the representing end quarter above up revenue was tailwinds, With areas, currency. Overall, some third with and new importantly, drove that last and was our margin in XX%, outperformance. retention strong year. to linearity to QX percentage and bookings, we last quarter rates in but more the all non-GAAP strength gross X ARR line due from for margins, over revenue saw

points third quarter to income gross the a guidance do of operating million associated upside. margin the XX%, operating non-GAAP high-end for This revenue $X of led was X million, from last quarter above non-GAAP margin year. Our the the to our third of $XX and percentage up

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

support both in However, Last accelerate we line. in balanced a one bottom believe top have place and that were to of strong the a sequential line with X% million in and to in sales QX mentioned shared business, approach targeted quarter, delivers the operating business. we to our R&D that and the these durable Many increasing performance I of growth XX% the $XX in operating strategy and on investments non-GAAP of resulting long-term in marketing sequentially. initiatives increasing areas expense, increase

is From this $X.XX was fourth non-GAAP Looking standpoint, will and a in quarter that moment. cover in another a investments step income net expect profit in or up forward, reflected $XX share. guidance million the I in we per the

million cash, the increase the to XX, balance of as of Turning period we $XXX sheet million last same year. December to of compared an $XXX had

Our ability generate cash business in while strong. to investing remains the

due sequentially long-term $XX last down the $XXX the the over of million in repayment that year and of $XX early principal quarter to million end Our million made at third we that’s debt QX, quarter. was a

approximately quarter, trailing have was we the end As our adjusted totaled EBITDA. the below balance repayment the further and January, $XX outstanding of fiscal committed leverage ‘XX, past, reducing of of reducing January ratio. We of debt in in improving ratio shared debt well month XX-month repayments our million. Through million to million principal our At leverage our $XXX we made Xx additional are our have to $XXX during the an the third year. current

top flow unlevered was cash previous level was related free million. favorable of This COVID Our savings, estimates. tax XX% trailing healthy a of was basis, revenue. combination original XX% On our refund line, margin cash trailing or that QX XX-month the and at than for is the unlevered free XX% flow our cost of due annual health our above guidance very to million XX-month $XX more $XXX the of to a a

expected million guidance, our is between $XXX to to and year-over-year XX% million, be XX% ARR or constant to XX% Turning currency. $XXX up in

Our ARR to approximately roll-off assumes points perpetual X guidance $XX while license million in percentage headwind roughly growth. of

on roughly growth be a is year-over-year currency Excluding rate headwinds, the ARR our constant XX% basis. perpetual to license adjusted expected

This million, $XXX million subscription paid $X cash that, expected full million be to in revenue resulting revenue currency. is XX% profit between XX% to $XX expected to For of fourth we assumes XX% million in of is year-over-year, and and Subscription approximately constant fourth million currency. to to expected million quarter, guidance in guidance. constant or share. between X% in year-over-year $XXX currency. constant or Total XX% standpoint, effective up or be be $XXX XX% to constant $XX the million, in expected XX% million, EPS a million, non-GAAP XX% year to XX% up with line currency. per to $X.XX million $XXX and between quarter, up Underlying XX% revenue rate be revenue XX% XX% XX% XX% From previous annual between revenue in is year in XX% XX% total expect to tax is year-over-year, EPS and an cash $XXX $XXX to up income to $X.XX be to to operating of taxes million, the to the for $XXX for year-over-year of non-GAAP the $XXX fiscal

income between of and non-GAAP to the $XXX and EPS $X.XX share. we non-GAAP expect be to $XXX operating million $X.XX P&L, per million down Moving year full

as compared million year to last well approximately ‘XX the approximately fiscal first free assumes That’s leverage of previous as refund the points margin guidance COVID-related a savings. cost performance year of unlevered due X of savings This X flow margin percentage to a line to cost operating $XX favorable full our combined high-end business with guidance due the business raising and top are strength our of our COVID-related original of XX% points tax above guidance. revenue. cash to strong roughly guidance We

are As and since then long-term. we I mentioned at Investor investing for to our the Day committed

and R&D sales of expect marketing to and percent a We increase spend as revenue. our

As a employee These top We margins. the cash will more Operator? power with coupled the net be expect expansion summary, Dynatrace spend, approach healthy operating of unique questions. building growth, and rate. continue to line would over take we will and drive performance to pleased return strong with generate with In level pre-pandemic result believe of strong will engine we sustained to levels as strategic And the profitability growth to continue very ability these a blocks a normal to to investments new for customers margins next happy return with I a platform and are provide our John ARR to your with third our and quarter move that, year. platform we our innovation the confidence us our proven forward.

today RBC from [Operator Thank is Instructions] Capital Our Matt Hedberg first you. Markets. from question coming

live. line now Your is

you here. had a But sense importance could earlier? in I lessons talk all how get taking of were observability a third you of guys really you marketplaces? bit talk curious for only And AWS? ask really about for Obviously, partnership am am about ARR? questions the wanted little to quarter from public just impact cloud press then the How expanded I release learned Thanks partnership. a the sort that can offering John, Obviously, three Great. of being ago. partner GCP sort they I my strong of platform might private with a about progress? trying it a you sort to bigger and did

Matt. comments. Sure, Appreciate your

workloads. go-to-market we relationships the as various are aggressive us their last GCP as these draw pre-commits and another partnership us sure are area the we simple been another to to side GCP automatic we have GCP this customers with opportunity with is and the be year, or in growing cloud for spend our So, enterprise great GCP the enhance our products to want seen to making one moving opportunity adding past, leverage provided over on of cloud and sort yet of we number them toward But opportunity to and see they a that from hyperscalars the each have for are the cloud to portfolio more they in focused deploy of technical in as start in more that’s environments. the various either an the for

to we put continuing saw ahead more seen platform this and Cloud market, the we So have of more together opportunity in that way. and competition the as to a get are relationship as aggressive in meaningful Google and go-to-market folks an jump

well And as flexibility of smoothly so to allow had it relationship that, and and so. with great we spends a does leveraging course run as easily, GCP the to and now pre-commit with do efficiently deploy AWS Microsoft, with as anywhere, our have customers well then addition do the really anywhere

So the for we about excited are sure. combination

super next of perpetual helpful. and year sort Kevin, year. of progress I of into obviously But am in next of do full for I QX expectation $X sort the year headwind this curious really loan run-off million as that on about then And we the and fiscal $XX you you out ‘XX? million appreciate haven’t guided calling you continue will through cadence talk can That’s QX.

Sure.

of fiscal or was of up top of QX, little will trend of last about for X.X on for a bit more the then think ‘XX move in points QX, So our more couple we ARR where of that growth. headwind And the guided for meaning headwind QX, I we than continue see course QX. to guidance little X.X about rate. it growth was a quarters, bit X.X the And

end then So, at of ‘XX. over points and there fiscal I bit think X a is the cliff a little big pretty

perpetual be a remaining as So, license ‘XX. large minimis will is not it from we de going there percent and of to fiscal ARR be –

fiscal will as ‘XX. we the headwind out the through of course go So, diminish

Thanks Super helpful. lot a guys.

you. Thank

Jennifer Your next from question is today coming from UBS. Lowe

now is line Your live.

Maybe like if to guidance and look on at continue the are if puts and of that the there model guidance little I in I Thank runoff, the just Great. there from a in QX around what for currency ARR very but relative and – headwinds, growth a implies those deceleration on lot but you. the seems takes back last saw if it adjusted out, question, QX. I we basis constant currency to

that put the assume the in I those sort of more last if should impacted impact of that you helpful? context, of we year of would or context So, about of optimistic any COVID in are reflects be more versus just sort industries, easier comparisons outside March in the getting growth there business kicking

is Sure. I can. add are start the XX%. ended the Jennifer you guidance actually where I given then we think factors in if in think implies headwind, excluding license consistent you there And look us if and we have at I wants fairly of lot John constant the he numbers, is as currency will QX business. right, forward to the perpetual growth, with And XX% a that optimism move which different

If the XX%, organization have XX%. talking been we during that at about you look sales

that be We setting up. are going to

rate those in conversion wind top of We we those marketing year, sales trends are and And the expansion. have productivity are we think that resulted in in and organization course lead gen in on through logo new move maturity in investments there so on comments as continue up when forward. activity – and factors new as we made expansion with And well. in all you step-ups really the healthy that seeing some we innovation, last have making as different nice focus year, lay down can that about go-to-market of we logos the healthy are seeing people the a we quarter the as numbers combined the net and stepped talked

billion evidence scale we company and said, that’s see that bring market seeing only Kevin. have the high starting these environments think that enterprise plus moving for is that And add we I to to level the level the at is automation requirements do with that companies and are highly thing and $X the And the the more continue well toward more that is to might us. I Yes, and difference we becoming resonate the intelligence advanced complex really payoff. to large market

would the well factor say, another feeling about that yes, business optimistic we that’s add, sets but I for strong so up QX forward. would are I going and us And –

Great. using just offering, environments of how how typically commented XX% APM? cover me, I add on that Are to just were infrastructure you the more mean, customers And they deployments or those infrastructure some sort can where get infrastructure, with door you maybe do I one XXX% broad the on seeing work around that point? are could context more in on you at using is And for they when module. yet theory, sort are – of of curious only the am in Could that go enterprise you wall-to-wall customers or it still go of related broad the you contained this side? more

Yes. Sure.

sort APM module of is to extensions remarks. are which the of capabilities, infrastructure but workloads those that don’t the still require the majority the that kind of pointed So application clarify, prepared first, includes all customers, out there in as just I

not customers We seeing go a are high percentage yet. wall-to-wall. It’s

they we across are and digital automation of of and single customers infrastructure of truth better expansion majority having do, the a and wider teams. intelligence the value the much are that footprint but sort can source plenty a gives more understanding their leverage of So, at getting vast

is they rolling to So net it again, expansion above out way that stay XXX%. which not in only are capability, as we more go, are but customers capability using also a exploring in and continuing our that broader rate evidenced

Great. Thanks, guys.

Thanks, Jen.

Thank you.

from today question Sterling coming is next from Our JPMorgan. Auty

line Your live. now is

guys. Thanks, Yes.

perhaps, the view, investors’ think side, kind from and it’s announced of and within I we the way a question else to and out have the seen you on there expect delineate Just Is hard market? of see of from kind some the from have providers to established one differentiate have from that where you cloud partnerships, outsider’s just what the Datadog partnerships vis-à-vis revenue my view yourselves. in announcements coming that you back these seen them to of impact public the differentiate

That’s – these it can Switzerland. little going course. of be parse hyperscalars difficult play are a of little bit bit of Each a to to

thing advantages has But to all anyone say. relationships that this I appears is important away deep that with relatively So, take think three. would Dynatrace is have I fleeting, the the to

a three. with are We all premium partner

expect anybody the at enable customers with we and bigger and customers the are value that to early is only access to received them. from spend. as that the they advanced that integrations in time else services better be that same key front not hyperscalars I have various really which these with takeaway at the aggregate efficiency greater the the of bigger there have that of piece relationships marketplaces from our most them the this is things technology and offerings, becoming is are and us offer are Dynatrace that’s think offer to confidence that these than we said And they hyperscalars these marketplace. a earlier enterprise but go-to-market is relationships to the We I and as tighter and also benefit These tighter

Thank you.

Thank you.

question from Bhavan today Blair. from William is next Your Suri coming

live. now is line Your

Thanks guys. question. my Hey, for taking

there. Let had my guys Chicago. and in our the of me a out disruption solid results echo too much the for already isn’t share you snow We congrats on hope

lot me partnerships, not have but a partnerships, let question you got follow-up on other now. guess but Sterling’s just partnerships service on webscale of So, the I around

of leverage think sales system drive into thought investments? it to got are I should still is have we accounts. And existing partnerships, growth you us going accounts to double do the out do sales leveraging across At early everything to like partnerships maybe some down of the you How help think integrator You don’t that we strategy vis-à-vis the add just new about on on doubling board? new through see the have those or John guess to need that? a that? point, headcount play things down or guys about leverage we using partnerships where the How that.

the return in at of the up the productivity little to same have we combination giving different productivity by just partnerships organization sales the different partnership, that. level, sort of that’s is, us required it having has and not sales at time kind seeing that observability, of in there seeing us and what’s improvements when includes the and a time, to Dynatrace XX% pickup are its in step time, we grabbing quite been bit the up is the definitely than platform, acceleration one. a in in the understandability, like it’s believe characteristics, predictability At you all these given the tap especially that automation question. same AI to do actionability platform At and the maybe Great have to right enterprise and we to mid-market. the are a the We the from to we is XX% provide continue that’s the sales front that it the gas But XX%, on ought we which in headed to level, to full XX%, acceleration where enterprise now. confidence it’s where ramp

that ARR that about as think I So, we growth combination help sets the level talked is and continued our the enterprise are about it us apart at will have combination. accelerate, and momentum in business. the excited and Kevin We

just question I and a regions that got coming seeing sales for and – think adding for tunnel or particular Helpful. seeing on But as adding you second, coming it, increased sort gas think any back post at headcount, got about you are get have are we providers, hospitality retail verticals understanding specific sorry Got bit a maybe talked COVID. in And a as little etcetera? know it’s and areas monitoring the the where demand you on? I it. you back bit of for are light it, you of of don’t about little oil there the the then greater we and staying adoption Are observability back and sort the – see that whether end like coming crypto sales

know. that any to globe it’s we for Everybody It that the a have across flawlessly Everybody area, digital not transformation you make those a happen Bhavan. they to really into if to as complex phenomenal and sure can continues around software extremely just really It’s environments board, manage more they software well the just platform large accelerate. is specific is company. turning needs

that front. on anything isn’t really it So,

let we business as more little of think – about an me the areas a especially in has that and And North talked we certain the couple government certain the I which as well, verticalize this accelerate we more federal a invest add second size opportunity we to in maybe business of spend in state it, is to heavily well thoughts seeing are to as which the those America, starting year. are that is time On uptick, getting and bit in and are thing also where geographies, earlier certain we of in areas, verticals.

Got guys. it for it. questions. Super it. helpful. taking Appreciate Got Thanks, the

Thank you.

question is Barclays. from Your coming next [indiscernible] from

live. Your line now is

and the for quarter really Hey, my guys. will taking on I solid well. Thanks add my as question congrats

of have it a be just million can wondering this as question, your that of there? expect contributor application us going sort you ARR at about you So, wondering to security like first the enough So Is relative you a about on going module, looking $X.XX last [indiscernible] doubling, bigger help per Obviously, your trajectory, that proportion coverage $X now right long-term, ARR think talked a going just you – the – million to from more the the you and it’s that as like of you I will what my obviously drivers you go application maybe mentioned, to John, that’s penetration but do so maybe have if monitoring for right? the so you customer the was will be per next for, give monitoring that year, you that and cloud much color of the us more understand do mature in are interested you they over growth? that, to are at double customer are the be help day bigger driver will that right? can think a be if years end few driver to drive

Sure, I’d love to.

and X-plus average is per cohort of is Average it’s know the XXX,XXX. higher it’s X-plus to the or first the that XXX,XXX module than module, So over well around customer ARR all, substantially is average. important ASP

sure first cross-sell. you that the make thing that’s So,

our is the on fully thing second of side, saturated that our very, The very are none even not largest customers ones. application

to the grow applications add or either them. continue they to So to continue

of expansion that don’t the but that security based add think and is based consumption is to model questions how that app where massive. then front it means All new how application you we the that, is on have in that mean, being alone I are a anybody valuable cloud space, super you entering it’s And markets, and by I early disrupted much cloud. consumption

at into good We out market. to and are that listening getting right, are you go as customers pretty a in we the

times app multiple to it it proven see are security space. have again you I We going the think And now. in cloud

those for solid gives together capabilities, applications, cross-sell lot growth to then long-term. running put continued new the confidence you three up-sell the to platform new adding So with sustainable drive us great and room and to with of existing opportunity modules modules opportunity of a and continue

the is so how moves the can to and talk to sort the I for what ARR of that to sales to the is My wondering to well the sales enough around color. your still. sales if gave grow. great mid to like light to companies Kevin, are they as efficiency for about raise us you higher Thanks talk on am qualitatively a of as you But sort expectations guys of that sort the back Great. much would not most sales of in like like capacity if that to leverage given see model capacity go that if XX%, I confident is long-term question feeling capacity going Kevin, you growth see follow-up of

of capacity gone ARR do it That’s XX%, they use mid higher, for sales some has to XX% the our expectations baking you. in the guys. like my side around long-term? in if growth Thank So,

first think and that of obviously, inputs building if the time, the blocks No, you Yes. business the about the sort the of productivity. to business over is

also believe our out as some growth no those under about. over working sales of higher think capacity the that of the they mature get it’s talked fact productivity time XX% are that sales not we on can longer we John organization the I But and to are XX% they do as conversions. just

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that will that to a about do new target also talked year-over-year, can business growth that back you long-term the talked rate first XX% as the we we franchise. QX skin and above number the The of is we ARR have to XXX% we new add grew about. rate, growth move net that said that logos we that couple accelerate and XX% we a XX% forward. We logo XX% math the is with expansion numbers that QX,

across up. So this board of in optimistic moved very stepped direction of we quarter, are lot lot everything the about the a A business. sort right things the

our numbers that to forward talk look we off QX fourth that quarter. the you about forward of point to and move long-term going in we the updating are the am We not to trajectory coming after come – can as are that of optimistic our I business not we numbers continue at this them.

Thanks, guys.

you. Thank

Davidson. is Nowinski Andrew from question next from Your coming D.A.

live. Your line now is

to the different security see what an want question for landscape you give that go it? that the I and solution cloud Great. taking just you solution, quarter. could nice And be is Thank cross-sell the around that maybe application a when the market? might buying in if enterprise us any to as competitive about that also, you buyer ask you color into

Great, great questions.

are The more out today. even is were now the scan. the code things lists sure we this a to then of we talk teams are cloud is teams found doing as we just all that first go do the to with triple sort by sprawls to and of secure because runs but brought So, pre-production, additional everything more folks very like course, not And throttled these rightly application common that results are, across the are try few to and being small to underway. we security what our that before to They to product clouds. number of are doing what actual continuous, the false vulnerabilities, when check locked deployed periodic, customers due after code diligence so but our scan playing proof-of-concepts of is talked make market need in positives. probably and and development There is everything and of down pain have to folks way production. that teams these Only periodic, of the before a the ones long the same security are them. and are we And

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excited and The validate go days optimistic will and the we XX going and or positive. it’s feedback more We about out. anything it’s been a first we XX we that’s are but – be going future. like gauntlet, here super as to it, especially days about think course, playing opportunity. in through take verify, little to bit of talking of time that’s the to we So, it’s security a if But the what’s go have grade, great has enterprise

believe caught maybe That’s round. as SNC that DevOps on last line, along to you very just integration I an SNCs, just with you. valuation had great. well, same Thank a a high And their follow-up then the which

partnership market? DevOps can helps curious where you am to your how I views that that that in you and think as So go on

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Yes.

remediate vulnerability Yes. very as have issue. Well, information also to database. to developers an for happen have good They to phenomenal a how exactly they

developers, their like of a as what the which combined of So, for sort perfect as acceleration. DevSecOps with leverage is database, vulnerability our continuous detection, combination for well information combination intelligent their we is

So, to a have great partner they with. work been

they excited are We and fantastic leverage. data value integrated to view together. of sort scenes give our us the behind runtime sort give and to them systems We of some have

Thank you.

Thank you.

from Your Canaccord. from David next coming Hynes is question today

now live. Your line is

would how a bit. XXX looking Hey, forward, you, a uplift frame be sure thanks average of bit I guys the of the Maybe on price if a the be But security there how results. about market is adoption happening is and grand question the last of with an helpful uplift spend, mean, any like of now. customer there the more think follow-up could it much the you reference spending to I right? and security like want front I if early to as am congrats it you like Look, in little on have I the XX% opportunity? realized is we XX% on discovery think

to bring we market that broad the value be way APM this in a kind security significant gets and So, very our and capabilities a mean, dollar plans it’s is rolled in no way, module. we the with multiple there to of is XX% we the obviously once kind solution out uplift. is I dollar module, our it’s plans piecemeal that in the of think include for based not module what proven. XX% the this have capability, But that different app can reason can’t a – first vulnerability to the think we on detection

something we can versus that’s only to disruptive this something but also anyway, invest So a why and over continue on moment, have time. those Not impact the of – significant thoughts really in some else? we are behind ARR it build great it’s is think

sense. for over I the for of you to guys just last new level backwards was looking think platform the right and of in get Yes, there like a question at triggers right. couple a migration the yes. get the expansion, then years of gets And that Makes bigger maybe great opportunity higher kind

context seeing? happened base, of Is for Is transformation that Now conversation? new right? speak the net digital what’s catalyst that process the products just that are you like the expansion? trigger past it dollar like that XXX to sustainability of us and renewals help in like just typically we that at expansion initiatives are in the the plus it maybe Is what’s it

finding different ball the are changed it And hasn’t and is Well, the motions, expand where we of so couple Sure. complexity vast really sort level massive of zone dynamic what’s the and at they are and landing spots they more environments But portfolios a when more with and or land like it, to nothing is trying whether and an environments. observability would bag blind the infrastructure that the hitting great application one motion. is they at whether are it call what companies multi-app that there mean and those they sort enterprise thought gaps I source short are are falling solution, Dynatrace of could in maybe that scale at much. level. comes tools Gen-X whether were and The in tools of gets large happening so, more more the do enough open first it, at APM to there those solutions microservices a and are of alternative be throw approach companies all

that’s well speed as to reps bring up land So faster as us new helping more new logos quickly.

lots production putting cross-sell footprint observed, just I a of fantastic of hang the On need the why the earlier it’s observed, platform new broader going the DevOps are my apps these clouds once people for works. natural thing, the of at of apps, same expansion can across more services as our have I catching or how troubleshot, a then I and And the because of and everybody about, want old is automation be to getting intelligence, days rewrite and etcetera. have optimized they everyone is in add is companies on, see more talked it. is fast faster we hang out but That’s like get workloads can front, customers as it new workloads infrastructure if they as services. time, doing move that said, the understood, on wouldn’t

the really why of So, sales partner we it’s the three those momentum front. up I that’s that or and things whether the combination of the are all think it’s are driving on stepping front

That makes sense. congrats. and Thanks

you. Thank

you. Thank

Citi. today coming from question final Pritchard Walter from Your is

Your live. now line is

thanks. Hi,

couple which sales to security, you the that little have sales got continue taking Around organization, of the you talked move force of size here. initiatives up these a buyer expand on – sort last on the go-to-market to follow-up we on then you more sales growth us structural a the evolutions force questions bit rapidly to is enable you partners, making keep are a of a you as are or pace that the into stepping changes understand about. Just of different up of any Can and to new fiscal articulated? rate as ‘XX have sort any you help hiring of you and this you

no our superstructure Yes, well We Walter. great pretty sales ahead. question, plan

front, So, pretty some good are nothing little sales mentioned a think on the dramatic. we I shape, focuses. around in I too vertical bit direct

smart of federal that, I We and and are are America, doubling in obvious down in like North couple state things that expansions think.

on We tech alliance system are on team the cloud our expanding partner both integrators. side and the

but management efforts. of stepped has up our marketing the have under that We opposed entire program digital XX little a us that as program last And been toward talked over before. about don’t months. the there as and sort really shift for organizational there continues talk that So, structure hood. big the much, then, we We bit physical to a quite and about

nothing what are we just sort it’s build and on easier. of more in expanding on gas we stepping going have a are So, dramatic place have do in that lot the across a out, It’s all we those areas, that pieces and what’s to just of prove – place we have up but number of now. to step and on really right

you in you look people look you just making hiring last of getting you that couple then are as sort the And any at there future bend you are the terms people of in types sales of acceleration, versus is years? towards where as are of

lot a of Not changes.

spaces are infrastructure find I opposed sort some monitoring or if backgrounds, find adjacent or to habits bad we people infrastructure as performance more going there. anything, of is to with try of we think there performance spending time to kinds

job reps acquisition, we especially think and talent, having really company not Kevin as us to work on better finding work, for sales for right they the reducing the a hood value And doing So, find sort for years people reputation a quickly the different, it’s having helping is and with been And lot advantage. a being Dynatrace that’s who here now a to maturity folks said, front. of the bit looking secret of really I articulate talent, of for good of is fantastic that our and the are with we think to a I new turnover. little train with get plus is how now sauce sales to like how under more but increasing hang X

Got Thanks. that it. Thanks Great. for compare.

can Maybe have are quick add Walter. I people thank you for a quickly, just I Thanks, real to know joining us. to going hop

was as And and alive are go-to-market in You up we could how innovation for quarter QX great year moving, May well off we how XXXX finish our ‘XX QX the in update guys as you FY for think. guidance. with engine paying and market results a a we us us, looking are an is tell great to is pleased sets the to well. forward as giving And

very much back to Cheers. and great you that, with So Thank a day. execution. have are we

conclude does you. Thank That webinar. today’s teleconference and

this day. line You wonderful your We disconnect for a time may your participation you have thank today. and at