Dynatrace (DT) 12 May 212021 Q4 Earnings call transcript

Hello, and welcome to the Dynatrace Fourth Quarter and Fiscal Year 2021 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation.

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. ahead. go Please

Siclen morning fourth Good call. thank for Financial John you me Kevin Officer Great, - Burns and everyone fiscal Dynatrace's Chief Van are, today quarter the conference Chief year joining Executive on and operator. Officer. call and - XXXX With earnings

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

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

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

XX% expansion $XXX Subscription of bringing across Good or year-over-year. guidance for their XX% that new to the model existing ongoing all most the markets us of unlevered quarter were flow of once free dollars allowing business platform, results see am for profitability. of verticals customers up year deliver free vertical in ongoing revenue. revenue our pandemic. These logo the driven year-over-year. previously we digital million million the was $XX solid journeys. we're ARR challenged million, morning everyone. balance operating was stabilization starting cash $XXX the heavily $XXX a strong an increase strong to continued flow and unlevered XX% an and joining Encouragingly, full These report million efficient exceeding the Thank And to cash investing key impacted to I transformation growth pleased had are of Dynatrace to inherently additions in of you signs combination us today. by execution, another by was quarter of again sustained metrics.

XXXX, backdrop more successfully the I which, morning, fiscal I this Our Kevin talent, on believe, value our continued key team. unique resilience like worldwide to this makes strength their proposition, fundamentals on our success moment ability and is throughout attitude we X,XXX fiscal commitment will QX a customer year. forward, and to teamwork build shortly. and testament customer-first beyond. thank for strong setting to 'XX we a that be of take to detail employees navigate company. four in success go and year to of Their mindset and to outlook for I'd results discuss a them, our through proper Dynatrace a our as past provide will our and topics The solid for and diligence past This incredible are baseline provide year-end guidance such and as focus fiscal what to to want

years First, as track company a on past our reflection two record the built. brief we a and public

growth customer new combination of base, for building powerful scale. the consistent our logos at and sustained Second, blocks expansion our across

for and value these differentiation our sustained expansion continuous for progress in initiatives evolving this innovation and acceleration building and our commercial go-to-market market. blocks the competitive fourth, Third, growth in of underpinning

ARR And too and a new the a transitioned public solid of Dynatrace start, classic three over sustain we when ago, ARR distant from to the company. margin. to of record predictable base Let two the products what we transitioned in a durable and on ARR delivered our subscription we is would been revenue over suited these success, me growth franchise including new for unique call built start as combining we public past that. XX back is subscription unlevered A combination we we is growth years flow said platform. XX% efficiently high line growth resonating XX% sight our growth capabilities We smoothly of the AIOps with a years, and with said on Rule with a these a we've The capabilities, to strong infused XX% in It's brief customer the track years as our look and our million proposition profitability and the our promises business. of two dynamic cash with in platform. a of that Two Today, highly predictable with last a automation the not done two best-in-class company use range of of balance business customers. mid we proof we billion of platform XXXX are a observability future. to value modern year-over-year. new and ideally logos fact our business $XXX today past the $X nearly said believe powerful free was cloud years a to last differentiated, addition Today, We said cases.

blocks leads effect our across this the With topic, customer base. sustainable me logos for net second powerful new place, of our building expansion in The the foundation success. and solid compounding to

of that total Dynatrace and we increased XX%. these ARR year-over-year. XX%, by high customer consistent our the provides base same to plus XX% During over our The fiscal XXXX, growth resulted of over per compounding increasing while this maintain customer time the effect XX% ARR customer we two long addition in growth Dynatrace per ARR believe It's over opportunity at the new term. logos, of

added we in XX% up XXX the new Specifically year-over-year. logos to franchise, QX,

Insurance, included Harrods and communications New Frontier Pan logo lands Airlines, Limited. Amica

driven. and applications continue become critical software accelerate is as digital all transformations We provided to are cloud-first services governments, and industries to across see how and revenue globally and

becomes transformation container at the in of intelligent at These seem environment to hit multi-clouds. this increases said scale can scale. as simple significant add suits point frequency as workloads and dynamic environments Ease of success we've scaling, our as but kicks underpinning some customers platform, becomes complexity are essential. and first lower of complexity Dynatrace overwhelming reach teams innovation, and and cloud It's change, that cloud complexity some DevOps accelerate orchestration impact when As enter at referred this at as modern and wall, and and native cloud enables it, risk the cloud digital automation consistent dynamic to any value. faster

their net XXX%, the we've European XXth such of once over again Chase, footprints their simplify consecutive and a The DHL achieved transformations. accelerate Pfizer, expansion rate this result. On the quarter expansion Cigna and digital front, to in Customers QX, we JPMorgan Dynatrace expanded Commission, achieved as

we an and to over with to $X to per us achieve full We cloud the instrumented stack additional the and now app of plenty X time. believe X continue you X five what security see to believe range applications, can recent APM in expanding still are and the average of to and with XX% we are add XX% And continue opportunity million times of across customer bread ARR can applications automation applications, most of why alone full targeted in our of for significant addition more stack opportunity Tier greater X customers provides modules butter. This cloud beyond this, observability. cross-sell our than

expanding progress to average sales fact commercial third our to again marketing This trends, average In expansion, differentiation 'XXs back a us. to percent powerful to topic are healthy $XXX,XXX. with who nearly expansion an two and of of plus times an spend and huge monetizable the the market levels three our multiple for today platform customer the revenue. modules modules, me $XXX,XXX, focus brings customers using be see have pleased this ARR almost very commercial for in morning, high-value I'm mid of our continues as a given

reps and quota the targeting of step range we we the we've year-over-year I'm increase XX% expansion, carrying As and in XX% year. to partner to discussed, combination our and of quota last marketing up XX months, ecosystem by for cloud over to able the expansion balance here were a QX opportunity investing sales that fiscal driven sales carrier direct report generation. the expansion pleased the are team are in

we transformation. SI influence such addition, Cloud partner cloud our cloud are three easier now for our orchestration fuel Azure in is regional SIs platform to AWS, SIs AWS, integration automation, extensions Tanzu. with or VMware as container go-to-market continue observability both any big cloud In for make prebuilt partnerships, or to and IBM, hyperscalers, OpenShift and platforms XX% with cloud Dynatrace's alliances. implementation wide of the coverage strategic tech leverage and cloud of we QX, to for cloud Google. of Microsoft and and over progress responsible it combination an modern and ideal worldwide. up SIs deep These from for ecosystem these continued GCP global transactions our intelligent Also

During technical And spend are three the simplify expanding relationships, our these go-to-market hyperscalers leverage as fit us marketplace to across quarter new joint and they of building processes. areas. transacted continue dozens offers procurement strong we with also through into customers cloud look as their we

our to help added to believe we Migration example, first us credentials have in AIOps the the and our differentiate ever-expanding competency being continue credentials We DevOps recently containers, the AWS, offerings will AIOps of AWS Cloud platform competencies. observability For and community. to with to only minds added

expansion past attendees be massive innovation a to marketing of brings Perform, sales to a the hit, fourth the over sustainability I our for the our and registered our and in at end of fuel a and cover we've projected as brand the for several was than final investment This fuel addition, investments February overlooked. I see awareness we January. should In progress Having user me topic more to go quarters. wanted XX,XXX and intensified conference expect marketing generation ongoing XX% to It's not partner today, It here engine. forward. opportunity

evolving, code adapted, examples to teams analysis and platform. our innovation efficiency. I'm changing analytics announced and not and Dynatrace faltered. and market stood The processes, see announced not We of the companies you intelligent, believe As thrived. has But witnessed, quality with critical Gartner's and closed-loop has littered this have this and only automatic others could and succeeded step cloud when proud thrived Logstash. say were a up. as greater operation. to to corner disruptive of always DevOps of enables around the a February, is change. dynamics, Dynatrace more with This this many engine cloud Automation Automation a In dynamic Magic logs on critical time test APM has have with everchanging, Azure, enhanced actually lead in Cloud brings in innovation market to toward where recent logs once February, There support Module and module AWS, execute. and Fluent high example. meets for continuously year, anticipated times, discovery such consistency perfect faster, a we again IT, Also, business competitive Through well Quadrant action. several Cloud consecutive is shifts recent deliver has new the to completeness any log high and this both remediations source conversation. of autonomous Google observability open DevOps leader an area, in XXXX we vision as It's as in platform been multiple Kubernetes, and from of ground XX Dynatrace important the ability is Module we APM keep

Leveraging across We've well talent growth highly of engineering faster Kevin? value, and growth the two platform of talented that, to let important have of cases years and across and native of proven approach technical With guidance. both digital drive innovation use begin functionality Now, take our for further been experience ability and expansion ARR to announced execute the capabilities mobile into lower that the rapid to both and before. approach, across ever for delivered applications market our through drive of a our sustained a modules, fiscal great spend in customers a and costs. adoption quarter, DEM for a R&D we confident consolidating to and Rule to base. replay in a these than and into pace and combination team this module. their QX business we the Dynatrace, past new that, visibility global can let environments our These we've In times mirrors and are more engine me high on financial results log proven extend building growth provide our XXXX. of GDPR advanced continuous me blocks into and fantastic, the future. high capped over session expansion We've differentiated gaining customer and cloud With highly our combination summarize; itself, to years. capabilities evolving drive and challenging off to to company efficiency profitability, the our continue Kevin and in in year-end past X past promise our turn a the logos compounding invested growing XX growth sustaining us balanced rapidly with it will

and John you, morning Thank good everyone. to

we As The another executing the Dynatrace tremendous John performance a by job above our guidance delivered done in quarter mentioned, year. challenging strong board, a great across ARR team range. driven has well

year-over-year year currency. ARR XX% $XXX the or up and constant is performance $XXX metrics you ARR growth was year, of the at overall last fiscal key As know, of we This over in the million. the believe million represents strength business. XX% health ending

license impacted an Excluding growth currency the was points, constant our X rate ARR which percentage XX% by reported on basis or headwind a on XX% ARR adjusted perpetual million negatively basis. and $XX as

As for have communicated, we to be our continue of the new the and rate. logos building expansion ARR net growth combination blocks

quarters new last We momentum the XX% more XXX added a and additions X,XXX customers. the fourth our from year new growth X% rate well over few the above continue year. last quarter. representing the quarter, exceeding and logo added in we XXX of ago ended to We We see logos logos in Dynatrace QX with than growth new expectations

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

to customers Our ARR of per more This our with cohort quarter increase. represented customer fourth three continues average up from modules the XX% last or in year. XX%

nearly that now the X,XXX modules, customers average we customer. of three noteworthy year have have an or result, ARR these it over with is and last customers per more over $XXX,XXX increase of almost a customers As an XXX

new average said, we As and of enterprise modules more coverage, be could and as expand John that believe the customers per north more million. customer adopt $X ARR

of growth the total strength due revenue million, XX% $XXX in revenue growth Moving XX% revenue, subscription strength year-over-year XX% above in constant or came was guidance basis $X quarter total currency. currency. quarter revenue in by a being solid and XX% was revenue to is points of percentage nicely better for expansion on of net with increase cost XX% We in an in margins, an efficient to representing fourth end The driven constant savings to X by in Overall, year. in the guidance by of With and high on both gross sales productivity. saw total pandemic, new or million above for benefits our to respect QX combined a gross driven the logos related rate, platform. the the margin driven up from margin our our with last Dynatrace in non-GAAP quarter last the and fourth line expansion

$XX Non-GAAP income up quarter above the from $X.XX high a favorable X due $X led end gross of guidance above was for share. million expansion. the or income XX%, non-GAAP associated the to percentage of of fourth point year. the million operating margin $XX upside fourth operating to end margin This upside. net the revenue of our last to revenue due million, and This guidance quarter is non-GAAP Our our per penny a was the high

being and revenue million, end above growth a XX% was an to XX% increase range constant $XXX for XX% income of the our for subscription operating above which growth financial XX% Turning revenue representing year, quick a revenue, 'XX. driven high non-GAAP constant by fiscal million, in operating resulting XX% in in high $XXX of was year-over-year guidance is Non-GAAP the XX% of our guidance, year the or the million year-over-year and summary underlying currency. in our the results was full of million above currency. $X $XXX from up end $X the Total up total in guidance margin million, of

we line. business, business bottom the invest John operating and one delivers is right the balanced mentioned the performance of strategy As in growth the to we've as both strong line And believe in on approach the earlier, one. to our areas and strategic a mentioned past, the to top support in durable that long-term

further fiscal reinvest portion the with to non-GAAP growth. back compared business we ended COVID of we large course points margin throughout 'XX, 'XX support of to the basis XXX 'XX was leverage that While a driven to fiscal by operating savings fiscal worked prudently leverage of into related the

Turning sheet, to million of $XXX the increase an of $XXX balance last cash, March of over XX, as million year. had we

QX. million was at of debt long-term $XXX end the Our

gross year the due $XX was to over fourth last made that down earlier down Our we sequentially a debt $XXX quarter. million principal million repayment and in

made debt $XXX of $XX In addition, during million. further April, reducing month our the another we balance repayment to of about million

cash, We significantly time levels increasing our are pleased the business. with extremely generate same while our ability in to investment at the

As shared outstanding the we to have to improving our we I am ratio debt and our in we reducing and committed past, pleased report that leverage delivered. have

Our QX million. $XX for unlevered flow was free at solid cash

improvements. free XX% full of of year, which is current of of unlevered revenue. to XX% to cash expect XX% quarters flow flow an mention recognize above performance guidance the million, over was revenue four year-over-year. $XXX is The at unlevered margin next measure remaining end The we revenue the as increase XX% free year. the other the billion, RPO, that last cash of was quarter over $X.X For would collections of also ARR, due and This increase QX which obligation, was million of of our like an approximately portion margin our combination our some strength the last stronger to or level of of financial working previous capital I $XXX

the metric and As a best ARR the remove I we we do but become mentioned past, over is RPO believe to believe we contracting it in meaningful more provide metric. time will had noise, billings as

Again, turn sustain enable to to rate. financial net and up me guidance. is new $XXX key business be currency. XX% are expansion We the XX% and logos year-over-year XX% growth From to believe understanding momentum constant to guidance commercial ARR our to or net is will and are new standpoint million 'XX. expansion in product the building growth let rate investments expected in expansion innovation Now, ARR to $XXX blocks metric fiscal and XX% XXX% ARR logo us between and to the we making our XX% for to million, maintain XX% the

ARR Our points of headwind X growth wind ARR percentage associated down. guidance X to assumes the to license fiscal with headwind 'XX perpetual due in to

We ARR the to end year. associated and of QX. the of X% headwind. to of believe and the X% expect be total higher At drop then quarters it the be which transition We X.X% range end will license ARR license two end to perpetual for will at that first in the perpetual down will essentially

million our to as strongest we currency year. saw XX% or QX. be in in Underlying XX% year million with currency. our QX XX% to or that a expect Excluding the what in being strength between past, linear ARR XX% $XXX Total expansion million, last to year revenue our up ARR to constant subscription be quarterly up of the is in fair be of to we the constant year-over-year is expected outlined XX% perpetual XX% our the license and between million to with the up headwind, to year-over-year quarter year-over-year for do $XXX year business be consistent have half Wrapping XX% to to seasonality discussion, expected is quarter ARR is growth $XXX XX% full adjusted constant currency. XX% seasonal followed quarter $XXX rate expected to basis. by amount back XX% from on We not full a Revenue with to

of strength associated the As driven subscription be and discussed, growth. by we ARR and expect XX% revenue subscription revenue size of to total revenue

for growth full $XXX levels the of and focused $XXX the P&L, expect business. revenue around to year. and million believe range XX% of for operating we to R&D a in of long-term non-GAAP spend From be to a of year marketing the we be of non-GAAP sales on investment to to margin an operating is result down proper Moving We standpoint, the XX% to million. XX% be This income and between of are XX% revenue. XX%

based shares year, to XXX share million expect EPS outstanding. diluted full we non-GAAP per $X.XX XXX For $X.XX of to the on million

believe financial Our cash tax non-GAAP non-GAAP three 'XX calculations the net income rate quarters of able the throughout investment in also today's to annual quarterly cash release first and was of of variability. used approximately A our tables non-GAAP fiscal is EPS tax assuming levels, non-GAAP solid effective 'XX. unlevered flow available effective we in non-GAAP rate At utilizing free which results reduces We tax cash very and press a quarterly an cash XX%. margins. X%, of are rate deliver recap effective reflects fiscal these

For approximately unlevered the XX% expect flow to to revenue, million $XXX which free million. of XX% margin to be is year, we $XXX cash

currency $XX opportunity to and share. revenue line fiscal between XX% top $X.XX margins. be to be XX% combined profit we pleased million, $XXX 'XX XX% $XXX.X quarter XX% constant saw and year-over-year, to income non-GAAP a basis. $X.XX up with $XXX XX% year-over-year where and strong and to and currency. expected XX% about at revenue between XX% to to standpoint, XX% constant total in Subscription to be Looking a non-GAAP and very per summary, healthy XX% From ARR million, million, growth to is time, the a XX that expected on excited the strong we by few the sight one a billion This is further software compelling value growth and and right of maintain maintain 'XX questions. of believe in believe will to we At the same being market, with the we another sustained operating Operator? help growth well in consistent the have the of open a fiscal future. line enhanced we Overall, and beyond. investments well with position revenue million a us expect with our positioned we'll And between also flow. In companies and fourth milestone million up $XXX or for topline and XX% that, track of growing proposition EPS of We have are ARR. QX, million making to cash solid strategic product into we up, is line operating differentiation for to we performance $XX are Rule record remain $X growth of important the healthy To we plus. in at durable wrap margins

question Instructions] Blair. Our William [Operator from Bhavan first today from is Suri coming

Your is live. line now

the in to process because the other is of well feels partners than does going so Thank maybe strong, plus more just finish sale touch hear investments That the end. you everybody John I XX% about that drive headcount, that partner was of the the of sales like that? on to how XX%, is and potentially -- there. piece partners think and you're love and how investments grow a in but north wanted the accelerating congratulations. -- growth a you're investment. I'd the you're means ARR here XX% strong as think you you about, and profitable you're is because increasing at be how balancing to one could brought the growth obviously then, the I little to but for, sales sales second guess partner And two this a the kind and investments one do to pushing in

there. you comments Sure, for thank the And Bhavan.

we sure hand companies, Remember, pretty companies so have our it We investments, they digital a base. the are them that do work in sort of or the they we combination transformation. of thing as an really go in the someone their our base there on source augmentation partners go-to-market see ones the they necessarily look in at customer we do don't plus are as We hand. helping $X separate whether that our much with channel. opportunity planet, hand billion the approach, do, hand for to always make So right largest to customer

execute productivity sales right So, if in glove job see of that, organization. momentum but accelerant It's at in you're we see manner, well ahead the yet it hard -- in some and do us. sort hand actually driving working our our yet to we're pay have great and we that that an right we combination opportunity and off greater ahead. And it of for we and to

color. the appreciate I just And Understood.

about XX, been I'm just months of program for about time. of program the next capacity, longer can jump we first the there to mentioned, I a quarter also of tangible productivity XX% productivity of and tailwinds right, also the of partner We've as some reps period talked great. results here last which the as off conversion I to Bhavan, came investing that and there where saw higher have time, as XX the maturing in as which in well in there the quota terms the in we couple sales we've is which XX, is we're something sorry, years deliver is nice organization the we've is historically seen a think believe over think and you the improvement this over

are we believe business to those good support long-term sustainable and So ARR growth. the all tailwinds

I guys helpful. about obviously do entered -- and were in had ton they I that, ServiceNow, you want next and ServiceNow a to of Bill instrumental on close this space. the really want previously on other company observability improvements you you great that follow question create. supporting where want the but for work when That's to But McDermott relationship, do ServiceNow. we a you've partnership that productivity to share you the for

somewhat a in are thinking with How was about Just because that that, relationship. did great that give you have thoughts that ServiceNow. your of what you partnership mean, terms unique change in sort does of

I a I'm minds. people's good question know and sure timely on it's question

it those ServiceNow our -- be customers and tool, really why at of bit Our a work extremely the sort fact pulled are that's them, moment. joint need observability with they in of us to of well has customers to sort part need been added The pulled with that looking they together where and will joint that's piece they inside us our cloud, make platforms relationship the together. of a outside sense in relevant for little been has field focus sort and future

it So, But not makes larger is more much piece and relationship, as than strategic customers in platform add conversation much would a to there as to sense that get on. our a try part sort they into our far of yet.

really forward. to go the field I now change we the with So don't any in service relationship as see

again, on Great, you, solid congrats, Thanks. gents. thank And results.

you. Thank

Thank you.

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

live. now is line Your

help well. me but you of And how from for better. a you someone our are the like differentiation understand it space other they Thank the some little from to winning benefit, entrants just John, me you as of little checks, it's more guys, bit saw and help comes newer top in kind and versus of where is to the see that you. enterprise that of seems playing on similar really the coming and to but of yourself guys kind you a distancing congrats topic, Thank also on in right the like quarter Kind just, move playing nice me up mentioned slightly that bit understand you from our more and on little might a you be without bit us can get broader a to low-end here,

and focus been customers, we what are going and challenging actually scalable That's we've which that to before clear years more IPO excel of sort we on observation, bigger at. problem more were the set, ourselves right since

different automation excelling different entrants on intersection. multiple So in win assistance, to you and market we you a giving the quite know, focus no There AI that's world. way it's explosion, of level, teams. volume variety -- those the a the critical us or of setting deal these levels our in with but fact, that global us know, is multi-cloud DevOps There with and dynamic sophisticated really apart some of in orchestration markets, so consistently data a Without that really frequency of enter and fuel. in XX,XXX observability of the that's world, SMB environment, that of change, velocity and in departmental sort space. -- In of are combination automation markets, other those some we

you with You new can growth enterprise it the class see that in it expansion in customers. combination logo the growth, large can our these see resonates numbers,

value ahead we a lot happy are, we market we that great then we're fuel it. to combination and with unique proposition to for appreciate this and So of support the we with continuing bring opportunity the see Gartner's where

I remarks, the long with now. rolling As like said the crazy that in my prepared have innovation right just continuous we that's engine

side, et Okay, and and Anything Thank follow-up should New increasing we maybe, you. one more we the sales And are Kevin and that Year kind perfect. you. aware investments terms cetera. on field more as as sales of your the anything in Thank on for the or little a starts force marketing start in driven then, be structure of side. get year the bit, logo to like of the change

well. our adjustments organization We've along partner program been account doing some minor named and as will sales enterprise a be the at the of the an but by day, with end complemented ways we're that strategy

levels out the executives just is from goal globally. of the we're things all account hired to our making VRDs, So at account down scaling these to and VPs the organizations, sure

of So clip into same, a more albeit at 'XX the going no a faster -- changes, fiscal it's here. fundamental at better hopefully

congrats. Perfect,

you. Thank

you. Thank

coming Powell Our from next BTIG. Gray today is from question

Your line now live. is

Great, thanks the results. question congratulations strong and on the taking for

Thank you.

Maybe very sort obvious starting had good off mean the all 'XX. fiscal just a I on side, of you

to industries. your you business talked beat ARR was XX%. by over guidance initial your you the think of time At XX% exposed from about how same I XX% highly

the think you what how about quantify number then COVID the impacted to just cohort. think year. even Thanks. then, possible and from And customer we recovery that it last of slope ballpark a it's should within is those headwind if of So, was

of start don't any, and year. want why little a now, if you I you we Kevin, on the put quanted bit to bit little because it quant a Sure. it during have

is first their, they make on things sure recovery agile, from can of verticals re-emergence verticals -- starting first those were software thing So said they half one of, than with we're challenge were second re-emergence And efficient, from a everyone they a my as be. in want fumble The forward. most of as remarks, prepare is pandemic. the to and verticals last the more sort going growth sort invests that they where more the into And that, there the see for challenged in of the scalable, I half. in most to the

starting digital look investing add. we're what that's full and encouraging in to want Kevin, It's to governments set see. and a verticals forward we beyond. and XXXX having So global to of transformation point in any you

QX we well. in at the and X into from frame most the into points -- reduced was Yes, and cut time of way strongest was QX, about impacted number quarter heavily as results year, the where mentioned it that a X that was that obviously, just and are as this going QX is got headwind sort COVID then our terms in we in John to the of half going

So breaking of sort of in the those those there back headwind, of think why a headwinds businesses, going the little and of companies to are and it's somewhat John says making point, out still immaterial which up not we're a at growth as it bit ramp this tailwinds as investments is or to to one we terms starting but is forward. headwind

makes That of a lot Understood. sense.

Okay, very thank much. you

Thank you. from from Hynes David The coming question Canaccord. is next

line Your live. is now

that's be factors obviously congrats more, support strong curious and larger or gating thanks it. get I'd ask, wanted think just to to team, of do could sales the to the operationalizing a place look, to thoughts faster plans sales you mean kind I'm Hey, there, investments I on why your not John, there is be the more market to the results. going on investment I'm in I to accelerate awesome. greedy, are going right. guys, ask about

talked In to question, to I as bodies assurance actually great line this that sight key quota see to superstructure. we've we've of it XX% adding XX% about XX%. We marketing stepped ask investments as made measurement, thing development. all partnerships capacity operationalize Same because it's well turning well, the before. the are with No, the onboarding, time out structure takes that sales range a the it takes pretty in that's It we're with the into we you're to well. sales ourselves order but operations the of improvement, productivity as opportunity now XX%, so up and of from be a expansion, able sort do as for to takes

place blocks talking that doing on we we a well we're to have able be be didn't -- once ago, XX% we'll that, building scale we So be have and about XX the to maybe year XX%. in we'll hit and to step up and

approach. prudent a it's So

sales scaling I the to think operation.

up what into of follow in competitive playing the how about and ServiceNow. mean getting you know to having know I them but past, product lots I today a Bhavan there observability, hearing lots I customers I'm out. as curious competitor a about thoughts. work see try curious disruptive. do you're different would ask do obviously together, I'm sense. love question, price of the think mean Maybe for can makes expand not I they'll talked be core you terms they're that any Yes, you of but I with asked Splunk. they about to want I you've in joint

Yes.

acquiring last of a -- announcements two of observability So with the the sort or years since talking we cloud I and of really been their in customers our think already is they've really about. environment they've in their haven't conversations of recent been seen repackaging any the change companies the a what market over just

in front automation massively of going to because as of they cloud them value not a know the is putting sort AI and that you the really many platforms assistance bring on are point I and sure challenge talk over we they They that not So, what's real-time of of have how scalable but things in a will have -- they're tools and sort well. Splunk suite and out, there, what's we to it. cut together, customers say going as that

our like whenever enterprise of knows, just sort certainly said, I their differentiation from gets focus moving simple the I us the think a together, at more but play is who I toward market Splunk like away So level. and observability

congrats, again. Thanks helpful. very guys Yes, and

Thank you.

Thank you.

Thank you.

from Our coming is from next today Matt question RBC. Hedberg

is line now Your live.

you noted your customers is over using successful you trend for this thesis have might thanks then be on on I think continuing I guess workloads. wondering, John, kind is think infrastructure and outside Hey impressive and long you why my importantly were the of guys, nearly I'm can been you from that year how of I growth APM? non-full-stack comment taking or XX% cross-selling XX% last so talk quarter XX% that of may time sort guess diversify hearing of about and questions. Hey APM I to away of maintaining part certainly

us same so are at helping Well, a tailwind. giving the several time are things a going that there actually at of us that bit on

perfect less One of around, metrics, and with them us because about full-stack about et less about having logs, full is that we're cetera. topology are for platform the customers a a and that's which rebuilt that whole layer the stack conversations reinvented more observability our experience, APM, approach user what is we approach,

we year, our something a key or base fact it as for with now XX%, that and penetrate mean but whether the perfect multi-module customer continuing of think not is see certainly part of I that this focus. that's customers do accelerating and that a we'll year. I modules XX% continue us. plus conversation I take sure this it's X our the So approach, that to to we Perfect have to it's XX%

mean, we other you the that that that to that cross multi-module selling. of that's I that modules this few step I innovation think sales to well. year. for more cross a the the part all numbers And portfolio, we on goodness is once net and up I well we're maintaining them great see I organization engine healthy think expansion and obviously continuing really able were selling, conversions, relieved adding and in and as as them this with the rate of see focus

functionality is very So sales platform capabilities a customers great all and I centering to combination. mean modules into you're AIOps of same, really powerful additional it. forward see our doing looking around of the organization are these more think the the going absorbing the a job unifies to I

moment; so So, a this and yes, great of place to feel we look beyond we'll we lot look good forward at market momentum it do 'XX keep really and out. we're we're and a riding -- we in like

sort think on NRR evident some us I been your And of kind blocks about well. a adds That's building obviously a I and but for XX%. you on quarter always ARR of year, of and assumptions capacity Kevin, this do your you as great. job of Certainly good your seems outlining to added focus lot of there's guess,

might your that XX% your grew your about by last grow last base than You do guess of you I'm year. customer assumption ARR even guide, on -- customer adds you did year, base wondering within you more this sort year, think of -- sort is what that I grow

new can is about and look at added break logos internally XX% new I'd to to So, and business XXX last to overachieve that frankly we've the we just when what we in we into the call XX% another year adding about components. additions, logo we're the One two it that. talked hopeful is

up $X those it million total number very of I came ARR. hundred customers, in that some million that customers, be to customers think a that standpoint, small less it's churn range to the -- side represents on customers, have primarily of positive customer of From the couple did the that the I who and we single the So if is programs conversion than adding think from XXXX couple a last ARR, some over module, of the $XX would of the of customers of we to million X,XXX base. $X still XXX from around years add it's are you

will some you think churn. I So, see of that

certainly strategic of Matt, just our opportunities. more going but to try what -- will that energies they those and don't, more We frankly customers we're customers, on of out platform would to believe be churn make those refocus sort those some sure become we if

the non-strategic module a take that So that related over helps. saying, add that in will months the come are going be very then long there churn has new customer logos base X,XXX, to XX the you ARR to and that some low next single way Hopefully component [ph]. of

that's super from that's me Congrats Yes, no, the strong. results, well on very helpful. as

Matt. All you, right. Thank

Thank you.

Davidson. from question Nowinski Andrew today coming is next from D.A. Our

is live. now Your line

Great, thank you.

of So a questions. couple

Thanks. I maybe driving specifically ARR in customer just the increase mentioned that that $XXX,XXX about and follow-up. per you more talk a which be I QX. increased think you then Can might have modules

it application, kind how we logs, dynamic stack pieces, mode Well, trace, in out network, really multi-clouds. topology, modern clouds every full infrastructure, to quarter are different a in obviously the need that of metrics, all in understand break because APM don't land the apps Sure. in combination we the you but order working

landing wider unit still platform the assistance environments an footprint. So beyond standpoint, the that and it's that's across of zone. But host expansion like Dynatrace from additional AI still the try a only full-stack extending infrastructure combination a to the visibility to get

customers, that's with understand So the digital their where any well expand of as elements to interact couldn't our they experience the continuing other in lot them our really within customers a customer to pandemic base way. customer better forced and remote pace because

don't monitoring big we up slowing see and experience digital over mobile down application tick business, at that year last our a especially all. the So took

So and engine, well. we they're ingestion probably some the areas AI those fuel into our analytics whether with additional business of metric starting they're as data are the primary then metrics or metrics elements whether which more more our seeing to ingestion business and are are two

I combination. the two but pretty extension a infrastructure working and experience mean, everything's digital of I well actually the it's So think drivers modules. additional the primary are

there a comment done just in adoption cloud coming if And to John. on significant it was wondering quarter to application fiscal work that be of or increase enough year is do the year before could I very starts customer and see then, features know module to think Thanks, you more is that contribute. security adoption it Super. in but fairly I new, last or this here solution was you how has this

Sure.

greenfield super enterprise in place, to little it right fill a supports first do of all, right space to feedback it work We're is the So we're entering more we're the out thesis. getting product there be now a ready. for the order excited our is, it's to and

XX% plus sort as our They our very, up add wide in we it's they we picky coverage great for pretty to of half that teams DevSecOps thrilled that think to of are customer and hoped. space, a said, and we as their driver remember portfolio. need impact early of of product, willing much something footprint they the The touched companies. half base an security going it's are that about us is to dollar into to billion pretty very year, to approach, we be early the definitely as this particularly company in is are fill make getting knew going everyone said, expect the to this so got else first entry 'XX You ARR there pick base, to to before DevOps point. second out a excited was we're a the the fiscal But in that I had we've customer start had just an but they're

Keep Great. the up good work.

Thank you.

you. Thank

Our is Sterling coming from today from Auty JP next question Morgan.

line Your is now live.

Yes, thanks. Hi, guys.

the a fiscal do in this how you see little about year. to talked bit But way, you which stability most rest at the and So of this that of industries contributing the are other evolving hardest want hit through industries. I point go the

from for list stronger there, and percent approaches system some to but have seen are has faster sales of, transforming that down, which of a the actually environments of and and across and state older need quickly here interaction governments around I'd state out been vertical, dynamic and pandemic our space gives of us to as think us mention governments new and verticals, to the been sticks is business. something citizens. to compare, that relatively promise I national the a a will. big some and world that of expansion new going is of sort that and it's the around is for or call a it's the with is so continued great it Sterling, an will ticked world we government upgrading in well ones in put you lot U.S. uptick the what sort there tick-down you governments of into The up resources really in hard sort we've sort a a if in that have around I world the mean change notice it investing modern and on the digitally that pressure of see And tick-up we And we've don't sort which but And cloud. expansion modernize us as as one these their augmentation, government the I for governments. go

follow-up, from least one for then how bridge Kevin of we the 'XX. operating fiscal you. in And to great. you in Can a us give at go It's qualitatively that margin 'XX

some So in the you marketing of other understand how sales of to we takes? much expansion coming and as the coming of other business T&A, words, and just is is about from so how pickup much from kind can travel, in talked versus return this puts

Yes.

about up the marketing the through to marketing, P&L getting right, back at see, the QX those in So R&D sure coming talked that year, over can that 'XX course that of investments big course over John a and resources, going around as people programs, that in XX% primarily prudent you were results income the and earlier investments Op sales some the through are that more I'm think about flowed how XX%-ish money and sales point forward. partner getting of as of well the cost had and of and and QX we then the and spend and a the we P&L and the additional are you this in XX%, put see quite marketing to on fiscal quite savings the I -- work to those and we you programs

is a R&D tracking QX, Sales going doing quota, partner ARR think travel of we've direct but been of and to driving organization, you we the hiring quota XX% the we'll investments the the it's there's in to it's which sure people online, to same great when right to be QX and we're so we strength P&L without sure, back So direct that quota the more the higher sacrificing and making right be keep and more marketing in know growth sales about frankly making capacity making sales right above. come fiscal do going given primarily expect through going to -- going in can people, of we that be timeframe, absorb the topline over the 'XX, more -- be capacity the and that program investments we're time. on at

say get a it's normal. the rebound we still we stuff COVID, think So, to back a terms don't little but bit do it's of also we going COVID in expect some from of -- to

engineers investments it's So making we're organization right, pleased the really and the are to those and in organization we're year -- growth. drive this about sales marketing people durable people that

you. Thank Understood.

Thank you.

Our next Andrews question is coming from from & Company. Needham Jack

now Your live. line is

some the should a largely potential relative or is displacement we to this others Thanks opportunity morning. wondering Automation contribution of describe your of for greenfield and could question. if this about was the thinking whether is for your uplift think good or in of and the Module Hi, just be the view taking how I your -- what module the portfolio. you you how Cloud opportunity

the and more a had It's you maybe Yes, a mainly opportunity effort a effort auto of and an No, approach continuous we deployment consistency ensure or early quality, place of actually code environments the actually modules said. we've services bringing had, of module it, greenfield we've and a I formalization great services quality been along in of targeted that's question. way an couple product to date, for the and years. -- as a into first see work productization a know efficiency that of continuation some at productizing its automated that to DevOps, we've greater remediation been of as and steps but

involved DevOps we the is process. always in of level that the adds cloud been we've beginning That the this said, code this to But -- detail significant of a the it's processes provide. approach. actually automation intelligent because So our autonomous

into we're same what we so, the operations, right taking the remediations DevOps do the the now again operation driving for cloud automatic production run books. of is and in take And approach we then extended environment elimination that

use APM what as become customers. more step module want it's module add And we addition, the become will valuable cases, the us, if of say it more you we it so journey within a dollar think quant see as to valuable kind anyway, the $X.XX the and on as it's as and go we first for to the portfolio this more opportunity know, doing to we're and for and additional with I our security said capabilities you similar of

been residents organizations. with the fairly some been looking they productization evolution. it's along can Services journey with really and us But customers who early out have again their its within great for So, this in scale of have it so level

That's thanks. the results. on really helpful congratulations And commentary,

Thank you.

Thank you.

from Our from next [indiscernible] question is Securities. coming JMP

line live. Your now is

quarter. the can Can infrastructure question how they any congrats and of Yes, displacements on the to they're those -- you talk for the speak talking a of competitive the gone but questions a that some you've bit that bit with thanks seen module. to whether taking you change on of are the incumbent have just the terms little in have you're accounts. Datadog accounts solid Most in a been the that efforts about I'm curious and making very to asked, of little many dynamics talk compete presume I with about

I woman these which for every for a of a of sort do-it-yourself Well, running I truth if we footprint, will still we everyone is of is tool more is and we truth lot in a trying that source all is sort many a consolidate we're of and different products, have what across massive are with into challenge, provide to angles that different and lot our tooling tools measure a massive approach. of with a modern in sort from it's telemetry and mean haven't dynamic you don't companies Datadog. so a quite man digital infrastructure throughout extend, process. light. change -- -- teams different and just where a clouds, module the And our themselves different our what seen competing consistent and automated with when market and competitive wide for seeing multiple with by It's overlap so single no transformation But of looking fatigue, we source

open really, So, today. that know, the go urgent they're where be the there, a that's to -- their is may customers source about may in why they against fewer be deal be we not they're more competing with different there, multi-clouds I Relic tools larger don't others to saw run may really much need dynamic think Datadog. you they away to problem mean there, but for a problem, bigger platforms platforms, maybe really going that complexity fewer one, experiencing but this we

in the for dynamic really So drives the and positioned that's we we're fuels well dynamic market see that's our the that's and really and and what expansion it.

comments. Thank turn management for you. our session. over to question-and-answer further I'd floor We've back end any closing to the reached of like

Yes.

say thank this trends -- us everybody let We're 'XX, momentum in who be market into Let great for just joined me to coming off morning. continuing fantastic just -- market favor. again, fiscal to our you, a me are 'XX, continuing is

and paying the fiscal think in forward results hopefully in much. going in look reporting everybody very July our in step the seen to on you've as results 'XX. and Our I investments off forward you I and first Thank updating are

webcast. and teleconference today's conclude does That you. Thank

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