Dynatrace (DT) 28 Jul 212022 Q1 Earnings call transcript

Hello and welcome to the Dynatrace Fiscal First Quarter 2022 Earnings 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, Investor Relations. ahead. go Please

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

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

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

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

smart And in ongoing ARR between we guidance everyone beating platform over morning, EPS minutes. Dynatrace are more profitability we Kevin was expansion terms our across report I non-GAAP growth and a of line few long $XXX in am all the year Along that business. to was that across we which for that key digitally that and to platform and Net XXX%. year-over-year. key by believe XXX growth pleased in which for growth Good with Noelle. again over the joining over on our elaborate a Thanks, new operating metrics top to XX% again quarter, million, building a continue strong we delivered two our you or added up And durable profitability rate thank growth, us balance healthy customers. by QX strong will to I'm to income, a above consistent the at led once net today. up new fueled pleased top had XX% logos operating expansion and year-over-year all modules term. report XX% Dynatrace line again once of Underpinning existing blocks. from the transforming makes customers ago. another

believe will percent said, we've two growth plus As we sustain for years some blocks continued business against execution at a XX scale come. building these to

strength of the XXXX, topics shortly. This our are will that success. drive believe outlook With provide fiscal and which morning, to positive and will for discuss increasing more we details Kevin QX to I our our continue like guidance momentum three on ahead I'd results

the First, rapid growth and expansion new within market base. dynamics ongoing that growing logo continue drive our to

TAM an we module billion we're of in success. and address progress market see third, expansion go-to accelerate ahead our the to the Second, platform full the to progress making we're strength commercial making expanding And us. $XX

us resilient. remains dynamics value our me with protracted a a that market the with term pandemic, provide Let Even opportunity. proposition long start growth unique

The risk the At happen and pandemic to mitigation can important all continue transformation a are all business. see sustainable change core on quickly and transformation digital three of mega assuring and in notice trends to interrelated. digital strategies We geographies put are accelerate verticals. how that has how are everyone agility

as look world all the ways transform. leading businesses applications for that innovative to first, The

combination risk multi rise the speed of increase The first, the mitigate and unique on second third observability and complexity, of cloud And applications unified the that cloud is the run is with ease Dynatrace's AI fact, multi-cloud and capabilities innings the our event. automation the these mega early platforms not of in they these driving to these are in transformations. digital driverless in trends. powerful And Take customers journey. the these we're transformation a play It's AI a the automotive still of is OPs Digital pure transformation an of who our cars. three all experience, three reimagining first. across is including mega trends.

on They are possible on long wherever and digital Our and a risk. the term healthcare platforms, to multi-cloud leveraging customers, and running better with healthcare, not new short cloud new term These or applications depend deliver strategies they carbon lower native embracing energy customers efforts. devices ways AI for energy tomorrow. for fuel for transform business replace are all automation looking scale, to our consistency, renewable

defines is organizations of One on. agencies. high. that complex, is transformers that banks, innovate depends almost and resources dollar and energy are our to They're to These companies, application healthcare multibillion government limited always global urgency the a digital to is and transformation off have manage companies companies, economy the digital challenge and other transformation market logistics expertise companies, the characteristics portfolios generations the with. of migrate and of, are rich, technology deal the Their

best Proof fit believe expertise digitally transforming these with these our have large fit can customers of for platform our We seen scale superior the to we continue numbers. be that and in digital transformers.

Central, cloud our one Rock QX. transforming as L'Oreal, orchestration, and As such franchise Cross mentioned and all earlier, added container Dell, requirements in platforms, include modern with Shield native new I another; Great DevOps we applications, in or XXX Blue Kubernetes hyper Blue scalar observability digitally that to way practices. all logos companies

before considered solutions, digital their off while been outdated multiple own and Some to companies their alternatives transitioning trying have of partner. others as transformation cloud cobble Dynatrace together are monitoring these all selecting tools, modern observability

and three their as Banking quarter, multi-cloud their past insurance, Dynatrace expansion DHL expanded Dynatrace global of use to needs. of Traveler's this Lloyds such use Group, leaders cover observability all the modules Toyota, and now On front, Lowe's, plus

for across and workloads, log they across cases. to before, once the of application AI customer look opportunities broader opportunity said Dynatrace of our ease the metric quickly power further transformative use our I've experiences by and scaling, As a automation, extend provided capabilities, more

strong we transformations and brings digital forward. in automation opportunity eating a as second So just in have continued of us, on expansion. trends and me is need capabilities to and new mean for first, increased us, for when the taking going through say position we macro of rise, market very success it's this This of moving the and the market but my multi-cloud expansion fantastic logo the in world, we morning, topic investment toward net that commercial AI advantage this front that's applications the

of our three You'll on and notice our sales sales expansion, range target XX% XX% of revenue, partner momentum, down efforts; and awareness. has returned force combination to of market doubling to spend key marketing a

continues Dynatrace never company resonates has integrators talent. to go-to cloud growing is XX% bringing Helping Our sales XX% quota to globe team to lift and customer the engine market quarter, partners. for the we first to fiscal our the continue around tech carriers a are scale. sales been throughout range talent by XX. productivity culture past the considered stronger. work and continues are in expect board this with Productivity to on and We top healthy, nearly grew be and and this strategic our system

the transactions is Our seeing is even marketplaces over globally. rapidly. we growing hyper partner XX% scalar leverage our community through more And of in now influencing are the

partners quarter the to fact, four than this increased times same by In compared last more number the hyper with year. of period scalar deals closed

project risk for more and success, their is reputation and members. reducing projects for the more catching and Our especially eye scale accelerating at partners of community

billion beyond for we've a as of area partner dollars. program focus is said, we us As our scale an important

within pillar our Third the global is awareness our A APM. commercial XX,XXX account showed target base, and more Dynatrace. than expansion now we for of are study increasing that known brand recent much

is AI Our logs efforts off. to to infrastructure, paying expand awareness observability, and ops

XX for around events, smarter, logo most completed scaling to of lower do one these We world. in to Like and hear here said, how known to leveraging awareness gaining better provide right these advantage for registrants digitally be and sure. more on go-events, from lower we prospects the there customers faster, across the To balance value series day. are trends help day are exciting the done have Dynatrace sessions it XX,XXX a they're where we be and work call every recently peers accelerate prospects. me more easier, new transform Dynatrace is over risk But logo XX,XXX new and prospects. we to had the XX% We but to Dynatrace We direction. I these customers trends a was XX cost. the to were transformers, between and of digital

monetizable depth final topic I'd our of maturing number cover third platform, growing its the and modules. breadth and like the today is and The of of to

And beyond cases. XXXX our climb. Dynatrace applications log Our module us stack now infrastructure over leverage three use customer plus use continues customers XX% of plus to across use Today, module cases. plus customers only of our three count XX% and full over

includes technologies, modern open big It's modules fully a embracing metrics, any Our ingest XX% now, modern we With is advance cases. observability steady log info growing infrastructure and and featured continue cloud year-over-year. we alternative business which and all with fastest reason robust to winning new why cloud extending module a against rate. win log than over aggressively and continue to our capable engineers growing used enhancing capabilities now more ARR of and module, at XXXX analytics

our new let here Cloud modules, to one much Security me about our just talk App there's module. So on of focus

in still the early maturity. of and But so market are we product far phases said, we've the exciting. is As adoption feedback

XX more recently vulnerabilities. module, have updates and told huge. three limitations potential time have lesson coverage two Dynatrace, scanning seven, from people of week, realize they're and week. with by customers than times prevented though a the deploying could trialed who our even they that's them once a banking This they process [indiscernible] real that One With us to

Thanks vulnerability Dynatrace. that government no as are recently be rolling needed scoring these tooling momentum for is could vulnerabilities applications, risks native value other with security mission gaining timing detection innovation. not is app continuous XXX no to Azure proposition critical to with Amazingly, while in immediately customer, intelligent this actionable. securely. They existing many ops Dynatrace deploy The clear movement just they from to became ongoing able now to trial, agency dev slowing out and down, better. quickly It's detect reduce examples accelerating longer fixing. and good sec that a and answer their them there started migrating said the was nearly output that cloud Another cumbersome,

module covered as are excited frictionless. several We second need there, the important this rapidly our to that, within and fiscal continue this greenfield powerful is deployment half let a for potential summarize me its The morning. the scale I've base this during see is and to With year. opportunity topics with new of

being is term investing opportunity innovation we incredible Commercial advantage. is delivered market the all long an modules. and across and seize have increasing are We to aggressively expansion continuous

continues platform well continue and scale Our our to TAM beyond routes. to mature we

We logos the are digital at robust to be two; plus sustain a we across to new and us into logos multiple expansion new compounding And gaining net these rate base a net future. franchise expansion to transformer continues a maintaining and healthy business the it's believe of above provide XXX% blocks that our rate. building steadily the the increasing a modules of XX% growth well

take to into Let Kevin? financial results to Kevin me now turn and guidance. it over our us

Thank everyone. And good John. you, morning

sales have with As line evident up for that of and John investments all top a We across $XXX in XX% key first the metrics for fiscal guidance. is $XXX we drive expansions metric believe we the million. as revenue revenue million reported was are this strength our and ARR quarter subscription and up another XX. commercial overall revenue quarter made delivered business. year-over-year, a That's setting currency. great mentioned, our growth annual constant XX% The strong exceeding ARR performance the return of of productivity

Excluding logo constant as $XX a the XX% expand sequentially building by blocks expansion relations new measured rate. for same. which additions combined was we adjusted existing and sustain all The currency net with the the well down remained Dynatrace million, XX% our growth X perpetual points, ARR to as percentage up platform, rate license basis, The growth was customer or how enterprise from ARR QX. our reported, roughly wind on Dynatrace

our global ARR logos the new a logo the was over said, landing in to very of QX or at new represents a been adopt This a growth quarter is logos logo. they're in net compared new was quarter increase consistent environment. new customers. the over quarter of which over customers to COVID new per year little new $XXX,XXX John we the at with expansion over platform, the logos added added a coverage. strong, consecutive land eager with past growth new Dynatrace in for As last historical very in XXX%. with XX of the expand rate, XX% ended value first the soft the XXX and we XXth We year which see This X,XXX QX modules trends is above once Consistent our evident have Dynatrace and

customers result cohort QX average QX have an to well ARR customer number in the with cohort. three ARR ARR nearly increase As per of three by year. modules over average XXXX in customers more over it strength this continue per both expansion of and the or over in of than our of XX% to see XXX increase modules, this, an Dynatrace with the are XX% the the customer. a customer using on and more customers and year. over $XXX,XXX our $XXX,XXX notable of this or now We continues we using three of to modules per increased customer last At that last end customers was of Adding more per

revenue. in Subscription to constant $XXX was currency. was end or increase million, XX% the an the increase for of the representing on of XX% revenue or and XX% for year-over-year, constant XX% of first $XXX $X revenue Moving in quarter million first currency. an high guidance million, year-over-year, Total quarter our above

margin it of performance pleased very ARR to last associated margin as total year, our reflecting very for are investments for the power make margins non-GAAP and respect further to an gross in with our to was investment standpoint, Dynatrace marketing. last quarter a line and the revenue We sales of healthy first With strength solid growth. XX% From of with the the validates we strategy accelerate continue platform. progress QX in investing quarter and

approaching is employees, up XXXX of and That's organization and XX% $XX level investment XX% R&D revenue. our last Our year, from million targeted this we invested quarter. R&D of now in

our we invest marketing sales grown sales rep focus XX% has XX% in commercial development. to by year over which growth. brand we scale partner the side, to continue as and and noted our Likewise, On tracking is continue organization earlier last the dollars pipeline organization on

revenue. targeted up sales over are XX% Our investments year and within and of zone XX% to last investment of XX% marketing our

run With a levels these increased investments, of to business. we balanced continue

operating to shut high was in mind we quarter the of XX% significant led margin first the non-GAAP range XX% operating saw Our and of the last revenue income keep above in was our how in upside. This of year last quarter profile exited $XX million, in the a XX. year. of savings $X Again, first guidance line half to for down to due related end first more margin we non-GAAP million with our to QX compared COVID fiscal

high to a income the was share. guidance net million the $X.XX $XX On line, is our or This non-GAAP per upside. primarily penny above due favorable revenue range end bottom of the

sheet. the balance Turning

year. continued puts We're healthy cash in had million last in to period investments and to compared it an there same we an strategic growth position where accelerate $XXX with us XX, strong opportunity to our is pleased believe a areas. cash, business selected consider June generation of As $XXX million increase the of of our

with good is Our to the associated four Though which to the the QX a extremely a RPO, our free and that understand previous recognize position year-over-year. on for removes XX% revenue. unlevered would over believe of business with about guidance the of metric of to us remaining we million, to The financial of become RPO performance at of to XX% deliver was year revenue because cash of revenue ARR this I it $XXX or to it's XX%, XX% XX. may million a QX portion achievement we performance in current XX% year. We're last $X.X an continue fiscal discuss we to end free to future, the in view of $XX increase due our billion, of best next pleased to last year is puts for the increase like contracting and was meaningful changes. over obligations, The a on was as flow unlevered billings quarter more basis. their Remember of best flow start the which of variability full variability, for cash expect quarters believe an season strong metric us the measure

Now, let me to turn guidance.

last to As growth to ARR least $XXX our XX% at I expect ARR we in of X we XX% net percentage XX, $XXX in to outlined innovation XX%. expansion mind over million when blocks making ARR and the and to maintain Keep expansion over wind XX growth XX% growth us to assumes currency. XX% With XXX% X core points between an that will down. to our logo be previous year-over-year, new million, quarter, point is XX% are we headwind up ARR rates across respect are of in to percentage the these X license lead or enable believe to This and increase to XX% and rates the sustainable rate fiscal fiscal guidance due growth to to midterm. building constant investments These guidance. commercial the perpetual product compared

QX headwind third little be and about thereafter. expect over then in to points, will drop X the and it We X quarters decline a and to points second in

be Excluding up seasonality. XX% rate and basis. growth to year ARR license is year-over-year XX% headwind, the discussion currency our on perpetual to expected Wrapping full constant ARR between adjusted a our

in add our back followed the year, being past, QX. the quarter, strongest half As our we outlined have with by of QX in to continues the business strength

be up That's XX% in subscription to size in Underlying rates growth increase to $XXX is And to expected we Moving total XX% compared XX% or to total $XXX and revenue strength year-over-year, XX% on subscription and million of currency. by driven of between be currency. full million, and when to to for million revenue constant for continue revenue million, and points subscription constant to percentage to XX% the revenue revenue and ARR expected the expect growth. $XXX revenue, revenue subscription to previous be guidance. to that up XX% an XX% $XXX XX% X year-over-year, revenue, year of XX% is total to our associated

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

R&D sustainable investing and are to sales for term XX% revenue we message, in to result of of revenue. growth non-GAAP the XX% higher consistent proper the standpoint a not the a The to the continue revenue marketing with be dollar of of we around is business. believe XX% guidance. XX% for investments of year range margin for levels the this long of As the and We XX% be revenue and of prior guidance operating to from to of

is For year, $X.XX previous from $X.XX of a full up non-GAAP the which per EPS penny expect we share, our guidance. to

Our investment assume free effective cash durable and and as a margins. when unlevered for to million rate were guiding XX% unlevered to non-GAAP EPS calculations I able or million, consistent cash free business unlevered growth levels flow continue delivering year. be full to a profitability it guidance, our tax plus of balance is expect a combined free growth revenue. our these of To XX strong to margins continuation XX% net summarize ARR flow year just of the to prior income $XXX and guidance. rule with non-GAAP cash flow of $XXX At XX% cash non-GAAP of we mentioned,

of XX% to XX% From revenue at standpoint, to million total up and be the profit XX% our revenue $XXX.X currency. is QX XX% quarter ARR the XX% about $XXX $X.XX summary, to year-over-year be million $XXX of XX% In performance to XX% very representing healthy between us. combined or high first momentum non-GAAP revenue income expected a the XX% non-GAAP We and $XX strong opportunities to ahead with top excited constant million to million remain and to million, year-over-year XX% pleased Looking between and growth constant share. of expected operating very overall $XX of $X.XX Subscription in expect we to is in with currency. between up line and $XXX or million with XX% be are growth to margins. EPS we per

ongoing the mentioned to John market continue dynamics market towards As us. the drive

‘XX the investing we us. are rate and are platform and TAM to with ahead full expansion And we accelerate and and Overall we durable line open in see believe billion questions. of that a Operator? success we $XX We module we the go-to-market will growth continue well-positioned expand to for for beyond. commercial fiscal to sustained strength address in

Thank Sachs. be and question today Rangan session. we Instructions] is now will answer question Goldman [Operator And from conducting Our Kash first you. from coming

line now Your is live.

see tens relative do base landing relatively scale you age fees very of start the the commercialization curious high of deal, we model very do you that a you and multiple quarter. today level should out have pending thousands. much to the XXXX scale what be thoughts I’m said potential where have you to its industry thank where of at congratulations the of [indiscernible] target able are to that you to it successful points John, broader [indiscernible], to at on your of think on true Hi, operating of you multiple a to whereby customers will guided customer the business high get is how about Dynatrace you business as kind of the point

this the that have well very make and more high you to about you you sales a you able points company out As that the think base, much strategy term XXXX Thank so you wider how know target mainstream? of landing channel modules do I how the commercial is a much. even spin do across extremely user longer the have you customers, do concentration and

appreciate it. Kash, Hey

our to stay to business is precludes as being We’ve from So scale first market. able down decided nothing focused. just that platform there a

the we few these extend lucrative side the first global as which is sort XXXXX. most of we of years what see on So business the

all is of by that XX% spend In global fact XX,XXX. IT about done

that we are huge of and in market massive a looking itself TAM against it's at. this So

plenty customer modules across of and out of of every set to six we more is have tomorrow. room whatever envision for sort scaling growing the that we and continue today in there we, So

It's So like are. paying we focus. We off. like the where we

are But comes at We're to numbers. the high to like global or said high XX,XXX supporting And being when it transformers. precludes you expand We I really just good at able go good further, see there's digital us in can time nothing to our down market. these scale end, the that from it.

Wonderful, thank you so congrats. and much

you. Thank

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

live. Your line is now

Thanks. Hi, guys. Yes.

So about and sales I wanted that the you're to hiring bigger to be very now possible? make growth ask to and to XX% to new bigger the the you able consistent that changes especially new With ramp numbers of you productivity quarter-over-quarter, had what make reps. of you're are and seeing out that reps getting the have increase adding

questions fan can onboarding great sort of need an like we're Great, of your doing expansion done management, out organization as scale, lot well sales of anticipating field A as program, the Sterling. comes the headquarters. all of a a it from growing because be you into superstructure via

that's would we're successful and XX success. focused attracting one over very a that's company that biggest on high the So going for talent management sales as of have we is growth, say that sales on. the the things on think customers a the quality I of change But us months the combination focused one last

to end scale customers, get to can't of up sort of developing of the of quickly, little think just organization sales shown the a a numbers. dimension opposed portfolio drawing list, get them of last culture bit is The and just in sales coverage some job each the as actually its reps that and they they I great better talent a in all. can but So we're it's of a talent doing with to

And good. been, all go deeper new it's coverage. We it's off. And helped it's it's also existing customers paying us It's faster. customers. significantly We broader all with so reach with

Thank Fantastic. you.

you. Thank

Next coming William Bhavan question Blair. from is from Suri

is live. now line Your

Can thanks. hear okay. Great, you me

you We have Bhavan.

little Great, John, want great, the competitive a on all billing here. a RPO I to great was touch That environment numbers initially, around. and bit congrats.

competitors. the sort by model seen some Over deals pricing by of and being of new last months, we've introduced those of products but XX some them you, both competitors, in changes,

and Just some front, any sense change, the change terms in of of what win rate. around any in then competitive in you trend more, see

players to crowded enterprise can seems there's Morning cloud level larger everybody other a around it's in sort been it is scale. the them to worry from hasn't gotten In changes. this The little Bhavan. at change ways nor competitive perspective, change. In this there little some more Really of space. most ways, the been minute very kind our simple. begin on handful less with. is about pretty has it some crowded focus we There you was level there. than really Certainly fall any transformer that really get away that scale been, it's the digital that of play of And to of multi dynamic

is as observability, of a platform part more a we refocused tracing, ago, of you tooling, our platform toward rebuilt etc. of happening know, a the marked their which and piece of is is they tired side is where concept consolidation really want to much customers see that, all sort the sort and On of shift there other platform we the of fragmentation what anticipated years metrics, And when their seven logs, of more it. their are

So also we've expansion It's strength sets think quicker we're us of seeing. the and we we've us trying landing our it it up And landing to market, gives for been in the in concept progress been new which leading, a also expanded and zone. because observability zone.

of and is other probably for where the dimension that's So it's this there some changed change, the good for us.

really other about little observability, company, really especially of one a with shift no, But the a I get at guess selling of at relatively your remained the look love it's between when one split you're color you consistent, think into or around that's you towards and really, departments. adjacent into telemetry, as right, look And I'd I you're expanding solid. cases partnership when sort too. metallogenic, kind to used is Yes, quickly, the right helpful. for with me

that, like selling maybe to versus So of an going kind used usability something existing into or modules e-commerce or case. more

and guys want So sort they I've of center doing like measure. the everything the data got now

how So out help think through plays drive me that versus to broadening deepening NBRR,

suit of the multiple and consistent expands that modules. so honestly are varies abouts does it, product but so very we're a to landing a the is to and if provided it that elephant rapidly. where that fact layer of with more zone, the now cloud that's the we're vision the staying a to multi sort That's care infrastructure landing play the zone vision even and is them in adjacent to know that's from so lot gets not we platform hunting The focused big expand with planted just I application somebody at to a our have different landing when by We we're want but The more and doesn't Yes. [indiscernible]. what, they one ways. all once of teams module fragmentation characteristics, buy time, use customer spot. zone sort of in that so means good the group bit of moving sort love of tastes that's the between already and somebody move to landing large the that little we're of customers most as just first different seeing different what who

pleased with So in module different two that the expansion comes ways. really I'm that. But

other module companies off doing maybe I our ARR businesses. can $XXX,XXX, we're base surprised to quite base We're And up over with the the growth, of too, the with six I'd from it of nine be per to and picking we to we now next about progress. it chunk over weren't because little That's plus think Overall we year-over-year, growing a and the just but customer. customer, continue. grew we little well pay where XX%. expect ones vision have large our take that straightforward of excited a with obviously, of be multibillion average if customer super progress. XX% percent the they customer when months. great we another they're the of just those it, of sort looking initial larger take Some a time, growth more dollar at time, customers more of And off size its plan nearly three

Congrats. that And for even my Yes. No, questions, Appreciate that those are guys. it. I see you taking and numbers. great infrastructure mean, grows can XX%. thanks

you. Thank

Thank you.

Next question Hedberg coming from is today Capital Markets. Matt RBC from

now line live. is Your

my congrats And for two the have we congrats seems forward future look on year years here. of It lot think the mark has taking questions. quarter. Hey, a the And IPO. But to guys, I fast. the two in on to gone thanks also, like

you success your John, And on to milestones. the just historically, I a alluded customers the I you're monitors overall customers applications. your modules or than those like XXXk. congrats base more with said observability, both these just So beyond three way Obviously full you've there stack full XX% think were know to into you in that monitor? to apps monitoring, is number stack XX% of different of if really about move But their having you think penetration

Yes, Matt.

advanced environments segment. blind they cloud usually the impact cloud where hybrid. It's right, there's more look of at a quickly starts lot there, Dynatrace their we but get if in stacks, but they other every there's the to spots, most or to a them want app of way that it stacks, So complex also expands either environment in dynamic, where that lots is to much more customer it, pretty app

they're something usually transforming? you are transformers And characteristics to why multiple from have their something, one so moving digital So otherwise, of generations. is they that

sort hybrid the as of and then sweep And out, so elements we modern talked start through back environments, about we cloud supply most we've cloud advanced the those and applications. in before, that come

from things to Oh everything sort is them The different sort a our fact People digital of is I other and moving sort journey. it's take a said, had will to transformation, characterizes there going the customers or as of they're of It they're the hard brand and continue there, long something they the are minute of time, this. here, end peg are a before, on evolve. way to that to new expansion. to look us, is So

So today. massive billion just is where multi with and certainly that revenue. continue sort There continue look doesn't this It us and the opportunity our at we're as of and cloud footprint, they're just reach is They our space. things how we're across I companies, see sort lead dollars into at early growing all matter, and we ahead the modules to of rapidly. expect that of expand all our enterprise worth some customers. will growth exactly like do to a to great and at scale come really And I evolve we capabilities these in the look at fast what of will innings. mean

along to your of then, do of great what to it Can authorization. have look of year federal And year? your in like was the exposure and you. Thank see forward to end us expectations FedRAMP AWS that start we what is your sort it. on competency sort guidance as you government with the prior terms into you you this remind federal awarded you to spending Fed think about of how Got

federal the think to a in. fantastic No, I market Yes. us for opportunity we continue think is expanding

relatively early that. are We in

it were fact, about doubling have down offers now small XXX% about It's progress are over The there. doing. year-on-year. significant, a we numbers. well quite team that a talked making in still we it We we think the considerably but I good year is ago, sized

we're the as think the said things some extensions like we're forward modules, that more great are and stack be XX this bringing government some XX we're of moment module, and in the is out some piece time. new partnerships with honestly, as at that with, app well, business, team these to with we look in progress them, the made. far meaningful building has of Fed extremely going but pleased from overall fiscal of the really things that a with to I And

It's an we're them. so from great important for thrust. And looking things

seems to commercial government Now, as as digitally like transform it certainly side. needs the just the much

So well guys. done,

you. Thank

Thank you.

is from today of coming question Next [indiscernible] from Bank America.

Your line is live.

word Hey, just award? does government process about the what to congratulations nice competency guess wanting dig award? take? questions. that I the John. wondering, platform's an goes I on could the like what How that. for you testament a that prior of really I tell I into us Great capability. Thanks achieving on for taking Kevin, long actually getting the it competency award my with on Hey, is AWS to a that question mean bit process of Congratulations. that quarter. little was

It's customers that competency technical you more review. actually Yes. about that earn that's is it, a success with joint really about not field. that's some in the

that So that's that's a what more bit one's little about.

a have AWS door. as it's that that community AWS pleased calling get were other hyperscalers with the there. the It's with to come And we card have We federal But and winning well. the great community. business It's partners doesn't as themselves we the whole not relationship that. in great but a just just

massive earn it still it. hard, as a to have is it sixth finished the spend, just I up. to that go as are leaning government but as can see everybody I U.S. for think the because mean, and I us. IT help You like federal Slowly, spends speed they country we're as we into transforming. digitally probably in we world And far hopefully, spend, it knows, opportunity the them

I product the positioning at And the the just Thank really for is should guess just future overall one strong about? you it. into my a the Got maybe taking be me standpoint, looking results you. excited Got getting or thinking we most the an Thank of the from demonstrates from within questions. you standpoint out that what power opportunity platform it Dynatrace and opportunity. it. looking up follow

excites spend there's cloud dimensions skyrocket. Sure. us of I to course, Well, to I the think two continues mean, the that it go overall. thing that

under of but that that's the boats. So float many can sort underpinning,

I from perspective think, our two things.

to is one first be ground. that apps continue the The high

a continuous and it top going on of you're applications platforms. to those you're transform unless put put going digitally driving cloud able be innovation You don't to and on platform not to unless you're

super are stack and strategic we're for extending So is just full the it stack at and action us. gravy the good the where is to cloud then apps

other going that's was mean needs explosion AI at complicated. clouds the they cloud us. they're their to to resources of our the reinvention. de-risk on, human handle as is that ability We're complexity very of complexity The for and look scale best platform extend are that's And our that's automation to their core do data explosion. the perfect consistency, piece these to at analytics and part to programs allow going drive that, themselves first extremely that help outstrip core, to keep that up to to the And further. that sophisticated going built everyone we and analytics to I realize some and

exciting us that buying big one against the all up matter and at starting other that's is the not that practitioners. community, certainly because at And the no us. consistently ahead there super for that's us that's So one a just that's win technical differentiator resonate who's of that finally helping is competition to

quarter. Great. guys. Congratulations really Thanks you. my Thanks, for Really, Thank taking again. questions. great

Thank you.

you. Thank

Baird. Next today question coming is from from Ruykhave Jonathan

Your line is live.

if Yes, about talk good you I well, am morning. could wondering pricing.

of You command pricing guys comfortable resource in with the curious from increasing thoughts your to on strategy see we competitors. how you a models various products. on are of for have just number really But your able light premium that consumption been just pricing based

too really about there's that honestly. think little market, in noise much much I We and sort seen pricing haven't of a Yes, bit the change.

momentum to digital aggressive. or use their try of shifts really certainly But to pricing lack in a it's marketplace. their transformer aggressive impact, seen we haven't in for as the the where level deflection not be people sort sort pricing much need of enterprise Some of at of business. we We're the

of our folks thing We in predictable a We space. a is things for can't something a sort all dramatic for do moment are see move customers. most sudden anticipate, worried And we this us this a off structure changed. we're far reason The pricing where think. of and ahead any point, that nor packaging of consistent get live We and for sort appropriately has our of hate we We overages for of they don't bill them. all what's how time it. to that that or see enterprise too us in of they at working know and these sudden that they

I So where are. we like

them. to is. and sure I listen with smart, And our we're customers, we're that the transparent predictable think anticipate and where market make we

you. Thank John. That's helpful

a I use one you or analytics relatively off question repeatable that the consistent motion staying second emergence new a I that seeing that curious just any applications it drive have a can is Just it's know a product? business you're more if product. you're is of sales but case more with

They're They trying monitor revenue new don't, No, their to modules trying that module what the be talked When logs. really transform they're of to you innovative, itself. the to put about. they're do cloud wants nobody don't three really that business some more expansion of more of drives it's the to streams, it's expand business. our, want to one we about it They and one find plus infrastructure. trying is think agile

on still in, in the And to getting put exactly analytics need this measure, getting that's experience pieces business where the something, you're you you value the the but order piece outcomes business output all so digital you what experience expecting? accomplish to expecting? the and value. measure the business they come Are are is customer you're in. They the And

you investments do get the investment in cloud IT your are on why and and of digital spent. that to kind your off. whether understand not do return can to the they're not transformation you applications making for off, what platform, have So you're paying And if paying

waking infrastructure the up they're really us. important the module to a it's to value it's other of at think do the end. It'll more are that continue and just the I about It's for putting more in. measuring transformers the not be So fact digital and

John. Thanks, helpful. Very

you. Thank

question Next coming Barclays. is today from Lenschow from Raimo

Your is line now live.

John on you behavior in like some from And looks there. guys talked of progress that Hey How you security playing you one follow quick do see you out for realizing stack see mean, be see getting and of data that up hub well will a it have the more security out like will question you. on the time. because the than then the terms natural do security thank about important. early app I like Kevin. they of more more how I seem evolving as over are you

a we reason production do where we scanning space very did in to without Yes. hard as entered greenfield see we the is overhead. Well, continuous that it it's

in and out we see a have fantastic entry detail, see point. we and technology instrumentation the every exit level We every everything, code

second unprecedented. vulnerability intelligence we have score a not, do engine, allows what's And and So determine you then those to vulnerabilities. and in, an that we we really actually really a the score have visibility is is AI that built what's thing the

can your the Dev security of you things on always So keep for limited side has team to spend time things. of sort this the prioritized on

we combination already So that simplify how we're production And scan others and And unique. world. very have to to just in that engine while to is make are trying figure to already it out there. the we help AI

we unique of It's great of have the the intelligent all, in. to course, application tremendously. observability, cloud if a very believe but we space. expanding have it's rapidly it's that And disrupted So angle stay being we place come of that in we do. a observability it in from plans application, we going be zone, sort first behind to a

doing continue we're I we'll much of the with us in competitors And worrying pursue served the moment. and how what what rather to well more strategy we're and about it. than the it So past we are at too think focused customers maximize to has the have value on that doing

Perfect can place So the good far, from back trials what we you mature, of so is needed. so spot fast be. out it hear and doing volume. How hundreds this roll is on been we can we've and we to

and that like one kind RPO if any here versus drivers or I'm more RPO. you RPO are long said really see? we about there should term the more will up exciting. sounds Yes, you for are most for than just forward, know you, of talk important we come I short more term Kevin, think trends And going you. as But

longer long Is bigger there, from see faster you. engagement your Thank than like So you RPO duration benefits some short and term going etc? term. engagement customers,

subscription fully we about seen slight uptick have was average a our as contract right having, approaching I it's So moved duration two and in years. a we've so now to business,

they we well. we resets customers, billings multiyear rip revenue RPO sort But generally signing deferred of and of we've and numbers contracts from agreements. is existing as that the numbers on back and sort we're ARR to and it's So as the that's But replace focus reason the investors are standpoint. our where gone out

So over three to of couple them the we metric. the if to in cut they the on you customer as ARR the next is It's variability metrics as continue one revenue the internally some scale leading it's through growth just agreements, on indicator we think get in subscription create focus base really grow, those which and is to we company. and around want we years to why as our noise to year everything, going certainly our all best different

Congrats. Okay, sense. make

you. Thank

from Next question is Citigroup. coming from Tyler Radke

live. Your line is now

morning, Good Hi. everybody.

find nice I logos first that ago. the a the with in that progressed. year bounce conversations to you your terms doing? have flavor appetite back how ask to seeing seeing new are take from of on full a just wanted on of that kind for market the of the a you're platform? Dynatrace just landing given Do a you their Just give QX you us obviously those What broader investments So you're set in solutions

appreciate No, that. Yes.

a customers plus of year-on-year. And three kind So a of up approach. third land the that's it's platform with module about approach

years away. because we the landing take about zone. maybe the this That's Two a zone. ago, one landing sort to application item So rise observability talked of that concept as of

be and next wider now if in XX little for see observability talked we quarter-on-quarter a isn't up the XX surprised to months. about is that we continuing. which zone, consistently scaling Now, It'd landing that

of So I trying to game are starting that customers that sort it see more, can as on cobble think do yourself get that's never tired you we just start of they important It's move, of. a an customers things And to together. top of that are characteristic. kind to

always we totally when happy and out to transform do-it-yourself customers that they That's work. together AI old already They've have clouds and why in way. and already feel say That's the this the the that's that's, people all zone. landing again expand work. out the we willing I and do way other they the that in don't really they're find up it's help zone. complex. there them You that out And you're They continue more I'd this to characteristic like that the figured automatic And multi feel will It behind cobbling to important. tools it footprint already all means are find give approach. figured customers think that module

a but visibility are uptick, not logos flow And of those XX% So XX% giving. new strong couple with dynamics starting quarter, what Probably and as to XX% the new we in guidance of this see of maybe logo we year. term I'm are those sorry, little a long of and the we see do bit ahead guidance, those environments. we're we've that just it's think that ahead the this quarter-over-quarter, saw I us, good, to our we've characteristics momentum a throughout steady, year-over-year see been think

application cloud obviously that modernization, is or your changed kind like, private to really mix nice you of deployed just these follow scalars. in mixed expansion new obviously cloud of mix kind the deals one with just kind public versus native and private how kind think Right, hybrid of between the curious hyper But you and of about that where has applications how of some public kind that hybrid, maybe just up, talked of versus public momentum applications cloud. between as TAM about tied are of cloud cloud

Sure, well.

a So or run cloud but environment customers native not cloud general is down towards It time. on public observing because to people and over has Every hybrid containerized that environments. ago, hybrid our today. XX% trend of it wasn't that they're Over just going they're public transforming are years more five more hybrid applications their there's and into in cloud that and extensions. we clouds definitely transitioning way cloud in is lock put

mid banks, into record range etc. and mainframe probably just of behind So required data record In of Airlines, of the their systems to or modern the cloud They use. data, realize be front management other they are that's of insurance reach somewhere transaction we it's applications extremely customer go modern ends kind to their transformers, also that risk there it's set to reach stacks order you a some you running their support to have data, list back a to business. on sources an firewall. but of that run are in back tapped mobile the data all tech sources need company, that digital down system,

about over hybrid years XX% environments. And be our are So transformers will from way come. to the highly digital think customers of perspective, modern we it is hybrid, for cloud that it's some

the well-positioned that and We from world for helping to new. them are extremely old move the

Thank you.

Thank you.

today final JMP Suppiger Our from Erik is Securities. coming question from

is line now Your live.

Yes. And Thanks Congrats. for taking the question.

bit of you secondly in terms bit in light returning little stack are app some Can bit. about your the been a like about Palo providers of On and the now a competitive Are bit was sales you've you talk a little module that for seeing selling more the ago return a broad of talked and then to the kind little the it to year that from organization talk Can you or startups sales you've quarter normalized a the Alto of about you where likes environment? marketing spending level? little office. more solution

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of And so lot that's what gives excitement us space. around a this

down angle good. about out there's to greenfield market. is in answer The on comes to that in coming people talk lots is gap a when tools big is of It work? there The the it good. there and timing it Our is yes want does is we're

forward well are to customers organization chomping the to already On that sales the plenty there's to customers at engaging. sales that of and the is front, as so to bit with and back looking get face face here

travel in of some a our year jump think I for were all from fact, where up particular sales In big down is we we is a when ago. locked were

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So it's all a good of to goes whether our characteristics sooner from we're whether or but some pandemic the either back those it protracted perspective. normal are way it's

good, you. thank Very

the years that to stay customer we new as come. long and logos the ARR fantastic we for And can key and both Great. us Hey our of I about said my ability of metrics commercial in well and our as the , We're us. as with business that a thank everyone focused remarks. joining toward two on growth, dynamics our thrilled believe innovation. expansion to market per excited invest you for We're grow moving in the expansion expansion prepared we

So a Cheers. forward thanks from again catching and I quarter look now. up to

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

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