Dynatrace (DT) 27 Oct 212022 Q2 Earnings call transcript

Hello, and welcome to the Dynatrace's Second Quarter Fiscal 2022 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Noelle Faris, Vice President, Investor Relations. ahead. go Please

Executive morning, second Good me thank for Siclen, you the Financial Burns, Thanks, Officer. fiscal everyone, 'XX 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 filings October 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.

everyone, morning, for and Good Noelle. joining Thanks, you thank us today.

start Kevin on year-over-year. few top again, metrics line line performance XX% up guidance well, all million, subscription our across proud bottom $XXX and me up I metrics. this beating will again, a was am by $XXX balance extremely we with let sharing how performance key First, revenue was elaborate Once strong these with also which the quarter. team's year-over-year ARR operating Once minutes. million, solid XX% as

I'm top for ongoing new platform a building growth we that ARR customers. from smart net line to key fueled pleased blocks across a our will the at customers of XX% rate to a growth logos at scale XXX year-over-year blocks balance that these consistent QX some expansion believe continue makes Dynatrace and all XX to between We XX% And sustain the execution added durable new up to or two above business. report business more are Underpinning once profitability existing believe and that above growth plus a consistent year-ago. logo modules percent years building was we two again net for Dynatrace expansion platform The come. the XXX%. against growth to in by

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

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

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

predicts rapidly this and little by transformation trends of digital Let will dynamics. driven whether three At $X in being are me IDC that and start transformation lived movement. protracted effect growing interrelated. short the the on by across a market. geography transformation sit trillion the with mega We digital market has core digital pandemic or XXXX vertical. every It's investments exceed are

businesses to look transform. is for that innovative eating ways the applications first The are as world

simplify benefit AI real retail capabilities It's unified the in journey our First, nicely the that megatrends. and is more trends. are an on is us mitigate the Digital and these Take one of a to position reducing mortar and with imperative digital of multicloud-first applications run supply is of for three estate automation to speed our dramatically. and footprint be the who optimizing powerful three is all these brick will a customer observability their in while years and mega risk and all transformation long-term multicloud at online, and of security early of business from Leveraging combination and these not the unique transformations. scale loyalty event. increasing of innings channels come. they to increasing AIOps third these Dynatrace's application digital reducing platforms customers for chains, the increase transformation complexity, while we the profitability, shifting rise risk fact business The and second Cloud

Another of digitizing cloud licensing their flexibility. and who public online customers, assets, for entire their leveraging scale of one and our is example, capabilities, extending media library entertainment video

and New digital will into revenue the well business their new fuel streams opportunities partnerships, powerful branding new future.

of a our For responsiveness needs legacy to multi-year on engagement. applications XXXXs agility, enabled increases the Dynatrace helping security, a native becomes a just modernize to customers, few journey ease modern from These and stacks, platform Federal functionality for of and of AIOps of application hundreds are U.S. maintained advances modern efficiency. centers greater a is and data platforms, multicloud who scale effectiveness to and mobile multicloud transform, of for and primary efficiency to is customers while channel migrate cloud access one be application

superior are for numbers Our of these proof digital transformers. our fit

logos with HCA, quarter, such new Cloud container As applications Great and companies the last as PG&E, I that FAA, hyper Secret, native or one digitally DevOps we from scalar up Victoria's mentioned our observability earlier, Kubernetes year-over-year. all practices. up requirements and platforms added another orchestration, modern all transforming include way franchise and to XXX QX XX% in agencies and XXX in

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

the of experience front, to and eager the Dynatrace platform, On module once value expansion are coverage. increased customers they the usage expand

to Airlines, Dynatrace cover leaders of and Hertz, observability their global their Veteran all Department three as multicloud plus of U.S. This use Bell MasterCard, expanded American such of use Affairs needs. quarter Canada, and modules Dynatrace now

for and complexity scale stronger. as expand, more than the accelerates more transformations human business, and As faster gets advantage value the digital Dynatrace as applications and expertise, value drive stronger

macro for market expansion moving First, the in and new second very in that success toward automation for brings past, morning, the logo strong and is us. us. As capabilities transformations the increasing my you applications capture and us need Cloud believe going front this digital say continued we position to on heard The trends commercial topic world, expansion a market AIOps forward. powerful us investment put the in of the This eating rise in me of opportunity to the

in our awareness market. increase relationships We partner salesforce, our continue of to invest to and expand grow Dynatrace aggressively brand the the

Dynatrace XX% carriers quota stronger. We grew this expect been over the our future. past team XX% growing talent and attract to continue has at ability to foreseeable above for to never this or by Our quarter,

market is strong. Our

products experienced our if Our seller. combination differentiated, great you're happy well are and customers there's are a an expansion, of plenty for room

expansion government opportunities the cloud with of $X market our a huge spend projected billion down exciting most is have we doubling U.S. this This the the market, One platforms. in year underway on over U.S. market. federal is alone

expand new as months, of more Federal win number Over than the doubled we XX our Federal ARR our U.S. across growing and customers. U.S. agencies has past

of to our of penetration Helping agencies accounts this So in commercial both government off. with early growing partners. success are our massive is and our accelerate still portfolio paying investments market, our

partner and alliances to and strategic the integrators strong. invest tech cloud in continue are We results system

our grow XX% influencing the through And now and seeing to marketplaces is community we nearly the partner globally. more rapidly. are Our of transactions hyperscale leverage continues even

than In year-over-year. has growth marketplaces ARR more in fact, doubled the through and hyperscale

more success, of value and especially accelerating the project be Our recognition members go-to-market these The of experts for reducing their gratifying, the tell Keeping monitoring reputation AIOps and leader for insights application modern in We and partner $X clarify highest and GigaOm Market beyond sales for partners often catch as this voice an awareness to is continues story. business. leadership for opportunity in named component native our experts more performance observability important observability. for market. Gartner in across by rated named and cloud the cloud outperformer and and customer, our our continues and the advantage billion risk for helps in exciting to for dimensions third various scale approach Solutions, leverage Dynatrace us Dynatrace, to peer leader of or QX, efforts. community XXXX party scale of the brand ISG projects we an with Dynatrace eye review. the

modules. continuous The a third and and monetizable today final growing in topic I'd platform like investment its in to the of number Dynatrace both cover is innovation

primary a becomes observability market requirement. As

customer three count to continues module plus climb. Our

Now base. of over our XX% growing

stack and plus and landing apps and hyperscaler more digital experience are for for expanding plus and platforms with infrastructure We metrics for mobile more full logs, often. microservices,

automation, technology nearly analytics anticipated increase $XXX,XXX. kicking landscapes, digital IT value digital [indiscernible] our these strong to the organic data AppSec quarters, dynamic a as augment modern accelerate from time-to-time. cloud transformation and business customer the as do development gradually have ARR massive the is lead ARR team innovation ops, an we expand for plus continued cloud we Behind advances This team three To module this innovation AI is is the few average software the automation And in Our acquisitions zone our our landing disruption, would opportunity per customers engine. and landing extremely well for XX,XXX may the great clouds materially. and need roadmap, in ARR Global increasing. on and and continue over to success. both they next see tuck-in of modules With

team of differentiation observability A to SpectX, SpectX example classic security and of as parsing and and fit engine continue September our analytics performance acquisition will fit recent cases the both cloud strong to platforms of used great a disrupt approaches. a technology convergence accelerate to accelerate and in Our modules. value continues and is high across which closed

strong forward, be and could accelerated. where the Going fittest meaningfully roadmaps

smart let summarize, as augment several this that, cylinders. we morning. Dynatrace, organic exciting an fire covered a for important time way. engine We in continue I've With It's as all topics to our on innovation me

aggressively is increasing Commercial our the transformer expansion logos robust. rate and and We we base digital have across of long-term and expansion advantage. the net increasing. gaining differentiation We're market to our an a is strong, incredible new modules be to seize are continues steadily at investing opportunity, multiple product

future. long-term sustain growth to a XX% the business with We building leader blocks are category the a building well into plus

our into Kevin Now, us financial to take results let to me it Kevin. guidance. and turn over

And good John. you, morning everyone. Thank

As ARR million in $XXX with XX% growth representing million. XX% internal expectations That's for ARR currency. this year-over-year or for both bottom stronger have we John The great we commercial on 'XX. and all productivity sales expansion in quarter evident our investments the revenue across top our and quarter $XXX guidance. made fiscal line second top line, the and and our of above subscription metrics exceeding mentioned, delivered was another up setting revenue are up constant

perpetual the headwind, Excluding $XX roughly was license which million.

ARR remained adjusted net reported in the QX. a up growth our on that Dynatrace Our and growth component with basis, when XX% blocks sequentially as rate for same. cover XX% Please The an to reported customer XXX combined new was review was as mind basis. will I ARR building basis to logos our platform keep ARR existing as That's full-year and ARR currency from the on guide. expand by by the I impacted currency movements the expansion of constant rate. sustained ability relationships, The measured addition points

logo XX% first XXX was continues it up to growth strong, to As new John half and be logos. the new for discussed,

consecutive ended EMEA and time, all in see our XXXX notable existing quarter North the expansion see traction with At at This new adopting customers or the We of more was our the platform, modules customers. above across quarter positive same rate, which coverage. expanding in of to regions. continue We net Dynatrace to than for strength continue America. Dynatrace is evident With XXth the the value XXX%. and

was result, continues of Dynatrace to increase it And ARR increase. a in our XX% per year-over-year. As an QX, customer $XXX,XXX,

end or we full continue ARR average the and three this now of increased XXXX three modules. momentum customers XXX XX% more the strong an over the modules, by Dynatrace more were customers cohort leveraging past see year. using have are platform to using customers We of QX, At of customers the scale more customers using addition, observability three modules In number nearly $XXX,XXX. than has in our as well of over or for that with defined over

With year-over-year the end was XX% guidance revenue. basis, high year-over-year the Total increase revenue of for an quarter million high line to $XXX a $X the second $X XX%, with revenue constant last the year. respect $XXX Moving for Subscription million XX% and in above million, on our quarter basis, XX% or quarter last of of an for in constant above of a XX% currency. guidance, gross representing and currency. margin QX of the margins, our on in second was quarter end was second representing non-GAAP or on million, to increase total

investments we the strength very strategy validates the reflecting performance. and As growth a before, with you the see path the the us this extremely have and us. opportunity to to our our revenue margin Dynatrace increase value of line pleased We market ARR believe healthy we and that and continue commercial Overall, platform. efficiency expansion of said is right to continue innovation to of to to further are our both grow ahead lean growing capture will in both technology large and top

our R&D revenue. approaching in that's million As last R&D a this of invested we of XX% over up from XX% and level investment quarter, year result, targeted $XX

and we our On zone target these side, this of of with marketing the XX% up business. year run a the and XX% continue marketing sales and revenue. within commercial for balanced investments, investment Even quarter, we of to XX% in levels to over last million $XX sales invested increased

the to and in mind, the we of last $X bottom the revenue margin the a high significant Our Again, year the to the growth of in innovation. guidance shutdown. income operating keep was last non-GAAP related half that resulted savings XX%, operating of to flowed in COVID quarter end for to second above range we first million second continue primarily in our compared upside of due And invest through XX% the $XX non-GAAP quarter million, for line. This year. to saw

On million or per $X.XX was the line, non-GAAP bottom net income $XX share.

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

with we compared opportunity did us strong million, healthy cash to We in an year. generation to Year-to-date, with XX% pleased in business cash SpectX select a past this same accelerate our investments believe there's free $XX continued it our unlevered last to and consider as the strategic are our was where period position quarter. puts growth flow up areas

more to over quarters year-over-year. An of four current QX of revenue is recognize the last in understand next of obligation, year. due to a the it's associated cash an and increase full-year business as on revenue. XX% to or free I flow XX% The increase our as best portion remaining a we financial free force contracts. XX-month believe basis. was reminder, best to our the with at measure the may $X.X million, would quarter trailing The ARR On billings view the believe future, of to our was meaningful As unlevered the $XXX which million. flow a we last RPO approximately which removes metric a it of metric cash that RPO the seasonal become continue we of to XX% was expect over basis, performance variability, $XXX like mention billion, variability end Though is of unlevered performance

Moving commercial to XX% least will last the net making XX% we investments product innovation maintain expansion and enable believe and guidance, expansion on in logo us we're as XXX% at quarter, XX% new outlined are $XXX These over growth mid-term. I to XX% year-over-year. to as building the to expected of and XX% ARR million ARR that $XXX core between growth support be plus. fiscal blocks million to 'XX, up With reported the is to respect

investors the guidance. of increasing currency wind the the of guidance basis focus As assumes to ARR was by the XX% at basis eliminate in which to call, our perpetual guidance there increase XXX year-over-year. $XX an mind, we're the as keep on movement. To This I rates of Also, previous our or XX% think XXX in basis be is headwind ARR points guidance our roughly impacts, to due should I reported of constant 'XX license currency fiscal To comparing impacted to FX points range. about at roughly million of growth down. guide, was midpoint mentioned headwind ARR beginning XXX when the our as to ARR specific, points reported

basis be basis continue of decline headwind QX to XXX decline about in expect then and it to points and third will XXX We quarter points to roughly the thereafter.

headwind, basis. Excluding year-over-year growth to XXX of currency a the XX% our between adjusted ARR basis also to rate XX% on increase last to license is full-year This perpetual an points compared be communicated constant expected we is quarter. what

negative and raising as Moving of revenue previous on onto the for revenue, reported but strength impact similar as ARR to to the we're a $X Despite currency million revenue our ARR, full-year. headwind that had quite subscription guidance. revenue our not guidance pronounced based

million, be now to guidance, to or XX% at year-over-year basis increase $XXX.X both to of $XXX XX% to to currency. currency. We're our an We constant be revenue expect up when to revenue total guidance in previous and It's $XXX million points or subscription year-over-year between XX% million $XXX.X between XX% compared XX% our in for to guidance. constant million XX% XX% up expected XX% the the to also metrics range of midpoint raising XXX

continue We revenue expect revenue of be driven to subscription size the total and growth. by ARR XX% revenue subscription and associated of to strength

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

for marketing a be the to and up and when of a our $X of a revenue of XX.X% standpoint to revenue. guidance operating the to non--GAAP XX% for of which to revenue of have of business. believe due prior The XX% the to we year, from point roughly guidance. a we is communicating, not range compared results margin sales growth to of higher proper one are R&D XX% durable revenue We As and been be investment around levels of XX% investing in for

end up previous $X.XX guidance per performance. full-year revenue our expect of we over of high due on share the to our EPS to $X.XX $X.XX For the non-GAAP

Our calculations prior non-GAAP delivering unlevered non-GAAP non-GAAP consistent a XX% strong net free effective income we're rate to levels able cash guidance. margins. and At assume tax continue EPS investment flow with these of cash

to For of XX cash ARR we to another between To a revenue raising million $XXX to our million Quickly is when growth XX% XX% be to unlevered to be XX% million margin. million rule currency. flow the XX% XX% $XXX or full-year to to a at be expected to year-over-year there currency. of QX, approximately looking or revenue. up XX% of XX% free in up profit as plus constant an durable a of strategy. XX% profitability, constant or to continue total we're summarize expect $XXX.X year-over-year is between margin on in $XXX cash million standpoint, business to to XX% our between $XXX to growth execute we year continuation our million, Subscription of free and $XX $XXX and guidance, investment balance non-GAAP of is operating From $XX revenue slightly expected million to resulting and XX% guiding between flow and in and be income XX% combining million our operating revenue XX%

non-GAAP summary, In and growth Finally, share. we're overall combined the margins. top-line very healthy momentum second per with pleased with we EPS performance quarter expect ARR $X.XX be to our strong with of

And in sustained accelerate Overall, have we're success module questions. offerings. for and durable investing us. to our As and opportunity an RD robust beyond. incredible go-to-market And that, Operator? for with we'll growth market to long-term well ahead positioned the platform in open aggressively further fiscal John of 'XX in mentioned, line we and commercial our strengthen expansion we're

from your Capital Matt is now RBC We'll question-and-answer question first Our conducting be [Operator session. Instructions] Markets. Hedberg coming today from you. Thank

Your now is live. line

in you acceleration biggest of super cloud size of market alluded my script, lot guys applications you guess the basis, as mean the workload? the that deals ARR guess, scale? All of sequential on what I for be workload. seems in questions. bit was, And percentage sort what impressive. the as Greenfield today, I competitive and John, observability more Congrats to one it of hyperscale the quarter in for scope talk taking I really are think does the that Thanks about I a your of of question to this a was currency drivers in solutions? adjusted really if isn't see on the wonder a that dynamic more the also and people growth a new Great. the this just could for

Well, thank good you, Matt. And question.

We're the seeing space You're Greenfield right for in increase us. that.

shifts this something they observability isn't a of an and from market that that they actually tool market expands, sort tooling now, cloud actually can old market. they fails, environments layered find it customers with into The live our in that As dynamic fail. themselves realize

up, scramble when us scale regain for tooling. which new things that Many a them there's for pretty with opportunity we to together gives to provide at to a start their they of And of need kind so a environment, trying open risk. the the And it's just to show themselves. customers cobble over accelerates lower and platform visibility faster approach ability control their

we're what Greenfield in So we that up us ago. first is years And IPO growth actually it accelerating we areas. when a for saw from of a that seeing number couple open

maybe super you have so then sales continue the generation? a incremental the follow-up, greater think reps And extent, if guess I that a is road helpful. you sales to to on the at start a new to what meetings? benefit rapid getting plan to do a pace. have they And wondering, I'm back rep sort That's for of could add face-to-face - do pipeline positive as

organizations will face-to-face prospect accelerate Well, global thoughtful with logo we're call been to the And I especially approach sales new believe sort especially the sort aggressive as pretty world, opportunities. and help we both above since area. director already in on that back that's and the of XX,XXX organizations direct level customers, in on that pipelines our the direct around actually, the but the re-engaging as and and road do of well

Thank you.

Raimo Next question Barclays. from coming from Lenschow is

now is line Your live.

the If Can around sales think that it's you of new modules of whole then by sales How's getting the for you on you? Hey, specialized as of what's well. on sales about expansion bit, the in expanded the motion guy like kind John? you expansion productivity? I of how And functionalities overly think tracking that terms there, from do follow-up the to little that you. Congrats about notion? thank me stay you're kind you. on for new and the Or sales Thank what's like the there's a versus portfolio? topic tell XX%, kind situation Kevin

so well sellers entire our the of handle Sure, most the portfolio. all sellers, back direct

So dimensions selling confusion very The similar at or outlier to help who's in that's which of there's with complement products what we the have no of the are manage around CISOs. with overlay with and calling is there's actually that There specialized team separate no over they account especially on of how the customer some customers, most point friction observability. various very certain that module, agreements important. that's, only security, are we a skills does the think AppSec

we're climb there. So we And kicking our the done and new at in talked but those automation quarter steady year you to and of lean hey, with we're only cloud really that cross the we'll sell, muscle one yet. program, pace. that's modules sort without plus into in half getting can AppSec numbers, continue And a when ago, that's and fact strong about, the the module three every built conversion we sell a great quite cross now, a see

that to today. ago, now against that, are see strong, that it. multi-module talked and executing two strategy organizations just we years So the our that and we partner And sales executing about motion well organization have is that we're embraced

Kevin. Raimo, Hi,

around your on question follow-up productivity. to Just

last first XX in it's as in So XX%, organization of quarter we've XX% of great past on been sales stepping growing the plus all, you couple that of terms know, gas been this the the growing years, over percent. acceleration

also I'd attracting we've we're invested super people great given onboarding a lot awareness a is brand in the there. the doing bringing of So visibility speed excited across up company's And organization. well. and to those job, talent as that's noteworthy say great

start see keep not of the probably productivity commercial that when on obviously a whole reps. extremely if around a gas we productivity to then much, view goal levels, to eye is everybody To little step our on I organization bit our relatively is more. engine flat, it out hit well, an We part think do too creeping few and want And So up be certain of we want more is we is sales on lean what sort productivity, generally productivity we lay we to on productive. keep working to go the too heavily.

done. Thank you. Well perfect. Okay,

Thank you.

today question DJ from Canaccord Next is from coming Hynes Genuity.

Your line live. now is

Hey, guys. as the the through the via there partner John, continue difference to versus of thanks of directly? also hyperscalers. of congrats any the quarter, size and what the deals profile And mix, the in Is you're part is influence right a those increase deals notable in closing attracting typical

momentum. But get a really partner now. of to and not them direct no, speed they We've for a to had DJ does to sales, engine. sales quite become quite gain this Operation really. while our while strong And our it take augmentation up little a

And ecosystem piece is parts will more include six, transformation a different global of cloud the relatively will SI's entire that XX the their think of different so What contractors? they're project and it. and So type deals an are is five, a similar. deals little of piece so bit of, be general

different from in So standpoint, for of directly. on so the well, how you of that market. what Dynatrace bring very in deal their that might to and say, But do kinds in they cases the motion we use and they use deals is that's similar and they kind the move

there follow-up. Kevin any is to like And you're a get as kind comment. helpful. expansion. bit I Is retention, And way default on same? net the that's levers to maybe north as okay, of XXX a Yes, more of the seeing staying it trends Is is of granular then it in know are improving? base of there the multiple kind part dollar that,

impacts the maybe maybe most So just having what's there? unpack

Sure.

out some we think in between of I out actually put So the but we our this break deck, expansion investor DJ. companies visibility the two

last been breakout couple growing if base. in expansion quarter. up. base coming been the if percent, and last logos from And from I in new that just quarters XX% couple expanding And has what's between of XX the mentioned fourth growth we was So coming growth the the sort from ARR over what's when quarters, in that stepped the plus we've coming of of

So to that QX, And then XX%. QX, that sorry to went in XX%. I'm in went QX, in

that's rate. that of net So indicator of sort expansion an

has know, you you expansion specifically As overall don't the which been but rate, expansion to contributing growth. ARR we base the growing, net the is from give

you, Yes, perfect. guys. Thank

you. Thank

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

is now line live. Your

timing. perfect Yes, thanks. That's Hi, guys.

that maybe of to modules look that net more applications? that versus So much segue how expansion, on is when at question you more is,

It's applications the it's won't bit environment. quarter actually as application I faster applications. application further Everybody's that growing scaling an than beyond sort or more two evergreen a little the module expansion because every was I've it's it expansion adding ago. is is, of said a applications, is faster, before, say materially But than

believe a it environment a to application And penetrated based, like only early would wide so XX% technology we us sort in have the application really their we're just still to growth we at of XX% applications deep like consumption the by side believe innings continue for we're it's XX% because Dynatrace. areas where mean, And in that alone. most we're I customers still most to of we XX% have monitored

that So we room grow on question no lots the to even more room grow and side. there, of module to have

wonderful there's go. of room we're executing, market. to, going doing a I just we're a It's more but much good think so So, to job

That look AWS the that's else? And when cloud business the maybe private for mix you one versus characterize of you versus business new would in how something quarter, Azure that versus makes observability on sense. GCP the at follow-up, versus quick

It's at in probably our closer whether extension application environments, environments. us a extremely Kubernetes, reason expertise another really Dynatrace. logos, the least transformers the our XX%, are the are digital all coming our combination this they're and the favor drives XX% includes know You customer that modern of or there, new public we global XX% The cloud for why in orchestrated strong cloud fact to because side XX,XXX, base, that of native just to of is so business. out those hybrid cloud,

to old companies they're modern view that the everywhere. a cloud, what new. is But workload real as get So business headed. the they And drives from can our Indian is are migrating modern where

Thank you.

from coming Baird. is Ruykhaver from question next Our Jonathan

Your now live. line is

guys. the performance. morning And good Yes, congrats on

observability. starting that some value kind potential the vendors, center? Did entire over talk GitLab competitive ability lifecycle time? how a about impact drive including as to DevOps a the focus DevOps and of that we're platform I'm DevOps view it John, And curious, these on see across perspective of you from notably view just to you So, their position

up or above having CI is, do answer CD impact tool kind as Well, there. the over intelligent, out of and view time we the along because automated short don't approach the sets it scale of sort competitive to And deployment the kind different of chain same what kind outdated at sort approach we than observability everybody GitLab. bit path sunsetting that legacy including code and platform, has of a different of of much approach to between of tooling an multi-tool production requires little that sort pretty

way the situation competitive a not but sure, of for compliment a kind it. we view it's So

Okay, that's helpful.

have, might accounts. XXX it question I but a potentially lower talked value us be Kevin, about you've few churning for second more The

the could some just be including might turning customers, on about on customers, more platform to of then kind progressed impact has seeing and that churn talk those maybe anyway wondering if that you how you success aren't if So seeing quantify meaningful ARR? are into to - other accounts what hand, I'm those you

our - mentioned synthetic on of turnover Yes, couple the synthetic a seen of sort products there And customers that have quarters a few that so customers, lot with last module some were in XXX we customers that of monitoring been one and that. have we've products. are these single running

this growing single but We you terms at in successful some logos, modules, more want we've but been over new land new with very observability point, logos, also of players those multi some not time. to know, do customers module

ARR as standpoint, sort So of think at churn it's the costs, yes, customer look line communicated nothing Keep an seeing that our quarter of you out million it AR mid-single fourth of in there. when mind sort from dollar in we're number. I we segment

count from not meaningful from AR a So customer and standpoint. meaningful an standpoint not

Thank you.

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

is line Your live. now

observability your their morning. question. first to types my speak metrics maybe is, Good on or part of just from net customers increasingly what things focused these part a want could to enterprise I And question. Thanks ask solutions you deriving to are taking two the for measuring days, being business it resolution, score like incidents critical to outcomes time for that me potential to promoter is still they about and are of like tie looking number observability example?

trying the results abandoned platform decks conversion And to different user other kind direct connect that the together and impact business IT more against results. words, dots that how experience should they on, and are a improve plumbing, well and and aspects outcomes. and should to the themselves rates, they unique rest actually measuring approach that, and their chain. kind the In applications so their indexes Dynatrace the of powerful to we these tool relative of it's to around services sort with very of all or app the the operators or carts, where of customers business business is one optimize of and should tie give actual all troubleshoot, of More how connect investments to innovation outcomes to between focused they good of manage

it a positioned excited is trend, for. and one that well and growing we're So about

capabilities sense a that. about than building quick Well, how acquire M&A expand just particular the on rather maybe follow-up. Could other of you you're of that terms might think on organically? thanks platform And thinking in aspects comments color as to perhaps the your for in make your you

great question. Yes,

cases AI customers manage, components if all because has approach operate always and automation of to manage the can that's easier believe to against we used platform greater first, Our we sort of that been platform. we of and degrees for apply

cash enough whatever of way and that that to therefore And our do. to kinds acquisition. it technology so well put acquisitive. And And and sense, similar we strategy top drive roadmaps sort where large additional continue accelerate tuck-ins can We have of to growth. in talented makes work line materially we business. we just And in we've extend extremely differentiation the the it about announced our Kevin find to portfolio, generation started want of SpectX as will be that talked a we fit teams can to

you. Thank

from is Next of Ikeda question America. today Koji from Bank coming

live. Your now line is

on and guess up. in I my We're quarter. nice just And thank questions. very follow Kevin, you that taking to John a dig Hi, strategy. M&A this for is

You acquisition. know, been about acquisition six It's the SpectX thinking about weeks now the closed. since

of here. So couple questions

did for there? good acceleration that it's technology And and I reaction as way customers the the analytics guess, has roadmap SpectX much then roadmap the out about And inorganic and the around partners to for a second, but I early, think was First, parsing it the how strategy? Dynatrace? still initial high with speed accelerate acquired. guess, how been

Yes, good question.

So of first XX that say say all, from of is a which I'd forward, kind to standpoint, bump roadmap significant. XX-month I'd

and ago, future where successful. before, of I all, we platform six tuck-in, you parts found next their is one we've right closing up, of the believe in and think feedback done two somewhere what to the and months customers we it sleeve have do So, and else have make nine which we be gotten about did partners thing? the be years into thumbs first And see between our technology timeframe of we they highly these will that more we of Kevin sense. couple from Second our we've infused that a when from what's your kind that been acquisition, and about in think kind up

in tuck-ins. Now, top line And as extending be I differentiation. our they'll life but said be And growth. There'll be smart. driving we'll aggressive

And impacts now? John. understand was FX follow us more we are we're bit help FX maybe if could Thanks, it. a may. I bit up granularly the you Kevin hoping a impact a what dig for right driving into around more. Can regions I Got the seeing

mentioned reported sort of $XX the of the of the about majority strengthening related was the by reduced million as the dollar and and points guidance primarily also call I year are dollar. A euro to Australian FX. in or percentage as a Yes, of so pound, came against that for two as growth result the

of those second operating sort the three we So saw quarter. we're that in, the currencies where are movement currency of the major end towards

growth, that focus like So as what currency increased at years. points that's But and call, as to about we on reported we'd in the which the sort is of by the for midpoint XXX basis investors impact. we the certainly in said resulted constant ARR

any normalize there. of trying headwind So to out that that FX

Thank you.

today from BTIG. from question Gray Powell is coming Next

line now live. Your is

Great, thanks for taking the questions.

my couple Just of a side.

full-stack then XX% think APM? infrastructure product? per in you're monitoring they that add of I customers if are Any outside highlighted, customers you of APM? Like, are the it taking much where quarter, could And of does And infrastructure last full-stack. $XXX there? go? How for use spending So year monitoring on spending update outside What today? infrastructure

base in you Yes, data, selling extremely think some the a quarter-over-quarter module customers. the dropped there, for way And doing range. so we're dollar, with versus a think many module, infrastructure, of And basis, about we about there's can on that, for a clearly it I cross full-stack package today, increase of because it as cents full-stack the just to the it as analytics in the our lot think probably is dollar kind the us log we in the about maybe when mean, microservices but together of how module. side well, $X.XX kind that the that $X.XX dollar application workloads be of in selling customer dollar on X%, on we're of infrastructure in by

we So expansion that lot of customer there's module with of a dimensions for every have.

I said, key as go three growth with the module plus is that well driver maturity. So of toe-to-toe with like going a its particular. module excited anyone and well. I in about cross-sell we're very can It's

Got it.

helpful. really Thank That's you. Okay.

Thank you.

from coming William Next Mielczarek question today Blair. is from Kamil

live. now is line Your

observability in I quarter landing zone third to last the a the customers land as the landing Thank or past as a toward attributed quarter. you. module approach. said third you've John, think, zone. three of on this, more from move And a away that congrats Hi, you the platform applications with

future? how that How faster and choose like size a the expansion lands expect logo expect of new to understand lands Or to you is pace of context, evolve? of up maybe faster And logo do trend the then wins new should limit long-term. better for the in growth there So to in point the you ASPs that new a where of zone rates? trend you to size to in we I'd foreseeable landing expect new favor

that driver to us. key speed we growth really important ask for ourselves, because acquisitions question a long-term logo the new That's is continue a definitely of

will that's And XXK. you've So XXXK constant. to that I pretty stay it say landing now it's XXK why seen to in ago, was a But we couple the more IPO years XXXK. zone in when the

creep that's and day has been been creeping one. up it that has on So more modules

do definitely So it. will creep to about continue some No I And has to observability it question up. that the shift impact believe that. to

jump Okay, it creep but up, will up. it won't

more and as zone platform pointed approach - landing zones more will broader approach, impact that XX% that that our is observability which you obviously landing a As third are today, that number. about is out is a that

for it's still I fallen have That have business, think fulfill not, XXXK, But, the XXXK. the to keep work it's we'll dollar close better pretty a might to to that many who's had try digitally it's even too short. it than that promises billion transforming always advertised, still up, just high XXXK, try to it maybe gets there, new. something not

So right I zone, do expect creep still time. it I up to in over think but the it's

a trailing Thank high up on close XX Billings after helpful. XX% a I think. you. in to ARR That's follow-up quick Current adjustments up for XXs. month And XXs. Kevin. RPO basis was also high

we divergence? and that of kind growth next years? revenue in to yet? revenue seeing causing rate What's to on aren't ARR And converge growth why fair sometime few So it is expect

what so. think seeing I we're So

extending very and lot pleased of of rip replace with all, growth we're growth also implemented and base and the three-year accelerating deal. an price. yes, doing more I think our contract, one that. first We've got We're standpoint, So of customer the a from RPO in one

to and quarters as revenue growth. growth is dynamic that's we driving growth But the been that's next will through get that - license wind that appreciate think probably subscription couple that there's think sort see But I bit will metric, those the RPO But ARR to of marry little nicely. subscription more the growing the the I of to do converge, So think And a to six I essentially each about. that's you quarter a the metric over that rate, important quarters, need revenue, as down. think I And the that's And start you subscription think, away. in ARR you other. of here, start rate perpetual four transition growth.

between - both there'll time. there's and a converge point. this discrepancy But at be those over both nicely two metrics pretty slight So again, they're grown

Thank you.

Bachman from Bank Next from of question today Keith is coming Montreal.

Your line is now live.

could you Hi, XX set? update the to focus on security I is, give where first potential the that if then thank you. on to the follow-up M&A next us How months back update I it, how including it to you the and Could us And your I could. question. a thoughts wanted you you what impact give an over but my have for least observe a of traction an and opportunity are on dollar-for-dollar couple security potential at recent going in quarters there? you've terms if now more would characterize had may just

Sure, Keith.

coverage, that of for about in a and XX% XX,XXX capabilities - combination like for to pieces at base, it be feedback environment. needed nothing a our things to of heard it sort point just to And with that trialed sort of CISO We've global still of is before, it module. DevSecOps well in And of the extremely us. as XX%, a So fits as opportunity few a mature introduced going now, we're are it this there's now operational this is we've about approve. customer how automation, enough a is Greenfield well still that same a

bit when said talked we track ahead customers So two AppSec a And impact on number, that that's scale we're add. it, second was office you technology maybe module. we still track key ARR see the either opportunities. it's see are what this won't with think actually. really been ago, of small year any December or little a about the a those so it in year it fiscal we January quarter of elements But really and We I until consistent as to But this a 'XX. half super about the have up introduced of growth

we be clearly have, we should are a far go it's, think and capturing think as year the full have, the be roadmap on from capture As where we we two Today the we'll acquisitions the a now to stack with over $X.XX on dollar probably stack functionality we dollar-for-dollar from But now and observability suite. with maybe able full impact with it's sort years dollar. of $X.XX we're a time.

Perfect.

Okay.

lot of to scale up. A room

investors offering think [indiscernible] three Yes. double three years? other plus plus that how is total module consider now? like customers offering Well, years what you your and years? for are that modules relates think from to looks would I six. your next In should should over expansion potential to does - the portfolio be five we three about thinking module three words, your model the over the Or next How

people me So just which use first than is sort things the We'll around them start cases, modules by of of all, use We includes different might products. we others. package package call all components cases. with other multiple features way let packaged and

kind strategy, bit So, customer different better. it's little global which fits a of XX,XXX packaging our a

modules, of amount massive a continue to have but gradually never we'll we So modules the increase will time. over

of bit really a dollar landing movement you plus up can about customers. million four little talking talking as to that customer think knew of think modules, customers I in the close we're halfway think three but like, we speculative, for plus go are zone which key with assist believe in reach exceed. a and to I we'll you talking ARR, ARR little five ARR that's a XXX,XXX, now, module, do a think But because our end start there. module is about how a the I about the XXX,XXX of way, this I see from all you can right plus And

stay underpins to over part growing. fourth to a really fifth, entire XXX% the long-term. growth And key a expansion and above come. add a our above it's You our a And and thesis long that's that XX% of strategy keep you pretty of for time

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

I your support appreciate attendance for today, the business.

you thoughts. leave with a Just few

business all, been believe stronger. never we our First of has

of Our actually financial was quarter take And very - results. when you stronger one currency. this for it business our our in strong guides constant us

thrilled proven our we're never about extremely has So been and well. strong, Teams that. as better ability execution

to for thrilled January and we at early much. at look or February the our - we're So when up catching forward next call talk you in the results. QX future about very Thank

webcast. Thank that you. today's And does call teleconference conclude and

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