Dynatrace (DT) 3 Aug 222023 Q1 Earnings call transcript

Greetings, and welcome to Dynatrace First Quarter Fiscal 2023 Earnings Call. 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. I would now like to turn the conference over to your host, Noelle Faris, Vice President of Investor Relations. Ms. ahead, go Please Faris.

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

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

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

some that, Officer, reconciliation Chief the me growth. our To with A non-GAAP, and Rick? As financial can release a please GAAP turn measures, reminder, otherwise non-GAAP to are to Relations these non-GAAP on reconciliation GAAP be currency rate today's see the McConnell. over detailed section during Executive found today's measures website. growth financial discuss the under we measures and we noted, let our between constant our Unless the And of will website. non-GAAP Investor presentation today of be refer referring call reflecting of to the and press earnings Rick Events call. section

today's call. you Thank everyone. joining morning, on good us and Noelle, Thanks, for

the growth to of proud a a XX% quarter at solid of about and strong constant In $XXX quarter fiscal $XX This me first business in the our and And a which, is and particular, performance share or Kevin of free ARR we the moment. and with mid-XXs and enable platform significant revenue market, value by in our our profitability in first am continuation I'd current of combined, the Dynatrace the of guidance team trends XX% my that million more in the in to strength year. QX view In came again revenue. durability to year-over-year details share our meantime, our of flow. a income delivers the currency. to million, of and us model, growth, operational market run this our Let start operating saying leadership cash will of year-over-year. business testament remainder platform at performance. increase high ongoing saw that our approach like XX% an our non-GAAP of adjusted I was Subscription

me growth fueling opportunity that with Let have been today. and start our underlying trend the market

Observability come. the in many cloud on we the stage organizations now well more our IT these growth evolution, security years past, resources. priority Dynatrace. for greater to us our the in widely observability. equipped said are the transformation as which become successful of cloud typically customers has companies of that for is our to places ability fuel near cost trend that Based confident as In an at opportunity Like estimation, need we've of digital are list and driving economic Dynatrace's is This As challenges exploding IT higher drive simply transformation an the digital are greater internally-built And and application fundamentals, will data will early ever. are initiatives solutions complexity, efficiency in an ubiquitous. as market the rapidly not of even top strategic drive deployments for than enormous yield handle to transformation given with essential lower digital solutions. demand proclaim, volume element to continue still priority efficiency current becoming deployments. yet at

revenue with growth environment. enterprise the June. consistent market we first evolving growth saw rate our notably recurring the of environment, QX durable a economic this and in time, coupled as our not same us rapidly a logo an resiliency last base, customer to results are quarter close subscription our XXX year. latter macro provide in the model, of with relative half most illustrate, is in during cycles quarter we the immune with elongated in with which form obviously This primarily company. are the Our even new sales At added, we saw of the We uncertain

expansion base, quarter XXth installed delivered XXX%. than our For rate straight our net we greater of a

customers existing expand ecosystem their their the usage value eager and to an to as we given Dynatrace Our provide. are VOS of essential proven partner

our As prudent now updating a the our assume ARR average per to guidance, In believe to it's to customer grown fiscal this $XXX,XXX. we year. of this, testament has our economic through uncertainty over balance continues that

growth conservatism topline a macro assume environment. and as the greater expectations of ARR Our in reflection

but couple their We will about a opportunities. enterprise this further continue tremendous plan moment. before like other to But initiatives. how engage Dynatrace software scale platform, secure uptime continuous and grow power are capabilities dashboards, our cloud of Dynatrace customers customers Dynatrace to and auto from the digital at and This doing maximum software oriented digital that AI this examples six a automation leader engineering, DevOps experience where of broad-based and goals, corroborate of facet approach four reliable data us. a help Gartner that of offloading wins broadest for released why navigate efficiency, to annual rapid use to product, to single help them to covering complexity addressing customers situational performance. just and comprehensive resource a time, the differentiation massive and customers choose more. deliver enables XX,XXX Industry why indelible, delivers combines in this on is, course, observability software Dynatrace and approaches position. enabling critical automation chain to flawless for focus Whereas our answers their I volume different. security. application with are Recently, Dynatrace every to and organizations our talk and highlight these and by ops, customers products, rather of action digital leader drive over the provides management. as market and performance of is to naming To site growth To development, share into at huge leadership achieve enable intend deliver with highest leading time, intelligent operations more and IT platform them intelligence to even accounts or capabilities observability we the Organizations run is transformation depend be monitoring. with our application most It to observability, observability the to their the with workload not employees, our for XXth unmatched the not industry. remediation. comes interactions the enterprise in rate. essentially observability platform And platform supply enable times, for its sophisticated customer and ecosystem providing reemphasize businesses with and performance, platform our multi-cloud directly Quadrant radically in a all and APM, and awareness global Gartner application with consecutive so, deepest monitoring data their I'd much strength. in quarter We operationalize facilitate immediately precise competition code operations like we complexity and cases effectively. will a on I'd application work to platform analysts commerce, It in observability use Magic a Dynatrace solution runtime end-to-end compared provide and to where of a deliver continues efficiency to perfectly. differentiation is and transformation expect intelligence take our ops ensure our for Dynatrace report, integrate Digital to their

to company not their were integrated They consolidating management entire an see, siloed observability its California tools couldn't that major services leveraging into AI-driven provide a information dramatically IT from was unable realized they tools end-to-end First, insights, in solution costs. cloud-first Dynatrace, couldn't a they customer what strategy. was and These disparate while insurance measure couldn't approach they to By their reducing system. ecosystem. enhance This of management these their and in improved resulted what improve through visibility deployment this operational measure. vastly they

dozens tools, upon A complex Let's dependent with for third-party was across comprehensive and an environment. take visibility of ecosystem, another supermarket SaaS example. large their chain extremely looking

wasted Dynatrace, action revenue, evaluation hours to that the widespread answers, dollars invested minutes of they These because immediate selected impacting the the of ensure to uptime throughout During production of the and examples customer and to loyalty and or loyalty resolve identify performance. their just the they two cause within root outage Dynatrace customer maximum trends our have able than build. precision are system of base. damage our are and rather program. avoiding process, days, They enablement our a lost issue the was to suffered marketing

never Our jobs have customers' been harder.

part reality of for more cloud Dynatrace, make a make consistent critical wide We've been leverage environments. done of cloud deployment. of Now we cloud to in than At stronger platform observability ever, the array a every to refer position right. an as is this never them integral it to Dynatrace across

expand to footprint within We installed also to ample continue our our have runway base.

the share logging us backdrop, We in market lost. status more deal including offer see meaningful they market the time for logs about and remain just sharing This macro straightaways, brings often current was months. economic auto when we which curves largest existing number execute the bank that as taking enable fervent module. healthy Gartner just gain resources with set value ready where and invested turn. enormous we sharpen unexpected. team coming speaker to long-term our recently a and leaders an a several the my must current R&D replace national to platform they quarter, to Mae, capability security in BRAO CEOs tools. cost-effective less release the data accelerate solution major through is enhanced a drivers the how the We won look a a the support of a [ph] gain store to ripe generally brand-new capabilities. which There visibility thoughtful their win have this seven-figure and races take also are year. dramatically momentum disruption. than believe of our of part air in strategic strategically that, a a while And quo. predictable, this end-to-end ago. topic, Fannie curbs. rather plan treating six-figure major talks as the a and us are with We to two are based upset scalable to in UPS closed reminded the objectives with logging are track with Application and deals, of that And current actions data more turns log of retailer I application me and for their that forward evolution we to tool. tell security Customers growth apply highly in are on event we on margins. of details in functionality, common a I are market an and manage backdrop. some satisfied to to security that recently log expression, We and and Customers the about platform to racing commitment back log or can us leadership, siloing believe to number closed called this winning Kroger. They maintaining to a attended there parallels Turns continues offering businesses. our its massively we innovation. are and bring a solution capabilities, lead. be We being observability we and monitoring can in about begun the is navigate performance years races Unlike only final And are our decision-making cost in want than log half frequently the this scales

direct the our line go-to-market have plan end grow during these margins most of deliver we the we for growth. to Innovation year-over-year, balance ongoing reflecting to top sales Through the through remain our revised headcount continue We to guidance still by in line priorities in XXXX, our support nearly and we continue reflect people prior we'll model. team increases to our in us, and add grew our growth July, expansion force objectives. XXX investments to of top aggressively plan year areas. and First, and strategic in OpEx adjusted operating to the with the commitment to to XX% invest FY

focused also rigor high-quality qualifying infusing into on pipeline, deal validation are leads We our rapidly and more even building process. more

plan to this practice. way. to we ahead. future. delivering managing while On our line the even me a from to to to differentiation global looking period stronger relationships turn our QX thoughtfully to confident other for growth hyperscalers increased of before. to we And environments, a Overall, with sales Dynatrace intend We’ll future even enterprise proven a continue announcements base with have announced will integrators to also macro digital the amidst we highly competitors. opportunity, to to expect emerge core market opportunities going to their into challenging than paramount expand And discipline our continue which expect Kevin. integrators. passion, we relationships manage and side, observability in perspective. the to strategic solid our share to that cycle we quarter, We're plan execute competitively, Last similar we in remain to was with in and leadership. customer to growth uncertainty. top increase with And to indirect three in build our over in continue innovate expand closing, I in us to our let use prudently leverage With selected the is continue from acceleration. invest the Deloitte fashion our culture. and call start, major that, We this had We transformation In balanced system resiliency financial system bottom platform in

everyone. Thank good and you, Rick, morning,

strengthening years expect first a subscription provides Overall, a from deliver performance. our base we balanced with foundation three our enterprise a flow, dynamic we model of resiliency strong in Rick public cash in of a business the solid the environment. operating delivered quarter to As consistent profitability which of mentioned, growth, QX are This in to reflected market. last continue customer our the and and the

predictability and fluctuations ARR focus adjusted growth, As I all normalizes the of the and constant Dynatrace billion. the in representing highlighting down adjusted the ARR Please quarters, rates the growth ARR with unless year-over-year growth, business of stated. subscription in will otherwise of wind XX% quarter, delivered it be previous on currency, quarter ARR. note first ninth first currency that and as our model. mid-XX% resiliency straight $X.XXX perpetual for growth for quarter will was

Excluding the million new $XXX which grew ARR was ARR currency we by and perpetual XX% net headwinds, license growth. year-over-year,

Throughout in little growth May, a the quarter. business, Before the impact of for I first the color building me the on discuss blocks provide we saw let April macro we and with rates. as was net trends. consistent historical well tone logo expansion coverage positive were and pleased The and our linearity, customer with strength in as of conversations was wins pipeline new

final and weeks requirements impacting budget we led scrutiny to in additional of the the cycles, entered sales we logos. a authorization saw primarily increased as quarter, deal new lengthening However, that two

net deals expansion win the quarters. Our last healthy did combination been remained new either or to the close the we and Dynatrace signed. with logos and the be rates in growth few platform These to customers. that in blocks added with continue consistent of QX existing pipeline not remain And have

again into the logos quarter, year. see Rick strength we our were multi-module quarter in more of $XXX,XXX new or our XXX nearly expansion with modules. than more we of standpoint, half As From modules net a customer. three half in land rate QX now to of three-plus mentioned, continue above first more existing new than added XXX%. see ARR we logos these pleased an And for per last that with And first using an adoption, to customer at once customers was the average of consistent

the continue believe the to resiliency for of with cross-sell Given providing more, very significant $X customer or that are average we performance. a in Overall, our enterprise current ample quarter base, healthy our first million platform. per with and drove we customer our pleased expansion ARR could that customers runway the expansion enterprise be opportunity

an ecosystem, given we customers efficiencies Our as value, existing operating essential proven deliver. and us view that of the their insights part

a for With vers guidance. revenue. guidance quarter high was customer revenue our up Moving respect end of which was of strengthening the Total of further point end investment first $XXX led up to of was QX our the range growth a million, our success to and high revenue on X margins, $X beat last $X first Subscription the the expansion first our million XX%, million, margin and the year-over-year. to exceeding retention by in to from the XX%, for $XXX XX% million gross primarily for year, down net rates. impressive initiative, due quarter quarter

said before, we and the platform. of profile, margin healthy Dynatrace reflecting As we have the have efficiency very value a

mentioned, Rick go-to-market us. remain innovation top As for priorities expansion and

up $XX the in year. XX% first last from invested quarter, For R&D, we million

We continue our to in retain expectations. our talent successfully attract consistent and organization, with R&D

On the target go-to-market invested year million XX% this $XX of current XX% up and over investment of quarter, and in to marketing we within XX% our sales revenue. zone side, last

we for income our operating previously quarter $XX margin in resulting the line operating communicated. million, of XX%, expectations the with in planned non-GAAP Our an given first targeted was investments

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

Looking at the sheet. balance

million XX, of of to the inclusive cash, of June period increase million As an compared and had year million of we same of $XXX $XXX last $XXX repayments. debt

flow same million in million year. the $XX to cash free compared $XXX period last Our was

like million million. very approximately remain $XX year. recognize expected RPO be I is year-over-year. of cash as free end of of The $XXX cash XX% we at to As $XXX last was that basis, revenue This impacted billion received the financial tax was the flow increase RPO, to to measure million, which On of portion $X.XX a XX-month We revenue. the XX% discuss our of cash positively XX% would continued remaining healthy over pleased over obligation. our the year. quarters, a The expect of first performance of with an trailing refund an quarter flow last next current increase QX a or generation. was in our was was quarter, reminder, over by previously last four

RPO. the are in We very with pleased growth

metric to billing as continue ARR best modification. business' we the However, associated is contracting and remove believe understand with variability they to performance the

turn things Now There in to me are let our guidance. with to respect keep a few to guidance. mind

First, we predictability durability be of At QX. sales weeks growth. the the mindful cycles we few want remain and confident in extended the given long-term to the in same we saw our of last time,

guidance continue for trends of XXXX. revised fiscal assumes will Our these balance the

we be the concentrated majority that, headwind logo believe in macro Given new will the growth. of

the with such, we additions be in fiscal logos we to As expect new consistent new in added XXX now fiscal XXXX XXXX. logo

deliver the this less our resiliency base cohort impact customers, in We will on macro are confident significant. and our the ongoing the we customer and be of to believe value we

fact, rate retention gross this has it past been last up X ever and quarter, In for best years. saw we our the trending consistently

believe will be rate expansion continue our for XXX% fiscal We XXXX. net to above

expected $XX guidance creates be in mind, And prior XXXX with With for expect currency. approximately continued throughout off consistent million, business almost fiscal start in $X the full guidance, and currency be finally, headwind. will to consistent license with growth X.X year. constant foreign wind half rates or will revenue. the impact then of in year QX down a sizable again, We in $XX our full taper the million point Second, ARR constant for the percentage with that strength million now and on with denominated guidance. with headwind XX currency, approximately be The USD let's our of perpetual basis approximately is points, year, prior to

Let's ARR. with start

new representing X from expect guidance, growth lower to XXXX. to is percentage an We be decline mostly and billion, XX%. logo of previous between ARR a point fiscal ARR $X.XXX $X.XXX by billion expectations XX% This driven the for adjusted

new billion growth total which $X.XXX QX XX% billion in to terms to revenue XXXX. of remain $X.XXX to roughly close XX% X $X.XXX to profit decline From a in and annual We committed year-over-year we between for point be to expectation billion. and ARR In result between the subscription of billion QX. percentage net a now margin from fiscal we be guidance. and XX% to standpoint, expect expect the previous revenue seasonality, we Both set of $X.XXX

We are our guidance of XX.X% margin non-GAAP to reaffirming operating XX%.

business growth hire. As and to Rick mentioned, we are continue a we

of to revised the we hiring However, certain expectations. line our expenses are operating top and align adjusting with slowing rate

per XXX expect of to $XXX to EPS expect effective based and be of finally, cash and on non-GAAP diluted $X.XX to non-GAAP XX.X% $XXX share million XXX cash million, million rate And flow we We tax $X.XX shares of XX%. outstanding or million XX.X% a revenue. to between free

healthy operating at XX% and profit QX, to growth. Subscription to non-GAAP From we XX% be between revenue $XXX expect total and XX% income XX% to a to $XXX $XXX be expected million, year-over-year. or $XXX between between up million $XX.X standpoint, Looking be a million, is and expected is million line revenue pleased dynamic to where of ARR per and combined and cash our XX.X% to XX% we EPS environment. first summary, top XXXX In solid growth, quarter with with are million revenue, margins saw to $XX fiscal performance, we amidst of $X.XX non-GAAP share. $X.XX million,

of proven consistent have We a track execution. record

of levels and mindful to being expansion are strategically and investments growth. we'll in investment to innovation continue commercial We prioritize sustained our support

to subscription for profitability resilient us position and move growth enterprise questions. predictable with continue line we financials, Operator? we open strong for the And Our will and forward. your customer and base that, model, as

your with question-and-answer At conducting we'll with be first a Tindle James. this Adam from Please [Operator Raymond session. Instructions] question. question time, Our proceed comes

morning. over I talked you know big logging you've infrastructure that being on solution APM the start the and as wanted upcoming that I product broadly. just and solution Thank to potentially as Okay. Rick, good time. about more

that would differentiation on speak around the can be additional So, trajectory if helpful. competitive the pricing an interesting product. of key and maybe color Wondering and Thanks. logging growth driver to early-stage any you forward. And pipeline moving

Great. much, Adam. Thanks very

grow average faster to continues as module growth. infrastructure a First, standard than our ARR, ARR much our

very, feel It to ongoing infrastructure integrating into inclusive experience plus positive we and end-to-end platform, log, that core observability our growth. infrastructure about So, of new element APM others. very is a

to are. much is core the we track solution. With So, delivery very of this about Rail logging, of of We're feel in part where year. the half we on a great development in it the of respect second

We are already ripe believe, of market disruption. of We're as what focused early prepared cold we repopulation in opportunity solution. that points very Program beginning solution, do great our Early process this tremendous on EAP the have performance a Access data. highly price We the issue delivering It to remarks, and a or with at access, for to pullback the or call I scale. said doesn't the in warm a my of is

we So, this we're look solution to forward shape in very releasing and good later the year.

guidance of could Great. mostly bifurcate you year? mentioned the quick into but do, Rick I'm versus half. you. And confirm business this it built wondering, think that's that. rest maybe to back the core the Thank just for And follow-up be guidance, as on new track not -- to wanting built maybe but product into just I'm I hard a logging might for Kevin. for expectations solutions

Adam. hi Yes,

a infrastructure continue a strengthen a from will capabilities primarily to much us. contributor, be two going meaningful The mentioned, logging be we're million years, a product. can where portfolio $XXX within the contributor more piece to obviously, two think, QX towards So, of new Rick standpoint, years, certainly over think the that going next end as business of we I into for the but QX

very little grown line faster. some more our other the has microservices So, and from a continues or growth, core last grow in quarters. maybe over smaller We're ARR the a and had then gaining we've five And security, momentum more here generally standpoint, well. component there with four progress to as module well, app bit apps nice

they’ll a think I we dividends, definitely introductions FY go become contributor. meaningful as back new little But into the meaningful are the bit -- So, much XXXX, half a more. paying following product more

Yes.

Sounds lot like you exciting so a ahead. much. stuff of Thank

with comes question. Capital proceed RBC Please with your question Our next from Hedberg Matt Markets.

for on Just some it. thanks the geographic detail, there European, more Great. new for Thanks you, was the side? I of curious my it cycles, North the of elongated was there a for anything on geographic? guess, business all and that taking America? questions on Rick, guys. Was Was aspect it deal

Hey, would modestly global was say we impact saw Europe. global Matt. cycle we it incremental deal June. say, in slowdown, that extension late a I But that a saw I of or would in really a

Europe, in the modest So in global nature. but

Global.

That's has long okay. and won I it's helpful. in And a turn. many economic through time, are been your the Okay, around for Dynatrace then races And been when cycles. of like analogy

business to entries, hey, at this maybe off as periods a Dynatrace? running more going perhaps there on try on Although, actually more customers macros, try point as monitor say, two. -- you're an to vendors to that and the tempering or maybe been expectations need consolidate help look some I'm like for, of standardize has some don't where, of customers new your new or one so to business opportunity sales here I'm maybe I do even time historically, at based observability that fewer are with running Could multiple to

Absolutely. see It's of a occurs for great tools, it in other and opportunities it time. the consolidation do observation. in all We terms certainly pipeline of our

potential new that market source and of see, share that in precisely from that part is phenomenon. logo, come we a certainly, So increases

Great. guys. Thanks,

with question. Please is Mielczarek Blair. Our with proceed William from question Kamil next your

are that end customer in you And customers? how on to much your my update of it questions. what looks year? Can for how the the It And through non-strategic attributable churn the is looks churn taking Thanks planned us the like may decline quarter? Morning. have of up. expectations in for picked

is you're Kamil, count I'm talking about customer assuming that? churn,

right. That's

Yes, yes.

These are small have product not XXX, a single the of a organization. sort running So non-core and smaller, to to of over deployed five we across do smaller or synthetic communicated that who's becoming with single-digit products, as probably over close we ARR low set four perhaps to us. quarters, combined customers last customers XXX very customers an

We decline. but are expand continue to to them, certainly to going they're working

you've four cohort. the or this of sort what of really a seen is burn AR another will last So continue think customer two. quarter that quarters for We down over low

I -- think deployed, to customers three we've we're the And infrastructure. growth their more landing we're they're importantly, business, think the so the our DEM, expansion be healthy much them a net been stickier the is with think, it's logos have in coming new landing at that when microservices, with that to apps, so the landing when cycle. Kamil, about they're are more it of rates I AR. those those that end And The healthier. you much solutions -- that And platform. modules: and components adding

it of So the churn a way bit is, we on the think about customer a side. little count it's

As to. move super full AR does out strong not customer we a that standpoint. And great needle to think it we're from going base an the come of anticipated, ability with a has this

cash at helpful. why That's quarter? drove what guide? strong the And cash the high. And flow. Can free very XX%, given then if on over to strong flow year, just strength full multiyear the the detail Margin flow I free follow quarter, down your more think, year very bring you a free some I in start was in margin provide cash could up on the

Sure.

great resulted think, in QX cash in as we the a strong had flow free ARR you very balance. I a bookings our business, very seasonality, of a There's know, that high in QX. So number quarter in lot

a addition, $XX about we tax million. refund of received In

increased on still number the the if you led that $XX and So business of had tax QX the in free back flow to QX a despite million -- really quarter we refund, the collection. based over cash healthy health out

for RPO, well we want visibility. careful environment. When for for the for the to revenue bodes we deferred though, guide think year all about that be this in So revenue,

are we ARR And be So will that, by of $XX on lower currency billings. a and result from be constant will million basis. as resulting that a bookings assuming down that about coming

and on We've and So healthy conservatism more a expect business in many generating continue. bit number. years, free the that margins little been prudence for cash we that to flow cash

conditions. market just based it's So sweep the current a we slight do way that is on

Thanks, helpful. guys. very That’s

with with question. next Mike question from Co. your comes Our Needham & Please Cikos proceed

about where last two Cikos. me Thanks And I of my up. commentary to the sense here on guys. just picked wanted June this for of was get based some you really cycles your really, talking on you're is that Mike have weeks it Hey, elongated these ask to.

I'm the staying curious two? closing between you number or saw you remains closed -- versus that what with pipeline deals Like either separate So us help in since then. is the or in that what has Can are away seeing the behavior been a then further of from part we And from as through question pipeline? the is, that June? has your cycles we July, the second how move those elongation customers consistent of

it's Mike, Kevin.

weeks the due if revisit back two existing customer continued bit what was quarter, go approvals saw we budget little expansion multiple of numbers, we our items. in there strength the a right? just last a required and of -- to So on of sort saw we pressure some There

in we was tempered little new really The saw in into during pushed QX. So change their this COVID, bit buying of when a bigger -- bit at logos People, a more the where they're be may solution, new a looking right? little that patterns.

we closed into QX saw of push some we certainly some And standpoint. logo those. deals So have new from a from QX

we to Some quarters, couple sort QX, there's But of of think I be the to push going the in those we pipeline. just about think think remain when QX, this little longer. of next QX, throughout going we've take logos new a the come, and on the of buying seen new bit year just patterns and of are those based how logos course things

we're the the with in customer overall, So existing quarter. -- pleased expansion customer

New adding the logos logos, going very targeted and is QX franchise. new the It's keep to QX, into QX, We're at QX. is push we obviously pushing think super-important the the marketing just to about growth the for call it business. new given health to we'll means logo But new on conditions, of long-term which sort flat logos this of add year. XXX year-over-year the current basis, a wanted we way

into June So, that's changes market end in today. conditions how we we from where are think about No of it. the

further said no So, deterioration, differently.

when quarter So we we'll all into the out. account see we that But guide. could how plays take

pressures extent, been more there any But if maybe the has enterprise target type I that. customer pushing say, scrutiny, delineation then could And that Global if just increased think customers is some know about the of Thank customers talking And budget deals I in. are XXXXX. appreciate the ultra-mega -- from, mid-market then? there any that way color. you the I you the you I squeeze new versus smaller about land let's When to to? more these or guys for like as far as think maybe seeing behavior I logos one we're

you trailing earlier. call four not as meaningful to the bit. number So It's $XXX,XXX, five highlight been $XXX,XXX quarters, mover mentioned enterprise leading a stack great three and zip to the net We our in this down over $XXX,XXX customers at purchase. the fact primarily I an landing the came that from appreciate, increasing code. don't little deal I an with get new the landing QX, also love land into and generally, significant zone. It's think full logo modules it It's organization, XX-month to wouldn't are a $XXX,XXX a that think a indicator I way a due size level. in is purchase the that there. It's it's from I of certain point. applications expand last

in budget we market, and means believe, faster to it faster deals. those out approvals to results So, close time time

make look, sort think in going decline the So, gets a that continue. $XXX,XXX enterprise that's answer to necessarily your customer to logo that's land We don't new yes, an slight land in. question, average for popped on side. We of overall, trend

I'll color. for it Terrific. on. the pass Thank you

Our next Erik your question Securities. with proceed from Suppiger question. JMP comes Please with

you sense or year. you target taking question. had of us a that XXX for new Thanks where to-date? terms a XXX give in of employees are of morning. employees One, good Can for hiring mentioned the Yes, you the

Kevin. it's Erik, Hi

in So, Rick great has start capacity, we mentioned, XX%, up a the to got a as great. grown that’s current first standpoint, our From sales quarter. quota

a R&D progress organization hiring well made significant from standpoint. as Our

to projecting XXX we're the quarter new that first hires out of a So, about in good the to off Close XXX start. for the year.

And So, our original growth which we headcount updated brought going we've as the for talked where And down rates generally be pleased to hiring rates in with think to revenue down growth will revenue down -- be line growth we just about, we've assumptions. targets, the with our the back performance. year. were

that new in XX% -- that year-over-year. in So, headcount growing XX%, headcount

the and the high make focus customer in we we go business. success to the trajectory a market to going to so on, we the continue want want continue that there focus will to based want And metrics sure we're of then appropriate and we're We -- obviously, standpoint obviously, revenue on R&D innovation. from

And sales we like of type of think in your saying, can the range, that within you XX%? growth just organization were growth XX%,

a has I And well, so -- sales through think on We capacity, end growing. reps been basis. the of grew XX% sales sales direct year-over-year so July

us a sales little even FY our continue business as and depending stronger on at once going of as going That much depending for point. goal get well. the is are put bit, Erik, stated of off and may where coming into direct on macro market is year the growth Our will to XX% the through around accelerate these investments that this headcount we But we it to QX position QX. business the perhaps some trajectory in growth rep believe, XXXX into move QX, a of in the prioritizing we grow pressures,

lastly, popular Okay. to or something could do is security on reach rate you modules? fall attach module, think it's another trajectory an you your where know I that's rate early. years, see in other attach out comparable still where But your could that term? that longer couple a that Is And of it

in We time a frame. very It's absolutely December especially module, believe so, popular since occurred Lafarge the Erik.

there solution customers the to and hit be it companies, triage job, do best the vulnerabilities to who and deployed to especially for utilize to nerve seems a uncover vulnerabilities it, Our seems assess enable vulnerability in most to and have our market successfully management the them sure rapidly. tool to out

very we're by it. pleased So

current certainly this the $XXX a a business we last And the of terms few as feel as span. we what In quarters, year long-term see same opportunity, and over the of million we trajectory. we that's couple see type felt opportunity

to timing of of on when sense it approach start the Any could rates? attach other some

the I gave it's will over reflect time. will attach going as rate And beyond. projection grow attach sort growth of few to you and we through that year rate think that period where Well, the to be.

Thank good. Very you.

question your question. comes with Please from proceed Our America. Bank Koji next with of Ikeda

wanted was We sort potentially early commentary come teams since trending from it's been maybe hearing sales comments that kind kind the the the appreciate two hit of July. prior Thank you. on last that pronounced to to really there the really April June or to the pointing Kevin, back Rick Hey, and just and sales how cycle or -- cracks I May. I Was you're weeks of really elongating in or any here. of But wanted just kind comments to on June? elongated and sales there was cycles of indications in of in it really cycles sales the

terms we're ahead Pipeline extremely that. was of linearity organizations so for covering April coverage process pipeline, May, trending of interesting instrumented an of we're they in trend. excellent. in thorough well of time it historical and terms the well have pretty was all across No, bookings, Obviously, deal period. very were coverage, a and

when prior over to a So it new seem quarter healthy. surprise went the weeks those XX that of was last certainly see we the weeks bit quarter, numbers little a logo the come very when two of through off things

to So, macro which see the in pressures weeks, these balance a the the how that something long slowdown two And definitely expecting last then continue we're of remain. for year. is we'll

into sign thought just communicated. would late later approval, that had It a in form, of of which levels the that example, even if in CIO add more the what And Kevin. deals took the answer these June of could be GSA us, I CIOs for That's sufficient require to tell been some the deal. to would of we quarter. additional the the And layers forced from Koji, approval cases,

view these be we lost. to to deals some do as questions, address clear Just and also prior not

In fact, these any to lost as we didn't identify competitors. of

quarter. and in course So, pipeline continuing we're the through the continue vast of these to cases, of to majority were the work they deals that in

much. hop I'll you guys. Thanks Thank the Got queue. into it. so

Thanks Koji.

comes Our from Raimo with with question. your Barclays. Please next Lenschow question proceed

-- a one, you thing? and does deals Perfect. aware get kind extra these you're ones. I've this you Actually, got not it the are obviously think as if kind know needed. you in related June. extra sales go you -- That the because become sales think you out of about of you Rick, like of two new once now these through beginning of But the that kind execution last that covered. of week we got something then kind process, more have these the process approval, everyone happen that required. the Thank you. layers that's that of obviously, Because turmoil, surprised levels caught Is you sales into this? of that But like execution could at quick bake to that basically of

is, so to reacting What in look it what of hear question So, you sales et vendors quite there's cetera? successful like out on technical it's there been will problem into that and did because kind The Obviously, terms space? excited confident you Because really my you. crack that. it you are makes log is a process, here That's And preferred -- so first in you? a market, special guy you for be the the only actually. if that like of super two one Thank second question. makes I thing logging. the

take both of I'll Great. them.

evaluate get thorough it sales specifically So, questions the what imagine of our of customers to deals Raimo, cycle incremental like, to closed, that going in and you to what doing it's more done. what are inspection that much these can we Absolutely, looks great of observation. takes within get to process, take champions paperwork asking first, on evaluation close terms

updated have we reacted cycle. environment approval an additional reacted requiring to and quickly So, that

deal we go say, through a sales the to the from Yes, first all as of to to it standpoint we the aggressive. are very So, further review answer question over process. execution a

elements. What Second, with as regard special logging. are several to would I say

solution The lower first a is, far, that, putting that in I requirement. can very the scalable believe said at we seen hypergraph we're that place we we've data earlier, no deliver rehydration here cost has highly that technology performing, so into based lab on as that

So, no distinction warm cold between storage. and

that capabilities own, our market. we very is its makes the platform. differentiated. compelling our about observability But That's believe and part as of really application deliver digital intelligent And its what set. is analytics, logs, that us metadata, it traces, the because logging end-to-end metrics, see most the really a compelling is independent the data So, it data or really believe to what that It integration behavioral into reason we uniquely our solution of is data. user experience all of most answers AIOps logging automation see. real we just from on And don't we is enables to fundamental simply the is that in engine logs data

get platform, So end-to-end for biggest that's integrate -- we you bang buck. into really, differentiate where you it But when on the the that's alone. the observability solution logging the

Thank Perfect. you. Great.

Kash from comes Rangan with question. Goldman your question proceed next Sachs. Our Please with

what logos you analysis on have saying new what they a table, also, on curious you've The through question Hello. your looking on, and how you done, the much. for take these constructed downturns you, order what to Extremely as still get the quarter, with what that for guidance, guys. been so Thank the A customers couple take I'm in are saying? And to are to they proceed are your much a clear really well a Rick, contracts? before. of your you kind respect of your very And we what is certain recovery? recovery? more concerned recovery, once Thank the it best quite of shape a is U-shaped that elongated sure. Because prediction and your expecting? come recovery But to best Is maybe how they're it to you again. are so of this with other like customers prediction are or about out the not what's happening as much things of we the economy, on

Thanks, Early you. joining. morning Kash. for for Thanks

the they levels telling to that our they’re want need that, terms going what approval champions those in proceed various front, speaking we're some about levels customer approval. And of the our to speak. of additional as on they're to solution. with of They get we companies is different us in So trying

we're still different little a it and alive, It's much very are system. than take to to deals in longer the environment. through just a bit going perhaps the used So working

champions, So With now row challenges, know. times to very are in much rates gosh, market, a to both our these of our and challenge continuing customers, July. opportunities have interest in China, a on in recovery, predict the assuming in don't at the us. which don't has a got know Obviously, to in XX-year couple mindset even which environment with namely are I I macro you've June a strong it. inflation growing additional highs, the Ukraine, creating geopolitical over to We've so two got the days now, of past as that. drive respect and how accelerate X.XX%, of stance you

So the we to environment that. of the end see through than that I a factored our environment, the is. what the we to in. into saw And short our we take know an If on it balance other is recovery economic benefit to fiscal say at than that's how from take then going July I'm should June of and we a of answer, recovery rapid and year, more that not that a don't position it, guidance reflects ongoing that

customers your new what to playbook to sign you here, flavor As changes. get is cycles? opportunity follow-up you the Curious that share Rick, of an ensure there's -- a so -- much sales how you Because And the are thank evolving your new how do on? right? fair

Yes.

in the focused a around three the detail which us, that for One quarter areas sales system last I've focus talked spoken particular. generation, integrator. for a playbook, global about past as in is in of Deloitte, In we're is in in of area pipeline core terms of partners, example,

continue have deal front through million to say, a couple our Canada. I Deloitte with already we dollar closed the or system We report contract work at contract deal on with I'm of specifically. to value integrator should delighted the them, first global them, hyperscalers that with total

I'm dozen So them. and trained partner they've sales enablement. got a in pleased We've And customers pipeline dozen on the several with that. opportunities individuals with almost or now

as I expect, do additional to come. have pleased about comments, integrator to my that. in We I'm system that. about good feel indicated we announcements So

category. partners one is So

areas through pipeline is core sales with focal category Another and and our reps also being our then through account development investment development. of additional both channels executives, for those

you so much. Thank Wonderful.

with Please PMO Capital next with Our question from Markets. Keith that. Bachman comes proceed

concurrently. my questions Time, I'll ask

The your the what controversy, thinking is. some on first, quarters if on a There could you of was on kind of update M&A. couple message us

assets, will prices same -- assets Privates fallen on question, line, particularly haven't but for to the do and And slow, macro, in you bit a perhaps continues continues -- based as How opportunity followed hiring macro August. different cash direction little a how mentioned think my guidance have to do to side off if Now is, slow, trend last the can six public hiring let's last weeks line of even some margin? the M&A? We had had you say, we surrounding issues integration balance in top two your the but second about through on you to moderate June perhaps of a on state pressure try materially. growth? feeling you your are not particularly, accelerate versus pressure. the slowed the And because of you further privates the noticed that the weeks. the some technical preserve is that steady therefore, from But to

speak, keep to get me. hiring will to subsequently for it and slow so impact Thank your plan margin? So you. again, just the That's or worse, things is wondering, you if just negatively

address last one, change To quarters. the M&A in couple Keith. Thanks, no the of stance over

by months, of looking communicated, accelerate we're acceleration maps. definitely worth in we've are opportunities disciplined at. terms we M&A road buyers, us of As for going we that, continue to we for to If R&D overpay map not road at very said XX can and assets. Having look our then R&D XX that's to tuck-in

going that. we're to So careful be about very

M&A. We are not transformational looking at

that not scope. is So and on that table something the is

stated it's We environment respect much manage the on bottom line repeatedly, With to types as hiring, with So is to margin. to macro focus profitability orientation. do of run tuck-in business, it We balanced evaluate to a those continue top we've operating our line. opportunities. commitment, overall in and very

manage And in guidance quite we you people reducing guidance to maintained rates, year have. we this a indicated, continue manage see, in hiring target. we are though will we XX%. to by the in the constant ramp, prior that our XXX order to We as even operating at As that did we expenses significantly, that target XX.X% to variable as recruiting margin

the on commitment operating So if to it continue top is further necessary, we've our manage to indicated. adjustment, based margins to line that

Perfect. thanks. Many

from Fishbein Our Truist. with your Joel last Please proceed question comes with question.

in. Thanks me for squeezing

`about doubling just to your the government talked I'm expectations on the sector would have That Thank the guys year. You with curious you. remainder the down about helpful. of go-to-market. regard throughout be public

A good D.C. our was question, and I much. recently with very input team. Thanks and in Virginia actually Joe. down federal

business the a opportunity to course that grow than it optimistic in And that, over rate that very remains our about significant -- time. classified think I ARR to opportunity growth our is I am from be faster to civilian. of agencies average

good situation the in feel I federal about particular. very So,

Thank you.

Okay.

to to us you joining. that think all much I thank I for brings close. want a very

of as headwinds we're and opportunity. our that Just persist, to We fiscal solid late that convicted remain through. view confident XXXX and in QX very macro interesting market June, appeared in summarize, a to to absolutely start some in spite managing and we continue

of customer to resiliency enterprise our model. durability seeing our business aspire certainly base. ongoing are in maintain the And We we

in Kevin be are also business We a with cash quarter. strong will to in several way, profitability I committed conferences flow. investor and balanced participating this running free and this

So, very your a and you Thank ongoing there. we for have much to forward seeing support, you look good day. of many

concludes This today's conference.

your you this participation. time. Thank You for lines at may disconnect your