Dynatrace (DT) 8 Feb 242024 Q3 Earnings call transcript

Greetings. Welcome to Dynatrace's Fiscal Third Quarter 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

At this time, I'll turn the conference over to Noelle Faris, Vice President of Investor Relations. Noelle, you may now begin.

you Call. Dynatrace's thank XXXX Quarter and Conference Earnings morning, for Third joining Fiscal Good

today Rick me Chief Joining are Financial Jim Officer; Officer. Benson, and McConnell, Chief Executive

include report Dynatrace's revenue, earnings and number quarterly and started, most that Form please materially Before may Actual of SEC uncertainties guidance that was our such due from recent we regarding today's risks our economic get expectations comments filings, XX-Q statements including as forward-looking earlier on results note in differ today. conditions. discussed statements a to filed

The noted, per forward-looking new We of the February diluted share growth today discuss the and statements statements reflecting assume contained a basis. views XXXX. result otherwise represent a information, in rates currency we future these this X, growth non-GAAP, update rates as company's amounts are call events no or constant on to obligation are Unless on circumstances.

other and will please non-GAAP in non-GAAP both the between financial discuss today's posted today's financial see presentation, reconciliations on measure earnings which and press GAAP section website. our are We IR supplemental also release of call. measures, results to refer To

our let that, with over Officer, Chief to turn the Rick McConnell. And Executive call me

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

fiscal operating flow Our leadership, platform the our XX% more XX% guidance business Jim in a free grew moment. results a on of year-over-year. durability free and continued of increased and pretax of our in delivered revenue. margin a QX our testament a reflect XXXX share differentiated $XXX or dynamic These and results a XX% on And basis to importance trailing will about XX% market. to performance market our strategic XX-month ARR QX of are Subscription Non-GAAP balanced our details model. the XX% cash ability basis. year-over-year. successfully flow income growth, cash million profitability we increased a to or execute revenue

continued the discuss driving like the begin Last trends our week innovation. market. them to Perform, called conference highlights like from customer would I pace are meantime, Perform with megatrends market, our in I'd we're the Waves. we that the In rapid and of seeing transformative week three at to last

continues to cloud. First, the cloud workloads drive to modernization

the focus sweeping the innovation sizable for drive need disconnected sophisticated data, bring in an advancements the these mandatory. a transformation to a and across it Second, with protection. is its of occurring the revolution especially for increasing by is escalating have cybersecurity AI leverage to enormous with And landscape opportunity and better are digital need to organizations analytics. security industries increase observability an These moved challenges productivity. as from increasing that is But transformation. in amidst megatrends threat third, such business optional explosion increase application in And they AI challenges, workloads exponential massive complexity, also tools the and more for

dashboards, . all as environments tools of alerts application it services, is these use and feasible longer limited not world created this no multi-cloud resources, In triage equal. But and manage hybrid and micro are as observability to manual to containers, workloads well security

this radically is critical Given landscape, our different in approach three respects.

analytics. Dynatrace the enables platform First, contextual

to types keeping an we traces, real together scalable user integrated, business store and logs, metrics, data in of others performing all We these By store. data, all data context, events will types, in massively not and Grail, and highly data billions unified are applications, interdependencies analyze throughout networks awareness that data dependencies store. replicate virtually infrastructure enterprise. is across of possible able These captured, a without instant end-to-end to providing are continuously the

is second differentiator key Our our AI. hypermodal

our causal AI techniques on of the relied and AI have customers Dynatrace decade, a Davis. over engine, For predictive

array the Dynatrace of to platform end Davis quarter, each much wider through make the copilot solution the together game-changing three thereby to generative beginning more with other on this eternally These available deliver making expect intelligent. our users. AI bringing techniques We a capabilities a AI platform

Organizations and third user The dynamically troubleshooting. discovers for remediation critical foundation workflows updates entire eliminating automation. result trusted consistently and one differentiator Our issues. automate key that is instruments that agent during can without situational is to a of environment, lead an want human supports the or scripting especially incidents. need is Dynatrace to applications cloud broad-based awareness automatically delivery, optimization analytics business-impacting resource manual configuration. and progressive learns This an auto and

scale as growing them on our by These threat tool hypermodal elements generative AI consolidation, cloud applications. analytics, is differentiators why AI native customers the cloud the actionable behavior reasons a incident an and also deliver rapid prevention. digital automation considered purchasing view and and delivery, software management in us market. and enterprise-wide use Dynatrace answers, log visionary resolution three drive across secure customers of navigate are enabling landscape. transformation, to They enable explosion to performance, Contextual cases, at variety for the key including And cost-effective faster a essential these in brought application leader challenges of

and and of differentiators virtually. was It in in plus mind people week These hosted last advantages person, Vegas. at thousands certainly a exhilarating tremendously more over top Las X,XXX trends, conference including customers, event, where partners were our Perform prospects we

customers breakout participate, replay business areas driving present with innovation, presentations these how and I transformation opportunities customers, risk. able of sessions. If challenges and especially along share partners, to encourage the optimizing the to you our can main insights of watch for several and trends in We, mitigating stage on cost and you weren't

efforts found to high driving Bank. tools. Lloyds consistently one, their availability One innovation down They team reducing deliver example requiring can now their sustainability, and cost. maintaining relationships to of approach of the reduce rather of the sectors performance. share by most are footprint Lloyds emissions on at application a XX%. how assess optimizing legendary IT meaningful carbon up has to that for Dynatrace direct and to experiences Dynatrace their was ecosystem. Bank operational leader in to identify focus their measure carbon thought their with a carbon myriad where TD impactful Lloyds the looking by helped of infrastructure. least IT sets to story They is drive optimize sustainable emissions, helping proactively innovation have from their customers, its Group their tool is among digital Dynatrace teamed than complex and opportunities Banking see They in reduce

security largest something location QX. not A Dynatrace able history, from closed was mitigate understanding standout do. security identify product to in vulnerabilities, of example our application contextual mode we of tooling immediately company a leading comes and to It impactful chose showcasing their in global A criticality because common our payment risk provide our technology of ability ability the existing which in the vulnerabilities, pinpoint a very confidence fantastic organization. to security is from large our exact their of win

their optimize on to that platform and innovation, to they do consolidating optimal in As customers standardizing ways risk, look mitigate observability a unified it. cost for know existing tools drive is the way

using is another at help Kubernetes experience platform from and week app. realized and single-unified came PicPay, them With costly thousands a automation the Engineering and they Dynatrace. platform. through such, This story inefficient. multiple gained of using He to shared the million visibility hundreds last at a of observability users of achieve from encompasses tools for PicPay massive of XX VP that scale. Dynatrace, his newer nodes. Dynatrace Brazil's As is clusters Perform great financial benefits with They customer ecosystem

alone. PicPay not is

to helping great We deals is position are and We siloed decisions. strategic demand productivity. tools, trend, in our availability broader Dynatrace a cost performance, increased to eliminates seeing innovation large customers make are looking of in significantly given proven this benefit software and record believe organizational customers improve where architecture track drive reduce and observability from

a these potential, these near positive a add of time growth future sign to are more of decisions. term, as larger strategic variability make deals these deals customers require degree While

consolidate to unified trend on us. observability existing significant as increasing this them platform view a standardize for tools and opportunity a We

are such, continuing GSI As invest prioritize demand we strategic targeted go-to-market sales generation partnerships, R&D. and in while to in capacity such areas investments also to continuing as

was GSI are hyperscaler such driving we Accenture, with win platform. The with into was that gain In addition media major frictionless of looking are end-to-end It partners, to GSI one motion Kyndryl. with social seeing such customer visibility X-figure that a Deloitte, traction and environment. the QX DXC sales positive a early made partners, to we the signs we've with closed investments their as complex we through incredibly

to ability we maintain costs plan and gain while our Our AI automation these pipeline opportunity. to demonstrate in business. the the partnerships, We focus invest of to to to outages on power as continue drove scaling efficiency reduce and greatly the saving generate

XX,XXX our the is market resources continue investment in We to sales our propensity our quarter, target the of Global also higher to far fourth the end weighting toward capacity plan where greater. spend in targeted

of to scale right our have brand that record go-to-market evolution team, the and opportunity. build market skills confident are the seize We this team we leadership with track and to the proven the

call I'd also Heisman, like at in of January Officer. former as addition Chief our exciting new the VMware the out Laura CMO to Marketing

was go-to-market investments, focus to to of market-leading to plan and team's our solutions technology evident continue addition unveiled engine in enhance the R&D our relentless we The innovation to plethora platform. week announcements our In our targeted on new position. leadership investing last with we extend

including enables confidently insights customers into layers First, availability to AI we AI-powered observability, the and applications, cost, providing all AI security. language large and reliability models announced experience, which of AI of generative manage Dynatrace to by embrace

ease to full control of ingest, security, boost at Dynatrace the data. the we management helping of customers empower pipeline open value customers and maximize Second, point with data announced of

and APIs data cloud automation. and opportunities We that through storage agent believe customers notably, announced more open one provide outside smart external monetization ensure as our more more Dynatrace to And analytics, reliable Dynatrace usage, collected these business business analytics. more platform business enhancements we sources further queries for and as and is telemetry, most systems third, of through and observability help such ingest, orchestration accurate drive data reliable

on Dynatrace This Runecast. risk to with Adding wanted ecosystems and will Runecast's the real-time turn I and analytics of the misconfigurations our on the call address enable customers acquire to contextual protection vulnerability security extend AI-driven comment in platform multi-cloud Runecast posture Jim, to Before compliance and hybrid to plans based automated I assessments. violations management. security over to and will

detailing context, response full perform threat and their it Additionally, attack applications allow security customers affected will factors. incident vulnerabilities, and detection with to

are reflect ongoing team our demand security application marketplace. an R&D observability to talented evolving business our automated in our to of durability model The We our successfully and to ability organization. In solutions. for QX closing, execute thrilled this welcome the results and

answers well resolution unified is market leading the for Our moving AI the positions actionable fewer differentiates contextual incident cash our desire prevention. automation balance better rapid us in relative us to to growth, strategically We as well and toward to opportunity and go-to-market and profitability market to drive free a and in to commitment believe we platform alternatives. hypermodal flow. insights us plan R&D to with invest while analytics, areas market solutions, competitive and and as ongoing with And innovation continue maintaining capture leadership

you. over Jim, to

good Rick, everyone. Thank morning, and you,

another As Rick line the again growth mentioned, surpassed we high top our QX as team metrics. Dynatrace solid of and once marks execution quarter of end by the guidance profitability

execute environment in to ability a in the and is application observability continued of to Our growing testament market. dynamic the this security criticality successfully

Our proposition ongoing model. business the platform our customers value to and of provide the differentiation, we durability

unless quarter otherwise let be Please detail. growth Now the will me rates in year-over-year currency, mentioned third note more the in and stated. results constant review

ARR, million or third Starting year, the to Net was to $XX XXX an ARR was new $XXX a billion, currency the last revenue, consistent $X.XX constant million with compared added year new Dynatrace representing same in annual basis In of for growth with quarter. period year-over-year. on we the the recurring total logos QX, platform, quarter. increase ago quarter the XX% roughly ARR

on $XXX,XXX past, basis, new and per XX-month the with focused the that quality on XX% propensity of new in year-over-year. shared QX logo trailing logo lands In average in greater have I QX, at a have As are up a to roughly ARR consistent expand. came we

that customers and in to or enterprise outgrowing tool breadth We automation commercial tooling existing solutions, our unified consolidation DIY continue attract of and value seeking the for business their platform. are to observability depth, Dynatrace coming

industry our net in and best-in-class at the quarter, expectations. to coming high contributed in rate third in XXX% of a the end remained rate retention mid-XXs of our gross the in retention Our

of When existing rate, retention there customer solutions two, that adding and are growth or three, management, expansion. areas three we cross-selling like think about workloads; net new log observability workloads; application One, our drive security. observability analytics new

growth our highlighted engine vectors further installed their to of are We have within base. to as our Perform, these we believe XX% And increase We solutions with cross-sell to us expand estimate that and opportunity platform provide upsell our last week innovation only enhanced deliver customers to workloads XX% customer observing at our three today. opportunities. continues significant

we access to growth believe in the licensing contribute less retention gain greater over rate further and in the model addition, In buying encounter process. will net friction customers DPS time newer our to as solutions

and of model. DPS closed bringing customers continue to contracting momentum base. XXX In in our We DPS XX% over see this strong deals more than representing of QX, XXX, we total roughly to type interest globally, customer

million quarter above for the million, And the end quarter million, up end of and $XXX third Moving year-over-year the high high revenue $XXX on guidance. to $X guidance. was XX% Total million XX% of was revenue. the revenue up for $X subscription third year-over-year and above

was gross ongoing up hosting points efficiency quarter last year, consistent basis from of respect to non-GAAP QX margins, third for the with by driven the XXX efforts. prior With quarter XX%, margin and cloud

additional and Non-GAAP related Our This net a This the resulted lower the million, in the by credits diluted exceeding quarter $X.XX end above guidance expense of revenue top was driven and margin end combination of high operating guidance incentives. non-GAAP tax our was million operating slightly highlighted items or of items points. non-GAAP and basis rate $XXX $X.XX discrete management. driven income $XX disciplined just per by a by tax upside I million the the guidance, was driven high income several XX%, of of to above $X by range, foreign our share. XXX third end for the

cash million free Our in flow quarter. the was $XX third

to basis, was flow of trailing flow On billings over XX% in and revenue. or As in due $XXX free cash we've best is XX-month believe discussed the XX-month trailing cash period to quarter-to-quarter. past, a view we variability it free seasonality million a

a includes was free and Pretax basis cash As points flow year-over-year. a reminder, trailing this XXX of impact revenue XX% of cash XX% on basis taxes. related to XX-month up

sheet, of third ended including balance $XXX cash the we Finally, quarter robust debt. a with and zero million

Before more to the the and growing. and a demand update the related want of number is The continues reported our guidance are sales rate. vendor consolidation trends to healthy we give market growth remains seeing. we and a I a strategic specifically, demand I brief heading seeing ARR and The environment this are on deals move you to faster architecture we observability our details, pipeline environment at opportunity to initiatives, More pace funnel, within growing than larger directional observably and expect continue. grow to

you a last installed to and our of sign value both the greater opportunities. the analytics, view the to a data-driven help number as in trend, quarter platform tool unified pipeline million capture base us ACV, to same of give number of that a the partner of And XX% $X than are in fragmented sense believe the customers compared this magnitude has for increasing year. these logo highly deals To We new drive increased becoming the growing position deals contextual with them differentiated we and and of consolidation. complexity AI well leadership unmanageable, tools managing looking automation is these business of

timing of At in introduced and that the values approvals they the increased variability these the close. require, required terms of given C-level larger they deals same strategic time, to

more believe prudent such, in to our it As is be guidance. we best incrementally near-term

for with let's full that rates with constant growth mind, with year And updated our in start in guidance currency. the

mentioned. guidance basis be points guidance We timing I ARR $X.XXX ARR year-over-year. lowering related our to to our billion XX% level strategic or for to prudence XX% now the the deals are $X.XXX incremental prior account to of just large billion to by of expect the from We XXX growth

increase the As a for strongest a of a fourth It seasonally over a year-over-year this $XX making sequential in saw history year. associated in was reminder, last million with first difficult we expansions the we company our ARR public had time compare where quarter third early renewals quarter, QX. our as

approximately our at revenue prior midpoint growth and from billion revenue, for million billion, are and year-over-year. XX% points up strong $X.XXX XX we guidance our to by Given the QX guidance basis $XX our raising finish $X.XXX representing

subscription This our $X.XXX midpoint billion growth an to to $XX increase of raising $X.XXX XX% at revenue by are the from represents billion or We guidance approximately points basis guidance. million year-over-year. prior XXX our

margin Turning to and in our financial our ongoing bottom model performance. line. resilience The strength evident of is our

expect growth that We drive profitability. drive are future committed we long-term while in value opportunities to also investing costs optimizing will to

strategic generation investments as sales and our our We such demand cost areas coverage prioritize to CSM and capacity. rebalance continue GSI R&D go-to-market to targeted innovation, in profile activities partnership,

our of With the to points are of $X the year range an the XX this XX.X%, translates XX raising points end of in margin and non-GAAP representing XX.XX% million. income guidance, full range. basis mind, operating the low at of This guidance we non-GAAP high to basis operating increase at end

per to the We to a share based an This diluted is diluted million are EPS at of million XXX representing non-GAAP share, shares. guidance of range. non-GAAP raising $X.XX to $X.XX EPS of on count $X.XX increase the XXX midpoint

a the results. this will expect XX. points million Runecast, March And increase flow XX% raising to cash material of $XXX will cash a on million, of the We up free an financial impact of revenue, are at midpoint. transaction by $XX the flow our at margin technology $XXX tuck-in assumes have This finally, acquisition close free our representing midpoint, guidance million XX guidance we to basis of which not

$XX $XXX revenue. revenue Subscription per taking a structural is operating to Looking is to year-over-year. at expected our customer be or XX% million be million, to $X.XX diluted XX% taxes. income seasonal expected up to XX% expected XX% some Perform to $XXX between $X.XX to we between and conference million a total and and Keep of $XXX including we revenue quarter, $XX $XXX spend incremental be From XX% place in growth. million between is in standpoint, non-GAAP share. mind, be reset expect million profit EPS to XX% of for Non-GAAP expenses as fourth to or the QX, well have as payroll million

pleased fiscal In summary, quarter we our third with 'XX are performance.

have record free balancing disciplined of and with cash line We execution, track growth proven flow. a top profitability

our in the building optimistic near-term are our incremental our and remain differentiation we market. intermediate-term opportunities outlook, growing in while prudence We growth about

that, open questions. line will we with for And the Operator?

this Thank conducting [Operator you. a session. line Roberge question the with of Instructions] At time, be Jake from question-and-answer we'll comes Our William Blair. first

Can Rick, that making. those you're you've the activity what top talked you incremental give two confidence the about continues quarters about seeing to make investments? investments funnel you're you the and to past talk pipeline go-to-market in of

higher Sure, than the Thanks is advance in pipeline Jake. ARR question. to The growth. our for see continue or form short we growth

So that's one element.

indicated board. we're deal the to we As pipeline in a we Jim little bit seeing growth about close, really They at his very strategic across that increased moment. feel longer size deal These take see for but increasing positive sizes remarks, are the deals. the

of Our next the line is Stifel. question Reback with from Brad

What has back for economy Great. growth improve, Like execution, of the or to steady X more quarters. last to been kind both there? best ARR a get cadence needs or new growth X net the to [indiscernible]

grow. coverage would Well, to the pipeline say that continues I

that's We the good. the a mentioned execution to transactions to these see, with and And against macro in pipeline a over question, ARR occurs growth, going that as need we with so at mentioned. positive. able prior answer deals to higher improvement time. larger larger sales be that convert I and that's also, growth pipeline that's So to obviously, exceeding rate, come that We

of question with Patrick Colville line next the is Scotiabank. Our from

the you the I juicy this XXX was DPS gave deals. mean one of quarter metrics

I you of like give I it's what already? might think now, when impact XX% at mean, just DPS you is we right can in us called on any if not impact customers if that to NRR, now And are DPS impact NRR I ? out framework think DPS. having as guess, having a all

Patrick. This Jim. is you, Thank

is of on capabilities this full talked we've DPS to rate get rate opposed it DPS, the the you gives for a all to So platform for to card buying card contracting What our SKU before. a as it you unified ability gives an basis. about with to vehicle access a

amount based down card. dollar term a to you draw for rate commit against you on So a and consumption this

leverage So on the you all platform. can capabilities

a because buying frictionless it's much experience. of that, more So

So this what Patrick, you a years expansion you had is platform faster. we've expectation, that found timing are And X.X customers contracting get for probably now. with availability we the is on that of the get -- the DPS such unlimited have and on proven when consume them we've vehicle and

incremental faster, means So expansion it leads when it rates. to they consume

This We're at of very early since generally phase this. the has available been April.

of going say begin when to of the to kind lapsing, it, you in call XX-month -- see this see we're to you're So is kind horizon. I roughly start would where

do not And it. a DPS DPS are track than what that see faster we So on those consume that is contract are contract. on we customers that a

probably be So is that, it will that expectation fiscal 'XX period. see our the but in we'll

line Our the Goldman Kash comes with from Sachs. Rangan next question of

made few starts now, products, your and months you've Good obviously large which fiscal indicator is deals My new go-to-market got you process. stage next XX%, next timing ARR kicking up making has Is question the potentially and from then rates performed, curious, to of pipeline year, growth you've close new if lagging fiscal DPS, in up then than in on year, towards show for you think with which which the you year. the obviously. the investments do could see expand this [indiscernible] the deals in better work where to a a DPS large the of the and is I'm Waves. capacity

take whether say that about, leads of the to are acceleration fiscal would Obviously, going call. areas guidance not an that we're Yes. not various I'm in drivers. provide the talked growth I'll 'XX on fiscal you this 'XX. Jim. certainly comment thesis to to on This is that. I going

sure that make in prepared just pipeline I The clear changed step what you and has to the fundamentally say, you days in pipeline? back will the that XX when to remarks say, strong. relative last I what the But was remains

large growing opportunities vendor have that consolidation of very We mentioned. I a number

So more the net bunch customers in trend having of vendor tool the towards complexity of a for of a disparate because it's market consolidation, we're environment I'd say or tools. doing consolidation the of Dynatrace what a positive seeing is considering because

So this believe, positive is a net we for Dynatrace.

The are is a that that that incremental window. are to deal has knowing of the only strategic closing variable we thing building changed prudence They're and X-month timing very for these large. level an sizes a be within bit them pick can

a we've all is, into The demand change So build of guide. healthy. we demand environment done prudence to environment. is the remains tried level There the incremental in no

that. Kash, to let me just add

market all, much And market analytics, the of in Perform, that of advantage that exceptional. really based remain, and that automation are Dynatrace's a to would requires in to manual and as resources take attending IT observability, and we our at. processing security critical, in particular, look evolve to like to this because hypermodal do on First is fundamentals very solutions of say the fact, mission automation position this observability view, and more our here simply of become sophisticated What constrained available I that's AI strong. thanks very degree for is contextual workloads going like in market are number critical application more we IT of

is Our Markets. with the next Capital from Keith line question of Bachman BMO

growth you it? Perform significant for look of security, wondered, to ARR growth I question a we look I it analytics way the and a that's better the to and If be that of is degradation suggested significant it lack residual your pretty with at a And and the logs happening suggests layer last again, we of couple. business. in to past for pretty a, nice at we'll of had And new do various b, the And what call residual a week. scenarios it word. offerings, why was fair at just think a degradation related

taxes Will a for could year? cash to FY a more one set sort for models add cash so our incremental our year. And is Jim, impact can you if just [ onetime a just also for help framework least -- 'XX? clarification, cash those it we an flow have of Or at next thing of taxes the ] next in on

Yes, that. I'll start with

is, cash it, we've is tax going So call This to the points a answer that 'XX fiscal XXX onetime. roughly which not continue. is been, seen, basis is has --

taxpayer full because are are a we We tax NOLs GAAP profitable, or loss carryforward. have and don't we cash

So you general answer, that, that in expect a will through. 'XX should forward. we're as But that we should strategic tax going the will that continue always cash efforts there's fiscal planning Obviously, tax going have expect that you continue.

the... to Relative

But to say, worse. incrementally yes, though, get right? It rate doesn't sorry, just at the same

it's the So same, right...

tell not become I for fiscal will as going more would that say 'XX. you're I I'm guide taxes. But you to you more profitable, going pay to

but is a at. say, a it to not, not to at minimum, it's currently going I'm or grows be going rate little that whether bit So what

Okay. Fair.

for the to we relative at unpack don't of ARR, detail level product categories. all you And a

on you So the logs. of a that the kind still phase I application and of journey for bit would remind I think we for are security early

businesses about AppSec those at 'XX talked exiting million ARR. We've little $XXX a longer So been at logs. being than we've fiscal bit

workloads is the next starts but It environment. workloads is environment. -- POC. log point in to smaller that you're what The in the of kind that to about we going production newer production then journey have goes with a in see you a in phase particular, a talked logs is that The

workloads. leveraging you're phase last existing the kind then of And being

early journey. the still of very we're So phases that in

So infrastructure, to in strong that around be our all ARR. the of Certainly, a of been horses material when you kind our of continue up Those along ARR. the about portion DEM. make most drive today, areas cuts product that think logs don't and that AppSec full we've stack

an expect speak, in see And that's should logs, but we're so our I'd acceleration application you in that the to and in to hockey to stick, say 'XX, continue security what expectation. happen is going will fiscal

POCs on we customers log logs, Keith, customers log add in and additional in management. that management saw a might XX% paying an -- increase I increase quarter-over-quarter, XX%

So in see we this offering. to do new traction continue

from is line RBC with question Hedberg next Markets. of Matt Our Capital the

regarding for a the the the closing either either on think -- accelerate out these you, and of I sounds push ARR large there are could did deal a to to start growth? And I deals partners of guess positive growing commentary, or that abnormal ultimately timing, large any impact large that your of quarter? like pipeline sales of uncertainty what guess, are things force I deals on have the of focused

and had them would will they as I say deal the we're take better get can that don't I that, you a quarter. that I'd have pull out that. notable. of quarter size And a you to of a Yes. of These They kind I out happen pushed guess as deals of seeing QX, But you like whether imagine, that Relative they've always kind progress, funnel. into deals nothing, deals some and they are overnight. these push that say been the you the timing. deal that's assessment in Matt, of of

have sales deals, is been we've good working process. the the many of news been as growing these them And through

kind with the has the of the we're have compelling a of a that solution timing. timing for not because good There event funnel. maybe consolidation in actually decision. renewal. be health there's may of for a a like that you're a And So up if them contract as the challenge date thing a deals a position to may these changed is, for kind close specific vendor competitor to The the is doing I always fundamentally mentioned, of only relative

may of one that event. So a compelling be element

building we're the a general, go and fundamentally through I nothing, that. that is changed an serious that and these strategic environment level incremental just is before, decisions so said The And is very still prudence when nothing of still are customers But in has healthy. for very evaluation significant there as they robust. demand in pipeline

huge that I you that in remarks these over As in deals up are last -- pipeline year. had remind have over $X mentioned I we my And the XX%. a that QX prepared are million

a is of it We of little you a this matter prudence variable. deals XX-day have bit it. a tried significant a movement a when to call pipeline. just in like into the very within more It's level So window this large to build is

Kyndryl. like posture you that longer going to mentioned, very to Matt, position about And GSI and well. I the be and as the take GSI GSIs in of good of bit evolution. we feel bigger particular, front, partner deals evolution are the GSIs enthusiastic the our with the partner some add, inherently Accenture, about especially a continue very we core DXC and Deloitte, would those close opportunities, just since with associated to mentioned I with But be

with from Needham is question next line Company. Cikos of & Mike Our the

I to strategic know has incremental And on prudence guide. And the tied spoken more want to made know, these lot it. I I just really you've larger, about incorporating ARR -- a Jim, I been fine-tune deals.

that I first the elaborate what expectations the this on magnitude the to or now. help think can change So question of guidance would incremental thinking you about prudence is, set is? level as that construction we're philosophy

about larger, think investors it deals, to way a these taking the were long second And strategic helping would go in point, close. which today, longer the are really, guidance more for not which then

guidance the ARR actually would fiscal raising 'XX be Excluding currency that, today? constant management

Well, you of imagine, can pipeline the There's a basket opportunities. opportunities. just small is opportunities, large

I improvements. time, provided XX% the was a what is last are becoming is will large which to that So though And funnel seeing these we opportunities. tell I you in bit the has changed. guide weighted incremental more guide Nothing think that I growth, basis that else the to points the to XX%, XX% in XXX about you fundamentally XX% of think way that just is is the should now, difference literally

appreciate I Terrific. it.

Our Fatima from the next with of Citi. line Boolani comes question

historically, for us logo expansion. these Jim, installed and acquisition the your along new algorithm between internalize been growth it's helpful base to very just lines,

expansion in as some behavior, bearing a on flesh side? uptake in seeing expansionary the versus us pipeline, your expectations your of help just relates to what DPS could some of for and mind commentary the on it recovery us the you logo I out So was hoping base installed what you're potential business a new the are

in And going we way before logos, that to had I would but growth new be think to XXX% to be the of higher year. we the rates -- the land term. And single-digit near the we're call thought range this in remainder shared that in it the that the and to expansion I for low -- last said I in I Yes. at shared before, The XXX% that this expect probably that in be sizes. case

call sizes So trailing XX-month basis. a it, been our have on XXX,XXX land roughly

a customer underpinnings they two a those that So continue expand higher expand. front, larger larger underneath on logo that. to have lands land to tend of be it's focusing when we're seen a blocks the the to building we have propensity at kind we set And on because of size, new

fundamentals So won't those change.

'XX a one obviously, little building fiscal to And give provide we blocks. on color continue I retention best-in-class those to more but be I'll that, the bit the other being kind rate. the guidance, have major when of continue you Obviously, guys

product the don't or We sticky. lot churn of sell. is very a So have down

expect either. changes regard So in obviously, don't any that we

Ray Our next the is of Guggenheim. McDonough from question with line

understand is log like be your areas the Rick, your when and at early displacement mentioned those Or you if and would your some of change of accelerating, logs, opportunities still tool APM it can at are helpful. it's management Is coming partners, are some competitors? seeing us other from talk due But a for on so, in color but acceleration we that Obviously, specifically? it that this to you control where you opportunities on in point? of And competitors? traditional any couple is seem consolidation hit throughout call. a to help does you've

us new above would in by the I of say to Thanks, a of a way logos tool bit for source consolidation. Ray. a way. material AppDynamics of all be of continues

some that, some of by over see they has disruption apprehension course announcements, said Relic it's terms to certainly opportunity some creates of Having going has us. which market Splunk degree created the time. stage of of certainly these as we'll of still and the transaction that for private, Cisco, how early confusion to have and New leads relatively evolve acquisition all in

BTIG. of the with question line comes Gray from next Powell Our

Okay. Great. Thanks for -- let me ask a question here.

what So normal us take is on in million new statistic helpful. just cycle The it's been how net the $X much way deals? as quarters -- yes, more And Is to extending I for think ACV a know was sales recent you've on deals, like gotten trends. on then how customers just larger like really deals? lot like multiproduct through there much that ARR a help

-- of you an The as you're I longer Yes. X X months, or are that that a upon on -- customers expansion. mean, and logo our -- nature. it's normal things imagine, a can depends be going to logo, is new much and it more significant because of a the If it's sales the whether the doing end cycle with new evaluation to POC that

So it new varies expansions logos. between and

as are And growing actually on the -- deals also number that seeing both side. logos. installed new these just mentioned, larger it not I We're Gray, of base

Because DIY solutions. base So it's other actually where cases, have in commercial tooling leveraging installed even we are customers, they both. tools and also other

kind So was ago they make in I as tool that consolidation XX% very, healthy. a showing of that's are a the beginning more over year now increase that, funnel And to is period decisions. very mentioned, and

a trend. it's So I positive think

it's to than a it a when this process within say, by on and really built of it varies, in customers if it a new on -- -- for it processes variability, as it mentioned, couldn't their to implications month. an both be existing average I we it has could be for into level people It hard size, Is has they're which impact could tell It cases, I the two organization. because organization, why and it an is months? using would and prudence is vendor, doing quarter. I say you cases, more a other because to and want month? introduce there tell some -- a their varies are tools it you that they that is where go to impact does some right? of deals you an In

date. they So that to evaluation that there's anticipate through, and go a a you trying as close serious you're have determine to

Got it.

So is X it's not three months, like an to that like fair? extra months, an month extra

no. No, no,

Our Securities. next comes line of with Truist from Fishbein question the Joel

last to as want Can ServiceNow week around as follow-up making there dynamics of consolidation, competitive great to and well. I those others there. you one about lengths well. to went the out differentiation, with -- the of compete the which the a the know and market questions which have I on talk we're you hear some in competitive vendors positioned about you those your saw some to seeing deals? We are talk noise some are earlier think you just to we observability that observability

seeing from Rick, So you I'd you're hear, who market. the love about to in

much the would of competitors those the some on some opportunity think, larger of the the towards areas. especially recently our our higher some to disruption further, position again, that very at extent, about talked based strategic say, I providing I end deals differentiation, upon extend I based Well, market. in I To are that already these like that trends core

just asked a that security application market. don't had as partner mostly them see They observability And the actually still do. ServiceNow. competitor the in We a and to opposed about as we you yet have capabilities in

integrate asking more are ServiceNow us them. customers with it's with not, So versus to than compete times

vendors perspective? consolidation other from a match that a you any there perspective can you think Are guys from product

at market market high -- the deal direction. the our the end that Well, the of and XX,XXX, end I of Global most would pipeline say of at flow higher the the moves

target we market segment, competitor, past, to in strong very So think I have biggest said a the and we've DIY. as the our be continues in play

from is question Tindle next James. with of the Raymond Adam Our line

a a spots? Do your pick of [ going agentless and and investment areas Dynatrace broader the plays choose of AppSec platform of think your would wonder attractive like that you where lot I on. a just combination time or space, as wanted going then speaking. you were something been and Runecast. see management the ] of strategic to customers view growth player you a a into push agent a over market? that start lot a for wiz before to adopting that type of motivation There's cloud asking question zooming posture or kind secondly, security, this technologies of ask CNAPP. And To broadly that, was start in maybe holistic characterize on in you're to related into that with, out I that strategic

Thanks, Adam.

of to technology would vulnerability and yes, we and the portfolio, It management escalate our posture lot. security analytics really, should quite and CNAPP particular, use which it doing, security team I liked compliance that on we're is misconfigurations first and to address the allows into say, in say, what we us the our capabilities. to vulnerability way a protection head risks to and added really like So the into analytics that nicely towards existing team contextual and technology, analytics intent front, fits Runecast adds a AI here our CNAPP violations have, capabilities and I as cloud we

a very fit is So it good in expanding it. very,

strong and asked, And we hypermodal continue would you to converging. I question again the to in security the simply that deliver time our as and broader past The -- regard application in see AI, mentioned in things we that say contextual generally provide we that very application observability very, are with analytics well. and security have capabilities time like platform capabilities

market spaces. better in of So security these do observability the types others we've leveraging to application in our core in elements been the outside of the platform than focused market, on

enthusiastic are investments very continue very in about generally. our be we So AppSec to excited Runecast also about

Thank you.

Our from final comes the of Will Robert line Power question with W. Baird.

we kind I respect that perspective year here? of customers on it talking perspective of conversations of just Perform your that Can both priorities those Rick, be would of you how budgets with you're thinking conversations get XXXX that as to And changed fresh versus guess, have are any about, and kind being to head into ago? -- guess, here. I any great might to customer a tone then how

customers to a Dynatrace would chosen -- I existing They've They prospects. existing there. customers or self-selected. Perform say that, are be are Dynatrace Well, generally bit simply obviously,

of market. you the So that get flavor

at that, said was to And they in I dashboards conversations number they transformation platform, and that making observability alerting, this world digital than the AI a Having Dynatrace and manual number in and more exceptional. leads after critical absolutely that: one, that customer they're the is They off leaned on is are and were better could number engagement regard it in can't to would otherwise. notion Perform a three, way through two, which a do Dynatrace that and investments phenomenal. the them is need with after analytics, becoming platform customer amidst say they more with they And which the buy customer in driving driving do enable to that to do it a transformation. automation business absolutely

And of It is event. was simply heard so that was the type positive. that extremely feedback a we fantastic

as I support. lies over the opportunity close. wanted the you to you. We ahead. remain about throughout that echoed this a to us upcoming and the questions day. quite brings at connecting and look IR as That you We coming forward your Thank bullish events we've to ongoing right. good wish engaged with very the all -- All weeks, we of thank you call, for usual all your course

today's conclude will conference. This

lines participation. your wonderful disconnect at this thank Have time, day. your and now your for may a you log You off webcast,