New Relic (NEWR) 5 Nov 192020 Q2 Earnings call transcript

Company Profile

Participants

Tony Righetti	Investor Relations
Lew Cirne	Chief Executive Officer and Founder
Mark Sachleben	Chief Financial Officer
Ittai Kidron	Oppenheimer
Sanjit Singh	Morgan Stanley
Michael Turits	Raymond James
Jack Andrews	Needham & Co.
Jennifer Lowe	UBS
Sterling Auty	JPMorgan
Mohit Gogia	Barclays
Chris Merwin	Goldman Sachs
Rob Oliver	Baird
Derrick Wood	Cowen and Company
Gray Powell	Deutsche Bank
Keith Bachman	Bank of Montreal
Rishi Jaluria	D.A. Davidson
Steve Koenig	Wedbush
Erik Suppiger	JMP Securities

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by and welcome to New Relic Second Quarter Fiscal 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions].

I would now like to hand over the conference to your speaker today Tony Righetti with Investor Relations. you. Thank ahead. go Please

Tony Righetti

Good year welcome XXXX operator. second New quarter fiscal earnings afternoon, you, to and Relic’s Thank conference call.

are Mark today Cirne, me New and Founder Joining CEO, and CFO, Sachleben. Relic’s Lew

assumes as statements. except and information Today’s conference projections obligation other update conference provided no is and in of characterizations a statement New projections is refers events, financial market forward-looking to this or these including not Any as of future future does call hereof by intend expectations, that forward-looking Relic law. required the forward-looking date contains conditions, and statement. call All to statements,

as more information our most risks Form differ refer obtained to statements, these described XX-Q For results recent please New with be filings or may and of factors by well the about Investor to Copies our cause visiting issued the Relic’s the actual from SEC’s website website. documents release SEC. forward-looking may in materially earnings subsequent that as Relations today,

commentary ongoing Our for in non-GAAP use we which trends. to investors additional measures, evaluating provide financial an results believe tool and will operating today include

However, in GAAP a found with information cannot financial substitute Reconciliations or prepared earnings release results our these in from, for as for, be considered in between our metrics and measures be non-GAAP GAAP. reported accordance isolation can today. issued

earnings periodic more or today’s earnings release replay webcast nature Relic’s New be an on in greater section our SEC that provide business into our reports, the the one-time about future call, insights issued accompany we or access visit may may a provide materials to additional you I Relations At these Relic. learn to we This to detail metrics of Investor encourage in times, may incremental offer may, today, update results. New metrics. to not, release, and supplemental our or of website

turn me over to the let that, With call Lew.

Lew Cirne

has Relic's driven our impact and digital the its us call. standards afternoon, world everyone can Thank joining the to and software ambition improved. good New measured you, Tony all beginning, today's establish instrument be Since to and which by and

half This I the first our user of Metrics. in advanced period. focus perseverance company this was the and released While conference year pleased where Traces was at New demonstrated Relic evident Logs, capabilities: am New by and over FutureStack platform September New we with the our steadfast Relic challenging, Relic

We Relic New and build workflows integrate to also business One New to which drive them on seamless to and real enabling added platform the on of actionable our Relic applications create partners data the new gives our platform, platform customers top the ability programmability entirely insights. One time to

metrics enables as built platform litmus experiences. and see programmability we a use to to to visualizations integrating capability competitive deliver business our observability for words, supported. advantage our and workflows limitless Connecting test technical platform. not Unlike a observability customer is company. experience see business and of dashboard-only the In cases platform-defining unique solutions, unique a platform and digital needs customer in nearly combining shared as unless a which customers' our business other development has application tailored We data the be and it's software

our Relic their on data; systems; our in top entirely their to between With programmable build relationships customers customers open digital New new to enabling platform and partners see agent-based open drive to recent observability the One enhancements, applications and customers Relic business. telemetry our allowing became New bring and our of empowering to connected

platform. development announcing our delivered products of General focus our innovation and of product the One Since highlight exceeded common number a user the Manager expectations our to I model, organization XX moved count and throughput to These and my New FutureStack our has open by was merits proud powerful product our raised SKUs. to Relic event new innovations converging new on around paid this record

phase we well during programmability organization and earnings a extensibility our last establishing on in our is hierarchies we base and executed are our expect observability we and regional complete go-to-market results call, the We imperatives better forward. The installed half. have driving second to our outlined be strategic go-to-market to better position the significant on going from believe acutely and platform of initial scale, entire leverage focused in

He as Mike President We to then October by at New company Xst team familiarity beyond role to drive Mike driving $X know-how us revenue. with but required capacity on bandwidth of our leadership a the strategic the to only and not operating allocate to which seasoned affords majority deep time is Christenson annual our billion executive initiatives. adds product me and in has welcoming strengthened also my our experience COO. with to the team, space, an Relic our

in the increasingly second With execute I'm platform, our observability confident to these of our changes in the place, plus expansion ability half. in

versions early that beta platform our experiencing are in with accounts success of In capabilities. signs participated of newest fact, we

particular multi-million by built The Elasticsearch competitors Relic One. and to figure of the sprawl power customer. stack, involved case, of logging technology team on proposition an value open standardizing able on environment Relic homegrown was The the a dollar to New tool. sector incumbent was one of the source expand metrics, visualization mid-six driven New In social in a our typical account a

scalability availability the through and deals scalable believe that applications are our by this the the then this of two year, while new we our made along and organizational beta. offerings. our log, offerings programmability field trace created superior I to due general capabilities of enablement caliber our recognized accompanies with deployed in enhancements customer metric broader The

platform adding moving offerings Solutions status. to template Relic are: development to GA our AI the productivity penetrate the expanding foster open the by our to Relic product initiatives and Group; to and the observability further connected programmable half, significant our New of the second field Logs library further our key we installed to differentiating context programmable and New platform enabling to Customer shift base; our focus sell As of

to provide the now to on financials. over color the Mark I'll call turn

Mark Sachleben

Lew. Thanks,

to up XX% guidance QX usage, our business turning new growth range. application high expansions a year-over-year landed the above second XXX ARR financials. well year ended paid $XXX.X increased was and of XX% logos million installed $XXX,XXX, represents derived Now end accounts quarter We as Revenue of the for from the with compared ago. up and base the both over coverage as expanded products. to This additional cross-sell with

ago base. Our driven this our to in upsell was rate quarter decrease expectations net annualized XXX% activity by compared amount XXX%, was QX expansion year dollar-based line of The with a from relative and our to lower period. a total installed in

was XX% of enterprise from up business last At same ARR, year. period as of around XX% the QX, approximately end the of

In for the revenue was $XX.X terms year-over-year, quarter $XX.X XX% non-U.S. up of revenue million geographic also million for XX% to while grew the up year-over-year. split, U.S. quarter,

million million was For was revenue, quarter above conservative $X.X QX, assumptions margin our X% compared number a operating Non-GAAP expense non-GAAP due expenses. and to $XX.X or personnel to X% benefit revenue an gross of This same in income was our the of guidance of or XX%. result lower year. last FX

share compared income the net year. in $X.XX Although, our quarter hires Overall, over non-GAAP back-end diluted attributable loaded. net New start to XXX were to per with generally of same we $X.XX the was a Relic hiring hires had quarter dates our strong new new last

software cash operations expenditures flow defined negative $X cost capitalized $X from operations cash Cash million. flow. from Turning was capital minus and to as was development million. cash Free

This total result our at range the million, balance to deferred the our quarter's year-over-year, with cash, revenue sheet, total. $XXX of of on below equivalents X% balance million was Elsewhere investments We up our initial to approximately the last sheet. XX% mid-single-digits. ended decline quarter and Turning ended $XXX a the up million second sequential down quarter short-term sequentially. in $XXX but cash from low

When provided bottom that in calibrated update year near revenue full the XXth, were we September to of range. outlook the

model that well refined Some revenue an QX as sales of in-quarter from slightly factors account. change aggressive the which $X since assumptions, deferred million been and impacted as attainment have lower invoicing include;

turn XXXX. full to for the fiscal our and I quarter outlook will third year Now,

million. to million ending to $XXX we of For the revenue third the $XXX quarter expect in December be XXst, range

We the million of to million. non-GAAP $X.XX. income would to attributable Relic to of This New to $X range expect net income $X.XX per in share non-GAAP operating $X lead diluted

expect revenue basis we in increase sequentially market percentage on awareness work to the a as to and low increase single digits build We sales deferred productivity.

$XXX For $XXX the from full range we million fiscal revenue expect to to year XXXX, million.

to expect million diluted operating of non-GAAP to net lead Relic the We of New non-GAAP to $X.XX. range $XX income $XX to This income $X.XX share in would million. per attributable

provide moving revenue and year fiscal the Q&A, to assist XXXX. remainder of like modeling with I'd the following Before to the beyond to

from down we $XX million be Regarding million capital year, which operations and from expect the update margin million is million which to we to cash million and be expect and million million, between be expenditures, we is million, to $XXX flow $XX gross $XX to fiscal up is between we and free are following $XX $XXX which from down $XX to cash items; to maintaining $XX million, million. from and outlook $XX $XX million; $XX between expect this million; $XXX

our objective Day revenue annual upcoming operating calibrated a fiscal $X provide a attached year, of $X model XXXX XXXX of to Investor we'll full Looking December this billion beyond to QX year our a $X fiscal we Analyst total are At fiscal billion XXXX. billion in refining XXth, from revenue. on basis run-rate and target to

QX platform. and improvements to of the broaden In our fiscal are as we continued improved anticipate enable the the we summary, in in accelerate XXXX working half through overall performance We second order and to into saw adoption growth. field

for And with call go questions. ahead. that, open please I like the Operator, to would

Operator

[Operator Ittai Instructions] from Your with first question Oppenheimer. comes Kidron

Your is line open.

Ittai Kidron

both out and the can kind I focus in the I'm then question process, the slightly of, about the process products? improvement attainment would training to productivity Lew for also a talk at three you feel productivity what trying do you guys. quarter. lower next of new sales kind this about the guess quarters? wise coming you about the and pushing maybe the what Mark is capable of sales said are two, your the tie Customer point how of this How Solutions to force? guys, guys, Group expect comment about bunch in you you new a And the they How over product Hey of is on learning just, trying of even

Lew Cirne

it, said execution provide prepared let part the an work pleased take has and introduced And remarks, as Great awful with We Mark the I'll color. the of of I'm some capabilities FutureStack. product questions very at lot of innovations first in Ittai. I delivered.

And lot new to understanding and very it's take on capability field And an of to not the market. and well, enablement pretty out of that's going that there focused enable knowledge on. but we're on our transfer awful is so instant to

a top it's us to so enable And for priority well.

many -- think to our platform efficiencies so with our our there intelligently, an of enable is sophistication with the platform, And I organization. in to more it breadth which we ought while CSG of the opportunity in result do

of is to So looking and focus. market It's We're focus And in with customers I'd being top how early see it's the definitely We're through absolutely what resonating market on well-enabled on say very efficient now respond with and need a team. pleased area to innovations. differentiation we it. to it go-to-market the our a for they it. taking

Ittai Kidron

things Got up it. officially what thinking internally quite point. is he's I as how time. there until changes this impressions first little been job doing have been month know only been he on a follow-up, implementing? just they is And for differently Mike than But about Or on guess bit then he's Any now? the some a at I a

Lewis Cirne

Mike with as years now XX mentioned for you ramped the company years. he's over involved been rapidly, nine nearly because up has very actually

been well America. in North Asia he having he's of lot offices awful an Relic as So European that literally about – around world, said, but and including think visited offices time, the spends New I even six our as

he's Analyst growing and excited he's very getting into business he's I'm we I'm we're to about our going idea up. in speed to as bringing partnership think quickly to – some his very coming Day pleased bringing this in. at energy and our initial is the he's developing. the depth about as go with But thoughts And impressions how how to

Ittai Kidron

All great. Good guys. right. luck That's

Operator

Your question comes Singh Stanley. next from Sanjit Morgan with

open. is line Your

Sanjit Singh

I customer the larger Lew, products expansion think quarter. big lot a are, function it released sort to question. I about from of contracts, customers New their question the of get taking your going and product look expanding at Or looking to you into have sense the want the we're Relic road of future stuff hopefully of bunch programmability guys announced perspective them. you in base? going for guys about they how we of Is trying of the renewing do them that a you you second them is was your the how sell executing renewal half, where get – a for had the into capabilities which this quarters, a on of and I terms interesting like But these half released Thank quarter the much second map today? the to you've this really lift a proof. on a core of sense saying oh sort stuff the

Lewis Cirne

It's a it are that we question depending Sanjit. great I'd about a bit what varies say we talking released. on

our how pleased product. Logs really to established to love about We're our that. else to in to more on-premise I where and is you demand use believe an And our indexing. about love an is login APM, as an think are easy talk is how think it love which evaluate customers or For than how with to market, they example, that with They pleasantly it's They is. administer it us, compared it use capture have we course, and of anything hassle-free integrated and offering to fast with best-in-class. eager

about done category. like adopt. the customers So which that's this the the that table. to understand in literally That our with very our time We're product pleased with relationship use customers that cases expanding anything nobody for our customers discover done about think takes the to of new and that. have their New programmability are Relic has talk like at is nature eager something But where

days, that's programmability signs to terms We're and fully stickiness to particularly like need That's and understand exactly bears important that's or of strategic I They're really in develop period take They of turning moments that truth. broadly what fine. there But out make adopted for a in over game that longer that see and truth of launch moments think that we're in time. engagement, or they really days, moments. of seeing to their being to – sure business. broadly going of about a longer to understood thinking are

look delivering. deliver spectrum. that customer we thrilled an on base those we of mind no plot energized what of all that across now we in have there's sort we've as So of what things with we've that But each at that are about energized can sales doubt got things an we and my force been

to time it's now So really execute.

Sanjit Singh

one to we quick the sort perspective what on in upon? Got as the a to guess early quarter? up your factor you environment on and it. midpoint any demand some quarter current from the come environment my hindered I QX proof what of there squeamishness environment that's topic, this outlook And about in going saw QX? terms of macro terms or sort And want execute that maybe into of a just current extent is of into on you continuing the ultimately, the Was follow-up points. macro same question is of quarter, you talked the

Lewis Cirne

tailwinds the are that these cloud, work No. speak movement the around things to may DevOps all or not of, outsized what digital that think issues economy are potential massive these to we may the macro that overriding around to exist. None, compared our in forces favor really to are

So a in the we're today quarter major as not seeing factor or either. that

Operator

Raymond question Turits with comes from next Your James. Michael

Your line is open.

Michael Turits

I to a down infrastructures that little ago I product including to time parties, et extensibility, one evening. a a this dashboarding, of drill this launched more Hey, made side? visualization, moving is a mean, but changes bit third cetera. guys. Mark. we think, can you openness lot Lew, for long Lew, Good on year was

And handle in uptick are you? I much expanding that about add talked along And would well. force how also as far process how sales the getting? that you to are you So

Lew Cirne

an that using to anything monitoring really that's the the with One into allows requirement offering. pleased environment handle. a natively increasingly really asking which we that is us made in particular Prometheus, could New from metrics directly We're address infrastructure send was New the progress on any to a side customer technology product complete more we in the infrastructure for popular key in It infrastructure market Relic virtually have Relic

key And our so that's game. that ups really the capability

companies the nice of think have we're other history. companies some closed effectively see with we to we the that And heads in competitive signs other So with more have on infrastructure we that starting up infrastructure. a have an infrastructure gaps wins space of

So -- we the but focus we got recognize that it. to on keep

our invest and to field enabling do a platform we have so history rich deals. infrastructure APM to big in is really continuing in deals. We it And about are

platform significant APM includes and that programmability, all platform have now and infrastructure one think winning and those as deployments. and infrastructure with together gaps particularly we having logging that we So on in this with that of platform differentiation the large closed

Michael Turits

lower on number Thanks, deferred would more shortfall clarify be assumptions invoicing detail part can attainment is one relative you towards invoicing that below the Lew. of change. a And sales Mark, going latter shorter a sounds called us general an which and You of revenue? maybe give to aggressive like Then on it then bit model a the year? out great trend to factors that

Mark Sachleben

Sure.

we co-terms million that factors. call shortfall modeling attainment those a have We so lower and some relative did out to obviously The impact. had to duration. that forecast $X assumptions yes, an So $X was around million renewals, sales aggressive did

the In fact has up pretty of years. last been duration number going steadily over

impact had and it impact. declines an that so quarter This slightly

pay wanting seeing terms to more customers pushback on willingness then of pay, in And to year we the invoicing, renewals are upfront.

ago few paid one years routinely back I went to to three upfront years they and year. -- go customers think you a

customer annual an multimillion-dollar impact. are incentives just give -- a to overtime. up so We that that make to we seeing pay are that We to we willing And anymore them and shortfall financial not since that had not do expect upfront pushback pay that. on also had customer would

that And interesting there totally hand terms to may of the some manifestations and with multiple, question year full years on multiple I the macro be agree larger response about and upfront. willingness other about their as prepay in companies Lew's that of

Michael Turits

Mark. Thanks, helpful. Very

Operator

comes from Jack Andrews & Your question Needham next Co. with

Your is line open.

Jack Andrews

taking these Good the of this opportunities potential when customers I is standardize afternoon, who One now? proposition you that decision market platform? greenfield potentially Relic and you you're the could approaching and are wondering think question. within to in thanks your with New on new my value approaching Who Lew, organizations was about buyer the for make

Lewis Cirne

does You number mention size. on deal a improved would And was know, by I vary it $XXX,XXX an it that quarter customers. of

the where it's to they're and So more tightly engineering may customer be ops. like side, projects and in let's take they're $XXX,XXX up deal segment be often of with digital not So a with the They approver. the may IT. of VP involved that or digital right? VP and tend than aligned not business And or

some got connection they've example. so carry of the level -- a pager of SRE development certainly but And point between for autonomy, team. have developers often they And a level the high and they team

to roles, and that's products for are building bridges and well between, our why, it operations connection So, a important the aligned is having development those the team. team

And of engineering VP a often so report CTO. may to align a under they who

and gets sorts gets we up. when so to more of to relationships. standard $X the cross-divisional talk about the like Then IT And then, start CTO And we involved the up. get and when and deal million $XXX,XXX to

standardize do involved New a we on either IT and And that's their APM suite. whole build get platform wants who or And Relic with function. with relationship the make product team of the essential we choice, it to where for that's where for IT

Jack Andrews

I I running platform a color. with impact currently. But simultaneous One margin Mark, your should is Relic your both to to wondering be just the could question about any was appreciate just thinking New that structure of we the ask I if and there follow-up existing

Mark Sachleben

In terms profile? margin, of gross

Jack Andrews

Yes.

Mark Sachleben

don't a We meaningful two. difference see in those

efficient guidance as New comfortable just for And previously. And Relic One, with we're we be given can so, the we've that as year. that

Lew Cirne

with really a previous our it's is we've that same generation think interfaces. that been I exact user the that is Relic And to onto collecting interface One user important new data clarify New

all unify, unified of data interface. Relic New So the cloud, it's a way simplified collected One in the a into user to

And so or almost negligible on anything that's is that. hosting there like costs why, impact our

is any One. of already an new New that's they've the are Relic that our in Relic types get like data. to way been for storing new such things nice a new is is not new easy just need already sending -- install on simplify or cloud. fact anything database customers the to New a One our on-ramp to about adapt sending of the why to It's don't know what what us. And new into They Relic view It's customers. improved data and It's SKUs to New one

Jack Andrews

for thanks Got it, taking my questions.

Operator

question Your Jennifer UBS. from next comes with Lowe

is line Your open.

Jennifer Lowe

Great, thank you.

would guess a I just clarification up I First, following Turits' this question, Michael of on had -- be questioning. line but

prior "When I at provided that came look prepared lower of revenue the revenue, the near you a comment there's that the was outlook guidance were deferred full says When the calibrated deferred bottom than. to in range." around in And remarks range assuming we which for September I'm that year revenue

you QX. can comfort those of deferred sort clarify things move. you that revenue how reconcile are get full of into -- year the But And didn't that do target? full that? that guidance still How that visibility sort year you at on given lower we revenue in and end then, So just the have

Mark Sachleben

Yeah.

Primarily we -- when QX much. QX that business this not year QX. QX based revenue our -- took an in on QX that revenue that and guide in QX does September. for was and Obviously for and outlook had since down So, impact to our whereas has on

revenue came as so, our obviously, down, deferred were And lowered. expectations that

this for I if the at quarter. implied -- And we've the growth billings XX-month numbers, you think in you terms latest numbers. And at implied the if going look of stand look we billings given forward, current guide the where

the think you'll it I low believe in see is. growth XXs, I

you look digits regard. our that looking of at look you at slight numbers, for billings acceleration at number if high-single in you're QX. that imputed then, project And kind billings our And billings deferred

revenue look we the numbers together And feel we good project have look all for do the of so, year, these our and -- like that. half into we at we second when at visibility

Jennifer Lowe

more Great, still year-over-year. last talked up down then, just one earnings being me, for call about the net dollar quarter-over-quarter, on Okay. but and the retention you

comment sort didn't on this call. provide of You a similar

normalized how As -- mean, we -- all are you're think year, products back with should of about the that couple next back in we think half? the it lot these, over of a I should the more that given coming return we about rate and assume to be to market of half the still depressed the now, now of impressive think starts a that of through quarters, or out should we as

Mark Sachleben

We're products. very excited about the

time think really early take there. going indications numbers. of are the Those good success and filter to into I we're penetrate seeing to

And this certainly back year. I the of think, half while in so, they'll help

I those think in of the XXXX. products be impact real will fiscal new

From the generally for standpoint dollar-based ARR us. back rate, tends the a be speaking, expansion to half year a new strong of from

calendar the -- QX end and just March. that’s our then in QX the year have We

large be QX the On other our tends to renewal and hand, base very in QX.

in And so, number. quarters -- two so just churn terms metrics got constant you've level in competing higher a with of renewal of got and somewhat driving you've that rate, a those the

is dollar-based over expansion our tend view rate do of the we like course should that, year. the to Our feel improve

improvement we but firm of any that. in looking So in back for year, the giving we're half not half, the guidance second are the on

Jennifer Lowe

Great. you. Thank

Operator

JPMorgan. Your next question Sterling with from Auty comes

open. is line Your

Sterling Auty

of you've specifically you've market the in guys. we solutions the I'm be milestones One the Relic that looking calls. been new months, you the I got? that feedback if should into introduced to out? bouncing what's apologize And covered over this, the roll that are initial between of kind New what next Hi, the for Thanks. last Yeah. But couple

Lew Cirne

talk to happy many I'm about products as anyone like. would Sterling, Hey, times

to for the so top response programmability as viewed or And XX So At in I North say talked I'd our customers America. FutureStack is to example, XXX% literally to market enthusiastic. conference, them. the strategic solutions our

feedback. the when agree first for time on something XX it's of asked to our all gotten we've customers we've And ever

You some they they're demanding, the can world, in but companies imagine execute largest of help the better. us that

great was So that as example. an

is responding market it to our the love amazing the infrastructure they say our it's that, APM same I'd and offering. our world-class places, see differentiated in login and They product. offering But all well

resonating that's well. So

a afternoon New of there Relic beta, and but as reduce Good then, noise by as towards specifically, AI future the Relic yet to we which look announced I alert to the of of was AI, lot has in And the capability year, New XX%. interest go in

our if customers, they to So And ignore one get noisy. might they things go dozen. start when worst don't customers. confusing production, a wrong get in very they case our in that's the alert, And they to too get alerts

And so, offers adopt. to beta. New in And to costumers eager them that positive propositions the they're Relic AI the a value is compelling feedback from

too. software year more got to we've deliver this market to and -- during to So fiscal and excited we're come see that

Sterling Auty

of you in the And the non-APM did one sense. the part guys quarter? business disclose up, Makes follow

Mark Sachleben

call the mid-XXs to and products in for overall the in, were be the Sterling. two high numbers specifically Insights didn't and coming that We continue out in leading and The teens. non-APM infrastructure

things and we're the more finding the One that of consumers platform. are embracing is more

provides lot more a the that's is products to it that value most from entire by adopting That's customer. the the how they platform. standpoint our from get great, value our And

adopt whole of toward how put And allocation, question so, other it the be -- when they to to to internal an we want an products. what we want do platform, gets allocation

are And so look the accounts. products usage of those in from some deployment ingest to get data like we like our things how things that sense doing at standpoint,

have But entire customers meaningful. starts customers rates our are less is suite multiple become say product non-APM and platform who of of in business the terms less overall have attach we seeing increase. what would who percentage actual whole is overall and continue the to things to But our I doing. the -- products like and how

Sterling Auty

Thank Got it, you.

Operator

comes with Your next from question Barclays. Mohit Gogia

open. is Your line

Mohit Gogia

taking for my question. guys Thanks

expect into progress a in if wanted business retention rates retention this QX. but progress mentioned we new at solid show to you further that some the look so And But improvement. quarter. you have rate. dig -- improvement answered trajectory you second versus I like before know sort of that of obviously so half, to I question --

you gives But least I'm business confidence this a second business. follow-up And comment -- on side And the question. what How half? if that you upsells is at the can on wondering how momentum that sustain quarter? the new sort new of I new like in have of then can business outside you

Lew Cirne

customers what Sure. done our years focus two the to With efforts over last on our the have number largest small is much we largest strategically regard or potential. of growth candidly a customers business, new of have who

in of that the over the the spend clip that a more reflection us. years. particularly seen than $X at That's two last with number You've steady grown million customers of

And one in like specifically we new things adjust $XXX,XXX customers. to more on that is business we to of the need model focus feel that

So tend to that wanted customers so And least now number, a products, We our $XXXXXX Virtually be and with you're a a but that's three to us. Relic at of of we feel like is stickier we they number. who faster. grow if growing increase to they healthy spend have relationship. use them tend XXX subscriber $XXX,XXX New really that all meaningful

spend business today an on Relic. all talking period $X on in on $XXX,XXX than need of of the and smaller of of are about and area to the million relatively for team less about go the Mike with to them of landing in board, base least a going customers cohort and with customers that been we too $X.X as us it time, million so customer focus And going to but an that developing a much rather $XXX,XXX focus New $XXX,XXX agree than spending think way number the let's focus. Particularly larger that customers from today with given focus forward. you're exciting many on might with And that's to me see new we also at he's

Mohit Gogia

Understood. the this Thanks my quarter. follow-up the on for question EMEA And color. was business

mentioned started new EMEA you So that you started leader in that QX. a had who -- sales

the new? whole there? Thanks wondering, obviously Any situation other of because Just out of from been you we've guys. the What on highlight hearing issues can like you initially? you about vendors update of to if sort progress macro seeing the macro want us are

Mark Sachleben

Yes.

we new QX. EMEA in start a So yes, had in leader

and quickly establish the tackling think his team business. to in his building I making say I would very and has -- that progress leadership team, good of is blocking he moved

team take you and expect what QX with him. we I now focusing doing driving things pretty for a it is this think he's message on and do the always the see got in -- to place still difficult And in execution, the good what quarter pipeline really he is him right building was early the to they and sales But the good is EMEA group market. team a

to I so, making but takes time obviously establish and progress, in think show for he's those really numbers. it things And the up good then

similar last in of think it's lot about externally where quarter terms about we it. overall I a hear we market -- In the to a EMEA, macro hear lot

look our those digital tend customers, view other is I slight be would may And funding. economy projects spending are or And hear -- projects the places on folks event cut that much downturn versus in the like get you the to digital that's we move From our about be at last of working to it. the to will the say that the we initiatives the I to cut of new those don't look when that a some think downturn.

Mohit Gogia

Understood, thanks Lew.

Operator

comes Your Chris next Goldman with question from Sachs. Merwin

open. is line Your

Chris Merwin

shift Okay. base that you your you're seeing you're all? competitive how about Thank running in Maybe can for just bit towards to impacting there customer capabilities that on containers? And further containers. dynamics is wanted at the the talk how if workloads to you. about investing monitor you a it just to extent the I a containers, in all ask

Lew Cirne

correlate improved them the for host that incredibly FutureStack in of we and We've One And containers Relic at of can do in capability scale correlate and customers We the fact, health now. application things install actually -- number with container health have on free. It's strengthened years in using that that well on. we the containers our environments. explorer for running containers by and any at that visualizer New launched look at course allows the with it platform underlying containerized customer been container's health of an an the of the massive to unlimited our several of one many

it's the increases -- feel just we good health improve So, of the and how that containers continues on. we to the running that feel migration infrastructure associate with about about great to need the application's

Chris Merwin

R&D Great. whether right can on the will the going the level these where do bit And sit sales the as business of think relates talk it forward? new then, you investment about to hiring, how of and about R&D going in of some or you yeah hires a most in that's in And conversions marketing? given

Mark Sachleben

Yeah.

a the org. we to new. expect XXX great seen And specifically, have And -- it And that from And hire R&D can that. go-to-market plan a be think record the over we we to quarter to standpoint. continue was to to continue looking net great get the always sales a there. continue that to board, across focus talent future continue the attract talent lot to Obviously, to we've And capacity And with invest years. we side, think terrific do there. and a R&D we they're and forward, get hiring want will but we I And got we So quarter company. across aggressively. make of sure you've on on ahead then I

And this Overall, think our looking great that. we've percentage spending I revenue. bumped on out, up year we're we're as think R&D -- I seeing a of returns

continue should opportunities to to invest we think I see there.

to up be I than anything bumping else. anything likely more spending think be will And so, R&D we our if

Chris Merwin

Thanks Great. much. so

Operator

comes from with question next Rob Oliver Your Baird.

open. Your line is

Rob Oliver

taking my guys. one question Lew, for you. Thanks Great. for

up you to large what your how begin the some customers, of follow-up if means of to I provide had moved look more curious the Relic monetize kind line You in mentioned initial remarks paid One New well. and multiple what a from for that long how -- had from of done company figures, you, just progression New figure other felt six the terms software One. as that. in that that Relic Thanks. color of could had bit little Relic your you on And conversion, a beta of One then Was like at and used time that seven social some take to quick features had New prepared to in use it might

Lew Cirne

I'd Rob. give color. love Sure, to more

standardizing of great So was about had move them QX this that They lots with the a experience conversation they working customer to faster. particular we on their different a them counter tools goal customer, course -- the deliver great and in our the to recognized over platform. to summer sprawl of of

to and being capabilities New develop power own they're the understood they their One. Relic And company, of innovative on able an

thing them was So would to everything seeing was that big there with. them case platform. to really no needed from that see that exception a one that attracts prevent in they And

they a and our that so adopting of a the source adopted our discussion. that major to. they aggressively standard new developed Relic onto One launch, during using part New platform programmability. they major then a logs combination adopted custom moved of this started of it capability. wanted two were New from open part less They My they a different course the launch view was weeks favorite logs. our and the informed before Relic technologies And OpenTracing was capability New Relic Metrics They and they with And is the company they're familiar that about

platform their built Relic building exactly specific the them an important custom we software needed for else final moment. from time One software worthwhile platform our New they themselves of They to on major They it saw what to It see. And spend top to Relic the did. going making a on was because knew important they what of that their in piece to programmability, they own our bit weeks New were highest was show launch. programming was familiarity So a of launching before little and it anything of usage was business. One an that to with of no two software on the

The was company. huge huge and reputation for for and our launch success that a was huge was within a the us business success it -- that and

the customers our So that's what but platform, not tell drives growth I build do story the so of our power understand team, business. this relationships strategic they when to the call, that understand sales of importantly of they more to our that rest and want in only

Rob Oliver

my you to initial and familiar making guys. just That's the to the I that really about There's I'd products the wanted so what adjustment wanted lot prepared Mike clarification. in -- one with follow-up in on force. Thanks And And something just bags? sales one the questions them and been thing the second said to a just Great. Lew. Or has is of people's something regional regional so good that if far. and more phase there clarify helpful. getting that? and But was sales hands just than the phase that Lew, has Thank color to sales understand for just still progress And else the then the establishing -- is is been your force you remarks happen? of I force actual getting

Lew Cirne

organized entire decision. more and That the don't or in how of integrated the we've sales was enabling regional anything want right importantly value these It's are any to product fully We the our of value no. platform, convey we're where to regional to No, market changes different don't this. wants the we model now completed a proposition of new move forces. the anticipate to process adjustment log like or proposition certainly the the like that. They that sellers more to from an delivered products jump product. because APM We've

with delivering They -- want place and that want context, Metrics our some why which many in come the same particularly to capabilities New adding logging logs us mix. the is having they infrastructure to see to love also Relic in And that to the we're they we're product. try customers

our really that it's tell the story we've built. take and capabilities enabling So market to about force sales to the

Operator

Cowen comes Company. with and question from Derrick Wood Your next

Your line is open.

Derrick Wood

adoption. new running the and into one platform core around Thanks. upgrading the New Lew, customers upgrade product you're know the have own tracks kind your upgrades seems Relic like customers of to in terms wanted speed, for motions onto innovation. I letting getting said you're down One. adopt I two drill the guys their it but at to of is One you

and kind do would vice time? seen in be at I core new then same products behavior have know customers adopt early, the or helpful. color but is it upgrade So trend of versa you there want any to Any first the whether the or

Lew Cirne

I or new call you're implies installing to One, because software just action taking new a So some New on. as wouldn't you're reminder, an it that upgrade Relic

that New the You're that view -- overlap dashboarding and particular, improved capability one we telemetry One very New of simply Insights. an so where functionality what One into there the what products. our higher-level alternative between in provides same collecting in And have existing Relic into is a we we're using like Relic have and in direct New we've Relic is our

dashboards, that customers are are great logging the for they engaging Relic of seeing often, signs for One are adoption. so New more they using And longer, we are in

see into the so the product. we're log when confident default Relic to metrics turn what feedback our New of customers APM has we're that with And been now seeing ready homepage and we're is One as And that our are the New it Relic. from on we homepage what fully where you default you seeing historically,

to ought happen. that So

happen sometime next that XX to in the We expect days.

Kubernetes, that increased of to Coupled it with metrics our course, expect New One New with to includes default homepage usage cluster other reasons global It to and That we beyond that. being will in being go One. Relic the able collect Metrics. logs. search New Metrics is Relic Relic our visualize of course we happens, that of available the -- when only That includes so includes And explorer. capabilities the

So, standardization part usage. organic reasons New come only that also time and to why increased that people ought log to for can is see it's it usage it and there. see around drive in are more that now, something turn And when those get it. the they because One to it they people we of Relic on But just and make to even

Operator

with Gary Bank. from Powell Deutsche next question Your comes

open. line is Your

Gray Powell

the couple a taking Maybe for question. Thanks if I Great. can.

XX past guess earlier have last quarter? year? know six of then, occurred Have showed changes on up kind last this been over of you meaningful the So have really visibility the that environment about call. earnings obvious, months And I but and the I this the this dynamic how sound might today to on that you to changes on it in any relative seen kind we feel you competitive do talking

Lew Cirne

we last when talked say would largely that dynamic since is the it. about competitive quarter I unchanged environment

in too we so However, about to have we've what on and released the with today. of end late quarter September, an impact the towards talked the that numbers

and ahead we've and of programmability. dashboarding that own believe have created capabilities logging competitors customer and that of effectively in we we our seeing product, we're our ways. that gaps our much actually with the the -- that now what particularly on infrastructure from we But stronger new is the with and some And we've feel feedback the of position of like much, with competitors competitive is competitive our some put had us closed some in gaps meaningful

days did But right Thanks feel customers to hard competitive today our the and can to Relic teams. I've position understand New make standardizing than focus the field, XX the mentioned, So, we have of that so now our capabilities we enabling on choice on better we as in about work product One. the ago. the

Operator

Bank of Bachman with Keith Montreal. comes Your from next question

is Your open. line

Keith Bachman

had if I questions I two Hi, could.

know for for are I most even Mark, metrics uncomfortable and important you is probably The is first the Mark. guys with this investors. guidance, but billings

QX quarter. investors any the there but for with about associated their XX% you XX% if about models So, of have QX which Is to think December, two last In thinking grown in kind metric provided provide calibrating guidance for sequentially. get particular? you that QX, QX you March years, want and to you've already is the

suggest would directional least you've but to in least last if the years growth with calibrate. assume investors I and help would could. 'XX, I back Lew sequential two comments exhibited want some provide done come at FY be a to 'XX under then in to you at And want what forum, you that to I meaningfully give

Mark Sachleben

Yes.

numbers. additional as not think software, be QX at a give really tends QX the strong quarter. guidance any to point, ready to QX into I this we're

no different to be We expect year. that for us this

think bit target more the December XXXX. think our more going provide hold guidance guidance fiscal terms We'll our about Analyst XXXX, at in in for off. in talk point, I give did We this But of I at little a that. billion revenue we're in to revenue Day. $X we'll fiscal

want beyond So something I sort of put the we milepost to extent that's the near-term think out. you

Keith Bachman

let back to you've least Lew but Okay. back at and things, get that on long. to come little how to I talked some want a a Lew Well about in feedback try bit come me few regard because,

been QX look market at late And thereby your guided pretty down the competitive in actually be for Relic impaired instance, for guessing for consequence. meaningfully has to you've positioning well, I'm to as New year-over-year. if So Difficulty] introduced your meaningfully or the and QX is going [Technical market as are a underperforming I billings what

kind how Is this important billings journey? think is And year? journey than the around rate. you years? this long get to that growth you're until Is number, so, stick just long metric a to the growth revenue do frankly of, asking two you this investors mid-teens one How that's more Because pick is rate? this

Lew Cirne

a than and to so the we're and And rather later you care progress speak long-term the and make the what's a company will from this make sooner this. the always but deeply the to great with of to of we urgency that -- best and am know at our We’re I long-term, prepared we short-term. I the favor a decisions frame. focused are you as like specific moving tell about lens we focused over I -- always are company not over shareholder interest one, largest see entirely time with we

and We me-too the is year logging best a company from logging had longer if buy way We customers been have to based example the a give product that and to rushed compelling. the be would NRDB inferior on the performance with on top that. have market Elasticsearch I'll and probably ago of perhaps inferior feedback a took on deliver our of on could to an logging in is and the go hearing out we rush usability. we're differentiation would

better deliver to have data that's something I'm the core mindset improvement advantage. we in last talked the of But sooner our very top a quarter. about most right sustainable on best execution pleased liked done. that technology would have to so executed have with we logging competitive we've have I and the it doing delivering doesn't of capabilities that change we that and the fact that Now

example an will that is Programmability of competitive advantage. believe a we sustainable deliver capability

And that. a seeing we and show us I on so and feel patient understand investors us little AI required be to about and for But you're on that has coming those some this. capabilities like of patience delivered too the Relic New through too. to we're it We've talk now worst

now market products. customers good when are these So hit certain you specifics the by give feel in delivered. a what it we with I saying quarter, are We're but on number, and encouraged about does we more can't what we what

Operator

comes with Your from Rishi next Jaluria question Davidson. D.A.

Your line is open.

Rishi Jaluria

for taking Hey guys, questions. thanks my

QX. you And cross growth next revenue implied three I've get model. And look, not it to $X new wanted Analyst acceleration somewhere about effectively to in more you're Thanks. got is that's revenue I Mark, understand outlook. the we're confidence looking the next the XXXX? talking just I in this the right look you revised billion ahead XX% what XX% in to range long-term of just quick than on of I help FY versus First, ask years now, over just the to CAGR a month, that about the in but follow-up. guiding a too at based Maybe mean if at appreciate I us Day numbers the guidance giving

Mark Sachleben

Yeah.

in about feel think call, product like sales a focused, in have Mike continued And place the got -- working them ways allowed on I go-to-market. the next We've get new we've but lot there out coming are and introduce start forward. done, get the working product. talked proper not deals. the in us we’re first the messaging the next them we that we've phase enable give making only that organization, this is roadmap, to changes on the hard The has to we're the our innovations drive we to to who's some out up and right? products releases phase us now that That's the driving leapfrog as We got catch competitors.

we Certainly of to the feel the expect look at growth look we hit we target we rate and out there we to that that when And can at do, we confident do of billion. want objectives. those market what put and $X

it fast to more how if growing, think and look certainly the is at than think I do But I objectively we're XXXX. are aspirations committing what say market I billion $X to our the that. in

Operator

Koenig with Steve from comes question next Wedbush. Your

Your open. line is

Steve Koenig

Thanks for me in for One Great. relative question in and one guys. occurred product assumptions? the on granularity us for any can quick just squeezing your QX sales Lew. Mark to give shortfall the you with one variance Mark, where

Mark Sachleben

It geos, of expansion was out. expansions it And broad was region no newer fairly a one across combination the stood or new. and

Steve Koenig

And anything was one at have wanting you aspects of quick you assumptions? that's your that product do think behind promise my last. -- I pointed then systematic Lew. And Okay. for that of change a like kind to you there certain I

Mark Sachleben

we Nothing make want lot made some have that and improvements that I would to. things can we a and make we in to cases. little point Again think that of

Steve Koenig

it. Got

that market? to learn sales need together? want great. could here How Is -- go all product are complementary? -- -- of about kind question. providing products sell any Okay similar the And that to Metrics together I what you're there the where now Or with explorer. that to to work does or to needs things New tweak Relic pretty how much then needs to Kubernetes Infrastructure to about overlap and versus ask Lew, that Derrick's you question the these

Lew Cirne

attach They align well well. and they

to and have So heavy new in the to skill fine it's a lift full not our its think I a infrastructure set required order reach potential. enable field there's or

Operator

next Erik Your JMP Securities. Suppiger from comes from question

is open. line Your

Erik Suppiger

a seeing mentioned more seeing of little trends earlier you adoption. on front? you're standardized You telemetry bit about Can that you the any that had were talk that

Lew Cirne

Certainly.

customers things adopting OpenTelemetry all about. people initiative asking using Prometheus, are for are are tracing Kubernetes, So the people that are

in want Now to what then we with that's for an that call want and one some that may get of want Because OpenTracing hear, in need visibility that order to manage enterprises applications the have example but they applications want. And thousands of particularly in some with of to do agent-based they're you their is to technology. all that to going to have enterprise they're they API you of going platform.

best place stuff. OpenTracing, set quite need the in providing like agents we're of historically would they one can meant inside broadest which put agents at most to software. of their of They so But a with for all they to for they frankly see the that OpenTracing in Relic And don't the platform New want select now to And they seeing and different technologies it One. choose. want stuff complement

Operator

management no for There at further closing remarks. turn the call time. I'll questions now over this are back to

Lew Cirne

Well, the want to Great. to for you I And I more world. importantly, thank all the listening. want thank Relics now XXXX around

and to to our innovations very the pleased be the more them is do There company working all time delivered now very that them help and hard. it's take I'm but successful. with You're to customers much

the the because have it software a unless care -- about one and that. And now of on We can customers our its platform, only observability not we're platform there's build only that nature. you

Day And those so you for you seeing investors in analysts, at on and New we're XX training excited forward about of and people potential. look our York. this Investor take world our to to Analyst the to And we're and its December we

So thank you.

Operator

call. conference today's concludes This

You now disconnect. may

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