NEWR - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to New Relic Third Quarter Fiscal Year 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions].

to McDowell the Investor like speaker to now Greg today Relations. would hand conference over your I Thank you. Please go ahead, sir.

Greg McDowell

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

Cirne; Joining me today Christenson. Sachleben; New Relic's Mike COO President, CFO, Founder and CEO and Mark and are Lew

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

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

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

a financial considered be isolation these should measures GAAP. However, not information accordance from substitute or with in in as for prepared

metrics earnings GAAP greater Reconciliations provide results. our At metrics issued release results business offer to in for our and found today. incremental non-GAAP we can between our reported insight be financial or times, into may

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

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

Lew Cirne

joining afternoon Thank today's to good call. everyone you. And

Christenson, chance had where during Mike Investor out Officer, the our meet laid for Chief strategy vision me our you Operating new at President today York, of who Day in Joining a is future. Mike started to the and New we of Mark and beginning Many December and in growth our QX.

those you yet haven't are seen attend For presentation recorded website. you our to we unable our encourage review who of Investor to or event, a on Relations

more New experiences digital create and Relic to customers perfect exists customer our help businesses. software,

productivity, digital It primary software afford how channel As becomes the loss poor brand loss revenue. cannot loss in and is for downtime costs done, experiences. simply or business attendee them of companies terms that

up must and XX/X. Companies available be

full fix issues visibility helps before New Relic precisely they where companies delivers across them can so arise, quickly impacted. are which customers that their environment, could pinpoint

performance for up have want We to collection disparate the open digital tools they systems. of serve the to of teams wrong, to don't goes the pinpoint issue. something When responsible a

During disruption the all with see platform context interface. the system they a of to and data want user unified single simplified a in

a demand three customers has characteristics. single Our that core platform

from sources multiple so so their systems scale their a infrastructure, quickly understand connected. They're they upon their in logs. systems, must all their be they that now can how of can it want NRDB, open case platform. applications, data and their database in First, connected our They a bring with across single are

unique can And business their customize platform platform is needs. so finally, need a they they programmable that observability their for

our experiences box of of out We for customers. the long have delivering curated a history

critical of applications for build five complex their a And mission own X's that their have many gold of on lets applications. them programmable their need However customizable reach our telemetry availability data platform, the order of top customers one in environments. to incredibly they standard

One, exactly what our well the observability available experiences. Relic New Relic most deliver the and we featuring Serverless, QX, the And companies deliver Our and New Metrics, incredible to customer Traces which help Logs, end platform Programmability. platform, demanding launched that's in scales with incredibly of most we

these the in platform train educate of large to new in and Given sales is breadth the Relic primary sell job features QX our customers in and capabilities new believe depth team market our these unique platform and and the our at we New about was exciting to capabilities, only One.

seeing Sydney traveled delivering Melbourne, our of while XXXk early our global our customers we're events and journey, still success And more XX% In from four hosted products, roughly 'XX. XX% we stack QX, Today, up world from customers. end over platform the paid platform and story. the future fiscal year a in we're in of have or with London,

secured In data. which observability figures, the we customers as of seven these New its Relic were for logged deals first market all of illustrates in observability quarter place power XXX our with one deals their in rest two the want nearly context of the Logs,

APM three logs. during using previously APM Case infrastructure logs. point New New offerings infrastructure in their across video company were the agreed large different different on They quarter, Relic conferencing to their and and Relic two and standardize monitoring competitive a for tools,

One consolidated application data context. log see and They in Relic can and New platform now infrastructure the onto their all of

seen there's issue, to consolidating their the find significant into New cost platform. What's a an to one One resolution. when pinpoint more, they So go have tools savings quickly place and Relic they've and

of time at our adopt they they whatever our across the right use we the are the level predictability get of combined spending products easier They Also cross with to they flexibility that commit spend Pricing right certain right to the for they customers need in need want. can environment. customers a the products. Through the it Relic Platform platform spend, our New and full to for making program, product

faster. the results Forrester at that the them applications applications showcased their we sponsor where our our the XX% XX% We we December, latest can study deploy help innovations which reported of cloud ensured by into many clouds. AWS joined moving to This platform Relic from across help cost can workloads were reduce New Research, visibility cloud and re:Invent customers and of gain into

existing we our which to and the interviewed a investment. AWS. customers and month go with customers has of adopting partners led break the with potential deliver Forrester partnership The on a is to three can tangible, cloud measured even market XXX% strong to four more What's ROI value

Our Kubernetes customers in workloads. last Diego have the attendees. event clusters the and platform complete we with industry a Kubernetes for San Con than most us just and more presence their useful Cube observing had We tell XX,XXX big at November, for

critical delivers and observability. at complete context demoed Kubernetes our observability the inside interface. infrastructure New user brings logs I value metrics beautiful all single As of application data That's in Day traces unified together and defense and Investor Relic it cluster explorer, a

Bill Chief a from on team Officer announced XX. Finally, that will led Staples Adobe Experience. February Adobe, we he as join behind engineering recently where the Product comes Bill

at XX Microsoft, Azure spent on initiatives working he Platform products. many that, Cloud other the and around developer Before years focused

and resume engineering that Bill knows product above class for what's and a creating world love use. organizations to relevant and businesses. how values But Bill his cloud, and customers most core products passion to experience, important that and build scale shares our

teams he'll product strategic responsible me, roadmap. to Reporting execute design be a product directly to for engineering our on leading and

the ahead. Bill, addition Relic Mike the are and the and at team future New With we about executive have grown leadership excited of

the Day. laid summary, out Investor responding Relic strategy market growth our In the New have to committed favorably. remains are most believe and our we We platform on to complete customers and in observability

to these a growth hard continue capabilities hire customers our working market complete enable to we're class our go platform. to bring rich to to to engine world and team objectives. our And Now members as we leadership advance

vision, our QX the Our platform continue including to is ops on of launch job executing in AI our enhanced capabilities. upcoming

Mark to numbers. to the I'll call provide now turn details over the on

Mark Sachleben

Lew. Thanks,

Now million. and turning our quarter, million Revenue for to XX% guidance up $XXX million above of was range the to $XXX financials. $XXX third year-over-year

QX Investor targeting reminder, results with to in on target. we December, you to this bookings in Based hit Day $XXX well at end year positioned we're our with we believe shared ARR. are $XXX our a we million As fiscal in million that

from We expanded with new XX% paid and business usage, landed additional to ended sale with ago. cross coverage ARR base products. This expansions derived a compared as year increased accounts represents QX well growth $XXX,XXX application over as of both installed logos XXX the up

in XXX% Our annualized ago QX year XXX% the rate base from net dollar period. expansion to was compared

four XX% last year. period trailing XXX%. enterprise of rate net QX was expansion At end the was quarter of dollar our ARR approximately up the same at of Looking base around business the average as XX%

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

non-GAAP was For QX, XX%. gross our margin

new a X% hires, or year. guidance QX. of $X million growth. at We to to X% $X due of with compared was strong result continued income in quarter of quarter last XXX the in our revenue add headcount capacity almost net low-end had the same was operating revenue hiring million and continued This it to Non-GAAP or

in attributable income same quarter New Overall net share or to was Relic year. diluted $X.XX, $X.XX to the per non-GAAP last compared

Turning used operating $XX to development defined expenditures was negative costs, cash Free used in minus flow, operating activities million. capitalized in $XX cash cash activities and million. software cash as flow, capital was

sheet, On up with Elsewhere the the million X% our sequentially. balance million from quarter our at up sheet, approximately and year-over-year cash, ended equivalents $XXX cash total. $XXX $XXX balance quarter the million, down deferred short-term ended we on quarter's third last and of XX% total revenue investments,

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

range of XX, XXXX, to $XXX revenues to $XXX we For the the fourth March million quarter in expect be ending million.

of expect a result. loss operating non-GAAP $X million We a breakeven to

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

to As deferred percentage we from QX. on look anticipate revenue we a in low QX, into the increase basis XXs

to For from $XXX guidance $XXX revenue range the $XXX million increase our fourth million. million now million to XXXX, between to $XXX of we prior fiscal year from expect an

to $XX million. million per non-GAAP guidance range $X.XX. to $X.XX of between our guidance net of will income the to to $XX prior of share $XX This $X.XX our operating prior Relic of income million compared New $XX and $X.XX non-GAAP expect attributable in to We lead diluted between million versus to

cash full $XX between to from $XX our million We $XX Taking cash down operations from to be $XXX million. fiscal which the year, into million expect guide million and for is account operations QX. of previous from now for

$XX flow, which $XX million free million be $X and For we to between million, expect million. down is cash to $X from

expenditures, remain million As previous to year. of CapEx total the we expect our $XX to million per $XX guidance for within capita

touched with including with ending elaborate new we quarter we business and Investor will percentage reporting the ARR be from fiscal March 'XX. on our a $XXX,XXX. for reasons Day metrics As over ARR accounts we XX, in begin in ARR paid as XXXX, and XX-Q, quarterly at we'll the reminder, Beginning of

growth we in renewed at at discussed we ARR in for points the Investor the And Day metrics these basis mentioned, commitment As invest to hit the future year-over-year. fiscal positioned $XXX 'XX. are to we to fiscal million for of target believe XXX 'XX drive well order least reflect accelerated

We at improved fiscal growth Day. expect targets into flows would flow our 'XX on the ARR Investor cash highlighted for route then to long-term operating improved

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

Operator

[Operator Instructions].

question Sanjit of first Singh from Stanley. Your the is from line Morgan

open. Your line is

Sanjit Singh

and just the demand off start sort question. environment. wanted to you of underlying view Hi, taking the I team's on thank guess, I for on the

So supply where revenue, your in at we'll we in growth. in billing speed look expecting. Mark, above, look of came on nice line. came to revenue metrics also low-XX you sequential terms the billings said a deferred for guidance what were When But I

that the rate, which I quarter. was the one bit down versus this metric net dollar expansion was a tick based little surprising think

based could just that? team's expansion December what Relic sort of you characterize So address the for Mark you would if dollar underlying rate New this demand on in then the quarter. quarter, the the in How way, view and a

Mark Sachleben

I today. Recording recording that. The genuinely people where the available difficulty] and was made apologize some and will dropped available so later transcript were [Technical off made be for

But apologies question, So for to that. Sanjeev. your getting

their XXX quarter. dollar expense spend impacted over quarter months number number couple for number customers -- that's the up been rate tick was right customer, and reducing you our at number When is to a the did from with the their look So, XXX is the that customers, stronger net New spend XXXk trailing in of Relic. down XX the by sizing about that overall XXX. based in But [ph]

was New sized, In large at one and reduced environment. Relic This one year their case a for so or particular, that spend projects customer, ago deployments and customer. dollar we time expected. a upgraded right it’s they is case. multimillion They their Not as renewal a had all go signed where up the

over they Relic. right the their expect couple And years. next continue so They forward sized, them be increase their subscription of a to continued be And dollar investment we going to multimillion to New rates customer.

the environment to improve I healthy. to would rate expansion demand QX. And, of net best is our the expect do We that in overall say year the

continue the we market after to want think attractive that aggressively. and something go continue to is very that We to

Sanjit Singh

to you Officer one Thank Adobe. mission may Staples in you follow of just little of you. next New brought if What's about and and new And I Lew, from Bill the sort into in terms to Bill year? sort of going of talk be? a statement is next for focus year for sort is for bit be getting up Can into to a going your overall Relic One Chief phase Product in what plans next going going

Lew Cirne

Sure.

opportunity, some particular was expertise the all, but of company. software, the are have which experience, quite and servicing as background to and themselves. first thrilled leaders. people the in one search toughest quarter his incredibly of please to We only But joined clearly right So software in not last Relic, of the that of for Bill an combination his experience Bill conducted New some a domain builders talented

very powerful at the really been acceleration scale. developers deliver role that at enterprise to we most at our what as help continue charter doing to his the observability growth. on Microsoft service a and Adobe Bill's deliver business the large innovate drive experience make today build will is building tools and well more us was to in platform So, have valuable as productive that them to world's

going company delights our be charter. execution It's product customers. love delivers the organization an our and about to perspective and with to capabilities be for Relic That's where take and we me. asking Bill innovation in is and to that is making the his focused market sure I think partnership a is best the New going the from space the

Sanjit Singh

you. Thank

Operator

Your line from [ph] next question comes from of the JPMorgan. Sterling Auty

is line open. Your

Unidentified Analyst

the this is question. for for Matt on Thanks taking guys, Hi, Sterling.

what or having a other of success are on call. don't that product. guys are the Just non-APM if customers that with trying get percent a to the of I But sense infrastructure know previously of products? you you seen terms in mentioned non-APM you guys guys using have

Lew Cirne

We're of customers infrastructure on meaningful percentage of standardizing enterprise. that We're across seeing good adopting infrastructure for and seeing number very good rates our particular. a in subset a attach infrastructure the

actually was us brand pleasant was the Logs, a what product. And new of for seeing uptake really

where the very alone And come in encouraging I we see expected it think only to available it for the was digit sale. base had do two, was in about showing customer seven days quarter the deals very have to that Logs well competitive into XX market. we in for a product and

and is driving What's business of they're They when see the systems in do customers keep up all trying switch these all not it to to place. one want to in tools this of running. integrated want complex multiple our between

information it want in the possible. solve the problems quickly it get context believe in running troubleshoot is to faster. to firmly all see They want to in back and want rapidly New One. best we as And And simple. Relic the place as They why context systems all they context is reason to

Unidentified Analyst

you're Great, Thanks in expecting from we of I And have just color. then follow aware of that but forward there Relic that front? that the of New that up, out ticking kind margins anything of great. of gross quick for One, going down build been that what terms be is kind should assume anything -- else one on

Mark Sachleben

Our gross margins very to be high. continue

a of our And peer of lot we're proud envy of the in think group. I lot of that. a

the would the higher rate look decade probably data collect rate at of that revenue growth. than over of increasing that been a you If growth last, data I our far the a say has at that we competitive to a us. be for continue And That's case. collect, data for that see to more The advantage our that's better and customers. for think better we we us. also expect we It's

assumed And expect going that case. the we up we five public gross have to to last over so we And Historically, case come years. forward. margins the haven't be going be continue since the to that's went that our

time. some If term models, at drift you the we term, medium longer margin do gross mild over our in look down expect

Unidentified Analyst

guys. it. thanks, Appreciate Great,

Operator

Oliver the from comes question of line Baird. next Your Rob from

Your line open. is

Rob Oliver

Hey so on platform a guys, the up XXX if But for connection. And about the then in new -- I one have positively figure ask have two, early Lew, Pretty seven you. for if follow side. just call I Apologies contributing Mike's about pricing. good whether impressive at talk he's I Lew, and available, that's Mike. all quarter on spotty And success wanted just afternoon. I to the which Logs of know to you some out deals. deals the called

that is usage wondering to and seeing ability as the does because find usage admittedly beyond you follow their corollary see is I a Logs, they start following take other Do people that, early, intentions? -- intentions? as products. In those you are to of you rates products words, the was in between APM, purchase then which Infrastructure purchase have And to initial initial know I kind switch

Lew Cirne

questions. great So,

the to First dynamic Relic customers New of well very And yeah, have the environments. responding platform our pricing very all, markets because that.

of want together. a one First connected they unified consolidated, data in platform all the place do to all, telemetry see of

predict for And logging yet, hard customer. they APM mobile infrastructure or environment need. or very much a will it's dynamic exactly or very exactly browser to much how how It's a

stand various and So they rate between like great the set allocate predictability any flexibility yet products. to of a the our

like with really rates. we're decisions the even product this Adobe, At really great everything think order focus. user good better the consumption decisions measuring into things to And And with. about and with would and an on in so is job a and Microsoft our brought I one our discipline data job he growth drive focusing of to activity Bill I do yet of pretty doing usage and Staples

we're do that do when better to think something and going Bill we place. I that's gets in I think So

repair So better customer that platform deliver really, experience. faster is mean all uptime, our customers a to to time better they want and

think or don't terms that in exactly of is. they So that much is exactly how much APM how infrastructure

long really deliver Then we'll the address a helps so goals. deliver that solution as business them And those business we growth. great

Rob Oliver

Great. a you unfair you Lew. detailed you, probably on December. Analyst I kind at But that. running I X. ask Thanks, of in know the the to update really is, And be things you for ask plan it's a said place Day a hit little to of Mike, ground in to laid April would out lot And I what guess then should

Thanks, And a then, not new -- you've side, just I wanted an that now you're know a front from you reps, operational New now aggressive to at get on term being that that you're are long And in on XXX that. hiring the but sales and now progressing had far? right XXX so the if get all sense on are plan pretty Relic, fingerprints been How role guys guys. to hiring definitely is there. to to you your wondering

Mike Christenson

Sure.

Day improvement. are balance the quarters at making -- So, adjustments at look be we it and of quarters for as I the December, where we might as in we FYXX, periods three And ‘XX, really we would Analyst where three we all described Investor see to where quarters do of some those and two four fiscal refinements. across then ‘XX fiscal expected additional

-- feel are we We process. where good in that about are we

planning are behind us. get We months are to and FYXX now important January February

organization distracting our quarter. sales fourth So are critical in not we the that

fill pipeline this reps. potential new the we So, planning, quarter, with lot started of sales trying to doing a

this completed end But taper have month. that and that goal the is the to month through we of off will of our this go as by rest

a closing can we year launching that attention focus Year. New and the percent everybody's of on then So XXX% out good

have in now job does today pipeline frankly, about field this as can We So, with February, has And, having early good FYXX. number FYXX. go going feel that through we of and some is in is make about we well quarter. one been the to the good who start successful, good how for rest people process the feel team the planning we filled sure on

focused accomplish We've on already got what at the of the XQ. so taking they people need care that And accomplish clearing to we're the make of they deck to end can very we're have. sure we

Rob Oliver

Great, guys. thanks, Mike. Thanks,

Operator

line Your next James. question of comes the from Turits Michael from Raymond

is line open. Your

Michael Turits

growth. performance the and get great on good everybody and and billing, below guide Question billings the Hey, quarter evening seeing in margins this line cash imply us consistent revenue top below. especially billings is flow. got congrats on Came

One I hiring questions. drove the two you that? the what know was schedule. And said ahead is of

You had ambitious a announced hiring program. pretty

the higher changed? And what ops cash guide EBIT? on So why flow and that miss is the than from on below

Mark Sachleben

Michael. Sure, so

think We that talked Day. are Investor and about we I in investment mode

an to going we And ahead opportunity that us to so we like and invest of feel go have after we're opportunity.

line day, at we top we that As growth. are said prioritizing

in to And and we we to go we're in growth growth fact, going next ARR acceleration, see an want do our year to be that. in into as investing

that is folks impact bottom in in the were of those a Many an quarter. very And so QX our on hiring line. strong having early was quarter. in place

able fortunate retain a that been our of been lot great to We've we've talent.

operating performance flow that so, Also the impact QX. cash that And quarter. results on impact on an the the had an for also in had

impacting for was rate. drop deferred in to came bit flow in a in cash Additionally the than expected little the expansion the the down, lower net the revenue due QX

flow as well. impact So on shortfall an the that had cash

at flow, issues came cash that into when timing And then look there some were you finally, play.

range, the QX. we million if the In that consistent pulled we you CapEx QX but QX. CapEx year of did of guide pulled forward for a fair to amount terms of from $XX our into CapEx million the lot And keep $XX we into in

year are at we When we XXXX. set the we you for we to can in for impute, ability then And as in to our guidance to QX. for expect fiscal increase you our rebound towards flow rebound next that out year targets cash confident head our or look the

Michael Turits

on, big you Any put wins even deals won really you there? more Thanks as out, can full in person, details give especially great could see you if not out quarter Mark. to And then the you large Logs, two deals. us a on Lew especially

about Why prospects a Does we log did displace you should have your existing it win and displacement? Did you think there? full how vendors?

Lew Cirne

So, yeah, early it's days.

We are really encouraged.

are they Relic New Logs. Our customers us things two love about telling

The is they of health in first use software, They the application. -- important understanding for tool thing the the strategic the are logs on like as the APM most rely context. with their they

The Infrastructure software. consumed only run reason why is is to

software. straight to to and vitally go That's the the that problem in Logs one. is that And from from start there Logs context matter important. of you So software

second any thing particular performance the The our our other in to is of blows away compared scale hosted solution. and cloud Logs customers

these in So it customers just unable requirements. solutions were too were or both that to they handle having towards load much were trouble with cases, to think perform their, the I was their source logging open or effort work

us XX excess just ability think in in belabor bit customers. our complete our and really they And a amazed day management or ease. this to I involved, with with handle And configuration I'm And terabytes going no to dropped of little a longer.

This why in we platform. our invested is

Day, Investor Okay, at really impressive shines the logging talked it it and case. qualities in NRDB some I about -- some use has the

a New we've Relic lot so NRDB. And One invested in and in

that because total the was And to to investment, to team finish start nine that about month I about zero. or eight logging market engineers from from XX get think of project a

time have short in platform in ready, investment, really the to about competitive a because relatively platform. we're the of think period have the have that. ready small So market we able a After we to and product

invested platform we've the And it's so the about of much it's in. so not power just Logs, about

Operator

from comes Davidson. question of Rishi D.A. the from next Your line Jaluria

open. is line Your

Hannah Rudoff

being for Rishi. taking the what's you about left my what how question. the is color I'm goals questions, one and some your Hi, of span Wondering a to following-up of Day sell enabling provide is you at full for if on going guys. Hannah achieved or this sales could the on one Investor your force lot Thank that? platform. you talked you've on earlier on This to

Mike Christenson

sales everyone's platform our we these it's for Sure, most September in the including One training New intensive out capabilities stack. October We new our organization. memory, immediately announced early future and of Relic at worldwide rolled refresh To Mike.

training came XQ of capable products And customer There lot front and people a XQ. wanted quickly. of we keep all we so The things. felt in could was new end the that that to

pretty feel we So good that. about

are described platform messaging. that the platform to APM ability as that we comfort the And sell Infrastructure progress Logs, and great clearly three just with with the also We then that they're And Logs. on has what in CEO ramps making message. Lew demonstrating call communicating the to that

to the a it's platform lot ramps. develop develop like But and sell be the effective to it the that could for on vision. skills three the executing XQ to we in people simplified ask So, enough that felt skills XQ and and they sell on to we

Hannah Rudoff

And helpful. the talk guys very building That’s you're own Great. you customer what seeing difficulty] what past app year about [ph]? are [technical getting on open their source in

Lew Cirne

use interesting cases. seeing really We're

spend, somewhere without some millions our So, opportunity their reduce we've opportunities cloud popular the particular, identifying in One is greater think workload save the customers customers in cases by Where Relic cloud capacity and over I for most open one that helps their New they've of given source provisioned application seen dollars. performance. is identify a the sacrificing to

see when particular also vendor Right? up. could no other that popular applications makes problem look are I building the But themselves. doing So, software Relic that well because sense the most I in their that the a data, and for are do. customers our showing way ones it's specific And are that solve in at making is New ones

It give I'll order has do to to be you one example. programmable that. in

cars helping actually them a identify spot. It the We is case. an of One the and Europe, Relic location use tracking IoT in using have parking for New right company

view helps really a So IoT another on built case One, use as strategic tool. our us cool platform, Relic and not customers top of New just

Hannah Rudoff

guys. Great, thanks,

Operator

line of the question next from comes Your Kidron Oppenheimer. Ittai from

open. is line Your

Ittai Kidron

Thank with on the you guys. front. you. start can on Lew, the competitive Hey, maybe we

for there that few Is now. platform to help been you're competitive a How you what any understand has front rates? Now us has look the changed? change from seeing at months that win on What out a do standpoint?

Lew Cirne

It's the one capabilities with quarter pretty these less market. offerings and had new still we've early in than

a Relic changed the platform love the unchanged say that is again But has the are truly with, I'd place. about one they what largely not in lot. all New say and customers is fact So, landscape is dynamic what resonating I'd the is

on We acquisition. We through faster the telemetry context. what right can built our the didn't database is. troubleshoot of customers do is all core the And logging because that means same all data is that our in this the technology rest

I’ve a so feel and writing by starts like competitive programmability. And now And there's we our with centric having got differentiation application story. already logging, with It now talked we've differentiated context really about.

I compete say set But the we the change. same with lot ability overall market. So not of our that is would of to like a players

Ittai Kidron

Mike think into intention Very for and a is be your front standpoint? there. as of front, it to that just try linearity from available so pick guess the up? me clearly Help execution target understand that was that you And will planning to hiring and good. impressive of quarter my and had load decided 'XX I question as hiring? a talent also follow fiscal happens from or an you this the the then lot And it up what a

Mike Christenson

question. great a That's Sure.

part have mode to at now just company want Now this that of was interviews. for selling you of gave out Mark that we did that Part number challenge year we for sales. don't people quarter. is do good whole of time a our wasn't But the of take to our

sales had front we that that pipeline team, have a as off possibly an been significantly really load capacity that now our with to can is in to try February, now of in initial talent much little expected but tail I acquisition January, focused March. prospects interview, as much in we and we're qualified on What as done in So FYXX, can. we so bit get November, hiring filling

If us then and spring them, roll early, in we summer the be and those as and train into get to we it XQ people can gives they'll ready XQ.

So as goes. the we're we how windows, right can that pull trying to, see in as hard to and we'll it into

Ittai Kidron

luck All right, good guys.

Operator

from next with the Your line Jennifer comes UBS. of question Lowe

Your line open. is

Jennifer Lowe

you're bit bit But go or guidance. did back a of to was wanted than come you. like coming to that off a a expect it quickly would to and you outset. QX revenue in that the QX. little Thank see Great. little at in great later normally QX I expect a deferred And certainly look more what we would given deferred the

What's that a what's talk about helpful. in back gives more us conviction assumption back to we little historically? getting of be where to really us execution, just you give If could just we trend? your that'd that, you sales a get seasonal normal you your more what it the terms to of on visibility, Can see

Lew Cirne

so to Sure, that. we see were pleased now,

We've got rates lot at our for of us history go various at of For things and terms various And what pipeline that. we things like look in forecasts a regions. capacity. look conversion on to are the internally, like

that products we We're more the looking the with comfortable and and at uptake forecast feel put that story, platform the we more as seeing seeing excitement new we're up together around and sales come We comfortable field the process. that we're with. and that our with gets that a

Jennifer Lowe

Great. And maybe for me. just more one

And piece one upsell saw that looked customer any color in on terms earlier, one have would the mentioned the had customer usage. particular from there's that at that did of of rate sense what you or large retention that those net happen. that that? of more dollar we retention, things ex Do QX, improve a Looking have whether their reduced planned in like you

Mark Sachleben

as the tick renewal around in will rate the have I don't mentioned, say, did detail one We customer's downwards quarter. that I the slightly explicit impact.

And so something to we want make that's sure improve. that, to

in and them of Investor more the being we're talked in renewal our yield. have really blurry. arguably and and it's, those the of think renewals about, And, ARR been new who's expansions. I for what? around the initiatives lines in around of one Day, we've some and at the past, responsible was the on so And too been And go-to-market clear Mike working organization process roles

so are and whose And really the those various is been pieces. roles more we've crystal job it to about do identifying whose

we that that, back would And so we to like up. rate, see come as renewal

customers other spend. issue rightsizing The of or factor their rate issues was the is renewal driving one the that

the we've that, you And year. they the -- they not of job that software of customers to what New next got these for And the purchased. get customers do to cases, that the reduction year. purchasing are Relic. And it'll be their software know, they're deploying they to are end sure this so deploying over get make And expect a be need spend all better amount is

happen. to getting we help hosts. We and there Rather not within months path that time, be find and a proactive see organization or where those more in that of deployment if opportunities other to be fully should be proactive support them X and than ahead to them say going they're We intervene with deployed. should

have up the comes than have flat span So when reduction rather a of time we up, stay potentially or an all sell. a sudden real

Jennifer Lowe

Great. Thank you.

Operator

comes line Cowen Company. from of the from and question Wood Derrick next Your

Your line is open.

Derrick Wood

guys. Thanks,

the one quarter, multi-pronged you ahead. deals. more account like strength to What for out the early focus was initiatives seem obviously laid do First and there there very in Mike. but have are generating at XXXk December much Analyst was Didn't you Day a on plan the it's you,

could you So if realistic be give be color a think new sense us more year? is more fiscal XXXk terms you net next would there that when in that see deals helpful. Any of and

Mike Christenson

about Well, Day. Investor whenever metrics remember, big we talked on you X

New ARR yields. XXXk improved customers and renewal

first The organization when everybody's is those message do got around aligned thing you the objectives. to sure that communicate make you've to you

them change that make announce you're communicate And when you to organizational or first limiting amount can the that you message, happen. first of affect

management, last So November, as year through we rolled was planning. all attention, December it about

executing you those do we people move if achieve of everybody's to to management focused a do practice and get those more on sure against we will How make It's How numbers. those goals? goals? try

actually basis. We in adjustments. adjustments do by each day As can we more as compensation can to we to We some some day can, plans. coverage roll other quarter this into there's business changes can we way changes, making on the passes do a make make quarter. We

feel I important I'm be -- quarter XXXk ability quarter So a new far will actually for in last to generate really better in metric. I this did this that customers. quarter than our

over fiscal go a into this we've significant improvement year. see what to we year, I done next expect As

But I'm that hopeful carry 'XX. that that front this FY quarter we will be able momentum into to show on material then and progress

Derrick Wood

give And some from seemed there you maybe Great, thanks demand for us guess, -- the the impressive. pretty Lew, that is deals log up over the we then curve think should beta we're races that to kind expect bounce around you customers with the of accelerating that quarters? pent or adoption XXX Can and on several next for off color. I certainly to do

Lew Cirne

use off see. I'm excited rates wouldn't about term I Let's to to the right now. the the potential. want

surprised it is. market quite given show how frankly in was the pleasantly Let's logging But I crowded numbers. the with

our was how other solutions. to That's to How at encouraging market forego eager rapidly and product -- look the me. really what's

As data we've want competitive value product manage servers. in And that managing they be a they got high in do logs don't in to really volume really hard these context. collection -- they value that application to

move they cloud, they offerings, other of when challenges most but the And or challenges. find management that to scalability cloud they the have

excited very earnings our Mark races capability. wouldn't call, me allow in any I'm So about the think. logging say off to to I But

Derrick Wood

Thanks makes guys. sense. That Thanks, for the color.

Operator

Your question line Andrews Needham. next the comes Jack from from of

is line open. Your

Jack Andrews

are in more but things. differences drill a you bit any on if we I Thanks aspect Hello, developing of taking are the my little good from for seeing customers it's could down early, I applications? wonder was behavior programmability that actively of afternoon. know sort question.

characteristics to interesting them taking new just be are of foresee observed of who advantage those you or actively really feature? that faster, expanding you've other sort this from Do

Lew Cirne

I out who New those digit four Relic also last of think logging One did of a seven customer came quarter deals applications One. built on that we

we all bet is, is the behind software. that a perfect people on -- high. platform can What their -- to that business correlation digital they're make So of more it theme want sure is deliver they the

of of of combination and relationship of between the the the Application, openness the the Infrastructure end Logs, a of the data just and finally, user platform, software. can't no Relic connectedness New data customer getting visibility showing it's the And in and that not all you the the the experience; it New agents; use the right observability deliver to Relic to more to presented relates there as pursue perfect you is to help way say programmability delivering case the and

Jack Andrews

Right.

to than to the think of merely just programmability lead just right on put consume products point to like customers that fine strengthening it. the will It infrastructure a value about think you Is sounds rather proposition like logs So and APM? perhaps it? way the

Lew Cirne

Yeah.

team Our of platform, they monitoring early their other I own build think SaaS are of of companies like in to the observability it thinking is, strategic not another particularly if Salesforce terms you look it to way and days think terms own now And in as of the of their companies, capabilities. a customers. staff thinking they're customers and that in APM it

spoke platform to because in we're could the requirements, want They that no vendor business, had capabilities they provide because New the shelf. Not be but now in One. providing they that the wanted Relic that off

can And because deliver the think nail if so we're of and end and for solution we on it's customers, these the can pricing the presentation of particularly highest programmability. demands end high really the that the customers, only we platform correctly, the

Jack Andrews

the Appreciate it. color. Got Thanks.

Operator

comes question Bachman Keith of the next from from Your line BMO.

is open. line Your

Keith Bachman

come ask to and going in XX Many flow cash the of midpoint, thanks lowering by at in you're income terms But a asked back first to it my guidance I'm your question for $X midpoint dimensions. lowering I start at Michael's [ph]. operating But by And want with team. yet to previously. million. different question you're he FYXX the

and growth was quarterly and yet expectations in the And line seems pretty DR with healthy same. is CapEx QX frankly for

quite speak Mark, a, year and the of different free margins would it's want say And least investors cash to both I to at be flow? try ask So a fiscal should next cash weak you to, I thinking how terms guidance. it about flow could in directly way.

And this the look if then operating otherwise, profitless Because question. growth. this which and In should cash bottom flow to would follow-on what other just improve year-over-year, should the like year should expect juncture? be we And free is that report be have FYXX about? next margins I looks words, you fiscal investors thinking over a it

Mark Sachleben

Sure.

we in prioritizing talked will are as into prioritizing mode. we are we've and we as we about, next now. And revenue And go be So, over ARR investment acceleration profitability. of year,

at growth in end we've about least million so 'XX. March giving our fiscal about talked ARR And XX, points number. by XXX We've year, accelerating talked for basis metric our of ARR the this the $XXX at

Obviously, you through trails work as the can revenue revenue that into ARR.

to At really be that revenue maximize our dollar billion number, fiscal it's hit it. time that, to we So we not ability want look out hit expect but the into to when surge and do number We investing. same only hit 'XX, target. a through that

And going fiscal for so in be that profile we margin time, that, investing the Day. put laid 'XX with to out out Investor to we we're comfortable term. we've Same do that are the near

cash path feel we cash do flow toward, fiscal Investor our comfortable In we will out would as cash path, well. Day laid are flow, 'XX we of with again, be in the that profile that but like the flow in terms linear on be increasing

Keith Bachman

Okay, so….

Mike Christenson

platform that to think want growing add one of at don't a thing just sophisticated including an And about selling in scenario a profit asset, subscription We're capabilities, I Mike, look incredibly as programability subscription broad platform the any in It's value growth. stream observability to that model. a on we We of set valuable that. that with long-term less as

Keith Bachman

or margins expect Okay. happen we platform end the to operating with say of I not what free be understand but to up whether cash it neutral the year. Mark, at context. flow improved, this down will willing sounds But like

Mike Christenson

are priority revenue looking and said, around As objective more at give profitability. over we’ll our to line and I grow for planned would ARR that next we top in call that accelerating that is the guidance that But is clear that our and May I our reiterate year.

to shown over XX years have we and went few we've [ph] We few positive negative been over the last positive years. from last

shown work. discipline, think the have I model we we've does

sure the grow make of the take and opportunity now to we to so we And line. to invest want top advantage

Keith Bachman

follow-up is winded rate. question the on retention Well of my net such long Okay. just a sort

when the me. I be But be is up around that? And QX, And Thank you you it you. attrition could there think within clear, give talked any into rather, around that sequentially. all? assume do improving it'll color that's at the can rate changed any Just to has teens dimensions mentioned for in about be that? that it you or

Mike Christenson

above to quarter the that year, be it's it of which expect implies We XXX. best the

of or the the amount right, And so two downgrades and by we impacted that things, number amount have. churn that do, expansion is of business we

period. QX is our highest renewal

we QX, lot business companies, most a here, do like of right. So,

and far largest by away got we've renewals the this of number quarter. So

we higher have it quarter. QX renewal means the will than have absolute in churn dollars other we rate, if still the the same So of

that expect that's not We unusual.

We offset a that. also business expansion the to large expect than number more in

So, we looking teens this at are in that are we quarter. the being in

Keith Bachman

thanks. Many Great.

Operator

from comes Mohit the with Barclays. question next line Gogia of Your

open. is line Your

Mohit Gogia

this Thanks, guys, quarter. wanted and for the new taking my performance question. Mark, the I ARR just into new logo dig [ph] to

ARR So how great for discussed to see $XXX guys you this that ARR ‘XX. the But and performed afterwards. you he quarter, bit a have wondering quarter? this conforming new given fiscal dropping new renewal And also for guide the million yield logo for are the a performance I was question

Mark Sachleben

March $XXX take we've out. good yet can the confirmed that with as not quarter. you that We'll start we're breaking But sign a million. so that the it Yes,

of we're that that report obviously that grew, And, and have that much we terms about talked and objectives pleased question of numbers, greater Mike number In than are we and did with answered XXXk earlier. while the that customers.

many customers be will it's certainly forward. going have and XXXk to how for we So, on adding ambitions focused something see and we want are lofty

Mohit Gogia

ARR fiscal better Understood. on year, which the trying of came to numbers say obviously fiscal ARR this start tick guide ARR is I was component that just get fair new bit 'XX is to that is, phrased a the at maybe down? it expectations, you quarter will was trying than another that the given -- reiterated have What performance next based renewal to your yield, I should that I you differently. disclose What question and to but

Mark Sachleben

we that individual not those this into from Well, saying at see head the to see we're I continuing good we you the of about guidance, can ARR. think not, We disclosing I components feel think point. quarter. QX. We're about improvement we And as the good feel

Mohit Gogia

Understood. up follow Lew question. a

New customers. Analyst Relic of the to for landing the in a will all Day at UI early mentioned One sort as sometime before start page XXXX, have default that you like you So,

concrete that's That's give planning timeline more out? my it you going still that? there? be end can Is to you you. guys. from Any Thank rolled more as be any if wondering Just when color us do Are to helpful. will some to there color more

Lew Cirne

Yes, great.

I've So, done a that. of review

specific We landing give to are make choice old may experience want want that in default If our We Relic it's want One, enterprise still selection. and quarter. to give the old can choice. to we requirements them really customers back that prefer going that that yet, UI. to they be happens we then they the on the that page, far have some this in New the certainly superior our track respect customers But it's

improved our -- One. into reminder, our do user and to don't new platform install the very they've get to interface been customers to the far in It's telemetry data and New different same on a to the gathering that benefits anything same and As a Relic need or very date. anything simply our of need new, products

and we're Relic into So this extent New some on One. is track a into head very easy product for to them of adopt. natively other And as on migrating track capabilities

standardize by month on week to are and all Relic your more there experience even New just So, reasons One. the more and

with After more that's up think so to strength. to I even continue how going. Bill speed I'm pleased show gets that'll And

Operator

Chris of line the from Sachs. comes Merwin question next from Your Goldman

line Your open. is

Chris Merwin

Logs earlier the plus deals. back mentioned that $X Logs you think just particular go in two, Thank my deals I for the question. taking I wanted million to you to

anyone customers product those for already Thanks. want should you had attraction installed? those think how like what curious, deals, complex how and they particular hybrid imagine in were there specifically, you potential its had enterprise? more were in of we I this products, about terms environments Just like In displacing complimentary the probably Logs because

Lew Cirne

Sure.

logs logging open were to -- or and time too And to spending logs high also volumes context. very they in it's as had energy, struggling enterprise. market of volume. open source source proprietary to, both cases, these that logging some more tools a customers of much In or lot with wanted keep know, you then of the So and a centric, traditional in centric, these that are or managing them more their see that players of more those cloud there's were up were --

to more we're collecting. data log get the of So value

see of and a right. repair use the We've And APM good got to product the think so chunk love case, for want that's a and to lot market context, particularly troubleshooting who of we in meantime there. right customers Logs our

faster about So troubleshooting context. log this with is all in data the

And for so, to other number we a customers. that for that our use deliver might of order case, that there's in displace players capability log

Chris Merwin

you Great. for Thank That’s it me. much. very

Operator

of from Your line Koenig next question comes Wedbush Securities. Steve the from

open. is line Your

Steve Koenig

dollar thanks, based deferred guys. net quick full quick Great, your One did assumptions guide? question being you. in expansion cash cautious flow view you follow-up. and these revenue more of in are change one Mark for and/or you Are and -- your year-end year

Mark Sachleben

three the period. We’ve we we've closer get got been visibility, quarters two so better of as less instead quarters, now to through time uncertainty

informed always So I think than more at we're were we ago. point, this months three

estimate. I went about say, which it's methodology from likely is a comparable. But the But, we standpoint, that be would with to better it,

Steve Koenig

come in have -- just your comparable bit, is retention? QX And your little expectations so, is due the a the methodology to

Mark Sachleben

We a factored We're QX. we the historical look in factors of getting at quarter. the lot as at We looking out performance of QX, of that. assess better in

to what ones months. getting of We're may work work should do to beginning ones renewals in And looking on. are months with be are which which have that of ones advance, we We not in looking renew we're we the three know not quarter, that or that. better quarter. to done that So a six expand, which doing coming sense are

at we But, I better getting think are that.

hoping enter rates as quarter. a better we forward, And so we're I going have to think sense the of renewal

Steve Koenig

kind little Logs relate Mark. generalize And look to maybe does added the try seeing size Thanks, the infrastructure great. standardization, hundred Lew, and as Okay, deals, versus for of auxiliary the and accounts? maybe color also on to being you or What's and cloud versus what extent the a the of to are block you, incremental and solution across Greenfield them mix you of replacement? it kind there bit, some

Lew Cirne

those. show to to a Logs. too claim Early much we've do great not how standard that be we that read those into figured can digit for an out seven early It's too to it's enterprise two standard But days deals. let's

just that also who We're using a logos some And are of environment. when Relic smaller Logs obviously our seeing, using companies very particularly large, love logs of our in in The the yet, platform. logs, in are I'm delighted segment. again, love New they market cloud that seeing we're is And adopting lot also our context. with a

moving well application. an we're to That's adopting that trend in, cloud another So they're already the with very already They're doing Kubernetes. right.

you're to a see context, platform and -- Kubernetes we've So logs in we a context, believe. that's your in for in in if running got great logs you application the want Kubernetes, that your best environment

a so, is going And that that very enterprise think every standard motion I through. is virtually that

that And so, we're well. seeing traction segment as in

substantial do at So say, product. standardization it But we're not applies pretty our yet business a winning broadly. with need we where point do we it's deals, can logging nor to

Operator

question next the JMP Rustam Securities. of line from comes Your from Kanga

open. is line Your

Rustam Kanga

Russ This on you. thank Great, for Erik is Suppiger.

the but of Just of be bit the terms for taking particular might a raising awareness? [indiscernible] be APM angle. in you broader say a failure just would more This would that stretch, beneficial of macro a markets, in

Lew Cirne

kind on, fabric notice standing In quicksand. the moments software it healthcare.gov. ground like it like on. software society. a XXXX do Relic to right? you're we stand don't we, like it's very Within ground the feels there's when problem, important the how is And if software just New sudden bring all But the the of as of a to working, this, is that exist when and we saved you a And How was forefront. of

software ways why so troubleshoot work why they with with many That's which applications all customers place, and fail. in platform systems a need to keep context they And hard in do our to application so, it need that complicated one these context. there's can running, And to bring it's single all work. faster, the

this our matters, one. you about why observability That's so we That's an best need platform. we're investing. platform, your have believe excited about So excited believe That's we're not if -- observability the we team. it's optional, software that's the do so I'm that opportunity. We why why

But -- an New And I need that's yes, why platform for wish happen. there's observability yesterday, a Relic. so moments they we like like didn't

Rustam Kanga

Thanks so Great. much.

Operator

like for to closing would CEO, I the Cirne turn over call now Lew comments. to

Lew Cirne

time you first very the particular had able we much. quality, the content with problems Thank today. appreciate with my our phone you excited and team you opportunity who content provide has with we But spending with up ahead. that presented we'll time mispronounced. to been all. very name the you much thank our And any for we there's for IR us if and Not very Thank those you that. in missed, Follow last be any apologize you about we're

Operator

conference today's That call. concludes

You disconnect. now may

New Relic (NEWR) 4 Feb 202020 Q3 Earnings call transcript