NEWR - Earnings call transcript Q4 2022

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Operator

Good afternoon. Thank you for attending the New Relic 4Q FY 2022 Earnings Call. My name is Simia and I will be your moderator for today. [Operator Instructions] I would now like to pass the conference over to our host, Peter Goldmacher, Vice President of Investor Relations.

Peter Goldmacher

Hi, everyone, and thanks for joining our Q4 fiscal '22 earnings call. earnings on hope Relations to everyone letter with letter hour about read a together and ago had today's published our website Investor an our We release. press a chance then begin will for from Mark the prepared Today's we'll call up with open questions. Bill comments and and your line

will forward-looking of including we predictions expectations as about on this based business outlook During our make call our today. we which statements, and strategy, and

uncertainties, filed and the Our and this a SEC. certain could number measures. discuss in actual most risk Also non-GAAP will differ to our risks results factors due upcoming materially of XX-K with during including recent XX-Q financial we to call be the

hours. release. a reconciled will intended like Bill. the We audio its there those in These being for GAAP and in is entirety substitute few an most with from our measures to financial are website GAAP this to over call be comparable finally, to available not results. turn our Relations And it be And have directly Investor non-GAAP our that, replay earnings webcast a measures to in I'd

Bill Staples

call Peter, welcome Thanks, and everyone. the to

announced is ago now a position New when a successor. CEO than was I it in Relic stronger was as year

you Let of me share five FY with accomplishments key 'XX.

while sales discussed commission the importantly, achieve our flat essentially by products we our cohorts and revenue new and last First marketing the retention and to revenue strong model, million of in FY year. in we amortized an top FY reported market keeping aggregate each grew spend from growth net quarter. acceptance rate adding and driven NRR line to total we basis. accelerated were $XXX this this, on able expense almost 'XX, Underneath detail 'XX our our This the XX% growth rate to by for pricing XX% this was or excluding in of

as cannot penalties The legacy from Second, shelfware a of speed our to many the that budgets a see we gross quarters non-GAAP forward margins healthier in gross four non-GAAP the low the indicator after paid expect base legacy we're both after through both exiting transitioned with can't to think of complete and customers our total model. another model has customer maximize business simultaneously; higher so another model company new the XX%s in levels them competitors. again the straight This of their come. overage largely consumption this the the business and a the be business of efforts. early and migrated be to business overstated. by the the the our sales-assisted is product boldness our in in model clear increases been stronger. going size, many consumption nurture platform and us see our successfully quarters growing of new differentiator, never Relic managing we finally and value Third, declines. associated of Customers quickly. business XX% avoiding with value towards margins Fifth, I has allows in our migration of single-minded of New quarters we the helping XX%s, new businesses can to to versus year growing of progress margins Fourth to Having of pool

our Inbox but major new our We differentiated forward. and extending new increased foundation Our with us like while going only infrastructure monitoring, like in of Browser revamped XX% innovations customers. Errors and largest also to and appeal not customers our across capabilities all-in-one that almost of new platform 'XX a lead A customers number our to capabilities for consumption we by broadening CodeStream the logs four APM our top came Historically our all moves allows brand customers XX,XXX Logs New ago. XX%, for to APM, from of approach one NPN. our Relic extended and waves introducing primarily year Almost and capabilities like data-centric to observability laid with offering. our infrastructure, of but of differentiation is APM, competitors significant approach adoption, capabilities, release and us Explorer, nearly FY further use increase from Pixie which platform

I've While past of talk to questions over your FY been I've identified a and concerns. few year, CEO, opportunity there I've lot quarters investors four remaining. the priorities to 'XX since was the FY many is a transformative with work becoming had and for 'XX. listening

of revenue the in usage. in with a monthly the metric growth with letter reported To to term. Our how Mark, we We real-time in steady which actual a of which we unique of growth consumption throughout CRR market 'XX FY our can on a 'XX, last months report better with lot better our factored supplemented FY understanding view for to earnings have platform in into of increasing learned past called 'XX, run growth exited and We top more a performed year can same we've rate moment. return in the in seasonal FY and XX seasonality remains CRR, consumption business for FY platform at exception customers' into model a We aspects plan variety which the an indication for 'XX dip will is about how the expand consumption sense give in letter effort discussion the this a reasons. and of our as our you call, business. about rates, see and revenue a and stated a Investor fluctuate usage this XX% to just visibility year or provide the priority Investor of the business the you greater intermediate the health, consumption the an our

strong we've Following April. and a a dip, steady with run consumption in rate the seen rebound March

in understanding potential the we looking this 'XX FY forward. helpful for of model, in the will While only believe the business our it is with growth, first our be our majority year second and baseline

priority non-GAAP Our improve to our exiting return and continue to is profitability second non-GAAP gross margins the year. to

margins non-GAAP will top our the broader drive a exiting customers gross growth 'XX the FY by and three and like For 'XX. line offering are that The with in functionality would we the result this menu centers data themes points and fully of year mid-XX%s. exit main price to end FY

modest to and We the targeting with are operating also intend improve non-GAAP year basis. on margins to a exit profitability

account growth. is Our third priority to accelerate

in 'XX. in to free the successes demonstrated internal build tier improvements we product-led These are efforts In on people paying of into addition the accelerate sales will our in conversion customers. investing to partner-led and investments growth FY we had funnel

the help observability full economic of and we value Customers benefit 'XX, depth platform. many breadth the our their get In FY for marquee is the focus Pixie, FY Relic already adoption beyond priority make the customer most to Network, more. of innovations CodeStream and Infrastructure, in customers they primary base and and our the Logs, fourth landed of to value as enterprise. APM, for across place is when across capabilities realize for New drive standard Our dozens the 'XX greatest such

New come the 'XX and and customers past and excited road We've Our all-in-one both ramp growth. on closing, I'm accelerate even for by has our FY ahead. a benefit been helping which so year focused will our year so product far achieved Relic. go-to-market pivotal more are model and much from In team platform on this

updates next Analyst and updates strong Las on forgo at the FutureStack making of week FY strategy, underway, and not announcements will using of provide in hosting Relic the priorities transition we In engineer addition company's and the business make software We But Conference lifecycle. are annual take with in will vision decisions the of momentum have data of roadmap approaches. our New on May every including a Vegas questions and to your long-term exciting source CFO year, market 'XX We regarding model. for day and XX. stage number targets. we share a And our fiscal ended product to Day light every truth opinion go-to every we'll the to regarding

XXXX has it the take to contributions New a the me served he best transformation. off employee partner and in on him CFO. terrific to New all Relic him want led future his as Before wish New Mark, has XX handing business for to to We three Relic, moment was IPO in an a to Mark number New I been Mark made years Relic thank our throughout incredible Relic's and endeavors.

it We over transition and to have until an hand Mark. CFO appreciate With our active new that search stay for you, underway I'll is that, complete. will Mark the

Mark Sachleben

we additional good fiscal and to briefly recap afternoon the the to fourth Bill on discuss results, the and business evening are Thanks, financial and everyone call. 'XX. sharing about commentary on some our like quarter I'd metrics provide good

First, quarter the recap. fourth

was how I'll XX%, with much we million, understanding color April was of at $XXX improve share provide year-over-year than to of going we we hoped lighter than of QX, in investor on but as moment, we guidance, a nicely letter a a of high reported and revenue representing quarter growth the our For the revenue but came the that bit stronger end QX in better forward. back March March. exited more

from encouraged While between seeing. million we we're Non-GAAP $XX provided our end low of by $XX we million, points what for limited operations $XX these of data the a loss below and loss are million. are guidance was

operations business we were for engagement of EPS I'd for dollar margins our between $X.XX. February, is of with $X.XX Bill how set is through metric our like guidance consumption on expectations of run non-GAAP to mentioned, CRR short. our in to time health ongoing consumption base. Non-GAAP based the value XX% in real CRR by the end below of from walking gross customer was usage. rate loss the few changing in line annualized low consumption impacted was our investments the primarily minutes is non-GAAP good a loss our CRR While of indicator in growth. drive and business showing spend a a a $X.XX, that our By loss of you in the or

way, of converted indicator the not an CRR of exact revenue. predictor into is revenue consumption is result a As or

individual a time, revenue as such over may differ CRR In fact, of in somewhat. shorter and change quarters, period

However we and will believe closely revenue longer over of periods CRR time align.

over we in as full provide with model investors into We year to visibility year. full the to as fiscal a more growth our revenue 'XX are sharing fiscal for tool consumption our CRR consumption investor letter the move the

dynamics of is I'd a our XX% going through like the approximately a consumption CRR With revenue spend key minute from to commitments, success. is to Although our QX. as of backdrop, driving

had Following success a year transitioning business. have we the over are now our consumption in customers, we past the

to reduced have recover, to expected quarter and off only which There got soft usage we for and quarter here. and a modest slow to in finished As at our consumption December reported, other starting growth note, business that start, seasonal down reduction than in patterns it with means based major CRR consumption mid-December two and in we longer slowed a period January holiday March the first play companies February. due on took revenues were

First, excess of that in the who means And due of period. limit second, usage months their the commitments contract growth to the to holiday those excess. in were as final we customers also their their far a observed consuming reduced slowed

a predictability Given had effect stronger. patterns returned better our greater ways consumption this April to and are QX us is the far seasonal understand which revenue. in expected even will provide largest to them levels was the now March far, mitigate and future on We growth quarters, business. by identifying renewal quarter for help dampening

we understanding Our of business an of get been learn continue consumption rapid our We and better. business. dynamics 'XX to transition the improved with fiscal has ended and

where XX%, us a consumption commitments lock budget predictability. which to pay approximately is usage, of reminder customers revenue The driven backed from Finally, revenue consumption consumption over for forecast. in challenging to is their commitments providing that of by is growth more by platform our good

are data trajectory. CRR However, April a good monthly as in on the shows, margin

Now our to fiscal 'XX guidance. first quarter share I'd like and

year and For the year-over-year XX% $XXX first and XX% of of expect between quarter we $XXX XXXX, growth between fiscal respectively. representing revenue million,

per and loss attributable loss $XX $X.XX and operations $X.XX. expect non-GAAP New a $XX between share Relic non-GAAP from a between of diluted to expect net we and million of We million

full million, expect representing year-over-year revenue growth fiscal For respectively. year and the 'XX, between $XXX of we between million XX% $XXX XX% and

from between and diluted Relic loss and million million and non-GAAP share New non-GAAP $XX net loss We to expect $XX expect attributable $X.XX per between $X.XX. operations

basis expect We non-GAAP a exiting on be fiscal modestly to 'XX. profitable

mission out. New build from continue helping After I role organization. time now retire ensuring a on strategic successor go better years in an we visionary privilege announced roadmap, It have for until I me to so is against of transition, to and and appropriate before Relic. may as we've will retirement the to New business. who and want to Q&A. been engineers afternoon. have New its your please Relic lead laid dynamic to remain you a deliver to and seen up identified from the And smooth lead press for committed helping continuous all New operator, millions company I I'm on the Relic you support help to and played has it's release developers open will the XX Lastly, software. proud honor execute Q&A, this look the and lines Relic an grow a forward of thank of and continued that, a for such success to with my of of

Operator

Our first from Instructions] question Baird. Rob [Operator Oliver with comes

Your line open. is now

Rob Oliver

one you, you afternoon, questions. for as you then taking guys. well. and Bill, follow-up had for a had I Good you. Great, thank my I Mark Appreciate

on Bill past sales the Obviously changes you of made force side. year, ask, the and go-to-market over So guys I a to around first have the ton go-to-market. wanted the

You then prepared fiscal in your any bit platform. you mentioned the was I focus But off or if for just focused and little talk the a market. year the really letter, wondering quick to 'XX there Thanks. follow-up. have sales of you could as get in kind Any whole remarks on that update was kick changes go-to about a your

Bill Staples

FY announcing XXX% is timely entire and team, team first sales few leadership two I the really my together commitment for the began. the years first just week was we striking had consumption organization Thank and the contagious you, year, me especially This restructuring since g- commission locked significant was the on really started model with change at before It that to it kick-off time ago, has weeks of over pretty a incredible for exited the actually a based a been they of question. go-to-market joined moved market throughout remember, the based. as Rob. compensation Really celebration year being the shared since was the that where you and been pandemic our It to the a and everything a And has sales as bring few jump-start from anecdotes ton we way a chance to The be month given I here. the with energy kick-off. to to was expectation got together had market team just them then started if a whole course Year. and was pandemic chance Maybe the in down. the a a New 'XX share really over of And momentum. go-to actually I'd event over-performing some They the week. really stories all

signed talking for moving saw each in annual moving level. the example day. customer to figure on one set In customer eight commitment that X eight customers multiple eight now doubled customer a we year, figure we channel one getting launched with upsell For to for years. had They're our with travel a headquartered into for and chosen and spend sending figures. a than into their by got that figure sizable at multi-year how financial In tier. platform, more customers coming seven it's commitment been platform into platform of from that Relic battle up three been levels launched upgrade Well head And commit cloud in we a XX New STR coming at investment year globally, quarter, over gaming mid-XXXX, and largest one about where to engineer acquisition customer XX% an out also our their -- new is saw the us competitor a a in graduating years figure New increased large more great the record up dollar Relic. for London. a XXx of through in the spend. tier average a new with multi-year us technology, a free-tier. terabytes free-spend last They in a in leading We've customer $XXX,XXX with commitment them to of we second all happen a this new free a become watch channel, over our and is native this was banking three finally an the free-tier, level QX, services when next this starting for million that significant one global to This the we engaged this head that

fiscal They and we energized night organization So where the this into year. from Such pumped. going started the are go-to-market last really fiscal a difference year. day is

think this going growing in us to coming business fiscal that's I bode the for year. well

Rob Oliver

Great.

helpful. you retirement Okay, congratulations that's then around. the been appreciate first all, all and having years. of we'll miss the Mark, with a well really over that's -- super color, Bill really your working And pleasure And on it's

ask did best. want I not the guys it, in the you address possibility letter, around -- 'XX the the And a so missed all then I up. is to expenses did additional So just unless in which

I process their could So guys. color you and any around if those provide behind expenses, them. wondering just thought use Thanks, more was

Mark Sachleben

those we're The we It's that salaries. guide, kick will of our rest take And with don't other roughly over the some there quarter. hand, things Thanks, in we a And FutureStack pressure inflationary and time wages working some take you what those pressures. definitely breakeven well. had looking unique as been budgets. expect on last at up some expenses to and year. QX to a Rob. the time expect and are we've tick There some appreciate Kick-Off these I as absorb down. is starting the fiscal the the We've that into Annual in it travel, the that And year months, Kick-Off got had we see We three beginning our they're our first QX seen But -- to the we've tick notably don't down can events. in Sure. pleasure loss regard, to it. T&E for Conference. to are then of in expense in-person 'XX see, you

or add QX, they've going Kick-Off forward repeated. And great so, a the be events, expense but $XX which I $XX FutureStack to about great, million not to going million or two in to in been would was in-person event, think those terrific. are close

And so of we the last we're the we've the breakeven think mentioned full and think at overall, $XX basically million. for we three million looking $XX to quarters then in loss year between a year

you remind that about commission have Fiscal with would that is be and that. I million $XX last we However, year will -- double hit everyone in 'XX 'XX. expense the bubble the That fiscal is expense. we

will And expense we'll a year. an in us will hit to as so 'XX. fiscal that non-cash this that zero be expense, And that's go

Operator

Thank you.

proceed. from Morgan comes Singh with question Next Sanjit Stanley. Please

Sanjit Singh

Mark. rate Thank you you the Also for taking years metrics. consumption appreciate last sad questions. for the run you for with you working revenue Really go to thank several now. And

of Can factors baked or the going us are dampening consumption you have we spend be and heading I think understand because your that's limiting give definitely a sort why just I that wanted that about rate. and excess the where of that usage understand dampening quarter, run I customers into their bit useful time. the you where are that March of in is assume cohorts of revenue, been driving going the consuming to to saw is particularly like usage. that just to in their understanding behavior of sense I'm dynamic their that to would trying December effect some over into be the to a little going

when would that number. would, of it be so they I And renew, into assume would sort baked they usage their

they you impact just that. if appreciate some of Thank the the dynamics revenue. on cohort through So and on the the walk to behaviors as Really up of these contract you. end come

Bill Staples

Yes. Thank you, Sanjit.

also as their hot several we've to level before, of in them in under QX their want getting two usage driven of excess around and that's those consumption think consumption their out consuming and is sure their customers so meaning factors. probably I to that that potentially organization commitments. being ensure of in the customers of go value in year, efficient burning we into coincided far is as possible. to or of their What as And the consuming try trending the help of as the excess a far to number very cold, obviously And Everything with that we running or commitment, the calendar As of understand XXX% And we slowed range cohorts. they They far maybe end was where It's there of give year interesting their new leverage. go-to-market their into from XXX% negotiation platform. our beginning customers' to described mean. ones from commitment significantly commitment final rallies they're contract. monitor month and final saw them the making greater the cycle very limit excess growth break commitment fiscal new well cohort, also their

slowing variety on of commitment factors. They their contract the a far their excess growth. in of ended still whole. So They're

already we've feel going the and commitment. when trend been like far mitigate So behavior that consumption of to more forward. in we better dialing that's in we in and around this excess now has And down need not something a clear they significantly moderating were QX seen,

helping learning they're fiscal the don't from customers where contract of year. at value not throughout their the of getting making need they the of support up One we in for budget they very the and all consumption end be platform have throughout year, is they sure our the place may getting from that our recognize secured, that the underlying to end that, at budget the better for that example, and that consumption so

FY customer based the year. that fiscal are making -- value. well underlie conversation are consumption those 'XX both as throughout on conversations early Those the So ongoing around renewals, renewal value in that as we're some of plans in changes the

Sanjit Singh

of also of [indiscernible] those dynamics. understanding some terms I Then in was

the hand some in that to the in As call, going and things earnings of think of year this really really usage of freed at said recent I customers is last that be fiscal we up you've sort and to drive team helping the be that sales the conferences to entered is more that drive of part to that that usage. the talk that made have to the you you initiatives place usage? drive be of of would more kind that, comment the on some revenue. increased impact Can goes question about And Mark, second is what that

your year So necessarily into successful I -- team sales ultimately am usage customers going the data how revenue that's magnitude of to understand this between more if bridge year. would you and and users is either and next trying of looking this for upside in fiscal guidance to use upside translate into your your getting guidance. to or sort that the into

Bill Staples

question. good Yes,

experience capabilities It was It customers of proud new how learning the throughout a platform, of our was the the help customers. year and so consumption to new year. before and So business our pricing significant It's how the year value I'm for to effort on fiscal sales was intensive the understand of full new last part was differently first team, year migrating it models model And Last new the for in we all the your we pretty a noted legacy or model. I've the very as consumption from that's question shift. customers around addition the about made. progress into works. this help and

and we're between new to business, six business for companies multiple migrate two go-to-market organization were motion. that value able now just years. What's the in now businesses -- happening the now transition the with many There's that struggle quarters. model, of XX% go-to-market about sort legacy to realization. business of our in majority is around consumption We the effectively So orienting parts of

or or around -- First those in areas cost or hard kinds them customers part revenue through reliability increased can of own save consolidation tool the satisfaction, things. value business for platform example performance, productivity, money is increased where topline of identify our terms their saving customer helping creation

with metric the our want business of So the document they go-to-market and we're opportunity them value consumption internal And our our is value cost their see SLAs, we team or increasingly, identification with side, part its spend, in on technical that does jointly have whatever or a of consumption this those of organization focuses Relic. their it's the revenue realization. improved around with organization opportunity whether part all plan, consumption better adoption ties solutions New jointly their savings is creation realize be. value their recognized, identified, customer then customer investing once a help go-to-market how own they customer to help or case on that the may experience, topline their own through metrics hard improved What

customers increase to of in revenue side. our based investment directly we is and recognize the letter. consumption now translates data, that line are a recognition report pattern significant users on through us adoption is that CRR, increasing that so pattern part second we businesses metric customers It quarter. that model. or that number that And your we're on investment now then investing our sharing they're us, And sending that's each is to the consumption the is XX% customer report the how amount quarter when for area translates of for of new the to to of We're top support the And motion resources, shifting revenue go question, the so that revenue market towards budget

Mark Sachleben

secondary and will could somewhat. sure the looking will get be at And look the Sanjit, driving I metrics, look short folks is very that's remarks, you'll be that at us periods model, growth really that be changes in quarterly think short-term the part, a should migration revenue, create people what patterns, as encourage XX as gives XX-month when be trying period months, confidence two to revenue underlying earlier CRR the of CRR function growth views to aligned. our large But it's if look we at be back mentioned doing was forward. to think some differ trends, we a that, over closely the really longer-term in would I view. should that very and historically, I And that And but in variability to take period -- in the when ultimately look -- and us to just add a then Over Yes revenue those think term you CRR going I the look aligned. I the multi-cure I'm over and if that. to you We will I'm we CRR there. there parse you're see metrics, closely

Operator

from The Thank Tindle next question Adam you. James. Raymond comes with

is line Your open.

Adam Tindle

Thank I on to wanted profitability gross mid-XX% fiscal you, to Non-GAAP start margins just 'XX. exiting non-GAAP priority return, to modest and the Bill.

Just does just I'm influence think and metric? why any do can how you. I'm variable OpEx you that we you the about achieve Thank that profitability can that but that. target? managing in is mix non-GAAP And Would sorry Is that it mid-XX%. that how curious skew. and don't versus things seats in there necessarily mix, secondly, case in cause calls achieving of issues thinking control here, data to target multiple

Bill Staples

prudent over given to end we're point, FY factors. Yes. high feels That's Yes, targeting of for year the for this longer mid-XX%s Good 'XX. XX%s to mid-XX%s XX$s we a a as not term. would like couple question. low But get like Thanks, back Adam. you fiscal noted, a target

by I scale our FYXX to get That we the low those that services. of time on though drive bubble plan plan in double get those and two continue to margins to One to services. a We've will end of a into is we've XX%s, out build XX%s. that, then on mark excellence drivers as a do planned. by last around centers been as cost the we has us seen That high that this improvements will driven more data noted pattern COGS lot us, growth noted our importantly is year. has before, the for data for engineering, as we and that that will we've into pressure of growth, carried the effectively business be reporting been plus fiscal years. of We're we've improve year-over-year is improving the around XX% We'll exit pressure strong which margin. put gross our really very mid-XX%, to low also us back Also, efficiency getting exiting margin stronger data a the

Mark Sachleben

following third margin think going coming efficiency optimization just gross datacenters on that we and be roughly the the that from the improvements migration of that expected driving savings a the is mentioned. that, remainder the being Yes, Bill addressing to we and of up of out

showed we improvements On market 'XX, in the to side, we continue expense go-to into going efficiency those forward in expect fiscal 'XX. good fiscal

we're not only see much both efficient more plan will to much wages the that good well like feel I growing so in they I But initiatives do product overall, goal. doing do and to I to us in we're change higher we're nurturing earlier place in ticking with also achieve improvements that customers levels. that customers growth compensation we know a and mentioned if but the allow and higher and up those pay-go getting have structure good any all are to and as at doing And see making bringing to better how business and our we go led we think don't as certainly expenses on what modernization we're where area.

Adam Tindle

helpful. could of competitive as the product. product that a Bill, infrastructure follow-up, on just That's maybe Maybe in the speak you differentiation

Datadog you're success the that's is in that at new run infrastructure, cloud is perception of hyperscalers to of from -- at least that kind and on secondly partnering opportunity investors time and an market that with up instance space for have the you. with in a buying a AWS of the spin standpoint. go product compete that that perception has how And a you on away so think I lot

product. on So, market go to Thank that into with you. infrastructure product competitive differentiation

Bill Staples

They Yes, you versus say To mentioned you platform the there. approach. monitoring distinct With one have infrastructure the experiences products underneath we a Relics, And of price into in verticalized we've sources data and infrastructure each New the stores years for starts distinct is made all experience. Datadog really and and a of prices. telemetry layer user Log telemetry is the differentiation products purchase for. sort consolidated the pivot With to or per with economics And applications. advantage like competitors $X.XX gigabyte that one application, charge, optimize our and host that platform of like in incredible more often cost June it them. X, Relic hyperscale New differentiations ago customers that or our translates effective significant applications specialized we with clear effectively per for be separately platform or distinct few all where APM a data distinct to now massive have as incremental types all those

And in there forms more and for, as simpler our second add more of to for you and to or few Hyper plan first, the cost in scale of economic hosts, approach that application So benefit in for the use. that's differentiation comes economics budget platform. all to from platform Scale engineers one in cost advantages much a then

more In across going we're 'XX go-to-market platform be as capabilities. terms of increasingly around I with FY to that, adoption mentioned, driving

customers year the our top XX% browser our even APM you investor use documented include who As the that $XX,XXX us. we've despite opening when higher my product. four products. than XX% all in letter, in logs FY spend in to 'XX fact platform that I and and adoption to improvement saw shared look We goes that move four customers more of focus. in XX% we've remarks the commit significant number with infrastructure, Up the customers as a using capabilities migration even at from those and And across top was seen

platform want and and more consumption increase really think So of on customers that's focus revenue an the us that for growth to for I that and motion drive use value our a the will as go-to-market advantage increased company. we

Operator

Rishi you. proceed. comes Please with Thank next question The from Jaluria RBC.

Rishi Jaluria

first. my taking guess for decouple just much questions. things. to I'm so couple Thanks Two trying of Wonderful. here a I

you So customers, look had sub a right. NRR, quarter the if at NRR XXK for we QX, especially really in strong the

percentage if but out But look from trailing know at we proxy, XX saw customers, so an so even the little a and Maybe bit walk is mix maybe follow-up. Can there pieces speak XXk well? exact through there. than I there metric, sequentially. the declined to stronger that quarter was XXK strength would And in doing imply us we going not and XXXk towards is actually above on put month sub would the it's represent. you QX the be XXXk sub-XXXk that And may the revenue you have then in a I moving

Bill Staples

to comment I under XXX. gave declining I'm I that your you mean Rishi, trying about impression? follow in the guess revenue what just

Rishi Jaluria

total quarter, in revenue by total the QX XX% in and just as XX% I QX, do percentage at XXXk customers in multiplied the revenue revenue XXX% of on QX, look a best right. at. If right, the math I flat, the it's what right, that's QX, -- for rounding, I there's with That get and trying to I'm at me very know has but NRR

Bill Staples

I our -- segment think are I'm sorry, we no, over XXXk again, seeing and But missing And I growth something. I'm under XXXk guess good in segment.

rounding the then growth customers, the good could the up But a the that there we're talking So XXk of sort like I some stack. we're good be the up something. into segment driving about to there. numbers next to X.X seeing over that XXXk from Perhaps XXK X.X think -- a doing through segment, feel job where in And over that we're we're XXk some and we're or has we impact. no, from that's

apologize, I to of the So can maybe that that. with get and bottom up we follow

Rishi Jaluria

just a clarification. Yes,

Bill Staples

in low our in can on growth I'd we're pay-go the see declines are hand, The any not the other seeing is of thing end say and segments. the you we certainly strong numbers other that but on seeing

Peter Goldmacher

maybe -- Yes,

Bill Staples

Okay, sorry ahead go yes,

Peter Goldmacher

clarify a increase There XXX%, XXX%. the really as the looking compared reporting is numbers, QX, metric on you than strong XXk is to good NRR a the customers less And said the to and year cohort growth metric customers. clarified as growth QX smaller in spent compare how sizable to Yes, this backward Mark, quarter ago. in was a

the all For in we across in aggregate greater to XXX went QX cohort from XXX to XXX and QX. XXk total in XXX than customers,

So one we increasing back all NRR. look year customer cohorts ago, compared to as and

Rishi Jaluria

it. just make to make sure got it, got Okay, follow understanding sure I'll it. I'm to Thanks up and offline

arrears. but this building time it why to have I pre-committed, still wild mean, through I'm QX. a new from I increase in vast in to model. consumption at know transition Second you're especially we of this follow XX% are you from just given revenues million mostly, sequentially What you're there my you're swings understanding QX, was coming up consumption deferred in QX plus, company maybe majority for my revenue, saw understanding is, own struggling $XX the -- you those as on understand said consumption still them basically that

be could So help revenue it, I'm really would you understanding give just why you. is moving. not clarify Maybe Thank that just helpful. deferred

Bill Staples

just we pay most our year commit small most and -- is commitment. then our No, of to upfront Sure. large to customers which overage. us business, clarify we are in for -- customers with of one customer that arrears for our and bill What continue pay-go that dollars

March tend that but is in make it, our almost December deferred the in in our subsequent quarter in tenant impact get still consumption folks, cash that our big we QX the will to biggest on the commit that we big be increases March, and times QX. has are always bill of and these QX and arrears the So getting is upfront excess commitment so big quarters. then renewals and and to we where and going the flow a

Rishi Jaluria

it -- got Okay,

Bill Staples

driven and our that pay-go, reiterate Can is of you then mentioned upfront arrears. business these we rest revenue also consumption in commitments that? we, paid is a that over-commit paid by for of As that lot, that XX% were the that and

Rishi Jaluria

retirement. IPO you. wishing you best Okay. Mark That's wonderful really And colleagues. the way, let It's lot. working since you with a helpful. and the by been Thank in my all Thanks echo me

Mark Sachleben

you. Thank

Operator

JMP comes Securities. question Thank from proceed. with Erik next Please you. The Suppiger

Erik Suppiger

thanks Yes, congratulations, and Mark. taking question for my

accelerate sales, or just newer on in over customer off, you your shift customers? curious First going from from is as growth to just migrating the away customers drive I'm new to count. focus -- that

Mark Sachleben

We are customers. grow new doing to things in 'XX FY

well terms customers. paid all funnel to to X about sales FY free-tier we've converting continue and as to perform continues product tier customers those of which talking the addition been In improvements year 'XX we that as both really to well make improvements in in

around program And partner around, FY and new the accelerating are well as to to as gives investing increase internal programs make that in new are customer us 'XX. drive those confidence sales acquisition We customer growth. priority which

Erik Suppiger

a, had XXX that of I course in fiscal manner? see terms think Might we gave You we Any that? customers kind the about we kind count, 'XX. of acceleration had comments you in see. we might track What accelerate metrics for significant might of a added customer over of what

Mark Sachleben

the of from do primary expect Yes, you growth we Also, accelerate. haven't which we into share point total platform. experienced pay-go assets is but the separately customer we growth new in that target, a coming customers source the paid I'd rate expressed we 'XX the FY specific count. also to customer the

also that, share accelerating to continue see growth. where will you and will is that We

Erik Suppiger

QX your Okay and then levels it that then get is looks at the remainder as off OpEx or that really though at of to point for we fiscal into going and up more less it 'XX. as step

a that slow the think part of from Let impact the my perspective. me to is your Is perspective? guidance, but from how that get like as it looks know headcount if you correct, should or that's going we 'XX to into not what suggest of that's latter from the hiring

Bill Staples

bit to hiring, earlier there the load one-time subsequent spend had the but QX. That in quarters. a of repeated won't between million $XX our kick that's that looking really or future events upwards that front company first in stack are was in that important we've off be biggest We impact was time

Operator

Thank you.

Company. comes from Cikos Mike next with Our and Needham question

is line Your open.

Mike Cikos

back And thanks which that out really usage. they coming depressing, here. guys, I the trying at or guess competing saw recent figure And is right the I'm customers each one changes comes ways. Hi were other. question most both consumption I'm how dampening first with two in to quarter, different from for and taking their or the are to in the it we let's get miss I'm a looking XYZ support characterizing if in make the the usage company if That's and sure to full for probably work make that bonus. my for right. company right me need dampening and I as I'm my I year, but to say dampening to first number VP one, -- usage. does because the well I'm my -- It's I

we holding I'm two the new how just for in of critical market to struggling thinking the question that back starts, where understand is, tool. And I'm depressing then being is the companies. second organization top do off? about digital mind question these you items all users the an provisioning mission me project new hear square this about find massive of So first this trends those remains observability if is away? the or help of Can environment transformation how you

Bill Staples

you're. So

right. you're think I

Well. kind holder the along budget and budget new function you're you to a you're that? ask large. into what run If rate motivating coming renewal but mitigate new heard can say, of customers quite trying was to question your current fiscal all it the wow, for your year you've help delta, is. you're on the a to realize That's a square we how there make cycle and as not I pretty maybe spend drive up the with are And any efficiencies can

of were commitment. realization significant the their who then far when are us that XXX% so of XXX% for about think the I again commitment customers cohort, let gap we to in we're is think excess their consuming growth talking

it to That's terms new more drive decision. projects, discover not and holder gets the the consumption budget a platform about within get year then them identifies more needs the to one the only fiscal product job increased virally consumption, or sure the new well if will the start Engineers understand them, that the value with to value. things they can the value. they top make secure the instrument and of we do While is throughout customer throughout can they to grows organization more of often budget need shared consuming. point use better the throughout contract as the the as get organically consumption some as the at discover as cycle. year ways is And down Maybe from consumption. engineers its help data. Because beautiful businesses helping optimizations a getting come They're to that

and efficient about seen again, change And engineers cycle that little rather projects X, possibly scale. there And make people and scale being we saying, that transformation coming the square that are If steady them or at do can second oftentimes period. all of just bit? put back of there's towards them them question a help rotated people high are talk pricing capture is can talk the and they maybe growth in we are a growth, which super-efficient. of Or to is When be of customers company, level we've throughout more example wait always is we ramp So definitely these all the the sources who the out that in lot top we and a these contract maintenance of little your to at How budget they're simple can that state, a afford way their data as about user efficiencies to the being are down telemetry spend really users around companies, a we contract our platform. have of to secure had, or the by renewal I or the slowing and not need digital accessing date are informing up, more them, course we over projects, about the when a maybe user spend the are for we would that even bit sure an looking of X in of new up date see. to the they consumption keeping of it gathering -- lot is helping cleaning talking about driving part list cycle. it's the than big year their with say those resignations even model. priority, up

ways might going are examples, as manage of a contract. those of VP be into run to looking rate kind that new Engineering So at their

Mike Cikos

I time And Thanks even I you guess is up option that. then follow about since ingest. about migration this in it. data talk I we've mechanism the my is priced investor really higher the per there appreciate on that a X. think different for for a $X.XX June to data alluded talking do effective had guys you through ingest. first This letter, on are guys pricing guys the gone you the And introducing now gig call

And the the help you will strategy? longer data. data, evidence think what's think if term? that I over follow-up what's that in time And the I'm should and for gross users think on of Relic bringing a margins, two-thirds, that normalizing the change -- been yet to or curious, normalized us to the amount can do causing into we messaging New about through how the don't one-third ratio has thesis So guys follow been user just users we and growing showing return data been they've platform? the you following that of up have that

Bill Staples

Yes. Great questions.

that data believe sort sort ago, we data there's have insights announcements the driven first our of made noted, original the correct. them we can indicator capturing source you The in leading regarding weeks bring You within account. of about of help of can data and make few going an a data It's strategy customers growth approaches. two prices. exactly We data the the is more we

for plus the and for seen successful rates us telemetry wanted platform we our us. intentionally be they every of amount XX% launched cost two growth offering incremental extremely price effectively customers advantageous ago application, years those to cost host expanded we insights. priced so when the been send that And we We've to data get year-over-year or very as have that's data to above

those We have look reassessed we how costs. at

considerably going few up years our price the changing value course, without last the years. for few Of over costs been increased have and we've a

the and the is all significant we few years per really give anticipate them we have relatively price been our that price new customers gigabyte that see standard we benefits the as sharing past to telemetry and goal of and change push So modest possible and with much customers on that announced don't increase. of data our continues price inhibiting back value don't $X.XX to capture as over we

benefit allow to based feedback query asking are and even features as that though we in that telemetry on and to new that additional across a offering. to ranges been increased platform offering, the data our more limit and significant of including time need of offering, real Plus on will customers and and the able petabytes that new including capabilities some data value be query retention sets their who the introducing want which they've be the of to Plus multiple rate, higher can new with customers performance clarity some for, of bringing and well as date engineers, is data Data has capacity us sent and plus our We top we're

is to give as of a priced customers there the X value. even be them higher into the June offering So entering well. will selling market That more

mix As see think plus but that will data well to see very and towards contribution new mix we'll based I view whether determined of be data works is plus your more that data question to revenue we the out. around acceptance could how still that versus the that acceptance on of change, shift users, to

Operator

with Michael comes next Please from The you. proceed. Thank KeyBanc. Turits question

Michael Turits

able that The That's was high seasonal prior you or two cohorts tough, other that back and their year-over-year. macro the first the the cohort questions words, shortfall. to and say versus parse, consumption. a congratulations. how cohort of second much of to -- course teens factors. around don't, my luck. And behavioral Thanks. factors, concern, to Two consumption new Mark overall But of you we Best into we sounded question. probably, are of were know that I other this the March mid know that We're cohort factors it's growing first, the consumption bunch In from get

with we ended about as where March up that cohort is So the well?

Bill Staples

hearing the more not macro impact offering. top-line space forward, and see, It on don't and macro we think seen customers, I predictability have want like well our question first people in I fairly cost becoming to observability I more allows model we we demand, on positioned, the demand. it. value-driven extent of we're more seems really guess conscious we're very that our and think only mentioned that given happens, in a And are a going people cost a

forward. that think set up will I So going well us

of the various the cohorts. terms percentages, overall In

base to explicit numbers I haven't whole. more And I that probably around various We away customer our look as the from and want given stay guess a cohorts. at doing

is about. talk business and your to like it's there top not an and a of doing about overall mean really, we we're customer got business Given in some are Bill prevent. not increase are in to we've we consumption we renewal But and as agreement. rate. the we should the consumption make to, can we mentioned, they in ready that consumption think impacts throughout growth contract I you have things where of work if are that and term dates I dates renewal base And the what sure think should and we on are impact for the about

in you from encourage so year-over-year standpoint, growth any just business. more it and December. we customers We'll renew in Yes, look just will as at take And that's we way the look will cohorts. so really at take customer than I QX a much individual much a numbers the and renew growth customers we that that would at a in our the base that as whole look it things June as whole from growth as rate, from like

Operator

Thank team conference management closing remarks. you. This now for the back to pass concludes question-and-answer the will I the session. over

Bill Staples

All the announced really years service ongoing We of his XX right, for Mark, especially your as And thank today. transition. everyone for through support the retirement you you, he question. thank joining, and appreciate and

Just FutureStack Vegas. next one have do in week final reminder we

talk a day. a business. Thank with who who but and It to to partners be day Have want We join in for everyone will can. be new also great about customers, event the analyst will attend everyone future you, with great person streaming of the we invite again. us the those

Operator

FY This the New Goodbye. Relic earnings participation. Thank concludes call. XXXX for XQ your you

You may now disconnect your lines.

New Relic (NEWR) 13 May 222022 Q4 Earnings call transcript