- Earnings call transcript Q3 2022

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Operator

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the SolarWinds Q3 2022 Earnings Call. Today's conference is being recorded. [Operator Instructions]. would turn I to conference time, Karaca. Tim this like the to over At ahead. go Please

Tim Karaca

our Good you. Third With Sudhakar Bart Earnings SolarWinds and CFO. Quarter Call. CEO; Ramakrishna, Kalsu, is our today Thank me everyone, XXXX morning, welcome and and President to the

slide business we summary a also Investor our a prepared release simultaneously you This intended remember can being financial financial our results Therefore, remarks question-and-answer subscription-first Relations do Relations certain subscription those call and evolution including completed N-able earnings the not timing and the Copies and accordingly spin-off call level business, our On our from is mentality. cybersecurity customer impact uncertainties, on remarks, Following on outlook, operations deck, as presented at our today's reflect a investors.solarwinds.com. website. this session. referring is find risks press are the and webcast differences our to the N-able of Investor call measures various release environment on the currently Furthermore, statements we during will and regarding the duty have statements, our A financial SEC. be Investor expectations our in of the the on otherwise available for statements on financial to cyber measures. include specified, incidents when financial risks the assumptions, of discussed economic and forward-looking are of law. on and this GAAP we impact website. to to are the the prepared earnings of page the which on except today's evolution, stand-alone our N-able our as earnings geopolitical Relations website refer available our summary business We to from supplement deck Investor website, SEC to phases between our of historical of SolarWinds XX, non-GAAP uncertainties will Unless required no market during call. with have today's non-GAAP including financial and our number that undertake Please included business. our numerous The and discontinued by are and of will global retention the on a highlighted generally XXXX, opportunities, press any concerning statements the Relations debt gross These filings on and of the subject as we release These call. today's and non-GAAP this available discuss in information slide of periods. call results and based information update reconciliation and contribution are business. July our our we on a made measures, measures

a reminder, accounting. revenue with our first for of the beginning purchase no quarter adjust of As the longer XXXX, impact we

For quarter the total is to of GAAP XXXX, revenue. equivalent total revenue non-GAAP our third

by in call that, financial our the earnings we pending the call final now until are on external release Finally, to and that results I'll review discussed over Sudhakar. turn note and With the XX-Q. be preliminary and final report today's we not fall auditors, will on quarterly our file

Sudhakar Ramakrishna

morning, today. Good everyone, Thank you, you Tim. and us joining thank for

ongoing our a of considering quarter, As accomplished during customers, all shareholders commitment proud start SolarWinds. team's employees, partners thanking macro environment. our by always, extremely and like their I'm I'd to to challenging for the

to that customer had XXXX subscription as including more comments margins, for several cloud discipline; results. operating color Let we it in retention; XXXX, our observability on the continued year. Transform of our Bart before continued of touch believe the on balance demonstrating for business our adoption continued well line evolution. with the over highlights, We the and EBITDA route Partner outlook subscription-first our down commitment execution superior In on me key revenue Program; to market milestones with X% of strategy; in our announcement observability to federal expense quarter of in public hybrid strong these customers; product I'll turning start sector; to value to on third commitment growth our and some as quarter year-over-year. the we QX a delivered our revenues our deliver strength announcements of few and reflecting including we of million, expansion financial representing healthy $XXX with major execution the

since But previously was issued headwind a guidance XX% million foreign report excited delivered been our QX, renewal used constant currency would within have assuming and currency revenue, Excluding in-quarter trailing a maintenance solutions, XX-month range, exchange X% the approximately of to on rates an we and I'm outlook, our report place negatively I to growth. attribute these trust rate we strong relevancy results provided in of year-over-year currency resiliency the guidance, in renewal I'm rates our our that to the $X that, currency XX%. basis, in by our headwinds. even business customers impacted commitment with team, the the our now of and these are at our us. metrics Both happy our execution. were model

us for billion we We leading predictable sizes. the value Adjusted on ended the opportunity coming million, months, as are our lifetime the achieve $X sprawl, the in even growing subscription, across to spent improving strategy right with $XX.X continue a an period some year. business from the provided. customers growth recurring and total comparable and their the of mix, more, previous was and visibility in The shifting multi-cloud in outlook comprehensive strategy XXX the delivered over to We with of last annual our environment, expand XXXX is quarter headwinds, years. continue believe progress subscription-first with strategy XX% our revenues to revenue to focus digital bookings revenue more to and lay fatigue customers. deal conversions resulted quarter for third we in tool more third has alert representing to margin to it By XX% and make increase the revenue year-over-year. demonstrable an subscription in with subscription-first have foundation reduce of customers XX%, we than $XXX,XXX More of we the who XX larger eliminate line EBITDA adjusted EBITDA helping transformation, with accelerate over maintenance

and our I best to time issues best will Day growth we our evolve to and and our out what in deliver value, best help time be then. together We portfolio it about productivity ago, remediate Now customers' accelerate to customers' believe transformation the what We our our their I'd multi-cloud and security, Last like time business we strategy. year and industry detect the talked laid retain to solutions environment. year, to SolarWinds and back and have X the today, on enable accomplished in to take what mission us multi-cloud costs. of grow our for aim the made to customers hybrid and customers' to environments. committed our the customers our we reflect needs evolve with through best the best a is simple, and to step and powerful issues designed at that execution Investors secure Analyst at strategy retain, improving we and since

we is broad, our and large. market addressable is portfolio believe Our

of business. evolution is many database performance today, and announcements. SolarWinds productivity, on complexity the focus monitoring future for observability cost solutions tremendous you our made of in face. ago, We monitoring first-ever made to the exciting and challenges we growth. QX, progress to management significance strong service making event where But to and address are during Day of from and observability us to customers I'll A increasingly transitioning key strategy X We our weeks its element joined parts our our our progress our

for unveiled First, we based is productivity stack will all ops solution observability which be platform our ops future to This Software-as-a-Service cloud SolarWinds built the on full professionals. of DevOps, and IT basis solutions. SolarWinds' SecOps, unlock the

own than now our anomaly Hybrid powered features solution an months intelligence hybrid to after most artificial on-premises tools, the at capabilities on announced while business applications enhanced monitored cloud of its investment. detection also machine updated to We SolarWinds introduction. learning databases. observability our observability Traditionally, version and systems, migrate cloud enable focused making initial their which less while and network IT SolarWinds customers their and continuing by from pace of SaaS X to

hybrid are to However, environments customers becoming challenging multi-cloud and IT increasingly and for complex manage. more

and Our observability solutions in by are expedite designed anomaly to visibility comprehensive cloud, into to private complete this problem detection resolution. the public and both solve environment providing

providing on their was companies. solutions foundation reinforce digitally SolarWinds our and with help foundational latest announcements These secure customers a commitment presence. transform them value-based built to to and simple,

Transform was Day focus providers last Transform system we growing month. and ecosystem. about growth the end, and Partner partners represents evolve retailers, enhanced and retain, and managed partner growth we last our and and reach of of strategy that our element distributors, year's global believe our service will cloud at Analyst the Investor SolarWinds talked integrators, with our we we the improve launch Program technology importantly, customer partner way it across development, globe. on our To value-added announced Another channel expanding

our to relationship their accelerate excited our customers shared in transformation. with are to business partners help strengthen our We vision

technology Channel. President industry hires We and who growth, IBM of during Chad the also at Reese, our to leadership joined SolarWinds key XX serving experience, including Sales our in recently years positions Chad as brings VMware. support Global at of and channel made quarter most leadership Americas

highly successfully my moment rates. macro transaction business customer our environment. is customer model the has as challenging reflected stood particularly high-velocity model reflected during diversified our me consistently one Now is us of strong compelling thing our during take tenure base, enable stickiness and by out to resiliency macro of address renewal our to our a challenging I the strong in value to believe We at SolarWinds to operate periods. solution, retention This solution, that the others, proposition want Amongst and through environments. cost-effective

peers, continue we but during although focused to experience our our Europe. to executing in strategic environment and continue delays priorities. particularly customers, our long-term monitor addition, did closures commitments are healthy of on many from deal our demand we remain opportunity closely some in on We'll quarter, confident we the software sharply In see like in the and

always capital We expense our on focused have been and are management. allocation and

expansion. continue to and seek We balance to margin growth

our on to to years, will intend built These year performance have an Bart? previous outlook. model on businesses. have an business Our we of diligently And -- foundation. over through remain worked even I that, and build manage over management expand to With downturns full and financial updated team hard it sturdier to led Bart this provide attributes we to our turn across are. who costs we a has we foundation companies the

Barton Kalsu

our of XXXX again Sudhakar, focus with Thanks, call. transition emphasize I'd on it thanks this, important and will around to be joining growing to strategic With us mentality. multifaceted. everyone is subscription today's by start subscription-first everyone our like a to that reminding

the of The hybrid first product. our subscriptions on-premises of existing and transition our both products selling phase cloud entails observability

The growth models of ARR while solution. X launch our exercising our second phase with of operating and subscription to the transition recent the of persist overall belief It focus our is our grow SaaS these observability that business, begins subscription will in is discipline.

progress represent reflect of this Our ongoing of another execution quarter third strategy. our results our and quarter transition with

value outlook, used and rates issued felt to guided below decline million currency over year. over Turning $XXX.X of an ended the revenue prior total which revenue dollar. year, the outlook compared of the to $XXX a exchange the of million. with have a would currency of range. currency revenue, $XXX provided other foreign slight range in the ARR companies $XXX euro X% We million, basis, increase revenue million, a year. our basis, numbers. total with our our have on roughly and year, have of to prior slight prior U.S. total with the Like to third approximately constant quarter a increase finished approximately our of million been is which flat represented constant the compared prior the We and to ARR the $XXX previously Total we decrease of quarter the third exposure, assuming the On we total impact within is would in $XXX.X the the foreign total been currency would compared million, the

a million, of the year-over-year. an Our to to the $XX This XX% execution XX% the was ARR our $XXX of which maintenance hybrid of the observability as million, portion XX year-over-year. subscription-first is was strategy well mainly our our up cloud is of increase details, as subscription subscription third due of as conversion into quarter Digging solution. growth revenue revenue September base

ongoing the total strategy current subscription-first quarter transition in revenue. reflects of Our headwinds subscription-first a subscription revenue success growth to our efforts. the The creates

result increasing subscription of third percentage million higher the believe was decrease basis revenue that a deals in prior a X% year. recurring in term. made the on $XXX a which we will revenue Maintenance of new long an However, the is quarter, from in

As U.S. the compared our lower we XXXX the prior by have dollar impacted conversion conversion of well subscription maintenance as customers discussed recently, to year. of has our euro to been a to revenue the portion as in rate maintenance

is XX Our Note customers subscription quarter. to and maintenance retention headwinds. We exclude performance from at rate base These to the our our is our focused XX-month our believe we with the as historical loyalty rate maintenance for convert expansion and the calculation. renewal by consistent and rate those over customers on this efforts arrangements, impacted XX are well trailing as we will both XX% a a the that to currency as customer rates past third of months. basis are testament renewal customer in-quarter

mind quarter, be impacted our third compared sales will represents third Keep of to the our revenue subscription-first the XX% to in new XXXX. that quarter was focus. For license by approximately $XX perpetual decline license continue as of performance million, a which

year. We the a quarter about third who of XXX decisions. in $XXX,XXX to than As are and improved with the spent customers noted subscriptions us the of in year And Earlier our customers XX a we quarter. in that we in third the pleased the last XX% improvement consecutive in sector ago. year, finished performance increased in sales previous more how we the compared with to the previously, quarter federal This with this is saw our talked sales license spending metric. revenue public quarter customers XXXX reach the federal third which have marks from double-digit are our decline months, over offsets growth

to sales We X of which Day year build the customers relationships to continue to I'm supplement our another efforts targeted approach strategic Analyst our our that delivered with strong enterprise Investor at detailed high-velocity low-touch non-GAAP with traditional profitability. report ago. more quarter we pleased also we and

EBITDA line representing to our adjusted margin even quarter in $XX.X adjusted was EBITDA the XX%, million, outlook our other costs cyber related investigation governmental EBITDA adjusted million of third incident. we Third invest $XX.X the continue quarter as an litigation professional are of in fees business. of Sunburst with to quarter which Excluded approximately for in onetime and is from costs the selectively and

onetime cyber predict. onetime these fluctuate quarters, costs to costs to We expect incident-related in future difficult and are cyber

leverage Turning XX approximately to months sheet. trailing our was balance X.Xx our XX EBITDA. adjusted Net at September

at In amount bringing Our quarter, debt and our approximately cash, end debt at $XXX net a of the made balance we equivalents investment $XXX billion. million $X.X million. was the third September, short-term the in to cash prepayment voluntary of

debt I work before now to in on a our XXXX, of gross discuss of Sudhakar you refinancing. at subscription-first for fourth that our for taking model our the impact into headwinds some the will transition. final year. start quarter We what then account reduce matures will turning further level and payment as walk in we parallel I thoughts. through February arrived our over make potential debt means to of macro outlook to guidance the it business Our an our additional and expect we FX environment, full with and guidance

to and rate approximately be for quarter. is fourth million end XX% assuming X% X% high Adjusted to fourth basis, we shares range the in million, non-GAAP be revenue to the the per to fully is for Non-GAAP cash $X.XX decline of For represent currency outlook midpoint. it projected during $X.XX $X growth total million to would a tax fourth of approximately slight would approximately year-over-year. quarter pay range expected X% at be $X.X the the and a XX%, taxes EBITDA million per we And the share constant XX%. diluted earnings low outstanding. a finally, fourth the share, estimated decline representing a quarter assumes in revenue of $XXX On XXX.X expect an higher, margin to range and to fully the quarter, at million $XXX diluted expect year-over-year to be our of

While lowering in headwinds conditions, challenging we confident our during could resilient our we has that be guidance. FX economic our approach may cautious and full business is model are continue. and This our deteriorate transition, to remain proven further business conditions year by driven primarily macroeconomic

we that the early appropriately accounting for in We our are subscription fact remain transition.

basis, slight the a growth for and the prior Adjusted million the a For guidance guidance we our consistent to decline year $XXX to $XXX currency which million million. total of $XXX EBITDA expected revenue to compares year-over-year On or million X% full constant XX%, quarter. $XXX revenue of to we are guidance now is $XXX be would to million, year-over-year. year, be approximately of is the X% X% in last margins provided total to $XXX be expect which with million, to range

we diluted we focused strategy. XXX.X on assuming robust manage our diluted earnings road map, to core outstanding. per While per fully share, subscription-first continue to to $X.XX shares fully $X.XX and million be Non-GAAP execution our remain expenses, estimated is an share product projected

and rate exchange euro of to assumes Our dollar quarter guidance X.XX. full year a fourth

our in of We goodwill, review our in the will light when which markets. a environment the appropriate continued deterioration the notice $XXX third the was macroeconomic and an noncash impairment current impairment this GAAP you Finally, you resulted financials, additional determined quarter. of charge equity million in in

will be settle last announce for week, Western of covered agreed to our District we by securities an insurance. that lawsuit action We the pending in class are happy to Texas amount that

will ongoing our on strategy. approach of and transparency focus cyber the company and we'll having to litigation our have matters, investigations we to related resolved collaboration, this continue enable While still government

find can and X-K his remarks. more on You our government closing I'll call investigations over update Sudhakar back to in With today. turn our that, for a detailed filed litigation the

Sudhakar Ramakrishna

our that The our represents you, ever solutions, the Thank long-term very basis, and constant customers building confident momentum Bart. belief year-over-year which of currency execution midpoint our outlook business. us. relevance in our continued the the and most of our partners provided reflects of I'm still and Bart place innovation, with for ability I'm growth trajectory on as in in the trust pleased critically, our a of teams the new

we As next share I'd near-term like X us. look priorities key QX to to for and to year,

robust have renewal and a expansion on over focused renewal for remain as business XX we XX% First, have We customer past with retention been the we rate. very months. efforts,

Second, we continue adoption subscription to business. seek aggressively our across drive to

will our years. continue consistent continue to in adjusted While our the billion to with a in is want this shift long-term our discipline and customers EBITDA products, third, key margins exercise consume coming to in our increasingly an and in likely And has strategy to at achieve expense in ARR we macro some to challenging reported the subscription variability revenue, resulted mid-XXs $X result will to environment. accelerated how

As XXXX, we to for to selectively, look to opportunities operating our margins. to continue to manage we expenses look invest to expect improve tightly and

team, We through and their shareholders companies customers we for led have have questions. cycles. I be again now economic thanking SolarWinds. I'll employees, your to address our experienced Bart will conclude to commitment by partners, happy an management and many and

Operator

from take Tillman Instructions]. Securities. Truist Terry our first question [Operator at We'll

Connor Passarella

for Terry. Passarella Connor on is This

was seems a just I'd busy it dig like quarter pretty deeper in quarter. this one, a nice to First QX, federal little their It bit season. love into

and has important how these the curious up maybe for amongst product SaaS adoptions to federal trends or enterprise. saw any shift on against offerings quarter the customers stacked during for Just you

be would there color helpful. any Just

Sudhakar Ramakrishna

So thanks question. your for

growth like and is side, I a On This we of highlighted, just activity. mentioned of federal had QX. good one the not quarter as in result Bart

public times of we know, call in federal federal speaking, results and the sector, customers, say. and relevance we SLED continued the broadly further, our a X stickiness public because our the combination building of we our quarter. the and us that engagement through, pipeline. of fed the the particular, keep of across to I public execution a would sector terms One A that is have X is factors, you the sector and at of customers for customers with value did last the them customers. teams the as reaching entire out, highlighting last confidence and call engaging As it in for and look with overall and it, our have in time supporting long reflection well solutions I years, deliver quarter challenging

continue forward this that trend a as improve to expect is So as move we well. I to

Connor Passarella

Maybe just That's as follow-up. Perfect. a helpful.

As of return in longer it markets that Europe, think How you maybe about year? still we about cycles seems international into next there's those you pipeline sales and deals the think the a over like Europe there. continuation should as move of

Sudhakar Ramakrishna

But is on rates. these up, The our business, part particularly trajectory and a it due time, quarter issues, have to it we we across every of in included. transaction, partner the in managing very demand the being Europe, Europe regards all, to, of to almost an conditions, the as business of demand local business. regard them part and high-touch company, not it, it be are going it with deals of a reported supplementing pipeline say, foreign all Yes. pushed, it except and said, business business, would which the in belabor highlight increasingly our are impact generation, happen relates call regions, large terms environments. Europe, get Absolutely. accentuated, with in That have call so revenues. or high-velocity our the I in activity Central going has in Southern we that to beauty and across to that's some let's to the the is our With at obviously let's I'm deal risk demand strong did say, been the every Europe to same you know closure that exchange is of on

Operator

Hedberg at Markets. RBC Matthew move to We'll Capital next

Simran Biswal

can deals update is continued there heightened scrutiny pressure, This you if My to SME any Matt is us spending? Hedberg. on on question Simran first give be over with continues for there? And the about on

Sudhakar Ramakrishna

in, the we of upper more say and especially segment, robust, the quite lot of have. typically effectiveness these I'd happens it, that in our be environments mid-market scrutiny simply continues solutions, a to of SME The more with the base be call of to the enterprise. cost and because customers

customer say, really, of really large And concentration low. And we unlike, pure-play a a let's is broadly across are customers. vendor, so base very enterprise diversified

So say SME there's soft anything I wouldn't that about particularly itself.

Simran Biswal

Got And you that you recently the Observability. of are has response launch say SolarWinds initial it. announced How platform? Okay. then the also, to been? would that And what benefits key

Sudhakar Ramakrishna

been little journey The would analysts a response with has been a weeks, of evolution call since this recognize standpoint initial it, launched very X a say, It's be Absolutely. positive monitoring with observability. We we going over as and customers is from likewise it. that I to to well. from, pretrial

premises as as look stop they doing multi-cloud don't for as it a deploy cloud. customers evolving think and as, the So everything environments continuum much we at are this, as it's what they from we over to then shift to about

system able same been including to database and observability, observability, And so only what we number them of cost that, provide provides application a is and state that is effectiveness, the from to we the ease a we multi-cloud two the are: one I'll for, platform. network full the provide, By stack of and advantages is always combination known on we capabilities. simplicity are simply, them environments, deliver levels I quite same are premises vendor the best of that number full have security one; that that continuum use that mean we

ease So entire environment. continued full focus on their them to deployment, effectiveness, give focus visibility continued ease use, and of on cost continued of to ability

Operator

next our at question from We'll Patrick Baird. take Schulz

Patrick Schulz

guess like I sounds strategy just partner quarter. evolve. continuing great your it a to is on Congrats first,

new wondering current had the So ecosystem progressing with of you important you ecosystem bring and SolarWinds market. at I'm that a is how recent partner how to partner look to you about conditions. talk macro in could if the Day, you just bit product And the light solutions little announcements see

Sudhakar Ramakrishna

for thanks comments questions. Again, your Absolutely. and

let business segment I'll been call me The the First, partners. we've relied of out. always end velocity it customer end on the the the -- of start higher or side of high with, that transactional reaching has

And of as large coming as so products increasing. us only well resellers relevance of this has focus to now to them think global to work you And the with new traditional been is system MSPs. both of as integrators. with that mentioned, amplification the value-added The it

also relationships the that We very global traditionally and integrate reach is through strong going put Transform with a had initiatives. it our supplier to in the -- solutions able more and we work their and building sales overall integrators, in this reason quite to highlighting their program sales on accessed, better do be us help The That's we equation. to larger manner. where teams our is have and close also participate they're us side a technology the it market for not are now system transformation because digital into entire help GSIs cost-effective that offerings simply to tends have our for having longer from cycles in and expensive. But perspective

as digitally To we the do. And transform we relationships. date, solutions. about So have space now enterprise the not very did excited customers these with also those in I'm but broader we opportunities we now our have solutions,

Patrick Schulz

Great. That's very then helpful just one quick And color. renewals. on a

rates the the Just we macro uncertainty, into based be And we on then the either level? Is you period? seeing XX% diverge enter a or cohort about renewal sizes do low thinking the range how macro customer more challenging even sustainable geographies? are ongoing renewal should given if

Sudhakar Ramakrishna

No.

despite partners that various As is belief talking My XX-month to at renewal currency able headwinds, Bart continue trailing to that, in to rates. XX% been customers maintain mentioned, we've and sustain. or get our to looking will

Operator

JMP We'll go at next Securities. Erik to Suppiger

Erik Suppiger

system you would there. is you First expansion context little integrators in SolarWinds with interest for us should aspire technologies? give Sudhakar, rates an 'XX. expense? what perspective Bart, portfolio Then you you're from talk off, working when as move fiscal using talking any a your global with can margin about modeling if of when And other terms you then their secondly, on are we Curious interest be part of they SolarWinds, about what can bit noted versus in up, going observability as -- your expense lastly, how partners,

Sudhakar Ramakrishna

Maybe XXXX we'll as And well, as prepared and as that comments, first, QX including goals us also established. my expansion mentioned the address is I we key expansion. near-term when in I margin as on can Erik, highlight But expense -- that give priority view margin can full enter wrote margin results a then we of for and chime report we have Bart our that I'll a in discipline XXXX. I

Now coming it say is questions, varies. would your it to I Erik, --

few are very SaaS, at the strategy We lot is approach, global announced, of because of hybrid a observability one we our given that That vendor. that observability with path both is portfolio, details and we significant a or will but this yet large and couple now At overall their integrators fully are their strategy. of least been is increasingly yet taking. become go into stated I especially cases, point. least sole can't their have not just those the at comprehensiveness with in and a system cloud engaged

monitoring GSIs applicability tool vendors' reducing platform a with are broadest also . the just as are that essentially tools common sprawl and different solutions like customers our helping onto So we we has customers, consolidating they to consolidate

one of kind that's So approach.

solution they for service as The system is integrators into more database solution. management other meaning customer first take pointed, either monitoring the the some their will approach our that much that our of matter, solution in or

last helps their some as both pick we integrated whole the providing But have that discrete made as solutions so. the interest are the in platform and XX increasingly, portfolio, an seeing of given in the we months well context. or in choose them So advancements more

Barton Kalsu

far work on goes, in process the of And our our we're to Erik, as interest trying as expense refinancing debt.

So to you for caused in a go cash to a interest little exactly it's say interest -- difficult me cash tell perspective. the recent modeling what spike our rates has Obviously, to tax up. from our

debt third some of first $XX paying third was number interest million we in And $XX to the in That was it the the our us down think about I up in impacted quarter. by quarter. that million is quarter. obviously, that of around paid

$XX it So in the assume when it payment middle that modeling quarter. made you're maybe because less somewhere slightly a be of we will that the range, that, in you out, million in should

Operator

comes Huang question Our at next Bob Stanley. Morgan from

Bob Huang

This is Bob for filling in Sanjit.

that terms Maybe your rolled of a pricing stack you Azure. in pricing? these on terms question can and on about products and you they in product competitors against in AWS Just talk up out how observability of

Sudhakar Ramakrishna

Absolutely.

is across goal a our I be solution, to the So say, would continue industry. cost-effective to

of to our simplification has be sell compare provide sense, in and difficult stack more It to has, on like we the consolidation that environments. cloud apples-to-apples highlighting with tend and that that same an observability because very And So hybrid we exact tools favorably capabilities. again, I package full the very competition. will of connotation was deployment

continues reinforce I mentioned our so words, other on -- I've that a much In the but this price So our to will Analyst pricing hand, not Day. at strategy be other leader.

value as at deliver or We we are -- to serious not as cost business company, point a so a compelling cheap speak, point. price much cheerful and

Operator

go Kirk next Materne Instructions]. at [Operator Evercore ISI. We'll to

Stewart Materne

is trying down maybe you over the all a greenfield vendor? another on from, customers you this process where how sense cloud? observability about can how opportunity of of these journey that to potential Sudhakar, Are are about to the replace, the come meaning on versus be the path much with that going the talk are go and customers just the I'm that get to these thought have on started long sort term? early side, might the for customers just in

Sudhakar Ramakrishna

Absolutely.

So of you get we in this And XXXX. as seen introduction to then think to trends observability we I'll cloud have since solution a into that how the I'll about paint our April. the picture on give kind date hybrid of

as of hybrid and maintenance As X to the would One cloud expanding and ways. observability, arrangement, to that reasons. deliver I observability our the the it the segment solution adoption on-ramp to we cloud relates existing them provide hybrid we on a in total them with that who the One cloud. comprehensive as well are customers is for X is evolving functionality

at which to to. are in they the move the pace to they ready So other words, cloud can move at

So that's customers. one set of

alert reasons of The would on. monitoring cloud again which hybrid the are in second tool I for elimination mentioned: observability, of solutions customers opportunities favor for so I greenfield say, represent set us, fatigue, of sprawl, consolidation of displacing, legacy and customers,

I weeks hybrid we of that it be, customers enterprise a cloud Now traditional the coming days the observability, the in monitoring to it, X just But continuum in again will the application to SaaS our more phases the early that's of still, ago. to observability, customers expect which announced initial the segment. given speaking, be largely call and but mid-market, evolving

Stewart Materne

there how in you That's guess buying returning? normal federal then, specific that as helpful. we the did quarter. opportunity? this Bart, Okay. an of I there And is vertical anything about on going that better just think And patterns terms business very should mentioned

Barton Kalsu

Yes.

most is always That's it the Just business, our just because space active the of that's is case. federal when the quarter always -- the our year. end to quarter fiscal comes third always federal been their

we year, of earlier company small is -- federal a we which We also talked Monalytic, -- provider a customers made to actually ours. in acquisition the about some service called of a

lot a that time the so, So over reasons. or investments base last made we've in years X.X of with obvious for customer

continue we cyber and we're the see so past that for expanding we to now us And see that market incident. opportunities,

Operator

back And session. question-and-answer the I'll turn that any conference to our this over At conclude for time, closing remarks. management does

Barton Kalsu

Thanks, think I our call. that concludes everybody.

Sudhakar Ramakrishna

all. you Thank

Operator

And you Thank conclude call. that does conference for your today's participation.

now may You disconnect.

SolarWinds (SWI) 3 Nov 222022 Q3 Earnings call transcript