Earnings call transcript Q2 2023

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Operator

Good morning and welcome to the SolarWinds Second Quarter 2023 Earnings Call. My name is Breanna and I will be your conference operator today. Please note that this call is being recorded. [Operator Instructions].

I will now turn the call over to Tim Karaca, Group President of Finance.

conference. your begin may You

Tim Karaca

Good morning, XXXX Ramakrishna, SolarWinds quarter our to President and call. With welcome CFO. Kalsu, earnings Bart Sudhakar CEO; the me and second and everyone, today our are

will we remarks, prepared our have question-and-answer session. a Following

on This Investor at Relations our call simultaneously website being is webcast investors.solarwinds.com.

summary our You during prepared find a today's press is which call. release earnings also deck, intended remarks can and our slide to supplement

of during our Please concerning currently by this release risks opportunities, certain and remember geopolitical made undertake we risks highlighted except to numerous call those number statements customer outlook, the earnings duty are in These statements filings on statements, and the the debt. and regarding and uncertainties to a information SEC. our business our assumptions, as forward-looking expectations phases timing financial evolution statements growth These and information of with expectations available the environment this our our impact and uncertainties, and based partner a market regarding evolution, including level mentality are subject our ecosystem, today's required including the to our of update no are the economic our that retention, such law. and our on of subscription-first global of

are on the our SEC available from Copies Investor Relations website.

non-GAAP be to Unless when we specified, referring otherwise refer measures. discuss will call. measures, measures non-GAAP various we financial today's We will on financial to financial

and on Relations in our our definition non-GAAP call available on other press discussed measures of A release financial today's the reconciliation as well GAAP of of page summary as the the between financial website. differences deck and are Investor slide earnings metrics

and that our today's XX-Q. are once external in file results final we our financial earnings us auditors quarterly final pending call note Form report release and review will and be on by we only Finally, preliminary and our discussed on

over the to Sudhakar. I will call turn now that, With

Sudhakar Ramakrishna

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

attribute SolarWinds. another I'd for to quarter end had positioning saw off We and our and building customers, our execution of and into QX portfolio as the we commitment the of of customers, I thank priorities. like we always, employees, well solutions, partners, strong to broad second results value at we to to shareholders the the half our XXXX year. of and the model, momentum our As to of the continued our their ongoing compelling look deliver business us resiliency the

of contribution strong addition management Second in revenue and effects from growth, subscription-first strategy; quarter lines; positive observability ARR include growing solutions, our the product database monitoring highlights our our subscription in and service compounding demonstrating growth to business year-over-year customer our the operating stickiness highlighting increased leverage demonstrating of EBITDA in solid commitment growth discipline. and to expense with solutions; our adjusted retention, and operating proposition our the continued and value margins, double-digit along and

on color QX before the the revenue growth total year these outlook touch for over of of of quarter QX full and turning it XX% now our We're representing XXXX, some I'll growth XXXX. quarter financial our delivered and revenues we of guidance high-end on ARR the X% range XX%. year-over-year. Bart subscription increase benefits the second for the In above delivered million seeing and we $XXX and to provided of subscription transformation and a subscription-first of more

model our delivering just of a a to business but greater evolution is before, change, As subscription value customers. to way I've said not

evolution. benefits that of into this Now transformation, to over this continue year see a we the are we

$XXX,XXX QX showing rate the the of and maintenance QX, was customers the period end value now with XXX highest continues year. solutions. the increase be quarter than continued a The last the over of in months, second XX who In our spent comparable the us XX%. our We XX-month is reflecting with trailing and in XXXX previous since ended of our renewal XXXX, renewal XX%, more of an XX-month rate quarter rate have trailing to improvement X%

business so, with initiatives us. transformation our while productivity. customers are to We grow doing continue In improving customers helping increasingly accelerate

$XX.X Adjusted EBITDA the of million, representing adjusted million for grew about $XX.X an XX% outlook margin $XX.X and we gave year-over-year XX%, to EBITDA to quarter. million the

focus industry SolarWinds intelligence I on Turning Capitol this Secure some I'm Hill quarter, or by Day: minds. highlight, Artificial refresh. Design of our AI, highlights sure recent is topic to and business your recognitions, to want our on many on the event and brand a some

our capabilities. AIOps In prior described I calls,

over by leveraging solutions is applications, devices, in have We AI-based productivity leverage have customers believe many innovations. to teams AIOps networks, been We for for across enable powered uniquely ITOps experiencing technologies invested to and use improved positioned users, our two believe and and years, DevOps databases. security cases AI and infrastructure, SolarWinds

play time to increasingly solutions value the will significant role teams reduce and environments. the an their in remediate and AI detect customers' driven issues time to to in enabling accelerate

developing DevOps uniquely are We and will manage, resolve engineering how respond, teams, incidents. believe designed we solutions advanced platform and new organizations for transform

and are to to of observability solutions management integrating elements service customers. We our benefits deliver these

on such intended users AI can solve expertise. addition May, machine issues answer to artificial user new virtual intelligence This to that agent and questions In practitioners the The problems solutions. complex volume of learning features reduce enabling a AI our ITSM include is transformative ticket service designed remediate easier announced requiring capabilities by focus more we IT to to their and desk troubleshooting. to

June. a the Wave strong IT In for as for addition, report Forrester was recent published Process-Centric AI SolarWinds performer ranked in Operations in

costs. continuously example of as automation, modernize capabilities accelerate migration drive for customers transformation, reducing AI digital evolve cloud applications, SolarWinds and initiatives, all undertake Our while one how their they platform our we just are

also we In have role go SolarWinds to offerings in our recent spotlight innovations across addressing to months, for want awards plays received I and our market enhancements. portfolio the cybersecurity.

CISA's held conjunction for Executive Day: and Goldstein. Issa, SolarWinds Krishnamoorthi, we Cybersecurity, Darrell our Director quarter Assistant event Raja by in Eric Secure Congressman This Design with Congressman

common private we principles our risks. established securing encouraged importance During become the cyber I'm the aware in adopt the early of Secure infrastructure in and continues collaboration showcased industry XXXX. of that Design from by to public event, we the

Our build component of XXXX industry. Judge edge recognized Design Cloud by cutting Awards. sets next was new system, standard Security key stated generation Security BIG this a The and excellence Award's the technology Secure Award Innovations Cloud the a in for by

includes processes with are outlined as Enduring we Secure secure Cybersecurity development leveraging generation principles. Design Separately, Institute Framework, Security and the regard, National our Strategy. Technology, SSDF Framework early our by build National CISA's NIST, aligning In This Development Secure next Software software NIST's Standards this our software in guidance aligns that announced and with the we system trendsetter for of an development.

ready set vendors guidance we the SSDF self-attest CISA later for While will formal the fall, we how are this believe today. software to

announced recently logo new we evolution, and Lastly, to customer our brand ongoing signify portfolio expansion a refresh empowerment. and

artificial in complex across As use multi-cloud CloudOps years, evolved broad now the customer serve DevOps, and of industries, SecOps, in the challenges increasingly have as face and has hybrid ITOps, and base a recent customers increased intelligence resulted our teams. environments across we

secure Our customers new lives made brand of has improve ever productivity reduce costs. reflects enrich powerful, our and simple, than help brand transformation, our to solutions that AI-based and equipped us with which the better

our towards solutions budgets that costs. remain priorities complexity, platform, growing customers database can our to on lower the of discuss ability IT you we our and continue And productivity our creating deliver and innovations value We believe to management remains these that to I grow ongoing ideally value by observability, relationships. while priorities. we laid the constrained. are to the all therefore, suited SolarWinds XXXX my the our these products services while remind address improve greater challenges. to belief like to environments I'd progress out service even lifetime and of simplicity customer and expand It believe for Now, establishing in comprehensive customers

that, efforts. business, is this even drive our and to want solid an First, ARR are how customers our our with key and With subscription subscription margin to expansion revenue results. which in and increase that seen our seek across in to believe provides as subscription strong consistent continue for priorities brace our is our growth consume We adoption near-term foundation we an revenue more our products, follows:

selectively, discipline our by year-over-year improving in EBITDA XX% Second, in reflected our in to a investing adjusted and growth costs challenging as QX. managing exercise we margins expense while continue operating macro environment

on we continue Secure excellent retention of fourth, we rates. and very ecosystem moment our to efforts efforts to value customer Design progress. by about The a expansion focused capabilities Third, examples as improved are and platform innovate AI And renewal remain organically bring greater I on to SolarWinds our evidenced customers. our our ago expanding by our spoke even with and

updated Bart? provide full to With that, expand on our turn and to over financial QX Bart outlook. year an it performance and I'll

Bart Kalsu

continuum subscription phase Hybrid Observability we Historically, XXXX. customers. Sudhakar. embarked as strategy and transformation subscription We existing customers strategy to build important relationships to with licenses SaaS in Cloud maintenance which on our maintenance started on to involves An half our to our conversions on subscription-first our needs sales. the a to dictate. converting offers on-premises in Thanks, sold XXXX, product, adopt this We and in in continue business hard last their coupled of momentum pushing year solutions second these new

launch the of with our began phase second solution. observability, The SolarWinds SaaS

more foundation total expand Cloud SolarWinds lays predictable which believe product, So or our as of the lifetime our value and version an which of opportunity the whether have to revenue. and sell Observability, is the We subscription Hybrid customers. is XX% we we revenue SaaS on-premises observability, recurring this now the revenue even recurring with for

a above the range million. the million revenue the total we million, provided to $XXX $XXX which of is outlook year to compared increase total Turning prior with quarter finished the of to second revenue and numbers, of we $XXX X%

You'll subscription in mix, meaningful revenue transformation. which notice reflects shift our our a

larger a as to percentage continue products. our We of sales have subscription

year-over-year. total second million, We the up X% ARR quarter with $XXX of ended

XX% June a strategy Our of subscription execution solution. This increase Cloud the of was of subscription-first to is Observability Hybrid growth our million, the continued mainly portion ARR base of to of conversion the as year-over-year. due an and XXth which maintenance $XXX our is

quarter million, Digging details, revenue subscription our XX% into was $XX revenue up year-over-year. the second

growth of Our efforts. the reflects success subscription-first subscription revenue ongoing our

our seeing converting Observability the a portion of We Hybrid base maintenance to also product. Cloud results are the of

convert a to at higher customers ratio. maintenance continue X:X We than

As can the and term timing a by model, revenue be subscription reminder, the subscription of transition impacted as we a deals. to

prior was year. X% $XXX the of is revenue million Maintenance increase which from the quarter, second an in

the are revenue be by new and business expect our focus These stated will changes impacted structuring robust fundamentals. by portion to believe customers We our continue of which improve products. as of a we sales with maintenance already subscription will on maintenance consistent subscriptions, our conversion to strategy,

XX% quarter for XX% Our maintenance was renewal in on rate months the XX a basis quarter. trailing is the and second

that Note we very maintenance base maintenance levels. get and and continues subscription those be as with we renewal customers convert pleased exclude are loyal from we to to arrangements, rates calculation. rate to Our our back to ability focused our customers customer historical renewal

now maintenance result the As revenue we our and as in a revenue growth renewal strong have recurring revenue. total of XX% of subscription rates,

For quarter, subscription our new impacted. perpetual continue the model million, has license revenue the year second $XX XXXX. sales therefore expect one of for of representing to a approximately that decline place now, license second will we over quarter in be compared to negatively Remember transformation been XX% was and performance

Our increased the more than in in the subscription license decline quarter. sales revenue offset

quarter spent in XXXX a months. more We with X% have customers, XX of second growth, with us last $XXX,XXX finished the XXX who year-over-year the than

non-GAAP delivered to pleased that also strong quarter another of I'm profitability. report we

XX% representing the higher an in margins. of is and Second to the both well profitability quarter adjusted year-over-year, gave $XX.X of commitment EBITDA adjusted $XX.X outlook for EBITDA we XX% million coming million above our in a dollars absolute margin was This quarter. growing continuation $XX.X and to million, in

the fees the quarter to investigation charges, one-time expected certain relating other EBITDA Excluded offset sunburst professional $X.X restructuring and as second in well litigation adjusted approximately costs by and incident of from non-cash insurance as reimbursements. million cost are to governmental related

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

manner. plan the selectively to continue we cost and a continue our to monitor hire to Looking ahead, closely environment and we in manage disciplined will

is net to as compared sheet, adjusted our down months balance June our leverage EBITDA trailing XX at to March XXst. Turning to XXth X.Xx of X.Xx

second Our and $X.X equivalents quarter, net the of to debt cash short-term approximately million $XXX and balance bringing investments was at billion. our cash the end

On XXXX. in debt million prepayments we made in debt the $XXX voluntary front,

debt bring Our evaluate to February and leverage with continue for of EBITDA the down additional debt expansion further in adjusted seek matures XXXX, and to we opportunities payments.

well as momentum the I line by full with our base experienced should and for retention. the focus our outlook then customer allow it our and across our attractive through sizes thoughts. execution We ongoing as to will the and base that customer formulating top XXXX, believe in commitment to quarter for to some portfolio final demand on economic our means us installed it mindful diversity in weather strong challenging the markets over you XXXX growth conditions. affecting of That now expanded our improvements we said, are industries continue In year. are us Sudhakar we continue and our I'll of generally to of discuss to the will year. from areas deterioration although and product we customers, walk what macro turning before potential guidance for the this see third and start we driven guidance all optimistic first spending grow half IT healthy allow our in of headwinds and

strategy model subscription-first macroeconomic what We to can continuing we remain our profitability conditions control the and profile carefully on impact to our our business XXXX. of outlook in transition. are focused our improve committed Accordingly, and and considers

finally, to non-GAAP projected third expect cash revenue growth EBITDA to $X.XX is share at be tax million million the representing outstanding. million XXX.X approximately fully and $XXX For the non-GAAP of we to the quarter. million, per XX%, the during expected shares approximately per assuming million earnings third midpoint. our midpoint. rate be estimated quarter to year-over-year share, in million, expect $X.XX is And pay diluted for a the be the third taxes the And $XX.X assumes quarter $XX quarter, diluted growth we total for $X.X at of Adjusted fully X.X% range to X% in to outlook year-over-year to $XXX an representing

to year, now the we growth provided midpoint. $XXX $XXX to the the in million million. full increase guidance represents of expect This previously range $XXX million For guidance issued are representing our be raising previously X% and to an revenue total of at million, to the $XXX year-over-year

XX% the the $XXX $XXX guidance compared provided to at million. million, We adjusted representing $XXX previously are, again, year-over-year increasing of full full EBITDA year to is midpoint. the This $XXX to the an year million be between growth for to million

assuming euro projected and to will earnings our to and profitability, pay believe product efficiency to go-to-market diluted quarter are committed investments $X.XX to assumes these improving consistent parallel diluted can million estimated meaningful with to strategy continue XXX.X as to dollar priorities X.XX and growth our we fully control to outstanding. starting remain make on an dividends. We Non-GAAP be very we focus third and $X.XX per share fully what share, to selective exchange rate and portfolio a that and And investments control per have to investments made of top-line is X. our in shares year in full guidance

closing With that, to his I'll the call over turn Sudhakar back for remarks.

Sudhakar Ramakrishna

about performance our you, evidenced Thank EBITDA. excited very strong I'm team's quarterly adjusted Bart. another and as both progress, by revenue on

much emerging our we built value across XXXX, and as changes transformational are in customers best time to a to remediate deliver and deliver time to predictable environments issues simple, multi-cloud secure in powerful subscription and issues, time solutions; expanding margins and value, their growth to the revenues. in ongoing organization subscription-first a making we significant deliver progress believe to our the evolve to Following our detect solutions player. made compelling best stronger even as via mindset; top-line more initiatives we product we our to via portfolio We're best

present Even and environment The so, our broader to I'm customers all customer continues success orientation industry. verticals. portfolio to macro across appeal the to that challenges and confident will strategy, software geographies

to discipline, margins. invest growth continue expanding to revenue and will expense strive deliver selectively We and exercise

across of strong and a first performance. adjusted and Bart, from XXXX We guidance on you XXXX half our heels as revenue EBITDA, QX the heard are total increasing for

end our the and the indicated at revised revenue fact, ranges or our is In for of on guidance end outlook low above year of adjusted total previously high EBITDA. both

our to thank partners, for commitment I their shareholders Again, and employees, customers, SolarWinds.

I and Bart happy questions. to address are now your

Operator

Stanley. Singh Sanjit comes Instructions] first with question [Operator from Your Morgan

Sanjit Singh

see reasserting It's the In had your environment. definitely see. challenges macro taking renewal and historical rates guidance continued the like guys in on for you the coming the to Thank and questions you are nice to environment. couple script, questions, what a seems up. pointing nice to the guys you I spend

the QX sort any see the same? sort more Did of did business? compare you more -- did respect of environment sort you and was versus As of or QX, tick with it of improvement things new to down

Sudhakar Ramakrishna

say thanks previously, environment has as our most and Sanjit, the and similar. question. demand, for say, can the would What I indicated the is I QX Between the is I've the that macro QX, for business robust. part, about been business

as measure larger only in In the continues And see deals broader some all is improve. we close. stated to this fact, the we longer macro of that little take a previously, environment that to I've variability pipeline the

foundation our have diversity of However, performance mid-market breadth and what is gives a business for us number strong we the of the the the because customers. large

We have the customers. larger

a we foundation are customer broad So spectrum participate base resulting the in we of that in building. the solid

Sanjit Singh

and that the a of associated the this operating I guys the such cohort did I If decline comment I the quarter-on-quarter. in, execution backdrop in if you economic by that with take decline, XXXK think sort quarter, on at XXXK factors customer customer cohort? a the What XX a looked are

Sudhakar Ramakrishna

couple be perpetual more a subscription will the size the smaller the notice is, One deals, fairly what as is customers in digest. especially be subscription factors Absolutely. arrangements, that and of straightforward tend of to year. the we little Sanjit, highlight to I'll convert deals that a you'll the than to more first

contributing that one it. to is is that So factor

a pointed you fairly small out, it's number. As

up X% from highlight quarter, I gone last is has from year. down while The other point it is, still it would previous the

about that. way So that's to another think

as upmarket But been a with partners. as mid-market and partners largely highlighted I've channel We strategic be our we've previously continue a going customer, GSI from to mid-market vendor a standpoint.

So be positive the tend some is especially trend of larger the the ones, for deals us. lumpy, but to very overall

Operator

with Your next Rob question Oliver comes from Baird.

Rob Oliver

you. if a most first and products? expect was I In I ITSM bit the we of most of observability. products granularity us for the quick follow-up then you. early in you little Sudhakar, what prepared little around talked and a of where remarks, terms success you're might those a getting wondering database your among just color some management, those more had of give for adoption could traction And traction, trajectory the you seeing the about and Thank bit Bart. products, subscription,

Sudhakar Ramakrishna

question. thanks you're Rob, for your doing first well. of Hope all

-- take segment color. and I'll let's high-level of at terms take In segment provide -- some by a

have you adopting If our a well The the When our base, portfolio, it service mid-market database on, across as the been well providers. I customers including who has follow very as spectrum, we well. are the to spectrum. answer say motions across the happy some large doing cloud the with partnerships, have cloud as monitoring database portfolio with

solutions, which environment. on deployment highlight over in in hybrid I'd we are convert are with part continuum very launched ago the solution, fast SaaS consolidation, traction, macro dictate, observability customers now. solution in almost them outlined for their we and been Cloud looking can to because is, largely becomes the customer increasingly piece business That's options, a unique compelling a gaining needs cloud Observability second time this help which who SaaS-based self-host tools as that The a the fact we sense year Hybrid a we into

the traction. lot a of driving that's So

value mid-market years. a solution some the management the is and is, where many value really solution cases, unlike for ideal the quarters; then prop there to management takes And other is XXX% service the SaaS-based in solution and time service that

able in to days. We customers deliver are to value

products, stickiness to them exciting and is and But platform. continue reduces course what's interesting Rob, increases time, productivity. discreet which for unified SolarWinds period more their reside are but of they and and not at increasingly are expand can of driving we long of experiences, most us thing solutions their which that That ability a then So all cost they be as looking it. gives the on that's the the and land customers the doing, and to provide

Operator

RBC Capital comes question Hedberg Matt Markets. from next with Your

Matt Hedberg

this have mentioned conversion to higher which maintenance X:X I it's are drive is had converting specifically Maybe see. maybe things conversion. great to a this question about curious, doing you're a I'm customer-led conversions more at you that or point? maintenance higher at is Bart to might ratio, there

Sudhakar Ramakrishna

Matt, is that a converting some at describes are I'll it higher you When take not is, as rate, give converting well and color. as what we Bart like-for-like. it

give example. me let you So an

due. Let's let's $X say also monitoring say Observability you're you Typically are up monitoring, systems of Hybrid you network Cloud our only solution, customer of convert, you not network ours monitoring. which a gives to but converting with maintenance when coming

reason overall when value and the simply It able look convert, add, model don't value transformation subscription as So more we is I to get consolidate business more we able are more to typically costs model tools, capability, why is Customers experience converting at our improve are to higher a productivity. transformation. are lower which a transformation. their

several driving conversion show will the So And what's of for maintenance to to my years that that's belief base size continue we our that come. large is the factors. given

Matt Hedberg

initiative. be think And time to even security to we Sudhakar, will lot I have just AI, it that with that more efficiency it's about in that started product an are prepared from past of But spectrum? of be your particularly curious, you investments gains imagine, on the where making So customer AI for sort assume guys in within ongoing has a on it's I'm much stack? the total and year's investment infused are whether do a remarks years. been have efficacy curious for your investment side? base, you the opportunity kind of cycle? huge two now, a you AIOps I you with then, how where

Sudhakar Ramakrishna

it 'XX And we expect much that I add pour it up to this 'XX I going be the at in being setting point state in able it was a into money think likely just zero to it. way bootstrapped and mode. days maintain but continually it, XXXX, to in more and I and capabilities. would heavy started These reason was our lift it The capabilities. we steady do lot don't and is, the Absolutely. describe at platform have most more forward, a a for we'll need

Now what of spectrum. the call flywheel matter innovations in it's a ongoing a motion of, I'd terms across

Operator

question with Suppiger from next Securities. comes Erik Your JMP

Erik Suppiger

talking good debt for a off, see of or for have you about got that are working, terms are target then you're any transitioning products onto down. that? breadth First you to the your and change your in that the coming terms any Do observability platform. ratio, portfolio? of of -- in terms And terms Where you SaaS the the ratio where leverage of you've breadth development process? the timing in net your of in secondly, Clearly -- update but

Bart Kalsu

take thanks due it's Erik, the things. questions. quarter, on couple Yes, the quick to real first good a I'll improvement Hey, for leverage. the one this

and leverage down. Our obviously helps cash net then continued our EBITDA our And as growth expansion brought balance well.

week, is So, have, down think to things ended goal couple continue over to Xx spoken second rather the below get we I publicly, We've where quarter. we perform you as the said our combine the than later. years. in we -- the happen next next of Obviously, those that'll if we X.Xx sooner is in over

Sudhakar Ramakrishna

Hi, Erik.

on objectives. have serve of strategy built and we paydown debt main continues our to cash organic portfolio the growth be because Our use that focused should

as inorganic to is debt continue stay well, paydown. focus primary the for course, but open Of we'll

your platform. the question about to coming Now,

the this our as We've increasingly its When solutions And as database progresses, say on solutions of released network of will October includes observability, to already and expand solutions, year of continue and capabilities. platform. more As and well. platform service a our our I've SolarWinds our SaaS security infrastructure I reside as indicated SaaS observability previously, we more XXX% monitoring our our XXXX, our today observability platform. management application is solutions, that

doing. team to will future us customers the our as And but on not been as only on acquire rapid all also capabilities great new customers, a have continually of building to continue fairly SolarWinds is a evolve we So towards foundation serve that platform. pace our for

Operator

Truist Tillman Terry Your Securities. next question with comes from

Connor Passarella

Connor is on This Terry. for Passarella

one, back come First topic. the I wanted to to AI just

the So what think be initial on a on service should the agent, feedback just I'm virtual to early customer been opportunity we have about product on curious I the monetization going this Then the know and I the the in base it's since AI has but that's follow-up. in like lifecycle, a maybe included how from of your announcement? an desk.

Sudhakar Ramakrishna

back little points bit of step a and a reinforce well. couple other as Yes. I'll

While the it more we building relate announced extensions, added we've desk as to our to been broader as the extensions and well. solution one that and that set of service recently our AI observability monitoring AI back

created releases In support very alert AIOps first was fact, of of of one customers. the to that we the capabilities stacking our

All we term we to are right do do have alert all heard how do How getting and of and get both we alert right how the fatigue. issues help know Customers do of them issue improve resolution, improve us productivity center are do better to productivity stacking, prioritize, the security headaches creating not left, we as alerts security? Two, how focused headaches. on and and cost as well faster?

our an increasingly AI for roadmap. we've a early integrated So what feedback And of very done it's our think of we are doing full assistant is capability solution has because what digital that becomes and from positive the the the while with mid-market. management days, customers as just our extension do we -- service been

is we but to service here where are fact a able only The of I vendor combining we with for our the automatically observability remediate issues that customers, portfolio, would not management them. also detect that's capabilities some are other highlight uniquely

that So that's strongly a in perspective. the resonate unique proposition very will value mid-market from my

Connor Passarella

opening these progress in side APJ, I'm to some just investment Europe curious has we continued follow-up, and with quarter, both what the Maybe data and regions? on centers last that just in opportunity new about like the as of would talked international maybe a with look how continued the

Sudhakar Ramakrishna

to a is variability EMEA, the I have region. APJ But have pace of situation our built base, Yes. the channel EMEA. what's as our well are bit are program. will large customers expanding transform people helping deal cycles at reach increasing to our channel And with refer I to, know, customer through that would through the capture the grow a more accelerated us our to you as partners of well as we set protracted. I opportunity APJ, the which and in in some what staffed both pipeline macro diversity highlight of I in and the What an own only is EMEA the of partners. conversion as previously is channel because say both of our we that been well alluded our also, Many our GSI can also people is continues based that have now as in

Operator

comes question Goldman next with Kash Your Sachs. Rangan from

Jeffrey Luo

on you're Luo for to approach to ask the Jeff wanted hiring. Kash about taking I Rangan.

You've you've prudent more a a investments maybe headcount. bit said and to of approach taken adding that little

can around quota headcount maybe year-over-year carrying reps like on give is basis? quarter-over-quarter So directional guidance you be or a where any a might specifically like

Sudhakar Ramakrishna

broader growth needed we to time, you committed the to making investments true ongoing been that, to to give the [Jacob], same staying significant discipline. at I'll response I operational and able capture were the a have believe EBITDA revenue show expansion. and both it. investments We to are selective process,

is be which forward, selective operative to So strategy that the continue and board. will the term discipline our across is going

in investments, as well go-to-market channel although our making product are we we to continue well leverage. where accelerating increasingly of terms are investments portfolio get for our capabilities, to as as partners increased will the and In leveraging we look expanding

Jeffrey Luo

Awesome.

Okay. sequential in large decline And around customers. question the then another

that the like of dynamic might when that You applied to subscription, at be mentioned they a play smaller in deal than to XQ? there's XXXK convert

Sudhakar Ramakrishna

[Jacob]. come that. specifics, to exact have on We the to have back you don't I may

Operator

call now back There turn over at will time. this questions are the Ramakrishna. to no I Sudhakar further

Sudhakar Ramakrishna

Thanks be in thank again forward all to look for call you to we joining continuing and and our touch.

Operator

today's you conference This concludes your for call. Thank participation.

now may You disconnect.

SolarWinds (SWI) 3 Aug 232023 Q2 Earnings call transcript