Q1 2021 Commvault Systems Inc Earnings Call
Ladies and gentlemen, thank you were standing by welcome to the comparable order. Once you still we are ready for anyone earnings conference call.
Besides all participants from them isn't really after the speakers presentation will be your question answer session. Lasik question. During the session. We the press star one for yourself.
Please be advised to todays conference is being recorded.
Right right, you're going to girlfriends, you need to reach an operator, let me stress started zero.
I would now like the welcome wanted your speakers for today Mr., Michael Night Director Investor Relations. Please go ahead Sir.
Good morning, Thanks for dialing in today for coal to discuss our fiscal first quarter 2021 earnings results before we begin I'd like to remind everyone that the statements made during this call including in the question and answer session. At the end of the call May include forward looking statements, including statements regarding financial projections and future performance.
All the statements that relate to our beliefs plans expectations or intentions regarding the future pursuant to the safe Harbor provisions or the private Securities Litigation Reform Act of 1995, and a based on our current expectations actual results may differ materially due to risks and uncertainties such as competitive factors difficulties.
Isn't delays inherent with development manufacturing marketing and sale of software products and related services in general economic conditions for discussion of these and other risks and uncertainties affecting our business. Please see the risk factors contained in our annual report on form 10-K, and our most recently quarterly report on form 10-Q in or other.
SEC filings and then the cautionary statement contained in our press release and on our website. The company undertakes no responsibility to update information in this conference call under any circumstance.
In addition, the development in timing of any product release as well as features or functionality remain at our sole discretion. Our press release related to today's announcement was issued over the wire services earlier. This morning and has also been furnished to the FCC at an 8-K filing. The press release is also available on our Investor Relations website.
This conference call, we will refer to non-GAAP financial measures a reconciliation between the non gap GAAP measures can be found on our website. This conference call is being recorded in a replay is available for the web cast an archive of today's webcast will be available on our website. Following the call with me on the call. This morning are Sanjay merchandise press.
<unk>, Chief Executive Officer, Campbell, and Brian Carolyn Chief Financial Officer of combo, Sanjay and Brian will each year opening remarks and commentary before we open the call for you and I now turn the call over to Sanjay.
Good morning, and thank you Mike.
Thank you all for joining us today to discuss our fiscal first quarter results over the past several quarters, we've spoken about the need to simplify everything we do deliver a best in class portfolio and confidently and Chris we execute our plans internally and through our partner ecosystem.
In Q1, we successfully started up first subscription renewal cycle, we received the largest IPO in our history in eight figure our subscription deal.
We hit an all time high in average enterprise deal size, we posted a record dollar contribution from seven figure deals and be signed a multiyear agreement with Microsoft.
I'm proud to say that companies are increasingly using our technology to help the moved into the cloud. This is further validated last week when Gartner named Us as a leader in the Twentytwenty magic quadrant for backup and recovery solutions and cobalt was the first vendor to ever score highest in all three categories up their accompanying critical capabilities report.
The public cloud virtual and physical environments.
As we previously discussed enterprises are grappling with more infrastructure applications, but more infrastructure applications and complexity than ever before.
Actually when compounded with non stop security threats and rapid change, we've all experience, especially over the past few months.
The tackle the complexity head on we unveiled our intelligent data management vision at a future body event last week, which is composed of three critical elements first our portfolio.
Second our partnerships and third our Executional excellence initiatives.
Let's discuss each one by one starting with our portfolio.
We never stop innovating it is core to who we are and it gives us a critical edge in a very competitive industry at future Adibi unveiled our newly expanded and revitalize portfolio to empower and organizations to reduce this complexity random but data fragmentation and accelerate the cloud journeys. It includes a new standalone comp.
All backup and recovery product any new Commvault disaster recovery product.
Both can be bundled together as a complete data protection offering.
We also introduced combo Hyperscale ex the next generation of Hyperscale product, which brings together the best a combo data protection with head Big storage management. This is a significant achievement.
Had big now has enhanced support so containerized workloads and is integrated for kubernetes deployments to help Dev ops professionals accelerate the application true.
We believe these capabilities are unmatched in the industry and the enable our customers to accelerate the digital transformations in todays remote world using tools that are low touch light touch you AI and machine learning to automate workflows.
And available with flexible cloud based pricing.
But products alone on enough our partners are critical and bringing value to our customers.
In Q1 of 21, we signed a strategic multiyear partnership with Microsoft.
Focused on offering on metallic SAS with Azure, you'll be working closely and go to market engineering and sales activities to unlock more joint opportunities.
We also have strong contributions and interest from a partner ecosystem to further momentum that needs to be largely simplified and rather see partner program, which brings me to the third initiative Executional excellence.
I'll go to market teams are gaining momentum and leaving no stone unturned, our ability to deliver complex solutions, mostly remotely is now mainstream for us.
Looking ahead, we believe our enhanced portfolio and ability to upsell and cross sell our solutions will enable us to lend new customers and maximize maximized customer lifetime value.
We have worked to do we're optimistic about a return to predictable and sustainable growth.
With that let me turn it over to Brian.
To provide some financial highlights and our Q2 21 outlook, Brian Thanks, Andre and good morning, everyone before discussing our outlook I'll briefly recap our results total revenue was approximately $173 million up 7% year over year.
Software and products revenue increased 20% year over year to $76.6 million, an all time first quarter record.
Software revenue growth was driven by a significant increase in large enterprise deals any successful initial subscription renewal effort.
Software transactions over $100000 increased 41% year over year to approximately $56 million.
These large deals represented 73% software revenue in the current quarter compared to 62% a year ago.
The number of these transactions increased approximately 5% year over year and the average deal size exceeded $400000 approximately 35% higher year over year.
The increase in large software transactions was driven by an all time record contribution from seven figure deals.
This included the largest ever purchase order in company history, a subscription transaction with an eight figure total contract value. In addition to other very large deals.
While we're pleased with our ability to close these large deals they influence the contribution mix from subscription and recurring revenue.
As well as the average deal size and should not be considered a baseline for the next few quarters.
Fiscal first quarter services revenue was approximately $96 million declining 2% year over year.
Decline was primarily due to covert related restrictions, which impacted onsite professional services.
In addition, maintenance revenue growth was impacted by the strategic transition of legacy perpetual customers to subscription licensing arrangements.
These conversions benefit us over the longer term because of the associated opportunity to drive lifetime value with an active customer.
Let me now discuss our continued transition to a more recurring revenue based model.
As you know prior to 15, we primarily sold perpetual contracts at that time subscription and usage based utility contracts accounted for less than 10% of our software and products revenue.
Recurring revenue, which includes subscription software and maintenance represented approximately 50% of total revenue.
Beginning it up waiting we introduced subscription based pricing that aligned to our customers workloads and purchasing preferences.
Slide 21 marks the first year of our subscription renewal cycle.
This opportunity represents a positive inflection point for our business, we expect the upcoming renewal cycle to serve as a revenue tailwind and that's why 21 and beyond.
As Sanjay describes the announcements that we made a future ready represent an important streamlining of our product packaging and pricing strategy.
We expect this evolution will continue to result, and even more subscription based recurring revenue overtime.
In order to best report and measure our business consistent with the way customers consume our products and services, we will be increasingly focused on the following three operating metrics subscription as a percentage of software and products revenue recurring revenue as a percentage of total revenue an annual recurring revenue.
For a are.
Now I'll take a moment to discuss each of these metrics in Q1 F. Why 21 subscription revenue represented approximately 69% of total software revenue versus less than 10% in fyseventeen.
We added approximately 200 subscription customers in the quarter and our subscription net dollar retention rate was above 100% exceeding our initial expectations.
Our total recurring revenue increased 24% year over year to $141 million and represented 82% of total revenue in the quarter. This compares to approximately 50% in fyseventeen.
This quarter. We're also introducing annual recurring revenue or are we define a are as the annualized value of commvaults recurring revenue streams at a point in time.
Going forward.
Our will replace ACB, because we believe it has a better measure of our recurring revenue streams as of June Thirtyth 2020 are a our increased 9% year over year to approximately $472 million.
Now I'll discuss expenses and profitability.
During the quarter, we remain disciplined on expenses Q1 F. Why 21 expenses, including both cost of sales and operating expenses declined 4% year over year to $138 million, resulting in an EBIT of $32.5 billion and an EBIT margin of 18.
8%.
Both EBIT dollars and EBIT margins approximately doubled year over year.
We note that Q1, F. why 21 benefited from approximately $12 million of temporary and cobot related expense reductions.
We expect approximately half of these reductions to repeat in Q2, while the balance of these temporary reductions are likely to return to near prior levels as business normalizes, our focus on prudent cost management continues.
Now I'll discuss our financial outlook for Q2, that's why 21.
For the second quarter of F. why 21, we expect total revenue of approximately $164 million.
We expect software and products revenue to be at least flat year over year or $69 million.
Please note that the subscription renewal opportunity in Q2, F. why 21 is the lowest of the year.
In addition, the SMB segment remains challenged and cobot continues to create overall macro uncertainty thats.
That said, we believe our renewals enhanced product and pricing strategy and refined go to market motion should more meaningfully contribute to results in the second half of the year.
Beginning in Q2 for 21 with the integration of head big into our new Hyperscale X platform, we expect to see or reduction of certain third party royalties to benefit gross margins by approximately 100 basis points for the balance of the fiscal year.
As noted we also expect that some of the temporary cost reductions. We saw in Q1 will begin to normalize as a result, we expect opex to modestly increase sequentially.
We will remain disciplined and aligning our underlying operating expense base to current revenue levels and we have identified other potential cost saving actions with that we expect Q2, F. why 21, EBIT margins to be approximately 13%.
Lastly, our projected share count for Q2 is approximately 47 million shares now I'll turn the call back over to Sanjay for some closing remarks Sanjay Thanks, Brian.
Your questions I'll take a moment to reaffirm our focus on portfolio partnerships and Executional excellence.
I believe portfolio advancements like Hyperscale acts demonstrate our commitment to innovation and bring immense value to our customers second.
Strategic partnerships and endorsement from marquee customers like Mcdonald's and Johns Hopkins reaffirms, our ability to provide the flexibility in choice customers need.
Loss with expanded portfolio impressive partner ecosystem and Executional excellence, we believe we can grow the topline while increasing our efficiency.
Our performance this past quarter is a solid indication that wherever you expect to take on both mixed Mike Let's open it up for questions.
As a reminder to ask that question you will need to press star one on your telephone.
Question asked about.
Yes, Thats started want to ask the question just on biological products you anymore.
First question comes from the highest decent added from William Blair Your.
Your line is open.
Ask a little bit about some of the large deals in particular, the eight figure deal could you give us a little bit more color on.
Maybe the vertical.
Exactly what type of project that was what we are they trying to do is it a was it a.
A competitive displacement or was it a renewal.
And then just to clarify that this was a.
But there was a large chunk of this that was recognized upfront because of success X.
Okay.
Jason Yes, okay digit Hawaiian.
So if we see.
Financial services it was a competitive displacements it business, albeit a small footprint in the account and customer at a very unique use case, if required our activate product speech to come in and so.
So what we could do from.
From a data optimization point of view and then obviously they wanted to make sure they protect and all that so it was a activate led.
And data protection followed.
Piece of business and the bulk of that a lot of that was done.
With a partner and done there mostly yeah. Jason This is Brian here, just adding some additional color to that is actually deal that was sourced and closed within quarter. So we do not pulled in from from future quarters. We're pleased to see that we could do that in this current environment.
And then secondly, you also asked about the recognition of it the software component was recognized.
In quarter in fiscal Q1.
Okay, Great and then.
Hi, I guess could give us a sense of.
Having a quarter like this where you.
Have a lot of the large you had a lot of large deals close I mean pretty impressive numbers on deal size et cetera.
Well, what do you attribute that to me we're in a.
We're in a pandemic.
I wouldn't expect I guess.
Customers to be.
Doing very large projects like that we've certainly heard of many instances of customers downsizing deals and only spending exactly what they need right now.
But give us just some sense.
From all that.
The different deals that closed is there some common themes and anything that can help us understand why these deals happen when they did.
So I'll I'll simplify and I think that once the once the coated the implications of cobot became unreal.
Data protection came back on the agenda.
For customers, because with with that data fragmentation remote workers no access to data centers.
Data protection business continuity bubbles up at the top as being important.
And so.
I think once the for shifts structural shift if you would've saying, okay. We kind of this is the new World Order happen. Then then as part of the probably to be privatization process data protection to bubble up to the top and.
Yes, Thats, how I look at it and but it did not and I think we benefited from good start to our subscription renewal opportunity and I would say that.
Columbus Incumbency right now for with existing customers is critical so we're able to.
Really.
Make sure that we're taking good care of them and they're coming to us and walk cases as well so we're paid.
And the other two very large deals that you cited where those renewals.
Yes, yes.
Thanks, guys.
Thank you.
I'm going to ask the question that started one wonders telephone keypad.
Your next question comes from the line is even Riechers. Your line is open.
Yes, thanks, Thanks for taking the questions and congratulations on the on the solid quarter.
I want to kind of dive a little bit more into the subscription opportunity is there as we think about the contributions of that opportunity.
Is there a way to frame for us to how we should think about the base of subscription opportunity that you're executing on through the course of this year and any kind of framework of how large.
That could be or what that base of business looks like and then also on that topic, you talk a little bit or mentioned in the prepared remarks about cross sell up sell.
Opportunities what have you seen so far how do we think about that.
In the context of going after the subscription opportunities.
That Sanjay and How're you.
Great. So I'll pick up the latter part of your question first and I'll, let Brian tackle the first for the first part.
Overall with subscription.
As we talked to our customers are not on a on the.
On a more classic.
Land expand renews at of cycle.
We are sharing things like.
New VR product that just mistrust released activate which allows them to do more with the data they have metallic.
For a remote branches and office 365 type scenarios. So we have an opportunity with the portfolio now early days, but we have an opportunity to the portfolio to really take.
More to our customers as they go as Dave said have evolved in the lifecycle of.
What we're calling intelligent data management.
Good morning, Eric It's Brian here, so just to touch on the subscription opportunity.
Been following us for several years now we've been on this journey.
And it's reassuring to see that what was a headwind for US is now starting to become a tailwind.
We last fiscal year about 40% of our software and products revenue was from subscription based pricing model. This past quarter was almost 70%.
We think that the majority of our software products revenues and continue to go towards subscription. So we're happy with that we think thats a great opportunity for us.
Both near and long term.
Also the renewal opportunity that we spoke about on prior earnings calls represents about a $50 million software opportunity for the year.
The majority that's in the second half.
Q2, specifically at the low point of year in terms the opportunity. So that's why we're being a little more cautious with that we're off to a really good start Q1.
As I mentioned, we had our net retention rate was above 100%, we're pleased with that start for the year.
And we're seeing opportunities now with our new product launch.
Increased cross sell upsell opportunities that will come as the year unfolds.
That's perfect and then just as a real quick follow up on the cloud side of the business can you talk a bit more about the strategic alignment with Microsoft when when do we think that that starts to kick in from incremental revenue.
Contribution perspective, with metallic and then I think in the past you've talked a little bit about how much data you've managed into the public cloud Arena can you just give us an update.
How that how thats progress.
So.
And the way we look at it is we this is not authorized relationship with Microsoft the Pat him multi year.
Successful partnership with that this was focused on SaaS Asher metallic and.
And it's again, it's a multi year.
In addition to multi year. So I think I think we'll we'll start seeing traction not be as we build out the plans later in the United beyond that.
On the.
Hi, good about that I think it's a it's a very nice alignment of the technology at the engineering is we've made some commitments to really make sure that would be what tightly together for customers. So solutioning go to market all elements of the relationship, but there's work to do and to make it real.
On on the on the number that we have shared historically, it's we've been getting route internally that it's gotten to the point I believe that billion serve so maybe we.
We don't don't release it but.
I would say to you that.
[music].
Well over at Exabytes been written.
Based on what we have been reporting and it's growing roughly 15% quarter on quarter and that's a healthy clip that tells you.
Our our place in the in the public cloud for customers in beta so.
Yes, that's the best or whether going and you start with Gartner said in the critical capabilities list.
Across virtual physical and and cloud where were number one.
Perfect. Thank you congrats again.
Thank you Sir.
I'm going to ask the question, that's Taiwan wondering when Keith.
Our next question comes from them.
Experts from Keybanc capital markets. Your line is open.
Yes. Thanks, Thanks for taking the question just back to the renewal opportunity.
Given.
Given what you thought it is a bigger deal I guess at the high level question is.
The move to subscription has this help you.
Improved the competitive nature of these larger deals I guess.
Are you.
Able to see better when rates with deals oversee half a million dollars.
Because of the move to subscription and I guess, how did that.
Impact your view on on future renewal opportunities in size there so large deals.
Subscription and how that changes the competitive nature and these larger opportunities.
Hey, good morning, Alex its Brian here, let's try to unpack that a couple of different categories.
So, yes, I mean, the renewal the opportunities that creates is.
Really.
Rushing to six we've been asked for a while it's our first.
Year of inflection, it's a positive inflection point for us as a company.
We're also good start.
Got a lot of this is going to be weighted towards the second half of your.
But it opens up the conversations with the customers more importantly, and when we go in there were not just selling more data protection, we've got a wider array.
A product portfolio to offer to them. So that's that's a reassuring thing for us.
Well get into exact things about when rates by will say that.
This gives us more options in terms of their workloads, whether they're moving to the cloud weathered their distributor.
Data fragmentation, we help them pull that all in and sometimes they prefer a subscription model to do that often we lead with that.
The choice so the choice we offer them.
When it yes.
Subscription renewable piece.
It's out first year, we've had one quarter under our belt.
We believe we've gotten ourselves ready.
But these are interesting times over just making sure we stay stay focus and.
Conservative.
Comments on it as a follow up that 50 million Mark Brian.
Number team, but since you started talking about last.
Fiscal year has value, but it has not it's basically stayed in that that range.
Okay. Thanks, guys.
Thank you.
Your next question Jonathan.
Fish from five substandard your line is open.
Congrats on the quarter guys appreciate nutritional where our disclosure.
I just wanted to double click on average yield record and get more color. There what caused the large seven figure yields record meeting was that kind of upsells related or was that cross sell and bundling efforts wanting to understand a little bit more around that greater than $400000 marketing what drove it.
Yes, Hi, James it's Brian here, So a couple different things we did after the quarter with some large renewals already in hand, we disclose that on the last earnings call that spilled over from Q4 in the Q1, but then we followed that up with some really large seven figure deals that were sourced and closed the largest one that we talked about it was sourced.
Closed within quarter. So testament to the fact that when you have a customer and you are the incumbent and you have the solutions to offer and they're not happy with their other.
Competitive solutions that they have in place, we're able to displace that.
So that drove.
Drove the need and also the new product offerings, specifically of activate really resonating with that customer and helped drive drive to deal.
Yes, I'd I'd add that.
I would add its Andrea James.
That.
I've been talking now for.
Five quarters on execution, simplifying and really getting focused on execution. Our go to market teams a partnership models.
The kind of hitting their stride now incentive.
And what we said, we but what we were hoping to budget.
So pickup.
Keep in mind James Me a lot of these lot of the sales leadership is only here for less than less than a year in many cases like nine months. So again, the scientists point that leadership is starting to show up in the field in the form of.
Knocking down these enterprise seven figure deal.
Yes, no agreed or was it was good execution.
If I can just sneak in two quick ones for you.
Last week Yogurts in future ready I guess, what was the main feedback from the product launches in terms of what we're really of interest with customers. Obviously, you had a bunch of new announcement, just curious as to which one generated the most interest and then just understanding it is becoming more integrated.
Like with Hyperscale wax, but what was had big contribution this quarter.
So.
I can't pick a favorite fit a child's I'm going to say that the feedback broadly on the portfolio and bringing the pieces together made a lot of sense to the folks that that follow us both in the industry as well as customers and so the defense is that.
The lifecycle of of simplifying technologies of the Bacon and making it more granular so they could work with pieces of it all of that some of it.
Most appreciate it.
The I'd say that the.
You asked about had big and we've been we've been reasonably quiet at work.
Integrating heading into the into the into the core I'd say that this is this is the this is sort of the vision, we put out when we when we acquired it acquired had big which is bringing the best storage management capabilities and coupling it with where best known for data protection and bringing customers a true scale out capability.
That is next generation and so.
And it's Super Super simple to use we've really focused on simplification as as a core had big as a standalone is customers are looking at it using it kicking the tires with it and now we've really enhanced our we always had it but nothing really enhanced our container capabilities and the product with given eddie's.
Support and automation.
Backup capabilities inside of.
Epics file systems, so that we really giving Dev ops and Dev ops customers.
And that off native way of sort of doing that so what Brian bye-bye, depending of the audience. It was it was but it's even what was really motivated with the simplification of the portfolio to use case.
James just had one more point.
In terms of hopefully picked up and the scripts, where I said that we do have a cost avoidance thats not insignificant.
With the introduction of the Hyperscale lax.
And the underlying had big technology.
Behind that it helped us to reduce our cost of sales moving forward by about 100 basis points, that's not insignificant.
So that was another component of this this launch.
Understood. Thanks, guys.
Thank you.
I'm going to ask a question that star one when your telephone keypad.
Your next question comes from brand to from Jefferies. Your line is open.
Hey, guys. This is Joe on for Brian. Thanks for the question really appreciate all the subsurface and subscription color Thats really helpful. In regards to America's software grew significantly while the rest of world seem to decline is that due to most of renewal base seen in the U.S. or other reasons.
That was trip absolutely the large portion on the renewals are in the Americas as well as the.
The largest PEO that we were able to pull then was from the American as well.
Yes. So that's that's just doing a really good effect for us coming out of this.
Yes, good execution to us and I think in EMEA. We saw we still saw a little bit will be completed.
The tail end of the cold that impact the first phase if we.
So the end and they're more exposed to sort of medium sized businesses in Europe.
Okay.
And then.
There's different puts and takes because it covert right. I mean, you. Thank you for highlight in the $12 million benefit from cobot on expenses, but you grew nicely for the first time in a few quarters and then now your decline you're guiding for slight decline in revenue growth next year, but then on the bottom line. It's improved so just can you help us think how your thing about this business longer term for the year.
The next year too as far as revenue growth and profitability.
Yes so.
In terms of software revenue.
It was at least flat year over year, and that's really driving force for us.
Yes, we got college that total revenue was slightly down year over year.
We are at an inflection point for the quarter as we said we're still in the cobot Im certainly right now.
Our renewal opportunity if not at large package, it's much less than it was a Q1.
We think that SMB, the small and mid enterprise is particularly impacted by the code uncertainty. So I think theres. Some weakness there having said that we're we're optimistic about the second half of this fiscal year.
In a return to growth we're going to have the larger subscription renewal opportunity, we'll have more quarters under our belt in terms of our overall.
Ref aging and experience and maturity.
And we also have the new products and pricing strategies that we just impelled. So the combination of all those things and hopefully we come out of this whole cobot uncertainty by that point in time, but we are poised to return to growth Thats, our that's our objective.
Awesome, Thanks, Brian if I could sneak in a quick one you've highlighted the 50 million opportunity from 18 any sense of how big the opportunity as from 19.
We did not it's going to be up.
We will get into that future quarters in terms of unpacking that opportunity.
Awesome I appreciate it thanks.
And your next question cost from denying Eric Martinuzzi from Lake Street Capital. Your line is open.
Hi, My congratulations as well on the Q1 I was just curious.
Going back to the guidance for the first quarter.
The midpoint being about 153 million and then the execution at 173.
Can you help me.
Kind of parse out that 20 million of upside versus where you were when you gave the guide.
Good morning, Eric It's Brian here. So obviously the large deal that we discussed right that was sourced and closed in quarter, we do not have visibility into that at that point in time.
I think that we were also being slightly cautious back in early may.
Right in the Middle decoded crisis, we didnt want to.
Yes over our skis in terms of the assumption on funnel close rates and our maintenance renewal.
Opportunities as well as our subscription renewal opportunities.
We're pleased with all that and.
And.
I'd rather be in this position explaining that then the other way.
We agree on that point.
And then for the current quarter outlook you talked about.
Reference in Q.
69% of software business.
Kind of subscription as a percentage of software can you give me insight as to what you're targeting scrip as a percent of software for the current quarter.
So we'll get into more specifics on that.
We unveiled kind of longer term guidance during the year.
I wouldn't expect that to be the baseline for this quarter, that's pretty hefty at 69%.
Having said that I mean, it should be north of 50% easily.
Yes.
Okay that covers it for me. Thanks. Thank you are.
[music].
Okay and participants to ask that question that's number one on your telephone keypad.
We have the question from Jack Andrews from you have your line is open.
Good morning, Thanks for taking my question I was wondering just given all the new product offerings that you are unveiling where are you in terms of educating.
The channel on some of these new capabilities.
It's an ongoing thing Jack we touch.
We unveiled them last week we.
I'm going to throws of getting the channel.
Up to speed enabled.
Ready to sell it so that's a that's activity thats well underway so.
Okay, and then just as a follow up we think about the introduction of products like Hyperscale X in some of the new capabilities around backup versus disaster recovery is this generally speaking requiring you to engage we see a different type of buyer in organizations.
No no the between disaster recovery and our data protection products like Hyperscale ex.
The buyers tend to be similar.
Well, we do where we do have to talk to a newer kind of buyers that more Dev ops.
Capabilities would with.
Big or or the SaaS cloud business units. Some companies have that office 365 type backup so just more on the fringes, but but by and large the buyers.
Great. Thanks for taking my questions.
The problem.
And your last question cost from Srini Nandury from Simon insights your line is open.
Alright. Thank you for taking my question guys. Congrats on the corner Sanjay in Layman's terms can you expand goes what a big bought to calm vault and watch congrats on for you and what are the use cases for the Hyperscale solution. You recently launched thank you.
Okay, Thats unpack that.
So how big you know as as a product is a is what I like to call. A next generation software defined storage system. So it was it was built for its multi protocol.
And so when I say multiprotocol at the spectrum machine did those containers. It does object storage that so on and so forth. So in one software layer you can do multiple types of applications would have brought to us was that that rich capability, which we've now.
Enhanced our our our appliance hyperscale appliance with with that level of.
Software defined storage below it so it gives them.
Rich set of enhanced capabilities and scale out on on the health of the system on cloud capabilities, there's a lot that we bring into it.
So in an off itself so thats, how its it's helped us integrate and.
And then the entire stack right.
That we that we present as part of a hyperscaler.
Tightly integrated is super simplifies our customers in a few clicks are up and running and doing complex.
The protection use cases on its own Weve also enhanced with the latest release of have had big.
A lot more kubernetes and container capabilities that Dev ops type engineers can use to to build next generation containerized applications.
So it's it's all that I hope that was right level.
Thank you.
Okay.
Ladies and gentlemen.
Today's conference call. Thanks for joining me now.
[music].
[noise] [noise].
[noise] [noise].
[music].
[noise] and.
[music].