Q4 2022 GitLab Inc Earnings Call
Future events or circumstances or to reflect the occurrence of unanticipated events.
In addition, during this call certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with U S. Generally accepted accounting principles referred to by the Securities and Exchange Commission as non-GAAP financial measures.
These non-GAAP measures are not intended to be a substitute for our GAAP results.
We believe that these non-GAAP financial measures assist management and investors in evaluating our performance and comparing period to period results of operations as discussed in greater detail in the supplemental schedules to our earnings release.
A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release submitted to the SEC.
These reconciliations together with additional supplemental information are available at the Investor Relations section of our website.
A replay of today's call will also be posted on the website.
I will now turn the call over to <unk> co founder and Chief Executive Officer since you Brandy.
Thank you for joining us for 2022 fourth quarter and fiscal year end earnings presentation.
And before discussing the quarterly results I'd like to begin by saying, we remain deeply saddened and constrained unprovoked and justify Russian military invasion of Ukraine.
The horrific acts of violence against the sovereign nation, and its people and the terrible impact to all of those in the region, including a good lab team members family and friends I'm heartbroken by what I'm seeing.
In constant contact with all our team members in the region.
Before the military innovation, we are asserting team members in Ukraine.
Some of whom are still there <unk> been working directly with those impacted we will provide ongoing assistance and economic support.
Now turning to the results.
We had a great quarter and are excited to share today that we exceeded our own expectations for the fourth quarter of fiscal year 2022 with revenue of $77 $8 million.
This represents a revenue growth of 69% year over year.
Our dollar based net retention rate exceeded the 152% we reported in our S. One filing.
And it's primarily driven by more users at existing customers, which we believe demonstrates the significant return on investment we provide.
This acceleration in growth was broad based driven by strong customer additions across all company sizes enterprise mid market and SMB.
In addition, we continue to achieve success in both upgrading and signing new customers to ultimate which remains our fastest growing tier.
We believe these results demonstrate the market is moving from DIY Dev ops that is composed of different tools to Dev ops platform.
This shift enables organizations to accelerate the time to market of their most important software and applications, providing them with a distinct competitive advantage.
The Gartner market guide for value stream delivery platforms further supports our view it.
It states that by 2024, 60% of organizations will have switched to a platform approach.
This would represent 300% growth from 20% adoption rate in 2021.
There are three main topics that we will cover today.
First I will explain the core aspects of our product differentiation.
Second I will discuss how this differentiation is translating into success in the marketplace by solving critical customer problems and Stuart Brian Robbins, Our Chief Financial Officer will summarize how our unique value proposition translates into a strong financial profile.
First we believe the source of our product differentiation is our platform approach to Dev ops.
Dev ops as a set of practices that allow us development security and operations teams to collaborate and work together to shorten the software development lifecycle.
Typically from months to hours.
But there is a problem for the it and engineering teams responsible for building these applications.
Their do it yourself Dev ops tool chain, which we call DIY Devils has evolved into something that can no longer serve Derek business critical mission.
Most companies are juggling, many different tools, plus homegrown integration Scripps related to co development deployment and operations.
The more point solutions. They are the harder it is to integrate them all.
Not only get a disjointed tool chain, but you also get a disjointed organization, which constrained our ability to deliver software innovation.
This we call digital duct tape.
<unk> is the Devils platform eliminates this problem of digital duct tape and moves organizations out of DIY defaults allowance. These teams to collaborate closely and efficiently planned build secure and deploy software and one single application with one user interface and a unified data model.
Get lab replaces the need for teams to switch between tools, allowing companies to cut their complex point solution tool chain.
We believe our single application helps companies to deliver software faster improve organizational efficiency and reduced security and compliance risk.
The <unk> platform also enables our customers to manage and secure the entire devils workflow across any hybrid multi cloud environment.
This enables our customers to select the best cloud provider for the applications and it allows our customers to avoid vendor locking an over reliance on any single cloud provider.
We believe this provides us with a competitive advantage to help empower our customers to embrace the full benefits of our multi cloud strategy.
<unk> our platform first approach enabled us to be extremely effective and rapid innovation.
That's super important because the faster we innovate the more mature the different stages will be and maturing features will continue to drive positive business outcomes for our customers.
We're able to innovate faster because of the contributions from our users and our customers every quarter hundreds of improvements and get lap comps from the people using the product.
We are able to partner effectively with a wider community and help them get their contributions over the finish line increasing the pace of innovation, while also increasing divested interest they feel in the product.
We call. This our dual flywheel strategy that creates a virtuous cycle, where more contributions will lead to more features which lead to more users meeting back to a more contributions.
Another reason for our fast innovation is our value of iteration iteration means reducing the scope of the next piece of work with the smallest valuable thing possible. So it can be delivered fast.
Our innovation is also predictable as we have shipped on the 22nd day of every month or 124 months in a row as of January .
This allows our customers to benefit from new innovation every months and it allows us to get feedback very rapidly.
To provide some examples of this innovation in the fourth quarter, we delivered enhancements in the following areas.
First software supply chain security continues to be a key focus for enterprises and providing controls that empower teams is critical as this helps everyone be more secure.
With this in mind, we improved fine grained security approval controls.
Merger request approval controls by enabling every software change to be reviewed by at least two people.
This allows organizations to better manage their security risk.
Digital transformations continue to drive cloud native adoption and we see this as a key enterprise initiative for quite some time.
To support this we are continuing to expand our cloud native capabilities, including improving the user experience for get lab agent for kubernetes.
In infrastructure <unk> security scanning capabilities.
We recognize that good lab as a critical business application for our customers, whether they are new startup with a small team or enterprise customers with tens of thousands of users.
Thus.
We continue to invest in improving both the performance and scalability of our Devils platform.
Recently made improvements to our gift lab container registry to enable better performance, while also reducing storage costs. Additionally, we made sure that our D O capabilities work seamlessly worldwide with better performance.
Fourth we improved our core functionality, including source code management see ICD and security features.
These investments support our typical customer journey.
As to date, our customers tend to start with source code and then expand to use secure package and release.
We also continue to invest in adjacent markets to expand where customers can do with gift lab.
I'd like to share two examples of this expansion.
The first example is our acquisition of <unk>, a pre revenue open source observe ability solution.
With this acquisition, we endeavor to offer robust monitoring and observe ability capabilities that will enable organizations to lower incident rates increased developer productivity reduce mean time to resolution.
The second example of this is our expansion of the <unk> platform to include data science.
Our meeting data teams as well as ml and AI engineers, where they are today and example of this has been a focus on improving to get lamp user experience when rendering Jupiter notebooks.
Jupiter notebooks are key to data scientists and ml and AI engineered workflows with the fast structure make code reviews challenging this improvement makes it easier to review the substance of changes.
Next I will discuss how this differentiation is translating into success in the marketplace by solving critical customer problems.
Every company must become a software company to remain competitive.
Enterprise companies are being asked to modernize their applications and move them to the cloud and small businesses are building cloud native applications.
We believe our Dev ops platform is addressing a $40 billion market opportunity.
To support our view regarding the early stage nature of this market. According to a recent Bain <unk> company study 90% of companies.
<unk> has stated that <unk> is a priority, but only 12% beliefs, Derek Dev ops practices are mature.
Get lapped helps companies matured, a dev ops practices faster.
Which in turn enables them to translate their business vision into reality innovating faster scaling more easily and serving and retaining customers more effectively.
Our <unk> platform delivers positive business outcomes for a very wide range of customers from single users to tens of thousands of users from small organization to fortune 500 companies gift.
<unk> lapsed user basis spread across a large number of geographies and across a wide number of verticals.
Given the successes customers are achieving by leveraging get lap many of them have expanded their usage.
We saw a continued increase in ultimate adoption as customers, who want security and compliance capabilities built into their <unk> platform.
This is also evidenced by the continual growth of our quarterly cohorts from over six years ago.
This value proposition translated into a number of strong business highlights and proud to share that in the fourth quarter. We added over 500 net new based customers.
Some of our new logos are major expansions include U S Army Deutsche Telekom and Travis Perkins.
We continue to see increasing returns with our channel partners.
From a qualitative perspective, we are pleased with the increasing number of strategic conversations happening at the C level, which is also resulting in an increasing pipeline of opportunities moving forward.
Please let me give you three examples of customer expansions.
First Travis Perkins is the Uk's largest distributor of building materials and leading partner to the construction industry.
The team at <unk> Perkins has accelerated their migration to the cloud using get lot premium by consolidating their software tool.
Doing soon increase their philosophy.
Cut down overall costs by 20% and it allows their team members to focus on building new customer facing digital services and capabilities instead of managing their tool chain.
This quarter, they upgraded from premium to ultimate licenses and more than doubled the number of users on the system.
This will expand usage of <unk> to their security teams and allow development operations and security to collaborate on a single Dev ops platform.
Second a world, leading German multinational automotive Corporation.
Janet its use of get lab from 3000 to 10000 seats by upgrading from started to premium this quarter.
The business challenges faced by this customer where they need to migrate their complex monolithic Ci pipelines from a competitor solution to a modular get lap Ci pipeline library.
These changes have unlocked increased efficiency and scalability of their Ci workloads, while creating an improved more consistent developer experience.
This customer is now consolidating their supply chain management on get lab is to internal Dev ops platform.
They are a leading provider of mortgage financing in the U S expanded their investment and get less ultimate this quarter.
The company wanted to change their development culture to improve the way their security and development teams work together.
We get lots of ultimate the company is now able to perform security tests earlier in the Dev ops lifecycle.
The company anticipates that developers will be able to immediately address security vulnerabilities instead of waiting for days or weeks in the prior approach.
The company expects to increase deployment frequency by 25% and reduced deployment cilia rate by 25% as well.
As we look forward, we are seeing continued strong momentum from customers adopting our <unk> platform and we feel we are still early in a large and growing market.
I will now turn the call over to Brian Robbins, <unk> Chief Financial Officer.
Thank you said and thank you again to everyone. Joining us today before I begin I would like to Echo said I'd like to take a moment to acknowledge whats happening in Ukraine were devastated by what has transpired in our supporting team members who are impacted by this terrible situation.
I wanted to spend a moment summarizing our strong demand for Dev ops platform translates into a strong financial profile, then I will quickly recap our fourth quarter financial results and key operating metrics and I'll conclude with our guidance.
We believe that our revenue growth our dollar based net expansion rate.
In our gross margin all serve to highlight our strong financial profile underlying our strong business momentum.
<unk>.
We use revenue as our key metric to evaluate the health and performance in our business.
Approximately 90% of our revenue was ratable it serves as a predictable and transparent benchmark for how we are growing <unk>.
What makes get lab unique is how we both sustain the growth in our cohorts over a long period of time and also expand the size of our cohorts.
To illustrate this cohort from six years ago are still expanding today.
This is a testament to how we constantly adding value to our customers.
Most of our customers start using get lab with small teams with just one or two stages of our platform from there. They typically increase their spend with us to ask over the first year as our platform is adopted across multiple teams customers being continue to increase our spend as our platform expands and more teams across their organizations.
They upgrade to a higher page here.
We are also at effective at retaining your customers our customers employ the Dev ops platform. It becomes a central platform from which all their Dev ops workflows originate from making it sticky and difficult to replace.
The result is that we ended our fourth quarter with the dollar based net retention rate exceeding 152%.
Which is higher than the disclosure we provided in our S. One at the time of our IPO moving forward, we anticipate disclosing tighter threshold for this metric.
On an annual basis, each fourth quarter as we believe this will allow our investors to fine tune their models.
Next quarter, we will revert back to reporting this as a threshold metrics using 130% is the threshold.
Get lab is a highly strategic platform for our customers. Our platform is offered with a free version and to paid subscription tiers.
Which we call premium and ultimate are paid tiers or price.
Per user with different features per tier every user within an organization is on the same plan, which helps keep our business model transparent and easy to understand.
The ultimate tiers are fastest growing tier now representing 37% of our annual recurring revenue for the fourth quarter compared with 26% of annual recurring revenue in the fourth quarter of FY 2021, and growing in excess of 100%.
In FY 'twenty, two our non-GAAP gross margin held steady at 89% over time, we expect this to comprise our SaaS offering becomes a larger portion of our business and associated hosting costs will increase.
On the operating expense side, we are committed to investing in growth. However, we will do this responsibly.
We believe that the investments, we're making our business will enable us to sustain significant revenue growth rates for the next several years, while continuing to improve our margins to ultimately drive long term profitability.
Finally, because get lab operates as a fully remote workforce. This ensures that we have minimal capital expenditures, which produces a cash efficient business now.
Now, let me turn to the quarter revenue of $77 8 million increased 69% organically from the prior year.
As of quarter end, we had over 4500 customers and <unk> of at least $5000 per customer compared to over 4000 customers in the prior quarter and over 2700 customers in the prior year.
This represents a year over year growth rate of approximately 67% currently customers with greater than $5000 in IRR represent approximately 95% of our IRR.
We also measure the performance and growth of our larger customers, who we define as those spending more than $100000.
With us for this quarter, we had over 490 customers with IRR of at least $100000 up from 420 customers and over 280 customers compared to the prior quarter and year respectively.
This represents a year over year growth rate of approximately 74%.
At the end of FY 2022, we had 39 customers with <unk> of at least $1 million compared to 20 customers at end of the prior fiscal year, which represents a year over year growth rate of 95%.
As many of you know, we do not believe calculated billings to be a good indicator for our business given that prior period comparisons can be impacted by a number of factors most notably our history of large prepaid multi year deals. This quarter provide an excellent example of this as we saw strong revenue growth acceleration and even stronger.
Billings growth acceleration.
Total <unk> grew 95% year over year to $312 million.
non-GAAP gross margins were 89% for the quarter, which compares to 90% in the immediately preceding quarter and 89% in the fourth quarter last year as.
As we move forward, we are estimating a moderate reduction in this metric due to the rapid year over year growth rate of our SaaS offering.
We saw improved operating leverage across the business this quarter largely driven by revenue outperformance non-GAAP operating loss was $27 4 million or negative 35% of revenue compared to a loss of $22 2 million or negative 48% of revenue in Q4 of the lab.
Fiscal year Q.
Q4 includes $5 million of expenses related to our JV and majority owned subsidiary.
Operating cash was $1 1 million in the quarter compared to $7 4 million use in the same quarter last year we.
We performed well during the quarter and year on both the top and bottom line and believe our business is set up for continued strength now.
Now, let's turn to guidance for first quarter of FY 2023, we expect total revenue of $77 million to $78 million, representing a growth rate of 54% to 56% year over year.
We expect non-GAAP operating loss of $38 5 million to $37 5 million and we expect a non-GAAP net loss per share of 28 to 27 <unk>.
Assuming a 147 million weighted average shares outstanding.
For the full year FY 2023, we expect total revenue of $385 5 million to $395 million, representing a growth rate of 53% to 55% year over year, we expect a non-GAAP operating loss of $142 million to $138 million.
And we expect a non-GAAP net loss per share of $1 two to <unk> 97.
Assuming a 148 million weighted average shares outstanding.
We recognize it's important to exercise a disciplined approach to investments and note that our operating expenses are anticipated to rise in FY 2023, due in part to the resumption of travel and in person customer marketing events as well as new public company costs, which combined we anticipate will be approximately.
<unk> $20 million. In addition, we also are forecasting approximately $30 million of expenses related to our joint venture and majority on subsidiary up from $12 million in FY 2022.
Of this $30 million, we expect approximately $6 5 million of expenses in Q1. Nonetheless. Despite these added expenses, we believe improved unit economics in our business are already becoming apparent.
Our annual FY 2023 guidance implies non-GAAP operating margin improvement of almost 300 basis points year over year at the midpoint of our guidance ranges over the longer term. We believe that a continued targeted focus on growth initiatives and scale in the business will yield further improvement in unit economics.
With that we will now move to Q&A.
To ask a question. Please use the chat feature and pose your question directly to IR questions. Christy we're ready for the first question.
Thank you Brian our first question comes from Sterling Auty JP Morgan.
Yes, Thanks, Hi, guys. So maybe to get US kicked off can you give us a sense of looking at the greater than 152% net dollar retention how much of that is actually coming from more users of source code and ci versus kind of up sell for more products and modules.
Yes.
Thanks for that question.
What's really important to understand about our pricing is that we don't price per stage. So.
We don't know exactly what is driving it.
Do know that along.
Our upsell is being driven by ultimate and the most common reason to buy ultimate is the security capabilities, especially advanced security capabilities.
And we know Thats driving.
A lot of ultimate is doing great over 100% growth year over year.
37% of our revenue right now.
Secure super important.
To verify our used heavily so they are important to apart from create their finance secure we see growth in packaging and release. So packaging. For example is replacing J frog artifacts at more and more customers does that address your question. It does thank you I appreciate it.
Karl from UBS do you have the next question.
Okay.
Okay, Great maybe I'll pose this to Brian Brian I think the number that we're most impressed by on this print and I think a lot of people listening or is the guidance for 55% at the high end revenue growth for fiscal 'twenty. Three can you maybe just elaborate on what you and the team are seeing to give you confidence in that number and to what.
The extent is there a good leading indicator metrics that we can look to is sort of evidence of that momentum is it <unk> or would there be another number you would encourage us to look at thank you.
Yes, Thanks, Karl I appreciate the question the market is still early.
US and our largest competitors still have less than 5% of the market overall and I think it's just really the business outcomes that we're driving for our customers and so every company today has to become a software company and we're helping them do it better faster and more secure.
Yes, I think that is really the sum of it cohorts that we've had six years ago are still expanding with us today, and we talked about the net dollar retention of greater than 152%.
<unk> for the quarter was 95% and calculated billings was 93%. So we had a great quarter.
And we put out the guidance that we have.
Much appreciate it Brian .
Cash from Goldman Sachs you have the next question.
Thank you very much hope you can see me okay. Congratulations on a spectacular finish to the year. So curious you talked about the.
Multi cloud.
Neutrality advantage. The Goodlatte passed can you talk about how that might have had a role to play in securing a beachhead that some of your largest customers and also if you could quantify how much was SaaS as a percentage of your business that'd be great and I have one for Brian after that thank you.
Yes, thanks for that.
So.
Customers find it important that they can measure productivity security irrespective of which cloud they are using they are.
Many of them are using multiple clouds.
We're also hearing is that customers center system integrators are saying, Hey, I'm already really dependent on the same cloud I don't want to increase my dependency and then from the side of AWS and DCP. The first reason they partnered with US is that we.
Drive great outcomes customers are able to move to the cloud faster with guideline, but the second reason is that we are neutral partner party, we're not going to push people to use more of Azure. So all of those are coming together, that's irrespective of whether people are using SaaS of self manage those advantages exist with both.
Thanks, so much.
One for you Brian billing.
The links rebounded very sharply from Q3 to Q4 I know that the company has been deemphasizing in S. Joey longer term contracts moving towards one year second can you talk about how the billings growth rate was particularly strong as it.
Considering the shift to the one year.
Which looked up quite surprising thank you so much.
Yeah. Thanks, Scott I appreciate it.
You will get a change in our sales compensation plan and the reason why we've during the analyst day and during the last call. We told people not to focus on billings is because it is going to be lumpy in nature and so last year, we had a change in our compensation plan and we deemphasize multi year billings and so two years ago.
Was about 25% of the total billings and last year was about half of that.
This quarter, we had a really strong quarter.
Across the board on sort of larger deals that were multiyear as well as <unk>.
Single year deals and so that's why <unk> came in at 95%.
Wonderful thanks, so much.
Scott.
So again from Bank of America. Please verbalize your question.
Hey, guys. Thanks for taking my questions and I'll Echo the sentiments great quarter here.
On Australia.
The pre revenue open source application in the category of observed ability definitely a topical category right now so I guess, maybe said or Brian can you walk us through the process of why acquiring Australia, what could this mean for the platform and maybe how does this pull forward or accelerate the debt process, Rob <unk> ability forget lot. Thank you.
Yes, thanks for asking so obviously a ability kind of let you close the loop you plan to make something you make it roll it out and then you see how it does so it's a really important element of the Dev ops platform and we're really early but because it's so important we wanted to accelerate how fast we got there and we love the team and a product that <unk>.
<unk> built so we acquired them to rebuild that inside get loan and we think that closing that loop will help our customers achieve better business outcomes, if you get feedback faster.
Reduce your cycle time, and you get better outcomes.
It's really important to note that we will do it in an iterative fashion. So in the beginning our solution will not so much compete with existing vendors, but with non consumption people havent havent setup monitoring yet and will start from a simple simple product and work with our users and customers contributing to expand the functionality over time.
And if I could just again with one follow on there you did mention the competition, though youre thinking.
Gross space, So I'd say that youre going after but.
As this becomes more of a.
Product for you and who do you think you might anticipate seeing more on the competitive front with the subs of ability.
But you have thanks.
Yes, it's the same as it is for all the other products, we're competing with point solutions that get integrated baidu, but a customary in DIY and demos. So any of the regular monitoring vendors come to mind.
But we're competing with like customers, having to do a lot of effort and we make that easier by giving them wanting interface on single product. So it's not that we.
We have just.
Better product for them, because it's part of our platform the customer gets more value out of it.
Got it thanks, guys. Thanks for taking my questions.
Michael <unk> from Keybanc you have the next question.
And just to thanks, guys. Congrats on the quarter, maybe to keep on that theme I'd like to ask a similar question, but on the security side. So so when you think about expanding into secure specifically around things like static application security testing, where do you think I understand the platform and commercial advantages.
<unk> cetera, but where do you think youre specific technical advantages or if you will disadvantages will come in providing that and building that versus some companies that are focused exclusively on application security.
We believe that our security solution can compete with the best point solutions, we've invested heavily in it over the last few years.
On top of just being able to hold its own against point solutions. It also allows our customers to shifted less.
The security testing is not something you do when you're done writing your quote that happens immediately as you are writing your code.
It's also nicely integrated and getting lab that allows you to do better compliance and get lumpy can set for every project. This is the security framework needs to comply with these early implications improve for every environment that we comply with everything so when an auditor comes you have that at the ready so that's kind of the upside above a point.
Solution, having it as part of the Devil's platform.
And then I wonder, whether it's maybe Brian I mean, I think earlier on your.
Cable to stack rank for us the priority of investment in terms of the ancillary noncore pieces, but not SCM not ci and perhaps not CD. So has that changed any or how would you stack rank sort of an investment priority.
Whether it's further to the right answer for that arrived in prevention or further to the left and planning how would you stack rank those investment priorities yes.
We are very much investing managing sort of compliance features in key and verify and insecurity. If you look at the next to have police package and release, which youre seeing a lot of growth.
Securities also kind of early in adoption, but it's driving more revenue as you can see by the growth of ultimate that's primarily driven by secure.
And then all the other areas, we're very early in investing there and we will do well pushed Emma will push for them, but we are going to be very thoughtful with our spending there.
Thanks, and thanks, Brian .
Our next question comes from Joe I'll, let Charles.
Hey, good afternoon, and congrats on the great quarter I just had a question around go to market.
Brian maybe you could let us know how you've been growing your sales capacity and how sales efficiency has been running that would be really helpful. Thanks.
Yeah. Thanks, Joe Theres been really no change in where we're investing in sales capacity, we're investing most in enterprise enterprise it makes up greater than 60% of our total AR and we've had a lot of successor.
Second area is in mid market and then very little in SMB.
So when we were on the road, we talked about some new go to market motions that were doing and so we've launched the channel program, we're partnering with the Hyperscale and doing a number of different things news.
Albeit still early the results are extremely promising and so when rates have really happy of pipeline coverage.
Win rates remained really strong and the Salesforce just from an attainment productivity standpoint, we're happy with the quarter and how things are looking.
Thanks.
Thanks, Joe.
Rob from Piper Please ask your question.
Great. Thank you guys for taking my question I'm curious around true ups and I know that was a little bit of a headwind last quarter, but just understanding the dynamic as it played out here this quarter and any difficult comparisons were looking forward.
Thanks, Rob glad we don't have to talk about through ups or billings this quarter.
Thanks for bringing it up.
So true ups were less this quarter.
They were a year ago.
There are about 600000 hours last summers, so theres still where year over year decline.
Just to remind everybody of true up with something that happened in the past and when we come up for renewal when our customers actually use more licenses than actually purchase and so we're in the process of putting in a cloud licensing system, where true ups will eventually go away over time, but.
But I don't think that there will be a tough compare like there was in third quarter of last year.
Great and then second can you touch a little bit on the federal opportunity I think it was about a year ago, you got stock type two and type three.
Just maybe expand on where you are in terms of federal sales and where that could go.
Yes, I'm happy to take that so we just recently have invested over two three quarters ago, and our federal team and really happy with the progress that they've made.
Our third quarter is a big quarter for you.
<unk> sales and we're happy with where they're at and so.
Continuing to build pipeline.
Team is doing well and working on February <unk>.
Thank you Garik with Cowen. Please ask your question.
Great Great to see you guys. Congrats on a strong quarter I wanted to ask about your hyperscale, our relationships, particularly I know your tight with GGP in I think AWS is ramping so can you just give us a sense for how those trended throughout this past year and what you're thinking about the opportunities in the year ahead.
Yeah.
This was a great year for building a stronger relationship with the Hyperscale and we see that we believe it might go in the future. We're very bullish because it makes sense they see that when they bring us into a deal the customer moves to the cloud faster and they really want a neutral party to for older demos.
Tooling for the demos platform because if it's a non neutral party they're at risk in the future. So it makes a lot of sense from both sides.
We are investing there and we expect it to grow in the future.
Makes sense, if I could get a quick follow up have been hearing that you guys are engaging more at the at the <unk> level is pretty interesting what do you think's driving that what are the ingredients that really take that engagement all the way up to an executive level.
There's a couple of things every company needs to become a software company. So it's higher on the radar of the executives security is getting more and more.
More important if you get breached youre in the newspaper so that's driving the priority.
Also because need C level invoice involvement sometimes because companies are stuck on DIY Devils and there's people in the company working on that and if you make something it's harder to realize its not needed. So some things we have to go beyond and as we grow bigger it's easier to get an audience with the C level, we've been training.
And to do that for a long time, but we're getting more successful at it.
Sounds great. Thanks.
Jason from William Blair you have the next question.
Alright.
Team I would like to Verbalize you may discount.
Alright, well, we will move on then to our final question from Matt RBC.
Yeah.
Alright, guys. Thanks for taking my question Theres been a bunch of questions on go to market I'm guess I'm curious you guys have several market several ways to market, including <unk> and Hyperscale. It I'm curious can you could you remind us what percentage of your business is partner influenced today.
That double in the next several years.
Yes, great Great question, Matt We don't so we don't give out sort of the sources of <unk>.
Go to market and how each one is actually doing we've been primarily a direct go to market motion up until about a year and a half ago, a little over a year and a half ago and so all of the different go to market motions that we've implemented is just helping us expand our reach and actually get to March.
Quicker with relatively the same economics and so.
As <unk> said earlier every company ask them a software company.
The business outcomes that we're driving for our customers.
It was really high and so the reach that we are trying to get we're doing that through GSI is through the hyperscale or through our channel program and so forth.
Got it that makes sense and then maybe just one last one.
NR with obviously stellar this quarter and thank you for that disclosure I know youre not going to give you that precise numbers on a quarterly basis.
First part of the year, but Brian I guess in your guide any sort of like directional view on sort of what's embedded in the guide something closer to 130 or just sort of how you thought about that and the competition for your revenue guidance.
Yes, so yes.
We haven't guided specifically to a net dollar retention rate.
We thought it was important to give out as an annual disclosure to help you sort of tighten up your models, where it's at and was happy to say that it was higher than 152% we reported in second.
The disclosure that we had in the S. One and so.
All I can say is the cohorts that we've landed six years ago are still expanding.
Our customers are seeing a lot of benefits such as security and portfolio management, and so forth with our ultimate future and so we're continuing to see.
Expansions either through receipts are up tearing and back in second quarter. When we talked about our logo retention. It was extremely high and so the contraction is relatively low and so you can't give a specific number but I can tell you the elements and how thats been trending.
Thank you congrats on a strong end of the year.
Thanks, Matt really appreciate it.
And with that I'll turn things back over to Stan for closing remarks.
Thank you for your time today I'd like to thank our customers for trusting <unk> to help them achieve their business objectives I'd like to thank our partners the wider community and get lab team members for all their contributions to all had a big part in our continued success. Thank you.
Okay.
Okay.