Q2 2024 Hashicorp Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to Hashi Corp fiscal 2024 second quarter earnings.
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Please be advised that today's conference is being recorded I would now.
I'd like to turn the conference over to your first speaker today, Alex Kurtz VP of Investor Relations and corporate development. Thank you. Please go ahead.
Good afternoon, and welcome to Hi, C Corp's fiscal 2024 second quarter earnings call.
This afternoon, we will be discussing our second quarter fiscal 2024 financial results announced in our press release issued after the market closed today.
With me are Hashi Corp, CEO , David Janet CFO , Nevada will end up our CTO and co founder Amman Dec arc.
In conjunction with our earnings press release, we published an earnings presentation that provides additional information about our quarter.
We encourage you to review that presentation in advance of our call you can access it on our investor website at IR Dot Dot com.
Today's call will contain forward looking statements, which are made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Forward looking statements include statements concerning financial and business trends.
Our expected future business and financial performance and financial condition.
And our guidance for the third quarter and full 2020 for fiscal year.
These statements may be identified by words, such as expect anticipate intend plan believe seek for well or similar statements.
These statements reflect our views as of today, only and should not be relied upon as representing our views at any subsequent date.
And we do not undertake any duty.
These statements.
Forward looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results.
To differ materially from expectations.
During the call. We will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.
The financial measures presented on this call are prepared in accordance with GAAP unless otherwise noted.
A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.
As well as how we define these and other metrics is included in our earnings press release, which has been furnished to the SEC.
It is also available on our website at IR Dot <unk> Dot com.
Finally, we will be holding an investor event during our annual hashi copies or conference in San Francisco on October 11th.
We look forward to seeing many of you there and we will also live streamed event from our IR site with that let me turn the call over to David David.
Thank you, Alex and welcome everyone to our second quarter earnings call for fiscal 2024.
We reported solid second quarter results that exceeded our top and bottom line guidance with revenue of $143 million representing year over year growth of 26%.
Current non-GAAP remaining performance obligations reached $420 million.
Representing 30% year over year growth and we added 21 customers with greater than or equal to $100000 annual recurring revenue to reach a total of 851.
Our <unk> cloud platform offerings to reach $18 $4 million in revenue, representing 13% of subscription revenue in the quarter were excited for the new capabilities, we announced during holidays in Europe around HCP tariff on vault boundary and across our whole product portfolio and we have more to announce that our global user conference. This October .
Our team executed well and delivered solid results against an ongoing challenging backdrop.
Although we continue to see you won't get a deal cycles. Our performance shows that we remain a critical part of the global two thousands cloud plans and our strategic partner for their long term transitions to the cloud.
To put it simply the purchasing environment is difficult we continue to win the market.
As an example of this in June we hosted our European user conference taking place in three sold out locations simultaneously and Paris, Munich and London during.
During the keynote I was joined by a large multinational financial services company, who is a long time <unk> customer and an excellent example of how over time, we become a strategic partner to the global 2000.
This customer shared how they approach their move to the cloud and how they adopted our platform engineering team to scale their consumption of cloud resources using automated provisioning from here from enterprise.
As your platform can be expanded their use of terraform being able to more than 3000 developers to consume cloud resources autonomously and powered over 200 internal applications, which ultimately accelerated delivery of new capabilities for their banking customers.
This customer use cases are great examples of long term journey of their organizations make with us.
At <unk>. We also made several product announcements the highlighted continued investment in innovation across our portfolio and I want to briefly share a few of those.
First we announced the highly anticipated general availability Apache Corp boundary enterprise. The early response to boundary enterprise has been exciting, but the healthy initial pipeline at interest growing by the day.
I was organization's transition to cloud they are finding they require a modern cloud friendly privilege access management solution, which has helped boundary was not available in the market.
We also announced several product enhancements across our portfolio, including terraform vaults and console.
This quarter as I traveled and met with customers in Europe , and other parts of the world I heard a consistent message from them.
The transition to the cloud is still in full swing and requires new approaches to managing infrastructure, which our products provide.
And once these new approaches and technologies are adopted teams are enabled to build faster more efficiently and more securely.
Despite macroeconomic conditions customer planning for cloud Hasnt changed.
Finally, I want to reiterate that we remain focused on achieving our profitability targets. While at the same time positioning ourselves for future of continued cloud adoption.
I remain very optimistic about our long term opportunity and we continue to build harsh corp to meet it.
Thank you I look forward to seeing you at our Investor event during <unk> in San Francisco in October .
Now I'd like to turn it over to Yvonne and I look forward to answering any questions.
Thank you, Dave and thanks again to everyone for joining us today as Dave mentioned, we are pleased with our team's performance for the second quarter and delivered solid top line results.
Compared to our seasonally low first quarter, we saw better contract activity. Both in total and also within the global Enterprise segment during the second quarter.
Similar to last quarter sales cycles remain elongated and procurement scrutiny was ongoing.
We expect this cautious spending environment to persist through the rest of 2024.
However, we also expect the bigger trend of enterprise cloud transformation efforts to continue despite the current economic uncertainty.
On the expense side, we continue to operate the business with a heavy focus on ROI.
Resulting in better than forecasted non-GAAP EPS for the quarter.
As a reminder, the second quarter for Harsha Corp is a seasonally low free cash flow and cash flow from operations quarter, mainly due to the seasonal first quarter contract volume where collections occur in the second quarter.
Free cash flow of reverts back to normal trends in Q3, and Q4, and we always view free cash flow and cash flow from operations on a trailing four quarter basis.
Our full guidance numbers can be found in our earnings presentation available on our IR Dot <unk> Dot com website under financials quarterly results.
Year to read through the Doc for full metric disclosures share count disclosures and GAAP to non-GAAP reconciliations.
To summarize our guidance for the third quarter of fiscal 'twenty four we expect total revenue in the range of 142 million to $144 million.
And our non-GAAP operating loss in the range of 26 million to $23 million.
For the full fiscal year 'twenty four we expect total revenue in the range of $571 million on $575 million.
And expect FY 'twenty non-GAAP operating loss in the range of $108 million and $105 million.
A couple of final notes before Q&A.
First the severance costs from the reduction enforced from last quarter was included in our non-GAAP expenses.
These costs amounted to $7 million or an additional <unk> in non-GAAP EPS.
And second as a reminder, our third quarter has typical seasonality due to the summer months and we have factored this seasonality into our guidance.
In closing we are excited to see many of you at our Investor event on October 11th that will also be live streamed on our IR site.
Thanks for your attention, Dave <unk> and I are available to take any of your questions Alex.
Thank you operator can we go to our first question.
Thank you.
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To withdraw your question. Please press star one again.
We ask that you keep your questions to no more than one but please feel free to go back into the queue and if time permits we'll be more than happy to take your follow up questions.
Please standby, while we compile the Q&A roster.
And I show. Our first question comes from the line of <unk> Kidron from Oppenheimer. Please go ahead.
Thanks, guys.
Sure come to the point to like it.
Maybe you can talk about productivity.
And this quarter.
Sales force side, how do you feel about progression there.
And maybe I know, it's early but anything you can share, but susan's first.
As in the field.
Any noticeable thoughts perhaps on how she is knowing what is climbing.
Hey, John Thanks for the questions Dave.
I'll answer the second question just to remind folks that Susan understands the company well through time on the board and certainly already adding value.
<unk> been spending her time with the field teams understand the lay of the land and I would say that there is a lot of excitement for her leadership.
Super Super early for her involvement with us the the question around.
Progression productivity I think perhaps it's more of a broader question around sort of the demand environment and how we're how we're seeing it and I would say that so I would say I did like 20 meetings. This week with companies who are in time for the Google next event and I'm reminded.
Of the critical role that we play in the infrastructure lifecycle, it's pretty profound for the largest companies in the world.
That being said, we're in the midst of an optimization cycle I think in the <unk>.
Software.
Market in general and there is a lot of conservatism amongst spend and we certainly have reflected that in our approach, but that being said, we don't see any material change people's cloud plans or the competitive dynamics of the market.
Just focus on winning the trust of the largest organizations in the world.
Very good thank you.
Alright next question.
Thank you.
And I show. Our next question comes from the line of Alex Zukin from Wolfe Research. Please go ahead.
Hey, guys. Thanks for taking the question.
I guess, maybe maybe just Kirk one for you Dave like you.
You mentioned the environment.
It's kind of unchanged I guess did it change between kind of the beginning of the end of the quarter. It here.
Into the following quarter has it.
Has it gotten any.
Or worse.
And then bigger picture do you see.
The changing spending priorities meeting generative.
Coming in and almost crowding out some other projects pushing out some other initiatives on a longer time scale.
And then just one for Nevada, if the recent BSL teams.
Should we be thinking about any numerical or model impacts from that over the course of the next few quarter.
I'll try to tackle those in order and I would maybe be on Armando to answer a couple of them on the question on the demand environment.
<unk>.
And the last couple of months honestly feels pretty consistent.
And we resolve we have been clear to communicate our products are deeply considered because theyre very very seriously parts of the infrastructure stack and so.
The front end demand signals remain super consistent.
How that flows through procurement as we find out later.
I would say net not a huge change.
Spend priorities I would actually just point back to.
People need to keep in mind that.
This AI push implies cloud.
New applications are.
Our AI in their orientation are built on cloud infrastructure and in as much as that is the truth.
Our products play a role.
So I would say actually our products underpin much of what's happening.
Under the covers.
Cloud of states and so we are part of that strategic initiatives generally speaking so that's probably the best way to describe it.
Any other comment you make a comment about it yes sure I think I'd add two things such as one is I think to David's point. It is a it implies cloud, but I think more than that actually implies multi cloud.
Because what we've seen it from a lot of enterprise customers that maybe are predominantly on one CSP or had a hybrid strategy now people are looking at how do they leverage best of breed technology across a multi cloud a statement I think that raises the salience of our portfolio.
In terms of enabling multi cloud access control with things like fault, enabling user access across each of our services without obviously.
Obviously provisioning across it with terraform, So I do think that priority shift that has been interesting.
Helpful for Us and then to the folks that are heavily invested in private data center. We are also seeing interest there until like Nomad and I think that was a major customer that we have.
We discussed this quarter that on.
On premise expansion around nomad to drive GPU workloads.
We're continuing to see sort of AI driving a bunch of interesting workload shifts both in cloud and on premise for us.
I think to your last question, which was on the BSL change and should we expect any.
Impact from that no I think the key motivation for US was really understanding how do we get to the right long term model that allows us to continue and invest in open innovation in the product and that's really what it's about and that's what the license change enables us to do.
So no expectation in terms of revenue.
Thanks, Alex.
Next question.
Yes.
And I show. Our next question comes from the line of Nick Altman from Scotia Bank. Please go ahead.
Yeah.
Awesome. Thanks, guys I just had a quick question on the acquisition of Blue bracket I guess, maybe a two part question here. The first one just being is there any revenue contribution that we should be aware of on a go forward basis.
From Blue bracket and then.
Know integrating the teams integrating the products and that's going well and you know it was sort of a head of where we thought schedule wise from both team integration of product integration. So our hope is to have that on market in relatively short order. So you know <unk> you know small impact of revenue today and you know we expect more of a contribution next year as it's you know fully integrated as <unk>.
Think about kind of the philosophy of M&A for US we're very much focused on you know where their products that are adjacent to our core offerings, where there's sort of a natural synergy so with blue bracket. You know I think the obvious cinergy for US was you know for customers that are starting with their first and obvious question is how do I help you know onboard secret.
So I have in my estate interval and Blue bracket help solve that gap. So you know it's an obvious adjacency is clear cinergy to you know same buyer and really helps accelerate adoption and I think that's really where our interest lies as you know as we look across core products.
Where are their opportunities to accelerate our roadmap and you know obviously would look for alignment to you know our core products and core buyers.
Right. Thanks, Thanks, Nick next question.
Thank you.
Next question comes from the line of Great power from B T. I G. Please go ahead.
Oh, great. Thanks for thanks for taking the question and congratulations on the on on a good set of numbers here [noise]. So I was one of the many drill into <unk> and just how we should translate that's the guidance finally get you to <unk> had a good sequential improvement just an absolute dollar basis versus Q1.
And then the year over year growth actually take slightly higher in the corner. So I'm. Just curious is there anything other than conservatism that would explain why revenue was roughly flat in Q3 for you to any any moving parts are there to to think about.
Hey, Gary I, it's Navarre here. Thanks for the question. So yeah. We're we're very happy with the solid CRP, Oh and <unk> and.
<unk> performance this corner so that was.
A solid quarter performance.
Then you've got a.
Remember as as an enterprise software company you have seasonality in the back half compared to the life of the first half right. So you have a <unk>.
Seasonally larger second quarter, which has a has a different compared to last year's second half and what we're factoring into Q3 and Q4 is basically the demand environment that they've talked about which is nice.
Challenging purchasing environment, but at the same time digital transformation and cloud cloud efforts continuing so that's factored into.
Two three Q for forecast guidance. So that's the that's the impact you're seeing on revenue versus the CRP Oh gross line.
So overall I think we're very pleased with the CRP, Arizona.
Okay. Thank you.
Thanks Gray next question.
Thank you.
And the next question comes from the line of Mark Murphy from J P. Morgan. Please go ahead.
Oh. Thank you so much [noise] Navarre I'm similar question to to Grace I noticed that nice sequential growth in this European that's great to see them at that occurred with a low volume of customer ads and so I'm wondering if you could just explain the mechanics for instance did did you have a few you know.
Chunky deals in the mix anything different in terms of composition and then for them on I want I wanted to ask you. The I, we noticed that Google next that.
Your announcement that the the Google provider four terraform it been downloaded 350 million times [laughter] and.
And I just looked at it has climbed to 370 million [laughter]. So it it it it looks like it's it looks like it's kind of shockingly active [laughter] [noise] and I'm wondering if you know should we look at that as confirming what your bench sitting there just in terms of Multicloud.
Movement is it is that somehow moving faster.
While the <unk> you know what.
It's it's kind of slow down where more companies are optimizing or the <unk> or did you actually see them kind of spreading their footprints over into Azure and Google a little more actively.
[noise] sure. Thanks, Mark let me take the the second question and then I can hand, it back over to Nevada.
I think you know certainly I think we continue to be impressed as as you know those download counts crossing new thresholds to your point I think that you know go go ahead of impressive milestone I think AWS recently crossed the 2 billion download mark as well. So we're continuing to see a lot of of download activity.
Going back to my comment earlier I I do think we're seeing the investments in January of AI, driving more multi cloud interest and I think certainly customers that were you know maybe focused on one primary C. S. P. R. Now looking at Hey, how do I access under these you know best of breed capabilities that google's announcing address announcing AWS certainly has that is quite a bit of offerings I think older.
Clouds are investing in focused offerings and I think that is driving sort of a look how do you get access to the best of breed. So I I think that's certainly fair.
Yeah market hates Navarre Monday on the customer makes question just add a note on the customers.
A wide range of customers in our in our total customer group right. There's the G. Two K on the high end and then there's the smaller self serve customers on the low end and these are customers generally spending somewhere around $2500 a year. So what you're seeing on sort of the total customer count perspective is the movement of that self serve small customer count we saw.
Some impact this quarter, but in terms of revenue impact, there's there's almost an immaterial impact of that that customer groups since they're so small so in terms of sort of the gross customer additions from our sales team in the hundred K customer additions their remaining consistent we're we're still taking ground there and.
There wasn't any outsized impact on any single deal that we saw in the second quarter for our revenue.
Thank you.
Okay.
Thank you.
[laughter], Thank you and I'm sure. Our next question comes from the line of branch sales from Bank of America Securities. Please go ahead.
Oh. Thank you so much I wanted to ask if you could provide some more color. Please on the updates you mentioned to the cloud offering.
What are those and and might that be a catalyst for that business and then also any observations on the macro impact on you know terraform versus vault in the core offerings.
Vault seeing more resilient results here given that it's going after security, perhaps more of an outsized impact that you saw last quarter to terraform, just Sydney observation on on that interplay. Thank you so much.
Sure Yeah. Thanks bread, yeah. So some of the key cloud updates and this is from our June Hershey day's event in Europe was it was really a security focus set of the <unk> that we shared among you know a bunch of other updates so across the board Dave mentioned the boundary. One certainly was a big launch for US was the introduction of boundary enterprise.
Which was ourself managed product as well as a set of advanced privileged access management features like session recording and that's been driving a lot of customer conversation around what are the modern Pam tooling cloud solve for those update the spam. Both are self manage boundary enterprise is all of our cloud delivered HCP boundary.
The but the other security tools reintroduced in net new cloud service around bolt. So this is called volt cloud secrets, and we introduced that in a public beta and made that available for the first time really a multi tenant much easier to use quicker to onboard and I think we've seen great adoption in the interest on that really looking at how do we make it push button and very easy to onboard into.
<unk> and continuing to see strong demand from customers looking for you know.
A simpler solutions to get started quickly around terraform cloud there was a whole bunch of different updates around different capability is really focused on different areas around policy cost management.
Ease of use and Onboarding, so terraform import with a key thing to bring on manage resources into terraform ephemeral workspaces to allow better cost management. So users can basically be provision Dev test environments, when they're not using them to reduce their cloud cost.
And then with constantly introduced a few different cloud capabilities round observe ability and workflow management, so really for our app scale of customers looking for how do I do global management of multiple palm So clusters, how do I do observe ability to understand.
These cultures and so there was you know I think what we're saying is you know.
Net new state of capabilities that are coming to cloud our differentiating the cloud offering from the self management will continue to drive a healthy rate of adoption and inbound interest to the cloud in terms of the you know how are we seeing the macro impact and is there any sort of delta between the various core products and I think by and large were not really saying any difference I think you know terraform continuing.
To benefit as customers want to go multi cloud <unk> I certainly helpful. There I think cyber remains very robust so lots of interest in you know our security portfolio of the zero trust tools around boundary vault console. So I think we're not saying a whole lot of differential demand.
He had one cards, but you don't understand the essence of your question about cloud I'm Gonna pull back and say you know historically the cloud consumption does come from the corporate segment with some throw some blue segment.
As we continue do invest you know dedicated and select the ones that are unannounced, we are seeing increasing interest from the enterprise customers certainly lots of green shoots from some of the largest companies that are inclined to consume those as managed services, but as we've always said infrastructure is a lot more deeply considered than say a day.
The base and so it it is happening on a measured pace, but we're super.
Optimistic given the green shoots reduce C and the continued investment putting under a cloud offering that that will continue to see steady growth there, but for now it is largely the smaller cohort of customers.
Thanks, so much too thanks, Vermont.
Thanks, Brian next question.
Thank you <unk>.
My next question comes from the line of Derek would from T. D. Counting. Please go ahead.
Oh, great. Thanks, it's Android for Derek.
Dave wanted to ask about boundary how traction is so far there I know it's early with the self managed version <unk>, but maybe just talk about what are you seeing that market. What are what are your <unk> about it.
Go go to market with this and could we start to see that contribute to revenue maybe early next year.
Sure I'll, let Armand answered that one sure yeah. Thanks to Andrew Yeah in General I'd say, we're we're very excited about it I think the the general feedback we've got him from customers is.
As they go to cloud they have a much more dynamic infrastructure is much more ephemeral and they're looking to adopt zero trust practices and it's I think boundary fits right in that crosshairs.
As a consequence of that we're seeing a lot of inbound interest from existing customers and in fact, new prospects as well. So you know this quarter, we landed a few pretty significant boundaries Ah deals. Some of these were you know expansion opportunities from existing customers in somewhere land customers as well. So I think from that perspective, we're excited in terms of the demand signal.
That we're seeing from customers and certainly the field feedback has been a very positive and we're continuing to build momentum with with new enterprise capabilities that we announced that our conference I think it was very clear to me is is that the cloud paradigm does introduce new requirement for this particular market.
And I think that was our theory early on it continues to be born out and you know the customer demand.
Nine out of 10 conversations I have with customers today. This is the topic.
Great Thanks and.
Okay next question please.
Thank you.
Next question comes from the line of James Fish from Piper Sandler. Please go ahead.
Hey, guys. This is Clinton on Virgin fish. Thanks for taking my question you know the press release you guys highlight are really good with a P. G. A government agency can you talk about any processor timeline you have in place for that ramp mm across actually really good solitaire boundary you care for them and then how you're thinking about can I have the opportunity and when that opens up in the U S. <unk>.
Our own business for you guys. Thank you.
Yeah. Thanks Clinton.
In general as we're thinking about cloud, it's a progression for us in terms of how do we move from today as Dave mentioned predominantly tends to be our SMB corporate customers that are consuming cloud as we're looking at the next set of commercial opportunity for us. It's a big focus on unlocking the commercial market. So top priority for US is really P. C. I is we're going into next year and.
We think that's the largest opportunity ahead is bringing the the commercial customers that today are predominantly self managed within our enterprise segment of course, there's I think longer term.
I think that's gonna play an important role, particularly for sled in civilian agencies and so you know, it's certainly on our roadmap as well.
I could just clarify G cause there is sometimes confusion around Federer fedramp really just applies to sass offerings underscore the point that our products and self manage form are broadly used in that environment already.
We call that fed ready just to do with it.
Understood I'd appreciate it.
Thank you let's go to the next question. Please. Thank you. The next question comes from the line of <unk> Singh from Morgan Stanley . Please go ahead.
Great. Thank you <unk>.
It looks like pretty pretty steady quarter overall, and I want to ask one question on kind of a pricing changes that went on some upcoming around my telephone cloud.
My question was really like how should we think about pricing changes grow it for telephone cloud, but also maybe for the broader portfolio kind of on a go forward basis like what's your ability to make further changes and then have you gotten any early indications in terms of how customers are receiving that.
Call him that won't be super helpful. Thank you.
Yeah, I'm gonna surprise him yeah. Thanks to the house. So yeah, I think I'm the Terraform P. N. P. R goal is really a few things right and so this is particularly the terraform cloud pricing and packaging changes. The goal is to us to simplify effectively before we had a few different tiers and particularly there was a free tier that had sort of a.
A very limited subset of capability that was distinct from sort of our standard of more premium tears. So what we've done was in there. The design goal here was to really bring that into one framework, where there is a standard on you know a premium tier and the free tears just a usage capped version of the standard here, so what the value of that as as as our new customers and users onboard there.
Get access to the full suite of telephone cloud capability, they get a sense for the value of the ads and as they continue to scale up with the product they cross from the free to air into our paying tier but on the same skew. So it really simplifies in some sense that motion of user signing up organically using the platform and then growing into being a paying customer.
Near term impact of you know that can't be a shift as you had some customers at the very low end of our paid here that move into the free to air just given the the the new structure of it but the flip side of it I think we're we've been that excited to see is that it's driven a substantial uptake in the sign up rate of telephone club.
So I think that's kind of the the near term impact of it you know and I think an expectation that's gonna make it easier for us to onboard users and then graduate them from our three tier into our paid offering as they continue to scale.
In terms of I think the broader question I think.
You know obviously, we're we're constantly fine tuning in looking at pricing and packaging Cross I think our goal philosophically as we want to enable our customers to sort of land small in a line you know a unit of value to ultimately their consumption and their usage, so that as they call outgrow their cloud programs and if they're getting more value out of the tooling that we grow with them and so.
We're always looking at you know how do we simplify that but that's sort of the the core philosophy.
Great. Thank you so much.
Thank you.
And I'm sure. Our next question comes from the line of Miller jumped from two as security. Please go ahead.
Alright, great. Thanks for taking the question so maybe thinking about the existing customer base last quarter, you all called out the large customer that kind of right size to a smaller contract I'm curious did you have any more of this activity with large customers in the corner or is there kind of incremental confidence now that this is more of a <unk>.
One off and I guess, maybe just an add on to that about Q3. Your company gets a really strong Q3 from last year. So I was just curious for any color on the renewal opportunity that you. All have there are many headwinds to call out on the flipside. Thanks.
Sure. Thanks, Yeah, no I just I just just underscore.
Customer that we called out last quarter remains one of our very largest customers.
And you know I think I think more generally as I as I pointed out I think there's this optimization cycle going on across all the software and we're doing the same with our vendors and I think that is likely to continue for some period of time, but.
Will be caught up in the last quarter was was a very unusual scenario I wouldn't expect it to be representative to go forward.
Can specifically you know the second corner grocery attention was a better quarter. Then Q1. So we were very pleased with that that result.
Thank you.
And I sure. Our next question comes from the line of Michael turns from Keybanc capital markets. Please go ahead.
Hey, guys. This is Billy on for Michael I think some of US have been keyed in on on the opportunities and risks associated with Monetising open source users cause you're switching of the source code license benefit benefit that monetization in some way where does this change kind of kind of more geared towards the dressing competitive pressure was pressures or something else.
Yeah, Thanks, Billy [noise].
You know I think right now there's a whole lot of misinformation on the market associated with our license change to the business source license in practice, there was really no impact to our customers our partners in 99 plus percent of the user community around the tools. So what it's really about was really addressing the <unk>. The there's a handful of effective.
Lee product clones that are cloning, our product and that's been enabled by our Ah you know traditional M. P. L license and so what this changes about is you know what's the right longterm model for us to continue to innovate you know openly within the community and so that's really what was was motivating it.
Okay. Thanks for the question, let's go to the next question. Please thank.
Thank you and I'm sure. Our next question comes from the line of Patrick Royle Ravens from G. M. P Securities. Please go ahead.
Oh, great. Thank you Uhm, maybe few Dave I mean, just.
If you look at this business from a high level you know two three of last year, you're growing 52 per cent and your guidance for this Q3 is 14 per cent.
I just never would have expected such a big slowdown so <unk> maybe rank the the the factors that have driven that slow down and and when could it reaccelerate.
I'm not sure I have a simple answer two two elements I certainly I think.
The optimization cycle for infrastructure is is is following the same process and everybody else you know I think the but the reality is if you look at our.
Global 2000 customer ads in the in the customer wins that route and their berbere consistent we're just seeing as a slightly lower ASPD starting prices. Those companies are apply more caution to the buying cycles. So if I were to point something out it would really be the starting point for some of these larger customers.
Kicking the propensity to start smaller rather than what was happening a coupla years ago that being said that they're not changing their plans that are clothelines removed talked and we're still winning the market. It's just it's just a function of the scale, which people are beginning one number two I think we've seen an elongation of of the sort of the expansion and extension cycle's.
Not surprisingly yeah, there's a lot more scrutiny has been applied to to the budgets that are out there and I've I've always been of the view you know these sort of circle changes and back different companies that different state who.
Who are at different stages of their overall lifecycle no. We are sort of can you earn.
The series of our growth dark and sort of you know.
4000 customers not 40000 customers to work with and I think that's.
Indicative of what you are seeing in the impact of that on us.
Being said no like I said. These these trends are are inexorably moving forward you know, let's get through this digestion cycle that is in every global 2000 account for every software vendor, we're super optimistic that that we can get the growth rates to continue to be.
Super aggressive.
We'll keep executed towards that vision.
Okay, well that that's it that's it.
Take a shot at when we might see it.
I would refer to the the guidance that you'll see from us at the end of this year with reflects our best view of of how that continues to progress I think anything else will be speculation.
Thanks Bye thanks.
Thank you.
I'm showing her further questions in the queue that concludes our Q&A session. At this time I'd like to turn the call back to Mister David Magenta for closing remarks.
Express my thanks for the prescription from everyone here and we certainly appreciate your Darling and and for all the questions. So we look forward to speaking with many of you at our event in October . Thank you.
Thank you. This concludes today's conference call. Thank you for attending you mail disconnect.
Mmm.
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