Q3 2024 Datadog Inc Earnings Call

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Good day and thank you for standing by welcome to the Q3 'twenty 'twenty four got a dog earnings conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask.

Speaker Change: Being recorded I would now like to hand, the conference over to your first speaker today, Yuka Brodrick Senior Vice President of Investor Relations. Please go ahead.

Speaker Change: Thank you Liz good morning, and thank you for joining us to review <unk> third quarter 2024 financial results, which we announced in our press release issued this morning, joining me on the call today are Olivier <unk>, <unk> co founder and CEO and David <unk>, David Obviously DSO.

Good question during the session you will need to press star one one on your telephone.

We'll then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today, you kept brodrick senior Vice President of Investor Relations. Please go ahead.

Speaker Change: During this call we will make forward looking statements, including statements related to our future financial performance our outlook for the fourth quarter and fiscal year 2024, and related notes, our gross margins and operating margins, our product capabilities and our ability to capitalize on market opportunities. The words anticipate believe continue estimate expect intend will and similar expressions are intended to identify.

Speaker Change: Thank you Liz and good morning.

Kat Brodrick: And thank you for joining us to review <unk> third quarter 2024 financial results, which we announced at our press release issued this morning.

On the call today are Olivier Hello did adopt co founder and CEO and David Blur it out to Seattle.

Looking statements or similar indications of future expectations. These statements reflect our views only as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially.

Speaker Change: During this call we will make forward looking statements, including statements related to our future financial performance our outlook for the fourth quarter and fiscal year 'twenty 'twenty four and related notes, our gross margins and operating margins, our product capabilities and our ability to capitalize on market opportunities. The words anticipate believe continue estimate expect intend will and similar expressions are intended to identify forward.

Speaker Change: A discussion of the material risks and other important factors that could affect our actual results. Please refer to our Form 10-Q for the quarter ended June 32024, additional information will be made available in our upcoming Form 10-Q for the fiscal quarter ended September 32024, and other filings with the SEC. This information is also available on the Investor Relations section.

Speaker Change: Looking statements or similar indications of future expectations. These statements reflect our views only as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially.

Speaker Change: Of our website along with a replay of this call. We will also discuss non-GAAP financial measures, which are reconciled to their most directly comparable GAAP financial measures in the tables in our earnings release, which is available at investors that beat about <unk> Dot com.

Speaker Change: For a discussion of the material risks and other important factors that could affect our actual results. Please refer to our Form 10-Q for the quarter ended June 30 of 'twenty 'twenty four additional information will be made available in our upcoming Form 10-Q for the fiscal quarter ended September 30th 'twenty 'twenty, four and other filings with the SEC.

Olivier: With that I'd like to turn the call over to Olivier.

Olivier: Thanks Hugo can thank you all for joining us this morning.

Olivier: I'm pleased to report a solid Q3, we continued to execute against our goals to help our customers grow faster safer and more efficient modernize application.

Speaker Change: This information is also available on the Investor Relations section of our website along with a replay of this call. We will also discuss non-GAAP financial measures, which are reconciled to their most directly comparable GAAP financial measures in the tables in our earnings release, which is available at investors that paid off its true dotcom.

Olivier: We kept broadening our platform, an observer ability and beyond including in Mexican AI, where interest continues to rise and we added new customers, while expanding with existing one as we grow into the cloud.

Speaker Change: With that I'd like to turn the call over to Olivier.

Olivier: Let me start with a review of our Q3 financial performance.

Olivier: Thanks, you gap and thank you all for joining us this morning.

Revenue was $619 million, an increase of 26% year over year and above the high end of our guidance range.

Olivier Hello: We are pleased to report in the sort of Q3, we continued to execute against our goals to help our customers grow faster safer and more efficient as they modernize application.

Olivier: We ended the quarter with about 29200 customers up for them.

Olivier Hello: We kept broadening our platform and that ability and beyond including the Mexican AI, where interest continues to rise.

Olivier: About 26800, a year ago.

Olivier: We had about 3490 customers with all of the 100000 at all anymore.

Speaker Change: And we added new customers, while expanding with existing one as they grow into the cloud.

Olivier: From about 3130, a year ago and he's got some are generated about 88% of all you are.

Speaker Change: Let me start with a review of our Q3 financial performance.

Speaker Change: Revenue was $619 million, an increase of 26% year over year and above the high end of our guidance range.

Olivier: And we generated free cash flow of $204 million with a free cash flow margin of 30%.

Speaker Change: We ended the quarter with about 29200 customers up from about 26800, a year ago.

Olivier: Turning to platform adoption.

Olivier: Our strategy continues to resonate in the market as.

Olivier: As of the end of Q3, 83% of customers were using two or more products up from 82% a year ago.

Speaker Change: We had about 3490 customers with all the other talking about or more up from about 3130, a year ago and she's got some are generated about 88% of I R.

49% of customers were using four or more products up from 46% a year ago.

Olivier: 26% of our customers were using six or more products up from 21% a year ago.

Speaker Change: And we generated free cash flow of $204 million with a free cash flow margin of 30%.

Olivier: 12% of our customers, who are using it or more products up from 8% a year ago.

Speaker Change: Turning to platform adoption.

Speaker Change: The strategy continues to resonate in the market.

Olivier: We continue to execute on growth across the three pillars of deliverability.

Speaker Change: At the end of Q3, 83% of customers were using two or more products up from 82% a year ago.

Olivier: And we are pleased to report that infrastructure monitoring our APM suite and log management together represent more than $2 5 billion.

Speaker Change: 49% of customers were using four or more products up from 46% a year ago.

Arm.

Speaker Change: 26% of our customers were using six or more products up from 21% a year ago.

Olivier: As a reminder, within the APM suite, we include core APM, synthetics really monitoring and continuous provider.

Speaker Change: And 12% of our customers, who are using it or more products up from 8% a year ago.

Olivier: We also want to call out on newer products, which are increasingly contributing to our business.

Speaker Change: We continue to execute on growth.

Olivier: Of our 23 products 15, now exceed $10 million and they are these.

Speaker Change: The three pillars over their ability.

Speaker Change: And we are pleased to report that infrastructure monitoring our APM suite and log management together represent more than $2 $5 billion in the arm.

These include even more cloud security products as well as CIBC ability and cloud cost management.

So we have many products beginning to contribute to our revenue growth and we're continuing to build greater capabilities within those products for our customers.

Speaker Change: As a reminder, within the APM suite. We include core APM synthetics really is the monitoring and continuous provider.

Now, let's discuss this quarter's business drivers.

Speaker Change: We also want to call out on newer products, which are increasingly contributing to our business.

Olivier: Overall, the business environment or dog has remained stable and similar to what we have seen throughout 2024.

Speaker Change: About 23 products 15, now exceed $10 million and they are using.

Olivier: Our customers overall are growing their cloud usage, while soma continuing to be cost conscious.

Speaker Change: These include even more classic beauty product, that's where I see a visibility and cloud cost management.

In Q3, we continued to see existing customer usage growth broadly in line with our expectations.

Speaker Change: So we have many products beginning to contribute to our revenue growth and we're continuing to build greater capabilities within those products for our customers.

Olivier: While usage growth with existing customers continued to be higher than in the year ago quarter.

Speaker Change: Now, let's discuss this quarter's business drivers.

Olivier: And we saw healthy growth across all product lines with newer products growing faster and more metro products off a smaller base.

Speaker Change: Overall, the business environment, So that a dog has remained stable and similar to what we have seen throughout 2024.

Finally churn continues to be low and gross revenue retention was stable in the mid 2019, highlighting the mission critical nature of our platform for our customers.

Speaker Change: Our customers overall are growing their cloud usage, why soma continuing to be cost countries.

Speaker Change: In Q3, we continue to see existing customer usage growth broadly in line with our expectations.

Olivier: Moving on to R&D.

Olivier: And the next NII space customers continue to experiment with new AI technologies and as they do they want to get visibility into the AI use.

Speaker Change: Well, you said growth with existing customers continued to be higher than in the year ago quarter.

Speaker Change: And we saw healthy growth across all product lines with newer products growing faster and more micro products off a smaller base.

Olivier: At the end of Q3 about 3000 customers use one or more dialogue AI integrations to centers data about their AI machine learning and edit and usage.

Speaker Change: Finally churn continues to be low and gross revenue retention was stable in the mid 2019.

Speaker Change: I think the mission critical nature of our platform for our customers.

Olivier: As some of the of these experiments start turning into production applications. We are seeing initial signs of traction for our LLM absorbability product.

Speaker Change: Moving on to R&D.

Speaker Change: And the next day I space customers continue to experiment with new AI technologies and as they do they want to get visibility into the AI use.

Olivier: Today hundreds of customers are using air animals ability with more exploring it everyday.

Speaker Change: At the end of Q3 about 3000 customers use one or more data look AI integrations to sandoz data about their AI machine learning and edit M usage.

Olivier: And some of our first paying customers have told us that they have kept their time spent investigating LLM latency errors in quality from days or hours to just minutes.

Speaker Change: As some of the these experiments start turning into production applications. We are seeing initial signs of traction for our llm's liability product.

Our customers don't only want to understand the performance and cost of their end applications.

Olivier: They also want to Edison energy motor performance within the context of their entire application.

Olivier: So they are using APM alongside Ara limits their ability to get fully integrated end to end visibility across all the applications in tech stocks.

Speaker Change: Today hundreds of customers are using air animals have ability with more exploring it everyday.

Speaker Change: And some of our first paying customers have told us that they have kept the time spent investigating LLM latency errors in quality from days or hours to just minutes.

Olivier: Meanwhile, we continue to work to make the data platform the best place for customers to monitor secure and take action on their systems no matter whether deployed.

Speaker Change: Our customers don't only want to understand the performance and the cost of the island's applications.

Olivier: In September we launched Teradata monitoring for Oracle cloud infrastructure for general availability.

Speaker Change: They also want to understand are they more performance within the context of their entire application.

Olivier: This launch our customers gain visibility into their OCI stack and they can manage in real time, the performance of OCI cloud services servers, Vms database, these containers and apps and dialogue.

Speaker Change: So they are using APM alongside animals that ability to get fully integrated end to end visibility across all the applications in tech stocks.

Speaker Change: Meanwhile, we continue to work to make the data platform the best place for customers to monitor secure and take action on their systems, no matter, where they deploy it.

Olivier: And customers cannot unify their monitoring across OCI other clouds and on Prem environment.

Olivier: We also continue to extend our platform and new ways to bring value to our customers.

Speaker Change: In September we launched Teradata monitoring for Oracle cloud infrastructure for general availability.

Olivier: At our dashes or conference. This summer, we announced hurdle on coal or newest product into cloud service management space.

Speaker Change: This launch customers gain visibility into their OCI stuck and they can manage in real time the performance of OCI cloud services servers. He hadn't got a base of used containers in apps in dialogue.

Olivier: As you know our customers with Teradata extensively during the workday for alerting and troubleshooting, whether that's forbes of ability or security use cases.

Speaker Change: And customers cannot unify their monitoring across OCI other clouds and on Prem environment.

Olivier: Now with that I look on coal, we are bringing a modern paging experience directly into a unified platform.

Speaker Change: We also continue to external platform and new ways to bring value to our customers.

Olivier: And we now offer a completely integrated solution that covers incidents from end to end from detection alerting and paging to incident management troubleshooting and regulation.

Speaker Change: Adult dashes or conference. This summer, we announced that on coal or newest product into cloud service management space.

Olivier: Given the Oncall is still in limited availability, we are already seeing very strong reception for the product.

Speaker Change: As you know our customers use teradata extensively during our walk there for alerting and troubleshooting, whether that's forbes of ability or security use cases.

Olivier: And we are beginning to see customers reports on call as part of their deals.

Olivier: Particular, new customers are interested in including paging as part of their land with better though.

Speaker Change: Now we've got it up on coal, we are bringing a modern pigeon experience directly into a unified platform.

Olivier: So we're working hard to deepen our proton deepen and broaden our platform.

Speaker Change: And we know for a completely integrated solution that covers incidents on end to end from detection alerting and paging to incident management troubleshooting and regulation.

Olivier: And our innovations are rightfully been recognized by independent research firms.

Olivier: We are pleased to see that for the fourth year in a row that Eric has been named a leader in the 2020 for Gartner Magic quadrant for Absorbability platforms.

Speaker Change: Even though on call is still in limited availability, we are already seeing very strong reception for the product.

Speaker Change: And we are beginning to see customers requests on call as part of their deals.

Olivier: We believe that this validates our approach to deliver a unified platform, which breaks down silos across teams.

Speaker Change: Particular, new customers are interested in including paging as part of their land with that up.

Olivier: And that has also been named a leader in Gartner is very <unk> magic quadrant for digital experience monitoring.

Speaker Change: So we're working hard to deepen our program with deepen and broaden our platform.

Speaker Change: And our innovation are rightfully being recognized by independent research firms.

Olivier: Which includes deadlocks products across synthetic testing really is on monitoring product matrix session replay and they are tracking.

Speaker Change: We are pleased to see that for the fourth year in a row that Eric has been named a leader in the 2020 for Gartner Magic quadrant for Absorbability platforms.

Olivier: Now, let's move on to sales and marketing.

Olivier: Our sales team continued to execute this quarter and we added some exciting new customers, while expanding with many more.

Speaker Change: We believe that this validates our approach to deliver a unified platform, which break down silos across teams.

Olivier: So let's go through a few examples.

Speaker Change: And that has also been named a leader in Gartner is very first magic quadrant for digital experience monitoring.

Olivier: First we landed a seven figure annualized deal with a leading E Commerce company in India.

Speaker Change: Which includes that docs products across synthetic testing really is on monitoring product matrix session replay and they are tracking.

Olivier: With its previous authority vendor to customers, so quickly increasing costs, while lacking the enterprise greater visibility they need it.

Speaker Change: Now, let's move on to sales and marketing.

Olivier: By switching to their dog, they expect to support the scaling goals and will rely for that on our tracing granular profiling and cloud integration support.

Speaker Change: Our sales team continued to execute this quarter and we added some exciting new customers, while expanding with them anymore.

Speaker Change: So let's go through a few examples.

Olivier: I will note that we are pleased to have landed a large new logo customer in India.

Speaker Change: First we landed a seven figure annualized deal with a leading E Commerce company in India.

Olivier: We are continuing to invest to grow our presence and our opportunities there.

Speaker Change: With its previous authority vendor to customers, so quickly increasing costs, while lacking the enterprise grade availability they need it.

Olivier: Next we signed a six figure annualized alone with a major U S Federal agency.

Olivier: Is the agency is beginning to move some of its workload to the cloud and is expanding the services offered to every single U S citizen through cloud applications.

Speaker Change: By switching to their dog, they expect to support the scaling goals and will rely for that although tracing granular profiling and cloud integration support.

Olivier: They have chosen their dog to observe and secure their club environment and deliver a faster better experience to end users.

Speaker Change: I will note that we are pleased to have led a large new logo customer in India, and we are continuing to invest to grow our presence and our opportunities there.

Olivier: This deal includes eight products on that it'll go cloud, including cloud team and cloud security management.

Speaker Change: Next we signed a six figure annualized aligned with a major U S Federal agency.

Olivier: Next we landed a seven figure annualized deal with a large American financial services company.

Speaker Change: Is the agency is beginning to move some of its workload to the cloud and is expanding the services offered to every single U S citizen to cloud applications.

Olivier: This customer has a very seasonal business and experience with dozens of major incidents during their annual peak season with an average downtime per incident of about five hours.

Speaker Change: They have chosen that a dog to observe and secure their cloud environment and deliver it faster better experience to end users.

Olivier: And they estimate millions of dollars of lost revenue for each hour of downtime.

Speaker Change: This deal includes eight products under a cloud, including cloud team and cloud security management.

Olivier: By replacing its cloud provider and monitoring tools with their dog and in particular, using a real user monitoring product these customer targets substantial reductions in downtime.

Speaker Change: Next we landed a seven figure annualized deal with a large American financial services company.

Olivier: They are starting with <unk> products and are Trialing on network monitoring database monitoring plus security and telecom management products as they look to consolidate dozens of homegrown commercial tools.

Speaker Change: This customer has a very seasonal business and experiencing dozens of major incidents during their annual peak season with an average downtime for incident of about five hours.

Speaker Change: And they estimate millions of dollars of lost revenue for each hour of downtime.

Olivier: Next we'll need a seven figure annualized extension with a major airline in Europe.

Speaker Change: By replacing its cloud provider and monitoring tools that a dog.

Olivier: This customer has adopted <unk> for its customer facing website.

Speaker Change: In particular, using a real user monitoring product.

Speaker Change: Customer targets substantial reductions in downtime.

Olivier: We are now moving hundreds of applications from on Prem to AWS and they want to Derisk desktop migration.

Speaker Change: They are studying with I've thought about products and are Trialing on network monitoring database monitoring clocks security and cloud cost management products as they look to consolidate dozens of homegrown commercial tools.

Olivier: The estimate that each incident can cost tens of millions of dollars in lost revenue and customer impact.

Olivier: By using data dog across five product this customer expects to significantly improve meantime to resolution.

Speaker Change: Next we'll need a seven figure annualized extension with a major airline in Europe.

Olivier: And they have already seen progress in that respect during their evaluation period with dialogue.

Speaker Change: This customer has adopted <unk> for its customer facing website.

Olivier: Next we signed a seven figure annualized expansion as a division of a hyper scaler delivering next nexgen AI models.

Speaker Change: They are now moving hundreds of applications from on Prem to AWS and they want to de risk their cloud migration.

Speaker Change: The estimate that each incident can cost tens of millions of dollars in lost revenue and costs and earn back.

Olivier: This customer is very technically capable and already has a homegrown absurdity solution, which requires time consuming customizations and manual configuration.

Speaker Change: By using their dog across five product <unk>.

Speaker Change: We expect to significantly improve meantime to resolution.

Olivier: They will be launching new features for their large language more soon and need a platform that can scale flexibly, while supporting proactive incident detection.

Speaker Change: And they have already seen progress in that respect during the evaluation period, we got a dog.

Speaker Change: Yeah.

Speaker Change: Next we signed a seven figure annualized expansion with a division of a hyper scaler delivering next nexgen AI models.

Olivier: By expanding their use of data dog, they expect to efficiently onboard new teams and environments and support the rapidly increasing adoption of the internet.

Speaker Change: This customer is very technically capable and already has a homegrown solution, which requires time consuming customizations and manual configuration.

Olivier: Next and last we signed a seven figure annualized expansion with a leading online food delivery company in Latin America.

Speaker Change: They will be launching new features for their lost language more soon.

Olivier: Before that a dog this customer suffered from excessive alerting noise siloed teams and lack of visibility with each minutes of downtime, resulting in thousands of lost orders.

Speaker Change: The platform that can scale flexibly, while supporting proactive incident detection.

Speaker Change: By expanding the use of data dog, they expect to efficiently on board, new teams and environments and support the rapidly increasing adoption of our daily lives.

Olivier: By using data dog this customer has experienced meaningful reductions in maintenance of resolution and wholesalers, while sitting on hard costs in their communities environment.

Speaker Change: Next and last we signed a seven figure annualized expansion with a leading online food delivery company in Latin America.

Olivier: This customer is expanding to 10 products in the data platform.

Olivier: And that is it for another productive quarter from a go to market team.

Speaker Change: Before that a dog discuss them or suffered from excess of alerting noise siloed teams and lack of visibility with each minutes of downtime, resulting in thousands of lost orders.

Speaker Change: Now, let me say a few words on our longer term outlook.

Olivier: Overall.

Olivier: We continue to see no change to the multiyear trends towards digital transformation and cloud migration, which we continue to believe are still in early days.

Speaker Change: Why isn't that a dog this customer has experienced meaningful reductions in maintenance of resolution and false alerts while sitting on hard costs in the commodities environment.

Olivier: We are seeing continued experimentation with new advances such as <unk> and AI and.

Speaker Change: This customer is expanding to 10 products into that platform.

Olivier: And we believe this is one of the many factors that will drive greater use of the cloud and other modern technologies.

Speaker Change: And that is it for another productive quarter from a go to market team.

Speaker Change: Now, let me say a few words on our longer term outlook.

Olivier: So we are helping our customers every day to observe secure and act on their business critical applications and workloads.

Speaker Change: Overall, we continue to see no change to the multiyear trends towards digital transformation and cloud migration, which we continue to believe are still in early days.

Olivier: With that I will turn it over to our CFO David.

David: Thanks, Olivier and good morning.

Speaker Change: We are seeing continued experimentation with new advances such as an exit AI and.

David: Q3 revenue was $690 million up 26% year over year and up 7% quarter over quarter.

Speaker Change: And we believe this is one of the many factors that will drive greater use of the cloud another modem technologies.

Speaker Change: So we are helping our customers every day to observe secure and act on their business critical applications and workloads.

David: To dive into some of the drivers of our Q3 revenue growth.

Olivier: Overall, we saw trends for usage growth from existing customers that were consistent with our expectation.

Speaker Change: With that I will.

Speaker Change: Turning it over to our CFO David.

David Blur: Thanks, Olivier and good morning.

Olivier: We've seen conditions remain roughly stable throughout 2024 with continued movement to cloud and modern Dev op technologies, and with customers remaining cost conscious and seeking efficiency and value from their spend.

David Blur: Q3 revenue was $690 million up 26% year over year and up 7% quarter over quarter.

David Blur: To dive into some of the drivers of our Q3 revenue growth.

Olivier: In Q3, we saw usage growth from existing customers that was higher than usage growth in the year ago quarter as well as higher than usage growth in the prior quarter.

David Blur: Overall, we saw trends for usage growth from existing customers that were consistent with our expectation.

David Blur: We've seen conditions remain roughly stable throughout 2024 with continued movement to cloud and modern Dev op technologies and.

David: Now some of our growth is coming from AI native customers, who this quarter represented more than 6% of our Q3 <unk>.

David Blur: And with customers remaining cost conscious and seeking efficiency and value from their spend.

David: Up from more than 4% in Q2 and about two 5% of our IRR in the year ago quarter.

David Blur: In Q3, we saw usage growth from existing customers that was higher than usage growth in the year ago quarter as well as higher than usage growth in the prior quarter.

David: AI native customers contributed about four percentage points of year over year growth in Q3 versus about two percentage points in the year ago quarter.

David Blur: Now some of our growth is coming from AI native customers, who this quarter represented more than 6% of our Q3 <unk> up.

David: While we believe that adoption of AI, we will continue to benefit data dog in the long term.

David Blur: Up from more than 4% in Q2 and about two 5% of our <unk> in the year ago quarter.

David: We are mindful that some of the large customers in this cohort have ramped extremely rapidly.

David Blur: AI native customers contributed about four percentage points of year over year growth in Q3 versus about two percentage points in the year ago quarter.

David: And that these customers may optimize cloud an observer ability usage.

David: And increased their commitments to us over time with better terms.

David: This may create volatility in our revenue growth in future quarters on the backdrop of long term volume growth.

David Blur: While we believe that adoption of AI, we will continue to benefit data dog in the long term.

David Blur: We are mindful that some of the large customers in this cohort have ramped extremely rapidly.

David: Now regarding usage growth by customer size in Q3.

David: Similar to last quarter, we saw the strongest performance among our largest customers who spent multiple millions of dollars with us annually.

David Blur: And that these customers may optimize cloud an observer ability usage.

David Blur: And increased their commitments to us over time with better terms.

David: And as we look at usage growth by segment similar to recent quarters, we are seeing the strongest growth from our enterprise customers where year over year growth in usage has accelerated over the past several quarters.

David Blur: This may create volatility in our revenue growth in future quarters on the backdrop of long term volume growth.

David Blur: Now regarding usage growth by customer size in Q3.

David: Meanwhile, our SMB customers remained solid with year over year growth similar to past the past several quarters.

David Blur: Similar to last quarter, we saw the strongest performance among our largest customers who spent multiple millions of dollars with us annually.

David: As a reminder, we define enterprise customers as our clients with 5000 employees or more mid market customers with 1000 to 5000 employees and SMB customers as those companies with less than 1000 employees.

David Blur: And as we look at usage growth by segment similar to recent quarters, we are seeing the strongest growth from our enterprise customers where year over year growth in usage has accelerated over the past several quarters.

David Blur: Meanwhile, our SMB customers remained solid with year over year growth similar to past the past several quarters.

David: Regarding our retention metrics.

David: Our net retention revenue retention percentage was in the mid 100 <unk> in Q3 with continued improvement from last quarter.

David Blur: As a reminder, we define enterprise customers as our clients with 5000 employees or more mid market customers with 1000 to 5000 employees and SMB customers as those companies with less than 1000 employees.

David: This is a trailing 12 month measure Meanwhile, which continued to see an increase in recent quarters as we look at the NRI quarterly trend.

David: Finally, our trailing 12 month gross revenue retention percentage remains stable in the mid to high nineties.

David Blur: Regarding our retention metrics.

David Blur: Our net retention revenue retention percentage was in the mid 100 and cans in Q3 with continued improvement from last quarter.

David: Now moving on to our financial results.

David: <unk> billings were $689 million up 14% year over year.

David Blur: This is a trailing 12 month measure. Meanwhile, we continue to see an increase in recent quarters as we look at the quarterly trend.

David: Billings duration decreased slightly year over year.

David: Pro forma for changes in billing timing and the slight change in duration billings growth would have been in the mid 20% range.

David Blur: And finally, our trailing 12 month gross revenue retention percentage remained stable in the mid to high nineties.

David Blur: Now moving on to our financial results.

David: Our billings and billings growth can be volatile on a quarterly basis, depending on the timing of our deals.

David Blur: First billings were $689 million up 14% year over year.

David: Our 12 months trailing bill billing growth is similar to our trailing 12 month revenue growth with both in the mid 20%.

David Blur: Billings duration decrease slightly year over year.

David Blur: Pro forma for changes in billing timing and the slight change in duration.

David: Remaining performance obligations or RPI was 182 billion up 26% year over year.

David Blur: Billings growth would have been in the mid 20% range.

David Blur: Our billings and billings growth can be volatile on a quarterly basis, depending on the timing of our deals are 12 months.

David: And current <unk> growth was in the high 20% year over year.

David: RP O duration was down slightly year over year.

David Blur: Failing bill billing growth is similar to our trailing 12 month revenue growth with both in the mid Twenty's percent.

David: Normalizing for duration RPM growth would've been in the high 30% year over year.

David: We continue to believe that revenue is a better indication indicator of our business trends, then billing and RP O as those fluctuate on a quarterly basis relative to revenue based on the timing of invoicing and the duration of customer contracts.

David Blur: Remaining performance obligations or RPI was $182 billion up 26% year over year.

David Blur: Current RPI growth was in the high 20% year over year.

David Blur: RP O duration was down slightly year over year.

David: Now, let's review some key income statement results.

David Blur: Normalizing for duration RP O growth would've been in the high 30% year over year.

David: Unless otherwise noted all metrics are non-GAAP, we have provided a reconciliation of GAAP to non-GAAP financials in our earnings release.

David Blur: We continue to believe that revenue is a better indication indicators of our business trends, then billing and RP O as those fluctuate on a quarterly basis relative to revenue based on the timing of invoicing and the duration of customer contracts.

David: Gross profit in the quarter was $560 million, representing a gross margin of 81, 1%. This compares to a gross margin of 82, 1% last quarter and 82, 3% in the year ago quarter.

David Blur: Now, let's review some key income statement results.

David Blur: Unless otherwise noted all metrics are non-GAAP, we have provided a reconciliation of GAAP to non-GAAP financials in our earnings release.

David: Our Q3, Opex grew 21% year over year, the same growth as last quarter that would have been.

David: Would've been referenced that although it would have represented an acceleration from last quarter, excluding the impact of our dash user conference in Q2.

David Blur: First gross profit in the quarter was $560 million, representing a gross margin of 81, 1%. This compares to a gross margin of 82, 1% last quarter and 82.3% in the year ago quarter.

David: As we've said before we are investing in head count and two in 2024 and the acceleration in Opex reflects our execution on our hiring in sales and marketing and R&D. So far this year.

David Blur: Our Q3, Opex grew 21% year over year, the same growth as last quarter that would have been would have been represented although it would have represented an acceleration from last quarter, excluding the impact of our dash user conference in Q2 as.

David: Q3, operating income was $173 million or a 25% margin compared to 24% last quarter and 24% in the year ago quarter.

David: Turning to the balance sheet and cash flow statements. We ended the quarter with $3 $2 billion in cash cash equivalents in marketable securities.

David Blur: As we've said before we are investing in head count and two in 2024 and the acceleration in Opex reflects our execution on our hiring in sales and marketing and R&D. So far this year.

David: Cash flow from operations was $229 million in the quarter and after taking into consideration capital expenditures and capitalized software free cash flow was $204 million for free cash flow margin of 30%.

David Blur: Q3, operating income was $173 million or a 25% margin compared to 24% last quarter and 24% in the year ago quarter.

David Blur: Turning to the balance sheet and cash flow statements. We ended the quarter with three $2 billion in cash cash equivalents in marketable securities.

David: Now for our outlook for the fourth quarter and for fiscal 2024.

David: First our guidance philosophy remains unchanged as a reminder, we base our guidance on trends observed in recent quarters and apply conservativism on these growth trends.

David Blur: <unk> from operations was $229 million in the quarter and after taking into consideration capital expenditures and capitalized software free cash flow was $204 million for free cash flow margin of 30%.

David: For the fourth quarter, we expect revenue to be in the range of $709 million to $713 million, which represents a 20% to 21% year over year growth rate non.

David Blur: Now for our outlook for the fourth quarter and for fiscal 2024.

David Blur: First our guidance philosophy remains unchanged.

David: non-GAAP operating income is expected to be in the range of $163 million to $167 million, which implies an operating margin of 23% and non-GAAP net income per share is expected to be 42 to <unk> 44 per share.

David Blur: As a reminder, we base our guidance.

David Blur: On trends observed in recent quarters and apply conservativism on these growth trends.

David Blur: For the fourth quarter, we expect revenue to be in the range of $709 million to $713 million, which represents a 20% to 21% year over year growth rate.

David: First on approximately 361 million weighted average diluted shares outstanding.

David: For the full fiscal year 2024, we expect revenue to be in the range of $2 65, 6% to 660 $1 billion, which represents 25% year over year growth non.

David Blur: non-GAAP operating income is expected to be in the range of $163 million to $167 million, which implies an operating margin of 23%.

David Blur: non-GAAP net income per share is expected to be 42 to <unk> 44 per share based on approximately 361 million weighted average diluted shares outstanding.

David: non-GAAP operating income is expected to be in the range of $658 million to $662 million, which implies an operating margin of 25% and non-GAAP net income per share is expected to be in the range of $1 75 to $1 77 per share based on approximately 359.

David Blur: And for the full fiscal year 2024, we expect revenue to be in the range of $2.656 billion to $2.6601 billion, which represents 25% year over year growth.

David: 9 million weighted average diluted shares.

David: Now some finally, some additional notes on guidance, we expect net interest and other income for the fiscal year 2024 to be approximately $140 million.

David Blur: non-GAAP operating income is expected to be in the range of $658 million to $662 million, which implies an operating margin of 25% and non-GAAP net income per share is expected to be in the range of $1 75 to $1 77 per share based on approximately 359.

David: Next we expect cash taxes in 2024 to be in the $20 million to $25 million range and we continue to apply a 21% non-GAAP tax rate for 2024 and going forward.

David Blur: 9 million weighted average diluted shares.

David Blur: Now some finally, some additional notes on guidance, we expect net interest and other income for the fiscal year 2024 to be approximately $140 million.

David: Finally, we expect capital expenditures and capitalized software together to be in the 3% to 4% of revenue range for fiscal 2024.

David Blur: Next we expect cash taxes in 2024 to be in the $20 million to $25 million range and we continue to apply a 21% non-GAAP tax rate for 2024 and going forward.

David: Now to conclude we are continuing to execute on our strategy.

David: Investing in our innovation and expanding our platform to deliver more value to our customers and lastly, I want to thank all data dogs worldwide for their efforts as we close out 2024.

David Blur: Finally, we expect capital expenditures and capitalized software together to be in the 3% to 4% of revenue range for fiscal 2024.

Speaker Change: And with that we'll open the call for questions operator, let's begin the Q&A.

Speaker Change: David at this time, we will conduct a question and answer session.

David Blur: Now to conclude we are continuing to execute on our strategy.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

David Blur: Investing in our innovation and expanding our platform to deliver more value to our customers.

David Blur: And lastly, I want to thank all data dogs worldwide for their efforts as we close out 2024.

David Blur: And with that we'll open the call for questions operator, let's begin the Q&A.

Speaker Change: The first question comes from Mark Murphy with Jpmorgan. Your line is now open.

Speaker Change: Thank you David at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Mark Murphy: Thank you very much and congrats on another very healthy performance.

Speaker Change: Olivier we noticed your NII contribution third to about 6% this quarter, we're watching all the advances in the.

Speaker Change: Foundation models.

David: Including the opening of the Strawberry version, we're watching the Multistep reasoning, how they're becoming multi modal longer duration and video model does it seem reasonable to you that we are on the cost curve.

Speaker Change: The first question comes from Mark Murphy with Jpmorgan. Your line is now open.

Mark Murphy: Thank you very much and congrats on another very healthy performance.

Speaker Change: Olivier we noticed your AI contributions third to about 6% this quarter and we're watching all the advances in the.

David: We do a pretty interesting periods. The next couple of years for the inferencing.

Speaker Change: And that May drive some incremental traction for for data dog that is tied to AI and then I have a quick follow up for David.

David Blur: Foundation models.

David Blur: Including the opening Strawberry version, we're watching the Multistep reasoning, there, how they're becoming multi modal the longer duration in print and video model does it seem reasonable to you that we are on the cost curve.

Speaker Change: I mean look the stiff earlier.

Speaker Change: Very interesting period to say lift we see tons of innovation that grow their customer base still largely more around experimenting and testing new applications, though as we reported.

Speaker Change: We are seeing some customers move into production and we are seeing our production mining it and we're going to get the product for example, being <unk>.

David Blur: You know a pretty interesting periods. The next couple of years for the Inferencing lids.

Speaker Change: And that May drive some incremental traction for for data dog that is tied to AI and then I have a quick follow up for David.

Speaker Change: <unk> bye.

Speaker Change: Real pain customers, which is real volume in real applications in real production workload. So that's exciting and healthy I think it's a.

David Blur: I mean look you stay familiar.

David: Great trend for the future.

David Blur: Very interesting period to say the lift we see tons of innovation across their customer base still largely more around experimenting and testing new applications, though as we reported.

David: In general in terms of the the workload.

David: You are right that we're starting to see more influenced book of the year, but they still tend to be more.

David Blur: We are seeing some customers moving to production and we are seeing a production mining at <unk> product for example, being.

David: <unk>.

David: Concentrated across a number of.

David: Given providers.

David Blur: Used by them.

David: Let me add a few others.

David Blur: <unk> paying customers, which is real volumes in real applications in real production workload. So that's exciting and healthy I think it's a great.

David: Both the Netherlands, and other kinds of models. So this is where I think most of the usage in production at least east today.

David Blur: Great trend for the future.

David Blur: In general in terms of the the workload.

David: We expect that to diversify more of a time as companies.

Speaker Change: You're right that we're starting to see more insurance brokers in Europe, but they still tend to be more.

David: Get further into production with applications in this time, because somebody money on their malls.

David Blur: Concentrated across a number of our API driven providers.

Speaker Change: Okay understood and then to the extent you've always said that revenue is a better indicator than billings in RPM.

David Blur: Yeah.

David Blur: Few others.

David Blur: On both the Netherlands, and the other kinds of models. So this is where I think most of the usage in production at least east today.

David: But to the extent that billings growth was affected by timing as you mentioned.

Speaker Change: We've seen that before we know it can bounce around but did you did you have some invoices that would have gone out in September and said they were issued in October of another word would receive some recapture of the timing element in Q4 or perhaps into early next year or is it some.

David Blur: We expect that to diversify more of a time as companies.

David Blur: Get further into production with applications and they start could you give somebody money on their malls.

David Blur: Okay understood and then David to the extent, you've always said that revenue is a better indicator than billings in RPM.

Speaker Change: Other dynamic there.

David Blur: But to the extent that billings growth was affected by timing as you mentioned.

Speaker Change: Yes, its really some other dynamic it's that the timing of billing for last year was soft.

David Blur: We've seen that before we know it can bounce around but did you did you have some invoices that would have gone out in September and instead. They were issued in October of in other words will receive some recapture of the timing element in Q4 or perhaps into early next year or is it some.

David: Slightly different than for this year and so it was more a factor of timing for building last year that didn't repeat this year. So we think that the weighted average what we talked about the average over the 12 months is a better indicator of the relationship between.

David Blur: Other dynamic there.

David Blur: Yes, its really some other dynamic it's that the timing of billing for last year was.

David: Billing and revenues and when you look at that Theyre much more closely aligned.

Speaker Change: Excellent. Thank you again.

David Blur: Slightly different than for this year and so it was more a factor of timing for billing last year that didn't repeat this year. So we think that the weighted average what we talked about the average over the 12 months is a better indicator of the relationship between.

Speaker Change: Thank you.

Speaker Change: Please standby for the next question.

Speaker Change: The next question comes from Sandeep Singh with Morgan Stanley. Your line is now open.

Sandeep Singh: Yes, thank you for taking the questions and all.

Speaker Change: Already in the framework you sort of laid out for that business observe secure and act I wanted to focus on the last two pillars secure and act when we think about how the security cloud security.

David Blur: Billing and revenues and when you look at that they are much more closely aligned.

Speaker Change: Excellent. Thank you again.

Speaker Change: Thank you.

David Blur: Please standby for the next question.

Speaker Change: The motion has been going this quarter versus prior quarters any timelines, there and any any sort of early indications on the uptake of some of the service management products and more of the automation features within.

Speaker Change: The next question comes from Sandeep Singh with Morgan Stanley. Your line is now open.

Sandeep Singh: Yeah. Thank you for taking the questions.

Speaker Change: All of you in the framework that you sort of laid out so the business observe secure and act I wanted to focus on the last two pillars to cure and act when we think about how the security cloud security sales motion has been going this quarter versus prior quarters any timelines, there and any any sort of early indication.

Speaker Change: Within the data.

Speaker Change: Yes, so on the security side, I think there's quite a bit of focus right now.

Speaker Change: On the cloud.

Speaker Change: Cloud team as we see.

Speaker Change: Number of very exciting opportunities there I think the.

Speaker Change: When you look at the landscape competitively.

Speaker Change: On the uptake of some of the service management products and more of the automation features within.

Speaker Change: Other companies are using because most companies have a similarly at least for some part of their business.

Speaker Change: I think there is a very interesting opportunity for us there.

Speaker Change: In the data.

Speaker Change: And the product is.

Speaker Change: Yeah. So on the security side I think we there's quite a bit of focus right now.

Speaker Change: Mature enough.

Speaker Change: To win best of breed situations.

Speaker Change: On the.

Speaker Change: <unk> products are where we are.

Speaker Change: Cloud team as we see.

Speaker Change: Got a bit of accretion we're in general we're still investing quite a bit in the rest of the platform in <unk>.

Speaker Change: Number of very exciting opportunities there I think the.

Speaker Change: When you look at there.

Speaker Change: Bring all the products together to be a unified platform for security, but I would say the the tip of the spear for the.

Speaker Change: Inscape with completely what other companies are using because most companies haven't seem already at least for some part of their business.

Speaker Change: This quarter and next to the user.

Speaker Change: I think there's a very interesting opportunity for us there.

Speaker Change: Lastly, I think there's a very specific opportunity there.

Speaker Change: The product is.

Speaker Change: On the <unk>.

Speaker Change: Yeah.

Speaker Change: Sure enough.

Speaker Change: On the.

Speaker Change: To win best of breed situations.

Speaker Change: And we also have a few other products security dock coming online soon that.

Speaker Change: <unk> products are where we are having.

Speaker Change: No we haven't we haven't broken it yet, but we think can make a big difference.

Speaker Change: Quite a bit of a cushion where you know we're still investing quite a bit in the rest of the platform and.

Speaker Change: In.

Speaker Change: Bringing all the products together to be a unified platform for security, but I would say to the type of this care for the.

Speaker Change: In the service management.

Speaker Change: We actually see.

Speaker Change: Very exciting transform customary we mentioned on the call.

Speaker Change: This quarter next year.

Speaker Change: Lastly, I think there's a very specific opportunity there.

Speaker Change: On core product, which we sell directly to the.

Speaker Change: Hum.

Speaker Change:

Speaker Change: The paging loop and the start of many incidents.

Speaker Change: On the and we also have a few other product security got coming online soon that we.

Speaker Change: The product is getting stronger reception than we initially thought to the point where.

Speaker Change: No. We havent, we havent broke could yet but that we think can make a big difference.

Speaker Change: Customers are clamoring to buy even though it's extending preview.

Matt: In 75, it's Matt.

Speaker Change: <unk>.

Speaker Change: So we we feel good about.

Speaker Change: We actually see.

Speaker Change: Very exciting transform customer we mentioned on the call.

Speaker Change: Handling the full loop for them, starting with when we detect something in that.

Speaker Change: Our encore product, which we sell directly to the.

Speaker Change: <unk> ability.

Speaker Change: More of the way to fully seen in resolution and automation are a big part of it. So we think our Hong Kong can be a bit of a watershed for us to do quite a bit more on that.

Speaker Change: The paging loop and the start of many incidents.

Speaker Change: The product is getting stronger reception than we initially thought to the point where our customers.

Speaker Change: Also excited and where.

Speaker Change: Customers are clamoring to buy even though it's a preview.

Speaker Change: Doing what we can to accelerate the roadmap there because we think there's a very big opportunity.

Speaker Change: So we we feel good about and.

Speaker Change: We have a few other building blocks on the service management.

Speaker Change: Handling the full loop for them you know starting with when we detect something in our EBITDA.

Speaker Change: We believe over the past year and they are all growing quite nicely.

Speaker Change: T.

Speaker Change: All the way to fully incident resolution and automation are a big part of it. So we think our encore can be a bit of a watershed for us to do a quite a bit more on that so we're also excited and where.

Speaker Change: Small basis today.

Speaker Change: We're very excited and the way they all come together to form our integrated platform, where we can fully automate reasonably thing for our customers. So that's again still something we're building lovely from those building blocks.

Speaker Change: Doing what we can to accelerate the roadmap there because we think there's a very big opportunity.

Speaker Change: But something that we think is going to be very exciting.

Speaker Change: We have a few other building blocks on the service management.

Speaker Change: In the quarters and years to come.

Speaker Change: That's great to hear and sort of one follow up going to sort of the.

Speaker Change: We believe that over the past year and they are all growing quite nicely I would say from a small base today.

Speaker Change: Spending intentions from your customers it feels like most of the past 12 to 18 months the sales playbook, particularly in the enterprise has been around consolidation is that still the theme in terms of driving new bookings new expansion deals, where you're starting to see customers focus more less about the consolidation.

Speaker Change: But we're very excited and the way they all come together to form our integrated platform, where we can.

Speaker Change: Julio to resolve this and for our customers. So that's still something we're building lovely from those building blocks.

Speaker Change: But something that we think are going to be very exciting.

Speaker Change: In the quarters and years to come.

Speaker Change: Any more about innovation.

Speaker Change: That's great to hear and then sort of one follow up going to sort of the.

Speaker Change: And bringing their innovation budgets that they are to invest in.

Speaker Change: AI and cloud and bringing state of the state at all along for the right.

Speaker Change: Spending intentions from your customers it feels like most of the past 12 to 18 months the sales playbook, particularly in enterprise has been around consolidation is that still the theme in terms of driving new bookings new expansion deals, where you're starting to see customers focus more less about the consolidation.

Speaker Change: It has always been.

Speaker Change: Elevation in new things.

Speaker Change: Youre right that at least for the deals we talked about in the in the earnings there tends to be more consolidation, but thats the nature of it and innovation typically.

Harper: Harper and gradually as opposed to being a big Bang.

Harper: Customers switching 5 billion from.

Harper: <unk> hundred into another vendor.

Harper: So we talk about these less inorganic growth, but thats been happening throughout.

Speaker Change: We definitely see room for a lot more considered consolidation moving forward.

Speaker Change: Both in terms of existing customers and new logos.

Speaker Change: And the same time, we are excited to see what's happening with DTA utilization as it gets further down the pipe.

Speaker Change: Away from testing and experimenting and more into <unk>.

Speaker Change: Production applications and we have some signs that it's starting to happen again, we see that with O&M with obesity product.

Speaker Change: We see that also with some of the workloads, we monitor for more customers on their infrastructure side, but I would say, it's still very early days in terms of customers being in production with that makes an application.

Speaker Change: Great. Thank you for the thoughts about it.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Raimo <unk> with Barclays. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Congrats from me as well.

Speaker Change: On that subject a little bit longer Olivier.

Speaker Change: If you think about it.

Speaker Change: One big driver for you guys in the past was workload growth and Thats, something thats kind of all watching out for.

Speaker Change: For the Hyperscale as well, but it looks like they're stable trends at the Hyperscale listen for you as well like if you think about the puts.

Speaker Change: Puts and takes here to think that that's changing like how much of that is just plain vanilla macro and how much of that is like taking project resources way not so much money, but also time for kind of AI and that's what we see like as you said early in its lifecycle can you just how do you see that playing out.

Speaker Change: One thing we were all watching out thank you.

Speaker Change: Yeah, I mean look the.

Speaker Change: The key thing to.

Speaker Change: We remind everyone of them.

Speaker Change: We.

Speaker Change: We think there.

Speaker Change: The general move.

Speaker Change: Workload growth in the cloud or cloud environment might be public cloud based but the models will be private cloud.

Speaker Change: This.

Speaker Change: This growth will move to the cloud is going to last for a very long time and he is going to be able to hire at pretty high level for a very long time. So.

Speaker Change: You are right that when we look at the numbers on the hyper scanner as and when we tried to factor Rockwood GPU driven.

Speaker Change: The growth looks stable ish.

Speaker Change: We think that cost is too high and is going to last for a very long time and thats one of the big underpinning trends that we're going to ride for the years to come.

Speaker Change: On the edge of that Youre right that the.

Speaker Change: Where the workload.

Speaker Change: You have grown maybe instead of growing 20% liquid grew 25%.

Speaker Change: Maybe some of those 5% instead of being invested both in terms of our transfer budget or.

Speaker Change: Innovation timing emission budget.

Speaker Change: That is going into AI, and that's largely right, knowing experimentation and model training and that sort of thing.

Speaker Change: That's probably right.

Speaker Change: But we see that also as a precursor to further workload growth in the future I would say more traditional production application workload growth.

Speaker Change: So for us it doesn't it doesn't really change the equation. It does create a bit of a correlation between all numbers at all in the numbers you might see reported from the Hyperscale <unk>.

Speaker Change: Innovation time Univision budget.

Speaker Change: A lot of doors, they're short term growth.

Speaker Change: All of that is going into AI and that's allowed me right, knowing experimentation and muddle training and that sort of thing.

Speaker Change: Rights more into on the complexity of Gpus that they bring online for those experimentation and training workloads.

Speaker Change: That's probably right, but we see that also as a precursor to further her workload growth in the future I would say more traditional production application.

Speaker Change: Okay perfect. Thank you and then one follow up for David If you think about capacity like where are you in terms of sales capacity in case things are changing or how do you think about like increasing maintaining capacity as we think about the new year. Thank you.

Speaker Change: Our protocol.

Speaker Change: So for us it doesn't it doesn't really change the equation. It does create a bit of a correlation between all numbers at all in the numbers you might see reported from the Hyperscale <unk>.

Speaker Change: Yes, we think long term.

Speaker Change: A lot of doors they are short term growth.

Speaker Change: <unk> revenue our sales capacity is highly correlated with our topline growth and as we said we've been attempting to <unk>.

Speaker Change: Rights more into our on the Quebec City of Gpus that they bring online for those experimentation and training workloads.

Speaker Change: Okay perfect. Thank you and then one follow up for David If you think about capacity like where are you in terms of sales capacity.

Speaker Change: Increase our sales capacity similar to top line growth rates.

Speaker Change: And that has to do as we've mentioned with bottoms up planning are putting sales capacity in areas, where we see either under under covered a lot of a lot of white space and then ramping in training our salespeople. So our philosophy is to scale our sales capacity roughly in line with the top with the topline.

Speaker Change: Things are changing or how do you think about like increasing maintaining capacity for as we think about the new year. Thank you.

Speaker Change: Yes, we think long term our revenue our sales capacity is highly correlated with our topline growth.

Speaker Change: And as we said we've been attempting to.

Speaker Change: Okay.

Speaker Change: Increase our sales capacity similar to top line growth rates.

Speaker Change: We have plenty of opportunity for growth and where like do the plan is to keep growing.

Speaker Change: And that has to do as we've mentioned with bottoms up planning are putting sales capacity in areas, where we see either under under covered a lot of a lot of white space and then ramping in training our salespeople. So our philosophy is to scale our sales capacity roughly in line with the top with with the top line.

Speaker Change: There are many markets many geographies, where we're under penetrated we mentioned in India on the call with one of them.

Speaker Change: It has tremendous opportunity and we have very little presence at this point.

Speaker Change: And in general the other.

Speaker Change: The question of what we're doing strategically where we're going and how much we want to invest and then tactically. The question of how we execute against that plan and if that one is a lot harder because it's too easy to say, we're going to grow the sales team by you know.

Speaker Change: Okay.

Speaker Change: We have plenty of opportunity for growth and were due to the plan is to keep growing.

Speaker Change: Any markets, many geographies, where we're under penetrated we mentioned in India on the Colgate is one of them.

Speaker Change: 30%, 40%.

Speaker Change: Much harder to then have these people.

Speaker Change: Show up in the right region at the right time and be trained and everything else.

Speaker Change: Where there's tremendous opportunity and we have very little presents at this point.

Speaker Change: I would say.

Speaker Change: We're doing fairly well there probably are doing better at the end of the year than we did at the beginning of the year in terms of bringing all of our agreements with capacity for technical reason.

Speaker Change: And in general.

Speaker Change: A question of what we're doing strategically where we're going and how much we're going to invest and then tactically. The question of who we are execute against that plan and it took that one is a lot harder because it's too easy to say, we're going to grow the sales team by.

Speaker Change: But overall, we are executing to up towards our plan.

Speaker Change: Thank you.

Speaker Change: Thank you for your question.

Speaker Change: 20%, 30%, 40%, it's much harder to didn't have these people.

Speaker Change: Our next question comes from Kash Rangan with Goldman Sachs. Your line is now open.

Speaker Change: True up in the right region at the right time and be training and everything else.

Speaker Change: And I would say.

Speaker Change: We're doing fairly well there probably are doing better at the end of the year than we did at the beginning of the year in terms of bringing all of our agreements with capacity for ethical reason.

Thank you very much appreciate it.

Speaker Change: And I'm curious to get your thoughts on two things I'll keep this brief and the subsequent <unk>.

Speaker Change: But overall, we are executing to walk towards open.

Speaker Change: Two weeks after the quarter closed I'm curious, especially with great clarity, how you feel the customer feedback has been coming along particularly on the SMB side.

Speaker Change: Thank you.

Speaker Change: Thank you for your question.

Speaker Change: The rate of change is not discernible at least at the end of the quarter.

Speaker Change: Our next question comes from Kash Rangan with Goldman Sachs. Your line is now open.

Speaker Change: One for you Olivia as you look at.

Speaker Change: GPU workloads, what about the company's existing portfolio are geared towards CPU applies in a GPU award and how do you monetize an instance of GPU versus the CPU.

Speaker Change: Thank you very much appreciate it.

Speaker Change: And I'm curious to get your thoughts on two things I'll keep this brief and the subsequent Q.

Speaker Change: A few weeks after the quarter closed I'm curious, especially with rate cuts how you feel the customer feedback has been coming along particularly on the SMB side.

Makes sense. Thank you so much.

Speaker Change: Yeah.

Speaker Change: The GPU I can I can go GPU, yes. So.

Speaker Change: Since the rate of change is not discernible at least at the end of the quarter and one for you Olivia as you look at them.

Speaker Change: So look the.

Speaker Change: There is two parts of it there is hurting you.

Speaker Change: What can you do for GPU, that's different from a few people I think in general.

Speaker Change: G P of workloads, what about the company's existing portfolio geared towards CPU applies in a GPU award and how do you monetize an instance of GPU versus a CPU.

Speaker Change: There's quite a few things that aren't the same in terms of understanding what that machine seats with the rest of the application.

Speaker Change:

Speaker Change: Makes sense. Thank you so much.

Speaker Change: The quality and performance that sort of stuff in.

Speaker Change: Yeah.

Speaker Change: And there's quite a bit that's new and differentiated around profiling in general and understanding who you maximize the usage of the of the GPU bandwidth, which is usually what it's about.

Speaker Change: The GPU I can I can go GPU, yes. So.

Speaker Change: So look the.

Speaker Change: There's two parts of it there is you know who you are.

Speaker Change: I would say, we're right now working with a number of customers that are real world large inference workloads on how we can help on the GPU profiling side foreign influence.

Speaker Change: What can you do for four GPU, that's different from a CPU I think in general.

Speaker Change: There's quite a few things that aren't the same in terms of understanding what that machine seats with the rest of the application.

Speaker Change:

Speaker Change: The quality and performance that sort of stuff in.

Speaker Change: We're doing less on the training side, mostly because the training training jobs tend to be more bespoke and temporary and.

Speaker Change: And there's quite a bit that's new and differentiated around profiling in general and understanding who you maximize the usage of the of the GPU bandwidth, which is usually what it's about.

Speaker Change: And they have less of an application that has to do that is that there is a very large clusters of gpus with closer to HPE in a way that it is two two traditional applications, though we are also.

Speaker Change: I would say, we're so right now we're working with a number of customers that are real world large inference workloads on how we can help on the GPU profiling side for in France.

Speaker Change: No.

Speaker Change: Experimenting with what we can do there you know there is a there is a world.

Speaker Change: We're maybe in a durable fashion, 60% of workloads are in France, and 40% are training.

Speaker Change: We're doing less on the training side, mostly because the training training jobs tend to be more bespoke and temporary and and there's less of an application that has to do with ideas out there very large clusters of gpus with closer to HPE in a way then to our two traditional applications, though we are also.

Speaker Change: And if that's the case and we're going to be a lot of value to be had by having repeatable training into renewable tuning product. So we are we're also looking into that today as of today.

Speaker Change: We really don't monetize GPU instances, all that well compared to the other.

Speaker Change: Yeah.

Speaker Change: Experimenting with what we can do there you know there is a there's a world.

Speaker Change: CBOE incentive who'd you viewing stance is.

Speaker Change: We're maybe in a durable fashion, 60% of workloads are in France, and 40% of our training.

Speaker Change: Many times.

Speaker Change: The cost of a CPU intent and we chartered Cinemark board.

Speaker Change: That doesn't have to be the case in the future. If we do things that are particularly interesting. If you can have a real impact on and deliver value with our customers.

Speaker Change: And if that's the case, there's going be a lot of value to be had by having repeatable training into them when people tuning product. So we're we're also looking into that today as of today.

Speaker Change: Use and make the best of <unk> in India and save money.

Speaker Change: Really don't monetize GPU instances, all that well compared to the other CBOE incentive so would you viewing stance is.

Speaker Change: But today, that's the that's the consultation.

Speaker Change: And as to your other question.

Speaker Change: Many times the the cost of a CPU intent and we chocolate Cinemark board.

Speaker Change: In the period since the closing of Q3, we've seen very similar trends to the year to date in Q3.

Speaker Change: That doesn't have to be the case in the future. If we do things that are particularly interesting. If you can have a real impact on indicative of value with our.

In terms of customer growth.

Speaker Change: <unk> and <unk>.

Speaker Change: Core customers.

Speaker Change: Enterprise.

Speaker Change: Stability in SMB.

Speaker Change: And we have a strong pipeline for Q4 that were working hard on harvesting as we get towards year end.

Speaker Change: Okay.

Speaker Change: Thank you please standby for the next question.

Speaker Change: Our next question comes from Brent Thill with Jefferies. Brent Your line is now open.

Hi, Good morning, David on <unk>. It has been decelerating, it's been focused with investors I know you've said focus on revenue.

Speaker Change: But I think many are kind of concerned.

Speaker Change: Concerned about the trajectory and I know, you've said hey, the backlog strong and you're adding sales capacity when it makes sense that your backlog is it may be bigger than the numbers, we're reporting but can you give any more context to what the pipeline. How you feel about the pipeline, but what you think is going on with the with the with the <unk>.

Speaker Change: Eric.

And in terms of the diesel was a pretty pretty big step down.

Speaker Change: Yes, I think.

Speaker Change: We started talking about duration, we had a surge in these period to period last year of longer term contracts.

Speaker Change: That was really customer led we may well have that in the future, but in just comparing the timing of that it doesn't affect revenues.

Speaker Change: We had that kind of compare I would say when you look at adjusting for duration and looking at over a long term, we do find that all of these metrics are circling around.

Speaker Change: Around revenue in the mid twenties.

Speaker Change: So I think theres a lot of noise in those and it has a lot to do with the timing, particularly in RP O of multiyear deals.

We'll report at the end of Q4, how that progress we have a lot of business to do in Q4, particularly in the larger customer and enterprise side.

Speaker Change: And we'll see where that lands, but I think it's again best to go back towards towards revenues as the North star and those really don't read all that much to the to the SaaS Weizmann pipelines because the a lot of those.

Speaker Change: I'm, putting my vehicle hard right now, but yes.

Speaker Change: Which I think are aware to.

Speaker Change: So bear with me.

Speaker Change: Sometimes the the.

Speaker Change: Everything has to do with when customers recommit mix and economic and for how long the extended summit and there's a high degree of variability there. So they might go from one year to three year.

Speaker Change: Two or three years might actually run out or they might be coming.

Speaker Change: After when you're in a handful tears and a half or two years or maybe three years into a market. It takes longer to figure out what level. They want to be at next and so it adds a ton of variability to the to the billings numbers in general.

Speaker Change: And we that's why we don't look at them at all for managing the business. We look at usage and we look at the pipelines in terms of working with you.

Speaker Change: Business units with needs with new workloads with new revenue and usage and we're getting from customers I think what I always say handset output to the natural flow of business, which which has more volatility than than revenue still.

Speaker Change: Great. Thanks.

Speaker Change: Okay.

Speaker Change: Please standby for the next question.

Speaker Change: The next question comes from Karl Keirstead with UBS. Your line is now open.

Karl Keirstead: Great I've got a couple of questions about the comment David around.

Karl Keirstead: Some of your larger.

Karl Keirstead: Native customers maybe.

Speaker Change: Revenues from them being a little bit more volatile going forward. I guess first question is why do you think that is is this just a natural phenomenon of a few of those AI native customers now becoming quite large and so it's normal that.

Speaker Change: They try to look for better unit pricing and optimization or is there something else going on and then maybe secondly, when you set your <unk> Guide did you embed the assumption of some of these AI start up pricing and observe ability trends that you called out or.

Speaker Change: No youre, just trying to be prudent in that might be a little bit more of a 2025 phenomenon. Thanks. So much.

Speaker Change: Yes.

Speaker Change: I can take some of that I think when you look what we see there is.

Speaker Change: We have a group of AI.

Speaker Change: Smaller relatively small number of companies or AI native companies. Many of them are multiple providers on hospital providers for AI to serve the rest of the industry in a really good proxy for the future growth of the rest of the industry in AI.

Speaker Change: The group has been growing very fast and you mentioned it.

Speaker Change: 6% of our a R.

Speaker Change: It was.

Speaker Change: It was about 4% of our year over year growth in Q3 versus 2% one year ago, So had been growing very fast.

Speaker Change: The there is some revenue concentration within that group of customers there.

Speaker Change: Our full Paulo in terms of the revenue like the rest of the customer base pretty much.

Speaker Change: And seeing the very fast growth.

Speaker Change: We do expect we've seen that before is we expect optimization at some point and better terms at recommit from those customers.

Because they are all way over her many of them are way over their life coming with us, which again goes back to your comment on bookings like their growth was in show up at all in the in the appeal is on the bookings numbers because they are wherever they commit.

Speaker Change: The.

Speaker Change: The analogy I would give there is what we've seen with cloud native in the lead times in early twenties.

Speaker Change: Where we've had these numbers.

Speaker Change: Cloud native.

Speaker Change: Consumer companies that were growing very fast.

Speaker Change: With two differences. The first one is that the AI cohort is growing faster and they are larger individual atvs for these customers.

Speaker Change: And the second difference is that it's a much smaller fraction of our total they are so at the time, we had a very large number and a very large amount of our revenue that was cloud native companies consumer companies in the mid teens and that 2020.

Today, we just have 6% of our AUR in that bucket.

Speaker Change: So we made that comment because we don't have anything to say in terms of where it's going we don't.

Speaker Change: Nothing we see in October that you know.

Speaker Change: Like you know there has been changes.

Speaker Change: But we do think there can be volatility there.

Speaker Change: Especially this can move the numbers in the short term.

Speaker Change: While the mid to long term growth.

Speaker Change: Or the mid to long term.

Speaker Change: Dominant emotion will see grow with that customer base.

Speaker Change: So that's why we made that call yet as to fourth quarter.

Speaker Change: I Echo the comments we make.

Speaker Change: Overall, which is we take conservative assumptions.

Speaker Change: Relative to usage growth that are lower than we've seen in providing our guidance of course, where we are in the year the effect on Q4.

Speaker Change: Is more limited than it would be on it on next year and as we report our Q4 and give guidance, we will update everybody on any trends that we do see in this cohort at that time, we didn't insurance guiding principles for these.

We made an extra comment on it because we want to be transparent we have seen that and.

Speaker Change: And we see from some customers on wherever wherever they commit.

Speaker Change: But we didn't we didn't break anything specific in there again, okay. That's all very helpful. Thank you.

Speaker Change: Thank you please standby for the next question.

Speaker Change: Our next question comes from Kirk <unk> with Evercore ISI. Your line is now open.

Kirk <unk>: Yes, Thanks, very much Ali you mentioned the one federal.

Speaker Change: Customer this quarter, there's a larger federal customer this quarter can you just talk on broader trends for you all within the federal government in sort of the opportunity there and what youre seeing and I guess, if it had any positive impact obviously its their fiscal year end in September. So just any comments more generally on fed would be great. Thanks.

Speaker Change: Look, it's a huge opportunity for us and where we're.

Speaker Change: I would say quite early with some interesting successes you know so we have some.

Speaker Change: So I'm excited and Gogo there like the one that we mentioned in this quarter, which is an agency we all interact with.

Speaker Change: And which has tremendous opportunity for growth and upset with us.

Speaker Change: The another agency that already has a very large.

Speaker Change: Multimillion dollars HCV footprint, we've got a dog that we didn't talk about this quarter, but thats been a long term.

Speaker Change: Customer. So there is plenty of opportunity we're still very early in terms of capacity building central building.

Speaker Change: And go to market in general in government.

Speaker Change: So I would say steel.

Speaker Change: Part of our overall business.

Speaker Change: But we see that there is tons of upside in it and we're working hard on the product side.

Speaker Change: So that we can capture that fully so we over the past few years.

Speaker Change:

Speaker Change: With no fed ramp.

Speaker Change: Compliance.

Speaker Change: And we're working further on getting into.

Speaker Change: Hum.

Speaker Change: More regulated.

Speaker Change: Even even tougher to get into workloads, we start ramping that IL five and older certifications like that so where we have a long roadmap there and did plans to build in a lot of upside.

Speaker Change: Thank you.

Speaker Change: Thank you please standby for the next question.

Speaker Change: Okay.

Speaker Change: The next question comes from Mike <unk> with Needham Mike. Your line is now open.

Mike: Hey, Thanks for getting me on the call here guys I just had two quick questions for you.

Mike: First on gross margin just wanted to get a better understanding is there anything you can speak to.

Mike: As it relates to those AI need and customers the intensity of those workloads and then how your products feed into it.

Mike: Even the broader portfolio on the product expansion that you've seen I'm just wondering if those newer products maybe.

Mike: Or detracting from gross margin near term here versus some expansion that we can expect as these products scale. That's the first question second question was just great to hear that the usage growth continues to.

Mike: Trend higher, especially for those existing customers.

Mike: Does it feel where we sit today.

Mike: This quote unquote new environment like.

Mike: Blake. This is this is par for the course kind of growth when thinking about the usage coming from those existing customers or is there reason to believe that this can actually accelerated.

Blake: If things can move higher one way or another what would what would drive that.

Blake: So on gross margins.

Blake: As you know we are happy with where they are and we do some small move.

I wouldn't read too much into in the moves I mean, there's a behind the scenes like Theres, a number of things that underpin that.

Blake: We're using new functionality at the same time, we keep optimizing our code and argue that we actually use our products to optimize that quite a bit and then we'll also keep getting better and better agreements with our cloud providers as we scale.

So it is diminishing of all that is what you are what you see in the gross margin number.

Blake: We internally we have to make a call always on whether we direct more effort at building new functionality or optimizing and the way we manage that is when gross margins get a little bit low.

Blake: We put more effort on optimizing.

Blake: And when we are in a happier zone like we are ready rack more effort on new products and new functionality.

Theres not a lot of change product mix doesn't really matter all that much on the on a gross margin perspective.

Blake: And so theres no particular worried there we think long term there are plenty of opportunities.

To improve margins, but right now the focus is on <unk>.

Blake: Really.

Blake: Shipping in August and our products to our customers, making sure that the products product get them.

Blake: And with as much value as possible, while staying within a certain zone.

Blake: On the <unk> margin.

Blake: In terms of the growth of Walker was looking like I said, we see growth.

Blake: Cross because some of it is pretty much with the growth of critical workloads in the cloud.

Blake: We see large large dwarf very long growth on the annuity side.

Blake: We think that the one big catalysts.

Blake: Catalyst for future acceleration will be AI native applications.

Blake: On the applications I wish I should say.

Going into production for non AI needed companies.

For a much broader set of customers and their customers that are.

Blake: Deploying these kind of applications to that.

Blake: In production.

Blake: And and.

Blake: And as they do they will also look less like just enough to absorb gpus and more like traditional applications.

Blake: The GPU would need the database it needs the application in front of it needs layers to secured notes.

Blake: Is it in all the other things. So it is going to look a lot more like a normal application with some.

Blake: Additional more concentrated computing Gpus.

Speaker Change: And as they do they will also look less like a just enough to absorb gpus and more like traditional applications.

Ali: Thank you very much Ali.

Speaker Change: Thank you please standby and the next question.

Speaker Change: The next question comes from the line of Gray Powell at.

Speaker Change: The GPU would need the database it needs the application in front of it needs layers to secured nook with horizon and all the other things. So he is going to look a lot more like a normal application with some.

Speaker Change: <unk>.

Speaker Change: Your line is now open.

Speaker Change: Alright, great. Thanks for taking my question.

Maybe just to follow up on data dog on call.

Speaker Change: And as you know more concentrated computing Gpus.

Speaker Change: Good to hear the commentary on that earlier in the call. It has been coming up more in our field work. So I'm just curious like how should we think about the opportunity there is that something that could completely displace.

Speaker Change: Thank you very much Ali.

Speaker Change: Thank you please standby and the next question.

Speaker Change: The next question comes from the line of Gray Powell at.

Alex like Pedro duty or is it more of an add on feature since my understanding is it mainly works.

Speaker Change: <unk> Your line is now open.

Speaker Change: Alright, great. Thanks for taking my question.

Speaker Change: With the data Dr ecosystem versus other tools.

Speaker Change: Maybe just to follow up on data dog on call.

Speaker Change: Thanks.

Speaker Change: Yeah.

Look we'll take it where the demand picks up so the.

Speaker Change: It's good to hear the commentary on that earlier in the call. It has been coming up more in our skilled work. So I'm just curious like how should we think about the opportunity there is that something that could completely displace.

Speaker Change: We initially built.

Speaker Change: <unk> as a way for customers.

Speaker Change: Ecosystem to to have a fully integrated experience.

Speaker Change: On page a duty or is it more of an add on feature since my understanding is it mainly works.

Speaker Change: And really as a stepping.

Speaker Change: Capstone towards full automation of the of incident resolution full ownership of them into them.

Speaker Change: With the data Dr ecosystem versus other tools.

Speaker Change: Thanks.

Speaker Change: The part that strategically the most interesting to US is there is the automation of the resolution.

Speaker Change: Yeah.

Speaker Change: Hey, look we'll take it where the demand picks up you know so the we initially.

Speaker Change: Not physically aging customers that.

Speaker Change: That being said the response from customers has been so strong.

Speaker Change: <unk> built it as a way for customers.

Speaker Change: Ecosystem to to have a fully integrated experience.

Speaker Change: That there is very high demand for integrating with many different other sourcing plug ourselves into incident resolution loops that we might not have been a part of before even.

Speaker Change: And really as a factor.

Speaker Change: Capstone towards full automation of the incident resolution full ownership come into them.

Speaker Change: So that's definitely something that we're going to be for customers.

Speaker Change: The part that strategically the most interesting to US is there is the automation of the resolution.

Speaker Change: We're just very happy to see the demand there.

Speaker Change: Understood Alright, thank you very much.

Speaker Change: Not physically aging customers.

Speaker Change: Thank you please standby for the next question.

Speaker Change: Being said the response from customers has been so strong.

Yeah.

Speaker Change: That there's very high demand for integrating with many different other sourcing plug ourselves into eastern a resolution loops that we might not having a partner before even.

Speaker Change: The next question comes from any tie Kidron with Oppenheimer. Your line is now open.

Speaker Change: Thanks, and nice numbers guys.

Speaker Change: A question for you I think you mentioned in prepared remarks that 15, no for your 23 products are now running over $10 million.

Speaker Change: And so that's definitely something that we're going to be for customers.

Speaker Change: We're just very happy to see the demand there.

Speaker Change: Understood Alright, thank you very much.

Speaker Change: Maybe if you look at the ones that are still under 100 million are under $50 million, where do you see.

Speaker Change: Thank you please standby for the next question.

Speaker Change: Okay.

Speaker Change: Where are you most excited.

Speaker Change: The next question comes from <unk> Kidron with Oppenheimer. Your line is now open.

Speaker Change: Which ones do you think have the highest odds of crossing the $100 million Mark.

Speaker Change: Yeah.

Speaker Change: Alright, Thanks, and nice numbers guys.

Speaker Change: Well again, I don't want to single out any product for which we didn't.

Speaker Change: A question for you I think you mentioned in prepared remarks that 15 of your 23 products are now running over $10 million.

Speaker Change: Disclosed metrics in particular.

Speaker Change: Maybe if you look at the ones that are still under a 100 million are under $50 million, where do you see more where are you most excited.

But look as we mentioned in previous calls our DAU products that are growing very fast.

Speaker Change: That we think.

Speaker Change: We reached escape velocity that we see we talked about database monitoring for example was a product and growing very fast very clear value.

Speaker Change: Which ones do you think have the highest cause of crossing the $100 million Mark.

Speaker Change: Yeah.

And we.

Speaker Change: Well again, I don't want to single out any product for which we really didn't.

Speaker Change: I actually forgot which number we disclosed last time, but we did disclose a number for it.

Speaker Change: Let me disclose metrics in particular.

1% of revenue what we disclosed.

Speaker Change: But look as we mentioned in previous calls I got products that are growing very fast.

Speaker Change: And so this one is clearly headed for north of 50.

Speaker Change: There's a number and the other in the other cohort.

Speaker Change: That we think.

Speaker Change: That is.

Speaker Change: We'll reached escape velocity that we see we talked about database monitoring for example was a product and growing very fast very clear value.

Speaker Change: Hmm.

Speaker Change: The number of products across.

Speaker Change: Security.

Speaker Change: These are experienced I think are definitely going to get there very soon so we we feel good about about about for that.

Speaker Change: And we.

Speaker Change: I actually forgot which number we disclosed last time, but we did disclose a number for it.

Speaker Change: Alright, great and then maybe as a whole.

Speaker Change: 1% of revenue what we disclosed.

Speaker Change: Yes.

Speaker Change: Pretty.

Speaker Change: Pretty much every single one of those products should be above $50 million. Some of them are going to get there faster than others. Some of them will cross 100.

Speaker Change: And so this one is clearly headed for north of 50.

Speaker Change: There's a number and the other in the other cohort.

Speaker Change: That I.

Some of them will cross 1 billion, maybe so I think we feel good about the product set.

Speaker Change: The number of products across.

Speaker Change: Security.

Speaker Change: That's great maybe as a follow up for both of you.

Speaker Change: You didn't provide 25 guidance of course, but.

Are there any.

Speaker Change: You want to leave us with as we think about 'twenty, five and perhaps given where we are in the year.

Speaker Change: Are all of your initial conversations with customers and how they think about next year anything to point out.

Speaker Change: With respect to their behavior.

Speaker Change: Investment areas of focus, which perhaps are different than what they've been in 'twenty four.

Speaker Change: Yeah.

Speaker Change: Look I think the only thing I would say.

Speaker Change: I won't get into.

Speaker Change: Second guessing all guidance or things like that.

Speaker Change: In General also it's very hard to guess usage.

Speaker Change: Fine.

Speaker Change: That's actually very unique very different or can be very different from the intense then it'd be manifested by.

Customers are their understanding of what the next year is going to look like.

Speaker Change: But the one thing I'll say is we are investing.

Speaker Change: Building were building south capacity, we're definitely investing heavily in engineering I think it's a it's about innovation in the industry.

Unlike many others, we we don't expect at this point to have.

Speaker Change: Outsized investments in compute.

Speaker Change: We're not building.

Speaker Change: Absurdly large GPU clusters, but we are building engineering capacity and we are building excess capacity and so you should expect that in the numbers. We gave for next year.

Speaker Change: Very good I appreciate it thank you.

Speaker Change: David anything to add or no I think we said that at this point we've noted that.

Speaker Change: There has been stability to upward trend in usage that many of our clients, particularly in enterprise are getting back to the work of launching digital applications and that's create.

Creating the pipeline and the results for us and although we still are in an environment. That's careful in and once return on their investments and.

Speaker Change: We'll update everybody as to whether that's what we see but generally.

Speaker Change: We're giving comments based on what we see in this environment, which is.

Speaker Change: Ben had been good and stable.

Speaker Change: Thank you appreciate it.

Speaker Change: Thank you. This concludes the question and answer session I would now like to turn it back over to CEO Olivier <unk> for closing remarks.

Speaker Change: Well. Thank you all for the call I want to give a few shout outs first to the sort of the product and engineering team for building great products in a quarter the customers that actually spent all this time with us on getting those products to walk right, especially for the new products and I'm thinking about embolism ability for example to encore.

Speaker Change: We spent a lot of time with customers.

Speaker Change: You get those right.

Speaker Change: I also wanted to give a special shout out to the go to market team we.

Speaker Change: Have a very very very annuity to fourth quarter.

Speaker Change: Very full slate for everyone in the next.

Speaker Change: Let's call it month and a half.

Speaker Change: So I know everybody is super high net worth so thank you everyone.

And on this I think what radical.

Speaker Change: Thank you for your participation in today's conference.

Speaker Change: This concludes the program you may now disconnect.