Greetings, and welcome to the Dynatrace Fiscal Q1 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Noelle Buford, Vice President of Investor Relations. Thank you, Noelle. You may begin. Good morning, and thank you for joining Dynatrace's Q1 and Fiscal 2024 Earnings Conference Call. Joining me today are Rick McConnell, Chief Executive Officer, and Jim Benson, Chief Financial Officer. Before we get started, please note that today's comments include forward-looking statements, such as statements regarding revenue and earnings guidance and economic conditions. Actual results may differ materially from our expectations due to a number of risks and uncertainties discussed in Dynatrace's SEC filings, including our most recent quarterly report on Form 10-Q, that we filed earlier today. The forward-looking statements included in this call represent the company's views on August 2, 2023. We assume no obligation to update these statements as a result of new information, future events, or circumstances. Unless otherwise noted, the growth rates we discussed today are non-GAAP, reflecting constant currency growth, and per share amounts are on a diluted basis. We will also discuss other non-GAAP financial measures on today's call. We provide reconciliations between non-GAAP and GAAP measures in today's earnings press release and in the financial presentation slides posted in the investor relations section of our website. With that, let me turn the call over to our Chief Executive Officer, Rick McConnell. Rick? Thanks, Noelle, and good morning, everyone. Thank you for joining us for today's call. We had a solid start to our fiscal year, exceeding the high end of our guidance across all metrics. ARR grew 25% year-over-year. Subscription revenue increased 27% year-over-year in constant currency, and non-GAAP operating income was $92 million or 28% of revenue. These results continue to demonstrate our ability to deliver a powerful combination of top-line growth and profitability. They are a testament to the criticality of observability and Application Security in the market, and the significant value our platform provides to our customers, even as the economic environment continues to impact buying behavior. Jim will share more details about our Q1 performance in a moment. In the meantime, I'd like to share an update on the broader market outlook, customer wins, and recent announcements. Let's start with our market opportunity, which we continue to view as massive and growing. As organizations increasingly rely on multi-cloud and cloud-native computing for successful execution of their digital transformation strategies, simplification through observability has become essential. The scale and dynamic nature of modern cloud ecosystems have made them too complex to manage with dashboards, alerts, and manual troubleshooting. Organizations are frustrated with fragmented tools, negative customer experiences, and limited analytics. Dynatrace makes order out of this chaos by enabling customers to have better control of their IT ecosystems and to help combat these pain points. Last quarter, I mentioned several use cases that have become key drivers of customers' purchasing behavior. Among them, organizations purchase Dynatrace because they are looking to deliver highly performant, cloud-native infrastructure and applications. They are seeking cost-effective and more insightful Log Management at scale. They are investing substantial sums to secure their cloud applications. They want to dramatically reduce incidents and downtime. They are seeking a fully unified observability platform to help drive material cost savings and improved oversight by consolidating the myriad of disconnected tools they are using today. These use cases helped drive new logo growth of 15% in the Q1 on a year-over-year basis and led to a dollar-based net retention of 116%. Some notable customer wins from this quarter include the following: A leading financial software company signed a seven-figure deal through the Azure portal. This customer is in the process of modernizing their environment from legacy virtual machines to Kubernetes. The time and cost associated with triaging incidents and manual troubleshooting in a modern, complex environment was a major pain point for them. With full-stack observability and Logs on Grail with Dynatrace, this customer estimates they will save $1.5 million in the first three months of deployment due to greater efficiency, productivity, and higher collaboration across teams. A seven-figure win in the quarter was with one of the largest satellite television providers. This customer was overwhelmed with the number of alerts and manual troubleshooting their existing monitoring tool provided. They were looking to simplify and reduce inefficiencies, as well as get visibility into every aspect of their cloud environment with no blind spots. They have now chosen to standardize on Dynatrace. A major U.S. oil and gas company signed a significant expansion to add Application Security to their deployment. After the Log4Shell software vulnerability was identified. They realized they didn't have visibility into what vulnerabilities were either unresolved or reintroduced into their environment. With Dynatrace AppSec, they now have better visibility into their applications and were able to integrate DevOps with DevSecOps. These are just a few examples of the strength of our product offering and the business value the Dynatrace platform provides. As we have often said in the past, we strive to enable our customers to deliver flawless and secure digital interactions. The analytics and automation embedded in our unified observability and security platform are what differentiate us in the market and frequently drive customers to choose Dynatrace over alternative approaches. Last month, after evaluating 19 vendors, Gartner named Dynatrace a leader in the 2023 Magic Quadrant for Application Performance Monitoring and Observability, positioning Dynatrace furthest for completeness of vision and highest for ability to execute. This was the 13th straight time that Dynatrace has been in the leader quadrant. We were also ranked number one across all six use cases in the Gartner 2023 Critical Capabilities for APM and Observability Report. We believe Dynatrace's position, longevity, and criticality in both reports reflect our ability to execute and anticipate change in this constantly evolving market. I'd like to turn next to two key announcements we made over the past couple of weeks in the areas of hypermodal AI and developer observability, both of which are great examples of our core focus on innovation. First, let's start with hypermodal AI, evolving from a radically different approach to artificial intelligence. Dynatrace Davis is our AI engine that has long been a primary differentiator for us. Dynatrace customers have used Davis AI for years to tie server-side observability with user impact, deterministically reduce hundreds of alerts to single problems, and automate the root cause analysis process in large scale and complex cloud-native environments. We've extended our causal AI to security use cases, such as automating risk analysis of vulnerabilities and accelerating investigations and remediation. We've made our predictive AI more powerful by leveraging machine learning to identify anomalies and forecast future patterns with great precision based on historical behavior. Last year, we extended our predictive AI and causal AI capabilities with even richer context, leveraging our Grail data lakehouse, extracting precise answers and driving automation from data in real time at massive scale. Last week, we announced the planned addition of a third critical element to our AI architecture and solution set, generative AI, to deliver the industry's first hypermodal artificial intelligence observability offering. Hypermodal AI is the combination of three different AI techniques delivered by Dynatrace, each having a unique value, but with a whole much greater than the sum of the parts. Predictive AI uses models to recommend future actions based on data from the past. Causal AI analyzes dependencies across massive datasets while retaining an accurate context to deliver fact-based, precise answers and automation. Generative AI provides recommendations on how to solve specific tasks through prompts enriched with automated context of a customer's environment, uniquely provided by Dynatrace. Our generative AI capability is named Davis CoPilot. Davis CoPilot will work with Dynatrace causal and predictive AI to automatically provide recommendations for issue remediation and optimization, create actions, and allow people to use natural language to explore, solve, or complete tasks. Many organizations have announced strategies around generative AI. Our approach, however, goes far beyond simply adding a natural language interface that relies on human intelligence to steer generative AI solutions. Our predictive and causal AI will be designed to feed comprehensive and specific prompts to Davis CoPilot to help avoid outages or degradations before they happen, and help remediate and resolve active incidents when they arise. We view hypermodal AI as a significant catalyst for customer expansion, increasing both the breadth of end users who can leverage the platform and the creation of workloads. We believe this will lead to higher dollar-based net retention, resulting from more customer cross-sell and upsell, as well as an increase in the stickiness of the Dynatrace platform. We are also very excited about the ongoing evolution of our platform in the area of developer observability. As we have indicated in the past, we believe that the role of development teams will continue to expand in the observability and Application Security decision process. In particular, we believe these capabilities will continue to shift left into software development life cycles to enable more productive handling of observability, insights, and answers directly in software. That, in turn, will lead development teams to shift right to take on greater responsibility for successful software operations, including availability and end-user experience. This week, we signed a definitive agreement to acquire Rookout, a Tel Aviv-based developer-first observability platform, to further expand our capabilities and investment in this area. In particular, code debugging in production environments has been a major pain point for developers. Traditionally, debugging tools have only addressed issues in pre-production environments, leaving developers without an efficient or secure way to troubleshoot production applications. Rookout's highly differentiated technology allows developers to address issues in live code with privacy controls in place, without restarting, redeploying, or adding even more code. We believe the combination of Rookout's debugging technology seamlessly integrated into the Dynatrace platform will be very powerful for our customers. We expect it to create a new standard for how engineers improve code quality and deliver better business outcomes by enabling developers to troubleshoot and debug without disruption. In addition to these exciting announcements on product innovation and platform evolution, we've also had some noteworthy announcements on the go-to-market side of the business. Two weeks ago, we announced the expansion of our relationship with Microsoft. We are stepping up our committed spend over a multi-year horizon in anticipation of even more growth through the Azure platform. Together, we will be increasing our joint sales enablement and marketing to accelerate cloud migration and optimization initiatives. Earlier in the quarter, we announced the expansion of our collaboration with Red Hat, with new integration capabilities between Dynatrace and Red Hat Event-Driven Ansible. This is a great example of how Dynatrace turns data into answers that can then be turned into actions. This integration enables customers to automate DevSecOps use cases, such as closed-loop remediation and application healing, to drive greater operational efficiencies and boost the performance, reliability, and security of their workloads. We continue to build momentum with the leading strategic global system integrators or GSIs. We have more than 10 strategic GSIs partnering with us today, and a few, including Deloitte and DXC, have built Dynatrace into their reference architectures. By way of example, sales pipeline contribution from one of our largest GSI partners has more than doubled when compared to last year and continues to show strong momentum. Before I turn the call over to Jim, I'd like to take a moment to discuss our CRO transition. In June, we announced the appointment of Dan Zugelder as our new CRO. Dan is four weeks into his role at Dynatrace, and we are extremely pleased to have him on board. Dan brings deep industry knowledge, having spent his career working at ADP, Dell EMC, and most recently, VMware. He has a strong background in building multi-billion dollar sales organizations, which will be instrumental as Dynatrace plans to scale in our next phase of growth. On behalf of the entire Dynatrace team, I'd like to thank Steve Pace for his dedication and execution as our CRO over the past seven years. His contributions to building a world-class sales organization have positioned Dynatrace for sustainable long-term growth. Steve will be retiring from Dynatrace in early October, and he is actively involved in ensuring a smooth transition. In closing, we had a solid start to our fiscal year, even as ongoing macro headwinds persist. We remain highly confident in our market opportunity, our platform leadership, and the powerful combination of top-line growth and profitability. We are humbled by the third-party validation from Gartner of our product leadership, and we are committed to continuing our delivery of significant innovations and customer value consistent with that leadership. Financially, we will continue to manage our business prudently and invest thoughtfully in those strategic opportunities that we believe put us in a position of strength for the future. We are purposeful and driven by our vision of enabling our customers to deliver a world in which their software works perfectly. We have made great progress, but in the context of an increasingly cloud-based software world in which we can materially improve software performance and end-user engagement, we have really only just begun. With that, let me turn the call over to Jim. Thank you, Rick, and good morning, everyone. As Rick mentioned, we are off to a solid start to our fiscal year, beating the high end of our guidance across all of our key operating metrics. Our continued ability to successfully execute in this dynamic macro environment is a testament to the growing criticality of observability and Application Security in the market, our product differentiation, the value proposition we provide to our customers, and the ongoing durability of our business model. Let's dive into the Q1 results in more detail. Please note that the growth rates mentioned will be year-over-year and in constant currency, unless otherwise stated. Starting with annual recurring revenue. As a reminder, the headwind associated with the wind down of perpetual license is now less than 100 basis points. As I mentioned last quarter, we will no longer be referring to adjusted ARR growth in our prepared remarks. For comparison purposes, we will continue to share the impact of perpetual license in our quarterly presentation and in the financial data trends file available on our website. Total ARR for the first quarter was $1.29 billion, an increase of $263 million year-over-year, and $47 million sequentially. Foreign exchange was a $3 million tailwind year-over-year and a $10 million tailwind sequentially, resulting in 25% year-over-year ARR growth on a constant currency basis. Net new ARR on a constant currency basis was $37 million in our seasonally lightest bookings quarter of the year. As we shared in our last call, we had a tremendous close to Q4 of fiscal 2023, which included $13 million of incremental expansions from early renewals that we originally expected to close in the Q1. New logos grew 15% in the Q1, adding a total of 155 new logos to the Dynatrace platform. The average ARR per new logo land was consistent with the prior quarter at roughly $130,000 on a trailing 12-month basis. Our gross retention rates continue to be best in class in the mid-90s and contributed to a solid dollar-based net retention rate of 116% in the Q1, in line with our mid-teens expectation for fiscal 2024. With nearly two-thirds of our customers using three or more modules, it's clear that customers are standardizing on Dynatrace as their full stack, observability, and security platform. Our innovation engine continues to hum, creating additional cross-sell and upsell opportunities in our customer base. As Rick mentioned, hypermodal AI and developer observability are great examples of building incremental capabilities to extend our reach to a wider range of users and accelerate the pace and volume of new workloads, which we believe will ultimately contribute to an incremental expansion in the future. In addition, we're seeing strong customer interest for the Dynatrace Platform Subscription, or DPS, having made it generally available to customers in April. With DPS, we are making our solution set broadly and easily accessible through a simplified cross-platform licensing model. This model allows customers to trial and deploy any aspect of our solution, such as logs or AppSec, while leveraging a single commitment. We expect DPS will drive enhanced net expansion and accelerate ARR in future periods. Moving on to revenue. Total revenue for the Q1 was $333 million, up 25% and exceeding the high end of guidance by $5 million. Subscription revenue for the Q1 was $316 million, up 27% and exceeding the high end of our guidance range by $7 million. With respect to margins, we continue to have a very healthy margin profile, reflecting the value and efficiency of the Dynatrace platform. non-GAAP gross margin for the first quarter was 84%, consistent with both last year and Q4 levels. Our non-GAAP operating income for the Q1 was $92 million, $14 million above the high end of our guidance range due to the revenue upside in the quarter and a staggered pace of hiring in anticipation of the Rookout acquisition. This resulted in a non-GAAP operating margin of 28%, exceeding the top end of the guidance range by roughly 400 basis points. Non-GAAP net income was $79 million or $0.27 per share. This was $0.05 above the high end of our guidance range, driven by the items I just mentioned. Turning now to the balance sheet. As of June 30th, we had $701 million of cash and zero debt. This represents a sequential increase in our cash balance of $145 million compared to March 31st. Our free cash flow was a very healthy $124 million in the Q1. We continue to believe it is best to view free cash flow over a trailing 12-month period due to seasonality and variability in billings quarter to quarter. On a trailing 12-month basis, free cash flow was $321 million, or 26% of revenue. The last financial measure that I would like to discuss is our remaining performance obligation. RPO was approximately $1.9 billion at the end of the quarter, an increase of 20% over Q1 of last year. The current portion of RPO, which we expect to recognize revenue over the next four quarters, was $1.097 billion, an increase of 24%. It is important to remember that seasonality associated with bookings and contract upselling will cause variability in the RPO growth rates. As such, we continue to believe ARR is the best metric to understand the health and durability of the business as it removes noise associated with the timing of billings. Now let me turn to guidance. As Rick mentioned, we are confident in the long-term growth opportunity for Dynatrace. The addressable market is large and growing. Observability and Application Security are becoming even more critical to successful cloud and multi-cloud deployments. Our offerings are highly differentiated. We are well-positioned as the industry leader, and we have a financial model that is both balanced and durable. Near term, we are mindful of the current macro uncertainty, and while we have seen signs of resiliency in the observability and Application Security market, we believe it is prudent to continue to factor the dynamic macro landscape into our guidance. Enterprises remain cautious in their spending, and our approach to guidance assumes that tighter budget scrutiny and elongation of sales cycles will persist. We had a solid start to the year, but it is still early in our fiscal year, and we do not want to get ahead of ourselves. There are a few things to keep in mind with respect to our guidance. This guidance continues to assume new logo growth in the low single digits and a dollar-based net retention rate in the mid-teens for fiscal 2024. We expect the full year foreign exchange tailwind to as-reported ARR to be approximately $11 million and approximately $15 million on revenue, roughly consistent with our prior guidance. The Rookout acquisition is expected to close within the Q2 and is embedded in our guidance. As this is a technology tuck-in acquisition, there is insignificant revenue as part of this transaction. However, we believe the combination of Rookout's code debugging technology seamlessly integrated into the unified Dynatrace platform will be very powerful and address a major developer pain point. With that as an opener, let's start with our guidance for the full year with growth rates in constant currency. We are maintaining our ARR guidance of $1.475 billion-$1.49 billion, or 18%-19% constant currency growth. Consistent with what I shared last quarter, the seasonality of net new ARR is expected to be more back-end loaded this year compared to prior years, with roughly 35% expected to land in the first half of fiscal 2024, and approximately 65% in the back half. Turning now to revenue, we are raising our revenue guidance at the midpoint by $11 million for the year, driven by our overachievement in subscription revenue in the Q1. We expect total revenue to be between $1.4 billion-$1.415 billion, or 20%-21% growth, up 100 basis points from our prior guidance. We are raising our subscription revenue guidance at the midpoint by $15 million for the year, as we expect a slightly higher mix of subscription services versus services revenue. Total subscription revenue is expected to be between $1.326 billion-$1.341 billion, representing 21%-22% growth, up 100 basis points from our prior guidance. From a profit standpoint, given the revenue increases and ongoing discipline management of spend, we are raising our non-GAAP operating margin guidance by 50 basis points to a range of 25.5%-26%. We are raising non-GAAP EPS guidance to $1.03-$1.06 per share, representing an increase of $0.05 at the midpoint of the range. This non-GAAP EPS is based on a diluted share count of 300 million-301 million shares, and a non-GAAP effective cash tax rate of 19%, consistent with prior guidance. Finally, we are maintaining our free cash flow guidance of $303 million-$312 million, representing a free cash flow margin of approximately 22% of revenue. While we do not guide free cash flow quarterly, due to the seasonality and variability in billings, as well as the timing of cash tax payments, we expect free cash flow to be higher in our first and fourth quarters, and significantly lower in our second and third quarters. Given our expected back-end loaded bookings linearity this year, free cash flow will be even more skewed to Q4 than in prior years. Looking at Q2, we expect total revenue to be between $343 million and $346 million, or 21%-22% growth. Subscription revenue is expected to be between $325 million and $328 million, up 22%-23% year-over-year. From a profit standpoint, non-GAAP operating income is expected to be between $90 million and $93 million, or 26%-27% of revenue, and non-GAAP EPS of $0.26-$0.27 per share. In summary, we are pleased with our Q1 fiscal 2024 performance. We have a proven track record of consistent execution. As we have consistently demonstrated, we are committed to maintaining a balanced approach to optimize cost, to drive profitability, while continuing to invest in future growth opportunities that we expect will drive long-term value. With that, we will open up the line for questions. Operator? Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. Our first question is from Pinjalim Bora with JP Morgan. Please proceed with your question. Oh, great. Thank you for taking the question, congrats on the quarter. I want to ask you on DPS, since you're leaning on DPS this year, what have you seen so far from customer feedback on DPS? Are people kind of able to map their existing spend on DPS? Is there a period of learning? Any way to understand the expansion characteristics, month-over-month? I think you, you talked about the point about accelerating ARR because of DPS. I think you said that last quarter as well. I was just trying to understand any indications that, that might corroborate that point. Hi, Pinjalim. It's Rick. Very early, still in DPS rollout. We just went GA in late April, but very good momentum already. Many dozens of closures of new customers on it. Pipeline continues to grow, and already for new logos, the vast majority of our dollar-based pipeline is coming in in DPS. I would say early, but very good, solid, positive performance on DPS evolution so far. I'd just add something, Pinjalim, that you mentioned on the expansion side. We've certainly seen for DPS customers that DPS customers have actually shown better expansion rates than non-DPS customers. Now, admittedly, some of that is some of our largest customers, so the, the sample size is a bit skewed, but we're optimistic that DPS is gonna be a great contract vehicle to actually drive more expansion. Got it. Thank you. One follow-up for you, Jim, on ARR. I'm trying to understand kind of the implied Q2 net new ARR guide. You kind of kept the 35%, and I appreciate that, you know, it's early in the year and all that, but it does imply kind of a downtick in net new ARR in Q2 versus Q1 in, in the growth. I'm trying to understand if you're seeing any kind of anything in the business that makes you feel like the net new growth might tick down next quarter. Was there any kind of pull-in of deals into Q1 from Q2, or is there just a little bit more conservative given conservatism, given kind of the CRO transition? Yeah, well, it's a, it's a great question, and I would say that, in fairness, that there's... We maintained the guide for the year, because, one, as we had shared, that we thought that the seasonality would be a little bit more back-end loaded this year than normal. 35% in the first half, roughly, yep, and 65% in the second half. We had a very solid start to the year, but you're still very early in the year, so we wanted to make sure that we didn't get ahead of ourselves, so we have maintained a level of prudence. One thing I would tell you is that, the demand environment is still pretty solid, but what we have certainly seen, and you saw it in our Q4, which was really, really strong, was that the timing of when you close some deals is really hard to guess, you know? Especially some large deals, that we wanted to make sure we maintain a bit of caution with that, because sometimes deals might close a month later, could be a quarter later. We wanted to make sure we acknowledge that, given what's going on in the broader environment. Demand trends look good. We certainly have maintained a level of prudence, and as we had shared, that, you know, more of the, the business will be back and loaded, which is, kind of makes sense because the majority of our renewal activity happens in the back half of the year, which is where you tend to get a lot of expansions. That's really what's driving kind of the broader guide. Got it. Thank you very much. Thank you. Our next question is from Mike Cikos, with Needham & Company. Please proceed with your question. Hey, guys. Thanks, thanks for getting me on here, and I appreciate all the disclosures for the guidance. I think my questions are gonna be more along the lines of that guidance construction, though. I just wanted to get a sense for the dollar-based net retention and the 116 that we're looking at in Q1. Is there a thought that we see the further erosion of that metric through this year? Then the follow-up, if I could just tack it on now, but I guess in your view, what helps that net retention climb back from, from current levels? If we're looking for improvement, what, in your view, needs to happen to, to drive that improvement? Thank you. Yeah, it's a very good question. We had shared in our guide last quarter that we thought dollar-based net retention would be in the mid-teens, and I still expect that. Q1 came in roughly in line with what we had thought. Very, very strong new logo quarter for Q1. I think you saw that we had a 15% growth in new logos, with actually a pretty, pretty good land size of roughly $130,000. Really strong on the new logo front, and dollar-based net retention in line with our expectations. You know, we do expect that to be, you know, hover at the, you know, the mid-teens level, call it 114 to 116 through the year. And what's gonna cause an acceleration? I think, one, we're being a bit cautious, given we have seen longer buying cycles, and we've seen expansions as they've gone through the funnel, shrink in size as customers maybe split expansions over multiple periods, whereas they used to give us large expansions at once. Some of the budgetary environment has caused maybe less expansions in the near term. I'll tell you on the, on the positive side, there's a lot more to sell, with logs on Grail and other opportunities that we have in, you know, in the business from a product perspective. You know, I think near term, we're dealing with some budgetary headwinds. I do think that the portfolio continues to grow. I think the market opportunity continues to grow, so we're quite optimistic that you're gonna see a reacceleration in dollar-based net retention. I think we're just being cautious here over the next year. Great. Thank you. We'll turn it over to my colleagues. Thank you, Jim. Thank you. Our next question is from Sterling Auty with MoffettNathanson. Please proceed with your question. Yeah, thanks. Hi, guys. I just want to continue on with one question around the macro. Just specific, if you can give us a little bit of color in terms of what you experienced at the end of the quarter and now in the beginning of this quarter, has that changed in any degree versus what you have been experiencing? I think a lot of the commentary you're using matches what's been said, you know, through the calendar year. Just wondering if anything's different. Then specifically, you know, the one question we all ask is cloud optimizations and what your sense is about nearing the bottom and, you know, kind of getting past that. Thank you. I guess I'll start, and then maybe Rick can comment more on the cloud optimization comment. That we really haven't seen, Sterling, a real change in the macro environment. The macro environment is, I would say, very it's been very consistent, but to be frank, the last three quarters. It's not better, it's not worse. I'd say it's consistent. Consistent means it is definitely, you know, deals are taking longer to go through approval cycles. Deal sizes kind of are shrinking as, as they kinda go, especially for expansions. While the demand environment is healthy, I'd say that as they go through the sales cycle, we're certainly seeing some lengthening. It 's not worsening, but it's not improving either, and so we've tried to ensure that in our guide, we don't wanna get ahead of ourselves, that where our expectation is that that environment will continue. Until we see a change in that, I think it's prudent to have a guide that reflects kind of an uncertain macro environment. Rick, I don't know if you want to comment on the cloud optimization trends. Right. On cloud optimizations, a couple of quick points. First, as we've said in the past, Sterling, our view is that cloud optimizations really do, in many ways, speak to Dynatrace's value add in the market. We continue to, to believe and see that, that, we are a solution in many ways to cloud optimizations. We're also less impacted just based on our business model and our approach to, to pricing. That's, that's sort of the Dynatrace perspective. Overall, my view is that cloud optimizations are beginning to, to, reduce in overall impact in the market. Not sure we're at the bottom, but, we seem to be, to be making progress toward that end. Makes sense. Thank you, guys. Sure. Thank you. Our next question is from Adam Tindle with Raymond James. Please proceed with your question. Okay, thanks. Good morning. Rick, I just wanted to start with kind of a general question on AI broadly, and just we would be curious, your observations from bleeding-edge customers or maybe your relationships with hyperscalers. The question would be: How do the needs of the observability stack change with those types of deployments? Wondering if the attach rate of monitoring software is similar or different than a traditional deployment. Then secondly, how does the competitive landscape differ in bake-offs with those use cases? Thanks, Adam. First on, on the market in general, I would just say before even getting to generative AI and hypermodal AI and our solution to that, the market continues to show very, very strong evolution. Observability overall continues to be of higher demand, of higher need for customers due to increased complexity and volume of data and workloads. That's my overall comment on the market. How does that relate to the AI commentary? The way it relates is that AI, and in particular, generative AI, is gonna contribute notably to enabling customers to be more efficient and more productive in their management observability systems. The, the combination of generative AI along with causal and predictive AI, which collectively we call hypermodal AI, we believe to be a mission-critical solution that will catalyze demand over the course of the future by opening up observability to more end users, to more people within companies, bringing natural language capabilities into the observability framework, but also using the combination of productivity from generative AI with the, with the deterministic capabilities of causal and predictive AI. Collectively, these elements provide substantial value to catalyzing, we think, future demand. Got it. That's helpful. Maybe as a follow-up, I wanted to ask about the Microsoft partnership. Rick, we hear a lot of competitors talk about, working with Microsoft, but this sounds a little bit different and much more strategic. Maybe you could start with just what went into, forging that partnership. Jim, if you could talk about, what this means for margin. It sounds like there's some committed, costs associated with this. Just curious what it means from a margin perspective, the costs, how variable they are, anything that you can give us around the, the financial aspect of this partnership. Thank you. Sure. A very important relationship with Microsoft, as you point out, Adam, a material extension of our commit to them and their commit back to us on the go-to-market side. Obviously, we just signed it, but very optimistic about the evolution of it. Jim? Yeah, and what I'd say on the financial side is, as you can imagine, as Rick said, we're expanding our relationship with them, which means we're expanding our Azure, Azure commitment with them from a dollar perspective. So with that, and with an increased commitment, we get much, much more favorable pricing. The pricing that we get is very consistent with pricing that we get with, say, an AWS. Customers are now in a situation, and we're in a situation where your pricing is very similar on an Azure platform as well as an AWS platform. This is something that's going to be, I'd say, enable us to continue to scale on gross margins as we move more and more of the business to SaaS. The way you should expect it is, it'll allow us to continue to maintain this very, very healthy gross margin profile, kind of in the mid-eighties. Very helpful. Thank you. Thank you. Our next question is from Andrew Nowinski with Wells Fargo. Please proceed with your question. Great. Thank you. Good morning, everyone. I want to ask about your GSI partners. I think you said you now have 10, 10 partners signed up, and one has a pipeline that's more than doubled, year-over-year. Is there anything unique or specific about that partner and their pipeline, and how does that compare to maybe the other nine partners, the pipeline you have with the other nine partners? Thanks, Andrew. Appreciate, appreciate it, the question. GSIs continue to grow, quite notably for us in terms of pipeline, even in terms of conversion, so, we feel very good about the evolution. The, the, the primary takeaway in GSIs is we're playing this for the long game. We do believe that, GSI has become an increasingly material segment of our channel distribution over the course of time. These deals tend to be quite large. In many cases, they're coming through digital transformation initiatives, hypercloud, migrations an other types of solutions of that nature. They're gonna take a little bit longer to close. Pipeline is a great leading indicator, which is why we, we provided that. The, statistic we provided on doubling of one of our largest strategic GSIs was just an indicator of that, of that leading indication of that pipeline. Okay, thank you. I wanted to ask you about the new Chief Revenue Officer. I know Dan's only been in the seat for less than a month, but any early observations about maybe changes to go-to-market that he plans to implement? Yeah, I mean, at four weeks in, we're not planning on any notable or material changes in our go-to-market strategy. What I would say is that, obviously, we are increasing our focus and intensity around partners. For example, the hyperclouds, also the, also the GSIs. We're gonna continue to lean in in those particular areas to, to grow our partner focus, and that's gonna be, evident in our go-to-market strategy as we evolve. Okay. Thanks, Rick. Thank you. Thank you. Our next question is from Matthew Hedberg, with RBC Capital Markets. Please proceed with your question. Great, guys. Thanks for taking my questions. Rick, I wanted to go to-- back to Grail. It's starting to show up a lot more in partner conversations, and these tend to be somewhat larger deals too, on the logging side. Can, can you give us a bit, a bit more color on, you know, how you're thinking about cross-selling that? What, what does the pipeline look like for that? You know, in terms of, like, areas to, you know, maybe reaccelerate, NRR, you know, is that a h ow do you, how do you think about, Grail in the context of that? Well, let me sort of, separate out Grail from Logs on Grail to start, which I tried to do in last quarter's call as well. The first thing is, Grail is an underlying core technology in the platform that is used as a massively parallel processing data store, data lakehouse, if you will. That, data store spans, traces, logs, routes, metrics, all of the, all of the components of data store that we would have. It is, initially focused at AWS for SaaS deployments, and, and virtually every one of our AWS SaaS customers is already on Grail as a core technology. They are already using and operating on Grail as a core technology. It was a seamless migration, happened in the background. Customers didn't have to do anything, they are already benefiting from Grail and the Grail deployment. The question that is the next question is: what about Logs on Grail? Good news is, very strong evolution. Already seeing customers using it at material scale. Customers like global retailer doing 30 TB of logs per day, for example. A good evolution there. Logs on Grail requires a selling process through POCs. On the POC front, we saw an increase in POCs, active POCs of about 20% quarter-over-quarter. We continue to see the evolution of our POCs, again, as a leading indicator for Logs on Grail. Hopefully that clarifies the distinction between Grail as an underlying core technology and Logs on Grail as an incremental sale. Selling opportunity. Yeah, got it. Thank you. Thank you for that. Then, going back to AI, you know, there's been a lot of talk in the industry about vector databases or vector search. I, you know, I don't know that we've talked about that in terms of the Dynatrace platform. Can you give sort of your perspective on vector and if, you know, if that plays a role in the tech stack? Yeah, I, I don't want to, I don't want to spend too much time on that other than to, other than to say that our view is that our hypermodal AI approach, we do believe to be radically different from other solutions and announcements in the market, in the sense that it brings together multiple different AI techniques. Those techniques include what we've been doing for more than a decade with causal and predictive AI, linked in to what we expect to GA by the end of the year, or the end of the calendar year, which is the generative AI piece. Putting those together, we believe, gives us a, a very, very strong platform for AI, being an enormous ongoing differentiator for Dynatrace as it has been really throughout our history. Got it. Thanks, Rick. Thank you. Our next question is from Koji Ikeda with Bank of America. Please proceed with your question. Yeah. Hey, guys, thanks for taking the question. Just one from me. I wanted to ask a question on, on new logo growth and actually how to think about new logo growth for the rest of the year. You know, in the quarter, very nice new logo growth of 15%, definitely above that low single-digit target for the rest of the year. When we look at the new logo ad compares for the rest of the year, they get harder and harder. How can we be thinking about the new growth, new logo growth cadence from here? What are you seeing in the pipeline that is giving you confidence for the remainder of the year on the new logo front? I'll take that. It's a good question, Koji, that you're absolutely right. We had a very good new logo quarter this quarter. We actually had a good new logo quarter in our Q4 as well. If you look at the guide, obviously, we're, we're maintaining the guide at kind of low to mid single digits. I will tell you that the pipeline looks very strong. Obviously, our pipeline, we have more visibility to the pipeline here over the next quarter than maybe the back half of the year. The new logo pipeline is quite strong. I think as I've shared on other calls, that we're really focused with our new logos on driving the right new logos, the right new logos that we think are gonna drive incremental expansion once we land them. We're not just signing up new logos for the sake of signing up new customers. We're really particular, which is why you'll see that we continue to average around a $130,000 average land size on a trailing 12-month basis, which is pretty solid. We're focusing on the quality of the land. Our visibility is pretty good to new logos that I don't think we're gonna have every quarter, where you're gonna grow 15%, but I think we have enough visibility that our ability to grow in the low to mid single digits, I feel pretty confident in. Got it. Thanks, Jim. Thanks for taking the question. Thank you. Our next question is from Kash Rangan with Goldman Sachs. Please proceed with your question. Hello, thank you so much. Good morning. Rick, I have a question for you, one for Jim. Rick, your forward-looking indicators look quite good considering the macro environment. You've got this GSI that has 2x the pipeline. You've got this expanding partnership with Azure. Yes, customers are taking longer, but why would you not consider ramping up your sales capacity? It does look like if next year we do not have a recession, which is not an if, but as companies come out of downturns, the ones that accelerate the go-to-market and gain share or end up being very successful. In that regard, as CEO of the company, how do you look to up the ante and gain share versus competition? It does look like the product value proposition with hypermodal AI, generative AI capabilities coming in by the end of this year, all look to really position the company well. One way you could counter the slow growth is to increase sales capacity, because conversion multiplied by, as you know, you're a veteran in the industry, you could still achieve better growth by deploying extra sales capacity, when the forward-looking indicators are looking good. Wondering what your thoughts are there on that front. Also, Jim, one for you: If you X out the early renewals in Q4, what would the net new ARR growth look like? Thank you so much once again. I'll, take both, then if Rick wants to comment, he can. On the sales capacity side, we actually feel pretty good about sales capacity. I think I shared on the last call, and it's the same now, that our tenure of reps that are two-plus year reps is higher than it's been over the last couple of years. As you can imagine, two-plus year reps drive more productivity than new reps. I don't believe at all that we're constraining sales capacity. We're gonna make sure we align, adding sales capacity, as needed. I don't think we're, we're in a constrained world. We're gonna align that with the demand environment. If we see incremental demand, then we will modulate, adding more, more sales capacity. I don't think we're constrained at all. You know, I think there's an opportunity for us to get better leverage out of the existing model that we have, and we'll augment that as we see kind of the demand signals change. I feel pretty good about that. On the early renewal side, you're right, we had about $13 million of renewals and of expansions in the Q4 that were scheduled in the Q1. I would say the first quarter was, I mean, you're always gonna have $1 million here or $1 million there, but nothing notable on kind of early renewals in the Q1. You know, I'd say the Q1, as I said in my opening remarks, it's seasonally the company's kind of lightest quarter. So the, our start to the year, we feel pretty good about. As I said, we're gonna be a little bit more back-end loaded for the reasons that I outlined, feel pretty confident kind of in where we sit right now. Jim, the change in sales leadership did not have any effect on pulling the business into Q4 versus at the expense of Q1? No. Okay, good to clarify that. Thank you so much. Thank you. Our next question is from Keith Bachman with BMO Capital Markets. Please proceed with your question. Hi, good morning. Excuse me. Thank you. I wanted to ask about targets for both logs and analytics and security. I understand Grail is the platform that enables logs and analytics, but you, you've sort of talked about ideas or direction of maybe, you know, kind of $100 million ARR in 25 for both. Is that still the case? Where do you think you are relative to those, you know, those goals? Underneath, last quarter, you gave us some numbers for where you are in DPS in terms of number of customers. My understanding is that to adopt Grail and thereby have logging analytics, you need to be on a DPS contract. Could you give us some update on, you know, specifics as it relates to number of customers on the new contract platform? Thank you. I'll take maybe both of those, and if Rick wants to comment additionally, he can. We feel pretty good about both the areas you mentioned, both Application Security and Logs on Grail, that we're on track to deliver the numbers that we talked about. $100 million for each. Obviously, Grail's being a little bit sooner, we said over a couple of years versus, AppSec, which is gonna be over three years. We feel pretty good about that. I'd say, as you can imagine, we're further along on AppSec because AppSec's been out, in the market longer. You know, to Rick's earlier points, we feel very good about the interest in Grail. I would expect to see an uptick, in Logs on Grail, in particular, over the course of the next year. We're still kind of early days with that. Again, feel pretty confident in both $100 million targets. Relative to DPS, you know, I just want to make sure we're clear that you can buy Logs on Grail, you don't have to have a DPS contract to buy logs on Grail. You know, you can buy Logs on Grail through a SKU-based model. Obviously, you have to be on the SaaS platform to, to benefit from, from Logs on Grail, but you can buy Logs on Grail outside of a DPS vehicle. Okay. Okay, any comments on where you are on the conversion of your customer to DPS? Yeah, I mean, I think as Rick. Yeah, the way I characterize it is we've I think we're as where we expected, you know, that, like Rick said, we've only had DPS available, general availability since the end of April. As you can imagine, buying cycles are six-nine months. Most of the deals you've been closing have been deals that have been in the pipeline for a while. And those deals were, were deals that didn't necessarily have DPS as a vehicle, and so you wouldn't expect to see a huge uptick in DPS. I would say I would expect to see an uptick in DPS, one, with new logos going forward and more in the back half of the year. And so I'd say, as Rick said, I think we had several dozen incremental DPS contracts in the Q1. And I think you're gonna see more of that with new customers, and I think as customers renew, you'll start to see more of them expand with DPS. I, I would expect more of an uptick later in the year and going into fiscal 2025. Okay. Okay, great. Many thanks. Thank you. Our next question is from Erik Suppiger with JMP Securities. Please proceed with your question. Yeah, thanks for fitting me in. Say, curious about the competitive landscape, if you have seen any change, and also, can you speak to what you see from the likes of New Relic in light of some of the changes going on with New Relic? I'm curious if you have any comments about them going private, if that changes anything on the competitive front. On the competitive landscape, no real change in the competitive landscape. No real change in kind of the pricing environment. DIY continues to be kind of the biggest competitor. You know, outside of that, there are a handful of vendors that you'll see. We didn't really comment on it in the script, we probably could have, that we continue to do a fair job of where customers have environments that get large and complex, and they have additional tools in place, whether it be DIY or competitor tools. We're seeing continued competitive takeouts, both AppDynamics and New Relic in particular. The environment hasn't changed. I think we continue to fare well. We fare really well when customers start to reach a point where DIY and competitor tools just kind of max out. Relative to New Relic, you know, you know, the only thing I would say is that they've tended to focus on a different market segment than we have. Where we do see them in the market, we compete very well. Actually, we mentioned in our last call that several of our competitive takeouts were actually New Relic competitive takeouts. You know, obviously, when you're going through a take private, there is a bit of disruption, but, you know, I would say that where we see them, we fare well. Any comment, when you say, they're in a different segment, are you referring to smaller customers, or are you referring to, cloud-first customers? Or what, what do you? No. Where do you see them? No, more, more size of customer that, you know, that if, you know, if you look at the general, the number of customers that they have, they are targeting not just enterprise customers, but they're also targeting the SMB space. You know, we're only targeting the global 15,000. Where we'll see them is maybe where they're playing in that space. As I said, that, we have found, many cases where, you know, the customers' environments have gotten, really complicated, and multiple tools and even competitor tools just haven't scaled well. They've, they've looked at alternatives, and that alternative, you know, we've benefited from that, with several key wins. We've provided examples of that in prior calls of takeouts of competitors that have simply not scaled with the, the size, volume, or complexity of their existing observability environments. Very good. Thank you very much. Thank you. All right. Well, thank you all very much for your engaged questions. That brings us to the end of our formal call. We really do appreciate your ongoing support. We remain extremely bullish about the opportunity that lies ahead. Fundamentally, the software environment needs more and more observability, and the observability that they need, needs to become more sophisticated in automating their solutions. We are fueled by and proud of the third-party validation, such as that from Gartner, with us being highest in ability to execute, furthest out in terms of completeness of vision, and we believe that that provides even further, a further catalyst for Dynatrace as we look ahead. We very much look forward to connecting with you at upcoming IR events over the coming weeks, and we wish you all a very good day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.