Hi, good afternoon, everyone. You know, welcome to the I guess not welcome anymore, we're almost over here today. You know, welcome to the Barclays TMT Conference. You know, very pleased to have Ramin, the CEO, and Stewart, the CFO of Sumo Logic here with us today. Thank you for coming. Thanks for having us. You guys just reported, on Monday, so maybe let's start there. Can you just talk about some of the key takeaways from the call, and what would you wanna have investors take away from it? Wanna start? Yep. I think, as we comment on the call, we had a strong quarter, we executed well. We've been pretty transparent with the street in terms of what we're gonna try to attain top line in terms of efficient growth, but also deliver a lot more of the bottom line. We hit across all metrics that mattered. Think, you know, a lot of commentary was on the mix of a business, the timing of the business, the macroeconomic, and everyone's got that same uncertain black eight ball that they're looking into as they talk about the outer quarters. We think we're in a strong position. you know, we serve mission-critical applications to help them make sure they're reliable and they're secure, and we're differentiated in what we do in terms of our technology and our business model, and we're continuing to invest for growth. No, sounds good. Let's talk about that differentiation for a second. Just really how, you know, Sumo Logic has evolved over time. You know, can you just talk about where you started, you know, some of the products you've added over time and kind of where you plan to go? Obviously, we've only been cloud native from the get-go, so we didn't have to do a pivot on product and didn't have to do a pivot on business model. We've always been serving two constituents of users or practitioners, engineers that are building and releasing code for applications. On the other hand, security engineers and security operations folks that are trying to protect the data, protect access and the corporate systems. From that foundation of log analytics and cloud scale log analytics, we've over the years dramatically enhanced our portfolio. We process more than a petabyte a day-to-day. We serve customers across small, medium business to mid-enterprise to large enterprise. Historically, it's been serving the digital leaders. Now it's about the digital transformation companies and the digital laggers that are trying to catch up. Our technology differentiation that allows them to start with one use case and expand to others, delivered as a service, you don't have to manage the tool or the deployments, really helps them focus on what they do best, which is building applications, make sure they're reliable, make sure they're secure and protected, so ultimately they can delight their customers and the business. No, that makes sense. You know, I wanna get a better idea now of, you know, your place kind of in the competitive environment. You know, you started cloud native, focusing on log analytics. Obviously, there are other competitors out there that, you know, didn't, you know, they started on-prem and they're transforming like you've said. Can you talk about maybe some of the advantages of starting cloud native with log analytics, and how does that position you to kind of take advantage of some of the secular trends, you know, shift left, more emphasis on DevSecOps, the convergence of the observability and security? Yeah. I mean, I think, if you look from an outside-in perspective from the industry analysts for a second, we're the only cloud native platform that's in both the MQ for observability and APM as well as security and SIEM. Now the Forrester one that's coming out will be really well positioned on security. There's a reason for that. We started 12 years ago with a streaming data architecture and design that didn't sample, didn't aggregate, that was looking at patterns and fingerprints and data as we're collecting it, as we're ingesting it, pre and post indexing it, and we've reasoned over that data over the years and had the algorithms get smarter and smarter and smarter. Ultimately, you can reduce the alert flood that a user has in the SOC, and also the false alarms that an engineer has to go deal with to fix a reliability issue or availability issue with the application or infrastructure. That foundation of log analytics and the tiered analytics that supports that, plus all the modules that we built up for full stack observability and SIEM, allows a customer to start small. For example, we sell a compliance and audit use case for PCI and HIPAA, and then they can move to security analytics, then they can move to a full SIEM when they build a SOC. Not all companies have a SOC, as an example. Similarly, as they're migrating applications from on-prem to the cloud, which is a majority of spend, that's $1 trillion locked and shackled in the data center. As that gets unlocked and moved to the cloud, we're a great technology to help baseline those workloads and the infrastructure, make sure they're reliable, but at the same time, allow that team to partner with security to make sure it's protected, the access keys, the gateways, the flows, all that information. We're a great technology for transitionary companies as well as the those that are digitally transformed already building mission-critical apps. When you're going into some of these companies, typically, are you replacing an existing solution that they have or is it more, you know, they don't have a solution or maybe they used open source or, you know, their IT department cobbled something together? Yeah. I think that answer depends on the use case. On the security side, there's still a ton of tombstones we call legacy SIEMs that are out there. 'Cause they're planted, they don't move. The people implemented them, they're not there. They don't even know how to run and operate those. Companies are concerned about the data that's there, particularly because of audit compliance reasons, right? You have to store the data for 365 days or in some cases, many years. We will go in there and sit side by side, Help them with their new security use cases as their workflows migrate to the cloud, or as they modernize their endpoints or their FWaaS or their firewall, whatever it might be. Then over time, take out the legacy SIEM or other tools that exist in the data center that they've been running themselves. Okay? That's very much a green field to brown field effort for us. By and large, the majority of the opportunities we go after are green field, which means they've either started to migrate workloads, they've built new workloads, they're trying to scale those up, and they've done it with do-it-yourself combination open source, and they're like, "I can't put enough people and scale this, and I need a commercial technology that can help deliver reliability and/or help me down the road with protecting that with security." When we say green field, it's either they don't have a tool, they've tried to do it themselves, they've built brand new modern apps and infrastructure or in the process of migrating, and it requires new technologies to support that initiative. Okay. Do you know, even though a lot of your, you know, deals are, you know, greenfield in nature, for the some of the brownfield ones, do you typically run into, you know, the Splunk and Elastic of the world when competing for those? I think a lot of people run to Splunk because it's one of those tombstones. It was good for where the market was and technology was years ago. It's not architected for where the market is today and where the technology has been going. That's evident in the business model, that's evident in the technology, that's evident in what customers and channel are saying. They're not the only one, though. There's a lot of ArcSight, QRadar, McAfee, you name it, that are still in data center, that are still on proprietary old hardware and/or databases that customers need to run. We don't go in there and try to rip and replace that. We go in there and try to find the team that's migrating the applications, that's trying to figure out how to do security different, and they've modernized security. We start there. Then we'll look to potentially take out some of those other tools. Okay? You know, Elastic, we see on the open source and search, there's a lot of coexistence with that. We don't see them for SIEM. We see them for log search. Then you have the other school of vendors in the space on the observability side that we coexist a lot with, and they don't really pertain to security. It's really important, despite what maybe financial analysts and industry folks think, versus industry analysts and practitioners, these are different buying centers. These are different teams. As a result, there's different technologies. We feel we're in a great position because a lot of that underlying information comes from log analytics, naturally, we can combine those use cases and start provide economies of scale for these customers, the single platforms address these different teams, but bring them together, not necessarily force those collapse of the organizations. You mentioned selling into different teams and buying centers. Do you think that will remain relatively separate, or do you think that will come together more and more over time? I think in the larger enterprise, yes, that's still gonna remain, because they have one foot planted in the data center, another foot planted in SaaS and cloud. It's gonna be a hybrid heterogeneous complex world for quite some time. CISOs need more tools, and that's how they've been buying, not less. Right? That means we need to integrate with all the legacy endpoints and the new ones, all the legacy appliance firewalls, as well as all the hyperscale providers. In that case, it's really a coexistence and integration play. I think they have a formalized SOC. They need a modern SIEM that's cloud-based, and we're a great technology fit. As you go down market, they don't have those formalized teams and experience. Our approach there is to bring in an MSSP or an MSP to help provide the eyes on glass, as we talked about, and to supplement staff shortage. That's a great business model for us 'cause we have 900 plus customers through that channel that we're able to just turn on instantly, that they can provide that value-added service to that mid-market segment without necessarily require them to hire more people. They could evolve from log and compliance to SIEM and SOAR more without having to worry about the people shortage, right? It allows us a great opportunity to turn that business model around with MSPs and allow them to sell not just security, but also reliability on the same technology stack. It's a win-win-win. No, that's really interesting. I did wanna just, you know, switch to just talking more about the business model. You know, consumption, the usage-based models are very topical today. I think we just saw MongoDB report the other day, as well. You know, you updated all with their consumption model. Can you just talk about how you price and, you know, Just maybe start with how you price. Would you like to start on that one? Sure. Just to start off, we're not a consumption model, right? To be clear, and we recognize revenue ratably over the contract. Now we are, you could say it's a usage-based model, right? We have a, what we call a flexible credit model, license model, and customers will license a certain number of credits, and those credits get consumed based off of the type of data they ingest, the volume of data they ingest, and then the analytics they're running on that data to drive business value. The other thing I think is important to point out is, for the majority, whether we're going in and selling an observability deal or a security deal, we generally license the entire platform. Okay? That's the majority of our customers will license the entire platform. We have not skewed it up individually so that customers, if they want to expand from whether it be security to observability or, say, they start with security analytics, and they wanna mature as the company matures and add SIEM, it's not a function of adding a new SKU. essentially, they can take advantage of all the capabilities of the platform. It will consume more credits, so they'll burn it down faster, but it gives them flexibility to expand within the platform without having to enter into a whole separate negotiation and procurement process. Okay. If you know, sign a $100 million deal or whatnot, they could essentially use that bucket on whatever they want rather than on a single SKU. If they license the enterprise suite, yes. They've got the ability to use whatever any capabilities within the platform. The other thing is they can see, they can understand how those credits are being consumed, and then we also forecast for them when those credits are expected to run out. If you wanna try a new capability, for example, you can see the impact on your credit usage. You can align that with, "Well, hang on, what incremental value am I getting from that?" Make a determination without having to go through a POC, a procurement process, et cetera. Our customers love that, the flexibility. When, you know, a customer, you know, really seems to cater to expansion, makes it easier. Can you is there a particular product or, you know, data threshold, where you kind of see how, you know, a customer may came on, tried maybe one or two products, but then it really took off? Yeah. I mean, You wanna start? No, go ahead. I think that answer depends on, A, the maturity for either security or running workloads in the cloud, right? You know, for the digitally native companies, it's really about onboarding that first workload into Sumo, and then more data naturally starts to grow with that. You know, you can drive the cross-sell for additional features or modules, right? The flip side of that is if they're in that migration mode of lifting and shifting an app, then we try to make sure that we talk to both on the security side as well as the site reliability engineers so that we can plant the seed in one or the other and then cross-sell, right? It used to be that we would land with the DevOps and site reliability engineers for those workloads that are being lifted and shifted, and sometime halfway through that process, you had to go kiss the golden ring of the CISO and the team to get approval to move forward, and then inevitably, that would open up a new opportunity. In some cases now, we're actually starting there. The CISO is championing this new security operations and partnering with the business and the development teams and bringing Sumo in. It allows us to go after the observability/reliability use case versus the security use case. Got it. You know, just back in September, you guys had an analyst day, and you put out, some targets, I think a 20% revenue growth CAGR target through, 2026. Obviously the macro environment has gotten worse since then. Can you just talk about, you know, are you still comfortable with that target? Can you talk about maybe the bridge to getting there? I'll start. I'm not reiterating the target today, just to be clear, right? Listen, what we did. The reason we put that out there, right? Company went public in September of 2020. Been public long enough now. Clearly, the market has changed, right? The macro changed at the beginning of this year, investor sentiment changed. We want to put a marker out there that would indicate to the markets that this was not a grow at all cost philosophy, right? That we had a plan to converge towards profitability. What we talked about was we think there's a scale equation, so a top-line scale equation that is critical to get to the right leverage, particularly coming from where we are from a financial profile today. We put a model out there, and just to clarify what we said at the time without reiterating was we said at some point in FY26, we think we hit that scale, and at that scale, we hit profitability. What we talked about just this Monday on our earnings call is, if you look at the results we put up this quarter, right? We've been doing this since the beginning of the year. As soon as the environment changed, we changed the way we were operating the business. We've gotten much more critical on spend. We've made a ton of changes on the go-to-market team. We've talked about this every quarter. We've actually downsized that team from a rationalization perspective because we brought in sort of a better fit for the new model. You know, we're managing this very carefully. Our goal is to get there as quickly as possible. As I say get there, it's getting to profitability. However, there's a massive market in front of us, right? Digital transformation is not going away. App migration to the cloud is not going away. Data is gonna continue to grow, you know, much more quickly than budgets in the cloud. We wanna take advantage of that opportunity. We're gonna invest into that, but being much more thoughtful and efficient around how we invest. Yeah. Can you just talk a little bit more about some of the changes you've made on the go-to-market side? I'll start, Ramin, you can add on. There's a lot that was done on, right? First, before I joined the company, Ramin hired Lynne Doherty, the new head of worldwide sales. That was November 1st of last year, so she's been on board now a year. This decision had already been made, Lynne then implemented the decision, which was to segment the go-to-market team between hunters and farmers, right? Because prior to that, you had reps who were responsible for new logo acquisition, expansions, renewals, customer sat, you know? They carried a large swath of responsibility. We thought a more focused approach, and this is very typical in enterprise software that you would do this. We did that in Q1 of this fiscal year. Lynne then upgraded a lot of the leadership talent as she looked at what did, what did she thought was needed to go scale the organization, so that was largely Q2. At the same time, introduced a partner-first model, brought in a new partner leader. As those new leaders have evaluate the fit of the skill set we had within the organization to this new model, we've continued to rationalize. We've brought in new talent. We've actually, as I said, you know, eliminate and remove some talent instead of the downsizing. If you think about where we are on that journey, we're, you know, three-quarters of the way through the changes. We've done the heavy lift. We're most of the way through the changes. As a result, we're down on absolute capacity and ramp capacity. Now we're starting to add capacity this quarter. We're gonna do that in conjunction with productivity gains that we expect. We've delivered productivity gains year to date. We expect to continue to deliver more. We'll look at that in context of the macro and what that impact will be. The benefit of all that change has yet to really materialize in the business. We think it's, we look where we are on that journey from, what is it gonna take to ramp a lot of these new hires? It's really sort of the midpoint of next year where we expect to see the team at a sort of a more fully ramped capacity and being able to accelerate. That's, that's sort of where we are. Would you add anything, Ramin, to that? No, I think it's a good summary. Now that's helpful. I think you mentioned you may still have a little bit more hiring to do, on the sales side. I mean, how much more would you say you wanna do? Well, listen, we're down year-over-year. We think the opportunity in front of us is such that we should add capacity, right? We, we think the market is there to continue to grow. I'm not gonna give sort of an absolute sense of what we're gonna grow, but we will, we will grow it, certainly double digits from a percentage perspective from a capacity. Once again, we look at this across all of our theaters, the pursuit teams, the expansion teams. We evaluate every quarter how's the productivity. We feel like we've got the right skill sets, are we seeing those improvements, while watching, like I said, any impact from the macro, and that's how we're gauging how quickly we're going to add that capacity. Our viewpoint is this is we're early innings in a, what is a large and growing market opportunities as particularly Ramin talked about the folks who've been on-prem, particularly enterprise, as they shift to the cloud. This is a multi-year, you know, evolution that's gonna continue to happen, and we think we need to invest to take advantage of that, but doing it more efficiently all along. No, that makes sense. I guess in terms of the type of salesperson, are you looking at, you know, a technical specialist, especially for the security side? Where do you feel like you need like what type of resource do you need? Yeah, I mean, I think we've evolved from a sales specialist overlay to a SE-focused specialist, and allows you to get better coverage in that, and secondarily, allows you to hire the right profile 'cause you have technology specialists in pre-sales plus post-sales to support one account team, for renewals and upgrade and cross-sell, as well as one account team that's different for pursuing new logos. You can bring people 'cause they're oriented a little bit differently in terms of hunting for new business versus building a relationship and penetrating more broadly in an account. That was just too difficult to do with one account team in the previous model. Allows you to get more efficient on your ratios as a point when you go to hunter/farmer model. Secondarily, allows you to get more efficient when you start driving a partner first, where we had 70% of the transactions this past quarter go through a partner. Now a lot of that's still, you know, partner fulfilled, and now we're starting to see partner-sourced activity in action. The last is our contribution from not just value-added resellers or VARs or disties, but also MSSPs, as I mentioned earlier. 'Cause that allows us to sell once and then expand, you know, pretty more broadly. Got it. In terms of your investments going forward, you know, you've talked a lot about some of the sales investments, but maybe on the product side, you know, are there specific areas where you see product gaps in the platform or are there maybe select areas you just wanna invest more into? Look, there's a cost of doing business that you're constantly having to update your analytics, your machine learning technologies. You know, every three to five years, there's another endpoint flavor du jour. You know, changes that happen in terms of technologies around how applications, the tool chain of how applications are built, that you need to integrate to, that you have to be relevant for developers. There's a lot of costs of just kind of maintaining that. One of the things I'm personally most excited about is the shift to what's called OpenTelemetry and the ability to standardize on the data formats 'cause this has been something that's been causing a lot of angst and frustration for, you know, what we call observability today, but the systems management tools in the past. Definitely an issue for a lot of the practitioners because one format from one vendor, another one from another vendor. As you look at what OpenTelemetry is meant to do is standardize logs, metrics, traces, events. We've been a huge contributor to that initiative. We've not only committed the schema for log format, we've contributed a lot for distributed tracing and now extending from observability to security and also from, you know, just basic monitoring and standardizing collection to remote action, so you can drive more automation. Then you have to compete on a level of analytics, which we're the best in the industry at. Not just the collection from host metrics, for example. A lot of effort for us is in that shift. Second effort for us in terms of product technology is integrating and simplifying the user experience, right? We're not only targeting the elite developers or security practitioners because you're trying to push more up to level one, right? In the SOC as an example. You're trying to push more to site reliability engineers, not just level two, level three engineers that are writing code and pushing code. That means the interaction they want is not always to have a blinking cursor. They can write a query, they can do a search. They want those things out of the box. They want those insights. That's the foundation that we provide, and now can bring together collectively for reliability and security, so that there's not this lag between development, operations, and security or DevSecOps that we like to talk about. They can collaborate faster, and they can iterate on the cycles of applications in these digital services together. I think a lot of the workflow, a lot of the analytics, a lot of the user experience is where we're driving to really help improve that value chain. I think look, it's worthwhile double-clicking because I think this is a misunderstood point, probably in the, in the buyer universe as well as certainly in the investor universe, right? I mean, Ramin touched on, we think we're best in class in cloud scale log analytics. What I don't think people appreciate is logs is the most complicated data, right? It's unstructured in nature, it's dynamic, particularly in the cloud. It's also the biggest data set. Sumo was architected day one, you know, cloud native platform to handle this volume of data. You cannot actually resolve problems that are identified with your apps running slow, your infrastructure running slow. At the end of the day, if you're delivering a digital experience to customers, what do you care about? You care about the experience, is it a good experience? Is there disruption to that experience that creates revenue leakage, creates brand reputation damage, right? Particularly as well as on the security side. What we do best is allow our customers to identify where the problem is and fix it quickly. Nobody else does that like Sumo does. This is, you know, I think you asked the question around product investment. This is core to the architecture. A lot of the folks who either approaching this from a different perspective from security or folks coming in from the APM side, they started with structured data. It's a much easier problem to solve. They've added on log management, very different than. Log monitoring. Log monitoring. Yeah. Very different than log analytics, particularly at the scale needed in the cloud. We think we have this incredible foundation. We've talked about data growing faster than budgets in the cloud. This is gonna be becoming an increasing problem for customers, is how do I manage all this data? I have to be able to run analytics on it to identify problems. 'Cause what they really care about is time to resolution when an app's running slow, right? Time to resolution if you have a security breach or you have a compliance issue. That's where we think we are the best positioned to take advantage of not only the market where it is today, but where it's gonna be going over the next five years. No, that's very helpful. Just wondering, we have a couple of minutes left, so I just want to talk about some of your, you know, profitability targets. You know, you had a couple profitability targets, I think in 2026, that you gave at Investor Day. Can you just kinda talk about kind of the pace to get there? Do you think it's gonna be pretty linear or, you know, front-loaded, back-loaded? We wanna get there faster, right? I think we've already demonstrated this year significant improvements in terms of the targets we put at the beginning of the year. You know, listen, there's that balance between growth and profitability. We've got conviction we can get there faster. We're not at the point yet of being able to say, "Here's the timeframe." When we get there, we will update the model and share that with the markets. You know, from a, from a growth perspective, we don't think the growth will be linear. We talked about that both at the Investor Day, and I talked about that just this past Monday on our earnings call. Given the changes we've made in go-to-market and having lesser capacity, we do think that accelerates over time, but really focused on kind of back half of next year and beyond. While people looked at this as a 20% CAGR based on the numbers we put out there, we actually don't think it plays out that way because it's not gonna be linear in nature. No, understood. Just, last one from me, you know, when talking about like the Rule of 40, for example, going forward, have you thought about that? Have you put out anything in terms of when you expect to get there? We haven't put anything out on that, right? I think it's important, right? I think that's how investors, they're looking for that balance. I guess from our perspective, what we hear is people probably put a higher quotient on growth versus profitability still, right, in terms of that mix. But we've not put any specific targets around Rule of 40. I'll just echo by what Stuart said. We want, we will, and we can get there faster. Now, the uncertainty for all of us is what transpires next year and beyond with respect to the macroeconomic situation, the budgets, but I think we're well positioned. The investments we made in technology, the investments we made in go-to-market, we've shown and demonstrated multiple quarters in a row of driving ARR, revenue, efficient growth, and more to the bottom line. We know how to manage our business. We have absolute control of how quickly we can speed up or adjust things as we see fit. We're excited because I think there's massive market still ahead of us. There's $1 trillion in the data center. Data is growing way faster than all of the vendors in our space in respective markets combined. we're well positioned to take advantage of that. I think that's probably a great way to leave it off. I think we're just about out of time. Thank you so much, both of you, for coming. Appreciate it. Thanks for having us. Thanks for hosting us.