Dynatrace, Inc. (DT) Earnings Call Transcript & Summary

Hello, everybody. Good afternoon. Thank you so much for making it to the Goldman Sachs Communacopia & Technology Conference. We brought together 2 major conferences and the result was magic. As you can see, it's rather busy. I think it's a record attendance. I'm told this is the largest Goldman conference ever possibly. And so that's also made possible because of people like Rick McConnell, who agreed to present. And so therefore, we have good content for you. It's going to be a busy set of days ahead. So why don't we get started to jump right in. Good to see you, Rick?

Good to see you, Kash. Thanks for having us.

Absolutely. Happy to -- most welcome. Now it's been a couple of quarters since he joined as CEO. Now I thought I'd ask you what has surprised you the most that sort of thing. But given that Dynatrace is still a relatively new story, how would you describe Dynatrace to investors? Just a quick thumbnail sketch, the key investment thesis and the main themes behind Dynatrace and then we can get into what you've uncovered in your first couple of quarters, that sort of thing.

Makes sense. So welcome all. Thanks very much for coming. Appreciate having you here. Dynatrace is one of the leading providers of observability solutions in the market. This, as we characterize Dynatrace, differentiates us by providing answers and intelligent automation from data, in particular, related to things like cloud deployments, so that we can provide a much better set of insights in terms of how companies are managing their IT ecosystems, and in particular, their cloud environments. And our postulate here is effectively oriented to the fact that in a cloud environment, data is exploding. It's exploding in volume, it's exploding in complexity. And the result of that is you need deep insights into what that data is telling you to be able to manage your ecosystems effectively. And that's what we do.

Perfect. Yes. So you've been at the company for a couple of quarters now, right? I know the question of what attracted you...

3 quarters, 3 plus. It feels like I've been working with you for a year.

I do. I mean it was a very different environment 3 quarters back, you went through rough and tumble of the macro, et cetera. I'm sure you've already been exhausted with this question of what attracted you to Dynatrace. I think we all get that. But what have you uncovered in the last couple of quarters that has been surprising to you. Granted that you did all the work going in and then you uncovered something in the next 3 quarters. What surprised you in your discovery process?

The -- I would -- it's going to maybe sound a bit contrived, I don't mean it to, but the surprises, if anything, have been on the upside largely with the exception of the macro environment, which is a little bit out of our control. The product and set of products in portfolio are incredibly strong. I've met with now, customers are literally around the globe and the feedback that they give me is just that your products work. They are the killer app. They are indispensable. We need them to manage our IT ecosystem and cloud infrastructure. So the feedback in the product portfolio continues to be very strong. So that's a great starting point. Obviously, financials are very compelling mid-30s, adjusted ARR constant currency growth, which is tremendous. Low to mid-20s in terms of operating margin, high 20s in terms of free cash flow. So very, very solid overall financial performance in the company. Customers are terrific, and the market is enormous. And probably, the market comment is the one that in some sense, it surprised me the most on the upside. I think the market opportunity is simply enormous. And my view of it is that today, observability is still a delayed decision really from the decision that's made around cloud deployment. But over the course of time, I really believe that observability becomes core. It becomes no longer optional and becomes mandatory as part of cloud deployments. The only way to manage them. And if that really occurs, then I really think that magic can happen in the model for end-to-end observability in particular for Dynatrace. And I wake up every morning thinking about how to make observability more mandatory as part of cloud deployments because based on the customer feedback, their existing installed base of customers thinks of observability as a must-have. It is required. They wouldn't think about deploying mission-critical applications without it. And we just need to figure out how to make sure that other customers and other prospects feel the same way.

Okay. Visa or Mastercard, the tagline is, "Don't Leave Home Without It" or was it -- they're the famous brand, right?

Right, right. exactly. So that's good. Maybe we can borrow that. I'm not sure they would appreciate that, that much, but we can start there.

I think Visa or MasterCard managements are at this conference, we could work out something.

There you go.

Rick, now that you've had a chance, you've been in the tech industry for a very long time. And how would you gauge your aspirations for the company longer term? Where do you want to be in the next 4 to 5 years? And what would you consider success and you'd say, look back and say, you know what, we did it. What would that be that 4 to 5 years out picture of Dynatrace?

We like to think of Dynatrace, our vision, as a world in which software works perfectly. And that really is our aspiration. And it is, at the end of the day, not about financial management and financial performance, although that's, of course, important. It is really about delivering incredible value to customers. And that is really a mission against which I'm very passionate. And the way that we do that is providing answers and intelligent automation through data. And that enables us, if successful, to deliver flawless and secure digital interactions. And if those digital interactions can really be flawless and secure, then we can aspire to achieve that vision, which is to enable our customers to deliver amazing performance of their software because the world runs on software these days. It's just -- the number of customers I've met with utility companies that say, "Dynatrace, you help us keep the lights on in our country," all the way to supermarket loyalty programs to e-commerce sales to banks that are in multi-cloud, hybrid cloud environments that simply couldn't operate digital banks without us. And this sort of core position as you are not only a strategic vendor, but you are quintessential to the success of our company and then our obligation to deliver against that, I find to be really compelling. So if you think out 3, 4, 5 years, it's basically an extension of that to a much broader environment or ecosystem of companies to enable them to deliver that. I'm amazed by -- I really am quite passionate about user experience, something I talk a lot about to various customers. But what strikes me as maybe most interesting these days about user experience is we all think about user experience not just of my banking application versus other banking applications. We think about that banking application as being compared and experienced to every other application we use. We're going to compare it to the greatest experience of gaming or video or streaming or commerce or whatever. And so the bar is growing day by day on the experience that's delivered and people expect software to work perfectly without any patience. So I have no patience for applications that don't work. And we help enable that. And I think there's great aspiration in that value add.

In that view of the world, right, everything works as advertised. Do you see changes or enhancements, additions to the product portfolio? And since you came on board, you've identified application security as an incremental opportunity. And that's within just 3 quarters, but we're talking 4 to 5 years out. Nobody knows what the future is going to look like. But what -- in order to achieve what you laid out as your vision, what are the things that you foresee adding to your set of capabilities to be able to achieve the potential of the company? Is it product or new markets or geographies or partnerships?

This is -- I'll probably spend the remaining 30 minutes on this answer. But to give you the short form of it is that I really do think it is broadening the portfolio, but then the extensiveness of really the notion of end-to-end observability being what matters the most. And so yes, we have added application security. Yes, over the coming quarters or so we will add in sophisticated and detailed capabilities around log monitoring, for example, something we've been talking about. But each of these in application security, as you pointed out, Kash, has been something we've added really over the past several quarters. These elements are important in isolation, but much more important, much more valuable in concert with one another because it is really that end-to-end observability view the advantage that really gives you the best answers and those insights we talked about earlier. If you are looking at not just logs, but traces, logs, scans, metrics, behavioral analytics, metadata, real user data and you're processing all of that through a very sophisticated AIOps engine, which we believe really to be our biggest technology differentiator in the market by far, then you've got an amazing advantage in your ability to deliver answers that are meaningful, impactful, better in terms of processing and enablement of customers to actually use them productively. And so that's what I think gets us excited is that the expansiveness of the data view, combined with the sophistication of the AIOps engine really provides a holistic and differentiable environment that we offer.

Got it. Really well said. I know that you've been out visiting with a lot of customers, and everybody wants to ask about the macroeconomic condition, et cetera. Presumably, IT budgets are being reprioritized, at least that's what we're hearing from other companies, too. What are customers telling you with respect to where they stack rank Dynatrace with respect to other priorities in IT?

Well, number one, I think that digital transformation initiatives continue to get a lot of funding because they enable you to operate your businesses better. So whether it's supply chain or commerce, revenue generation, acceleration of product development cycles, whatever it might be, the move to digitally transform your business and driving those initiatives is here to say, it's ubiquitous. You need to look no further than what the hyperscalers are doing in terms of revenue and growth. Last quarter, you take a look at combination of AWS, GCP, Azure, $40 billion of revenue, growing at 36%. So it's $160 billion of annualized revenue growing at an enormous number. So you don't have to take my word for it, you can just look at the numbers to see the amount of cloud spend. And even if that slows a bit, it's still growing very fast off a huge number. And our view of Dynatrace, quite frankly, is that we're really trying to position ourselves in many ways as cloud done right that you need Dynatrace in order to really be able to effectuate clearly that cloud environment. And we have a hypothesis that the more you put on the cloud, the more apps, the more infrastructure, the more workloads, the harder it is to manage the old-fashioned way with a network operation center, with a number of people in the room that are looking at dashboards, that are staring at a yellow or a red alert and wondering what do I do now? And when you get a bunch of them at the same time, you don't even know where to go. Meanwhile, Dynatrace would give you precise indication to what the issue was, where the issue was, very broad situational awareness and ability to act and engage on that to make sure that your software is working more effectively. So very, very different environment. So as the cloud scales, you create more of these issues. And we need -- we provide a solution that customers need to enable them to handle that more actively.

Really well said. And you've been investing in direct sales. I think there was a fall since the pandemic beguiled us all into thinking that structural margins in the software industry are super high, which they are, but relatively you don't have to really spend money on sales and marketing, that sort of thing. But you are investing in this fiscal year. There's a bit of operating margin compression due to the investment. How confident do you feel you're going to get the payback with everything that's going on in the world, macro pressures, inflation pressures, rate pressures, whatnot, and you're investing into that?

Yes. I mean, a few quarters ago, what we said was we were going to allocate a couple of additional points of spend, which we've done or in the process of doing. That brought our operating margins down just by those couple of points into the range of about 23%. That's how we're operating. At Dynatrace, we have forever, really, for certainly a long time operated top line to bottom line and manage that accordingly. And we expect to continue to do so. And we'll regulate our spend based upon top line growth so that we're going to manage that operating margin model as we look at -- and that's our commitment both internally for our Board, our shareholders and others. That enables us to sort of scale the model up and down accordingly. But heck, we're a growth company, growing fast. We're going to add around 800 people this year on a base of nearly 4,000 as of the beginning of the year, people. So we are investing in areas like innovation, R&D, in particular, towards the sales force. Beginning of the year, we said we're going to grow sales count quota-bearing reps by 30%. We're doing that. So year-to-date, we're on track for that, and we'll continue to grow. That said, I think that there's an opportunity to adjust the model to a more partner-oriented model for greater leverage. And it is our expectation over 1- to 2-year span or so that we'll be able to reaccrete that operating margin a bit from there.

Got it. Got it. And how do you feel about the ramp time to productivity? What are the enablement tools you're providing to your reps, although it's not what a CEO do, but I would assume that you've taken very good interest in getting the ramp time to be as quick as possible so investments you're making can really start to pay off? And how is that ramp time coming along for your reps?

I don't think it's changed much. 4 to 6 quarters typically for full productivity. Certainly, you start booking deals in 2 to 3 quarters. And so we try to manage against that. But again, what we want to be driving with our go-to-market philosophy, our go-to-market approach is really more leverage in the model. So I talked about partners, areas like hyperscalers, global system integrators. These are areas where we really believe that we can see pretty substantial leverage in the model and what we're really trying to deliver against in order to create even more sales enablement.

I was taught a long time ago when I started covering software that just watch -- one of the main things you got to watch is sales hiring. Sales hiring is a sign of company confidence and generally, if the productivity trends hold, that should lead to desired revenue outcomes, right? And then if you do that well, the profit models will ultimately fall out and you will be in a good place. So in that regard, as you are hiring, your sales capacity is going to be up 30%. Is there a way to think about where are you dedicating them specifically? Is it to go farm existing clients or add new customers? If you want to take a product cut, is it more in the core APM where -- by the way, you ranked really insanely highly on the Gartner Quadrant -- Magic Quadrant, congratulations, or is it more in the emerging growth areas like logging, infrastructure? How do you invest your precious 30% headcount growth rate in these different places of the Rubik's cube?

Right. So our sales reps are typically generalists, so we don't certainly specialize them by functional area with the exception of AppSec, application security. We do have a small specialist team that is really devoted to understanding the application security market and assist our generalists in closing deals. But otherwise, there are generalists all across the portfolio. And in fact, that's what we want them to do because that's where we create the most stickiness for customers, but more importantly, perhaps, also the most value for customers, really across the board. So we get enthusiastic when we see broad-based sales. And in last quarter, for example, we delivered a quarter in which more than 50% of even the new logo ads were multi-module sales, which is great to see. So that for us, that's pre or more modules sold out the gate, which is good because that means not only are we selling, but customers are really buying the value proposition of the platform as a whole. Now in terms of specific allocation, we have various different kinds of reps. We have major account reps, expansion reps. We have hunter or new logo-focused reps, and we're really allocating dollars for new investment in those areas really across the board.

It just crossed the mind that we use a hunter-farmer analogy for salespeople so much. I just wonder if we can look at a salesperson and say, "Hey, you are a hunter, and you are a farmer."

Well, I think it's sort of understood what's meant by that. But yes, we call them expansion reps, new logo reps. We don't quite use that language. Maybe I should reconsider my terminology.

Yes. It's the standard of the industry. So you had a formula at the end of previous fiscal year, you said, "I feel really good about expansion with the existing customer base, 20 points." And there's a formula that gets you to your previous target of 30-ish, you'd have to grow new logos. We took a more decidedly conservative stance with respect to new logo adds. But again, you're hiring salespeople, I mean some of them are going to land new logos. Are your previous assumptions just turning out to be, I mean, the right thing? Or could we be at a point where at some point, people say, "You know what, I'm done doing my ROI analysis. I got my [ ARR ] buying Dynatrace is a good way to make good returns because I solve all these problems," that you could be set up where the new logo ads are actually better and not like how you assume to be?

For sure. I mean it's sort of staying in the macro environment that we saw at the end of June. We saw a modest slowdown and we saw it in new logos. The installed base continued to be pretty much on track with what we had expected as we went through the quarter as part of the commit process. And so while we brought down guidance by a couple of points of growth, we believe that, that derisks the guidance model. We also certainly are focused on delivering against that in terms of both the installed base and new logos. And the new logos we brought down to essentially flat year-over-year in terms of the growth of that.

Same number of logos as you had last year?

Same number of logos as last year, so that we would simply be more conservative in that approach. That assumes for us that the macro environment that we saw at the end of June sustains through the end of our fiscal year, which takes us through March 31 of next year. If the macro environment recovers more rapidly than that, and if we see an uptick there, then we'll see, I think, some upside, especially on the new logo front.

Got it. At this point, we're halfway through -- a little bit more than the halfway through. Let me see there's an interest on your part to ask any questions. Kevin? Go ahead.

Right. Do we need to repeat the question?

Yes. What aspect of the macro environment are you particularly watching with respect to purchase decisions, right? We're paying attention.

Yes, it's a good question, but it probably varies customer by customer in terms of the impact. Let me start with the results and then sort of work backwards to your question. The result is that there are more levels of approval typically and more levels of approval can often result in budget delay or budget access delay. And I think it even surprised some of our direct buyers as we got into the balance of the June cycle as we went through last quarter, the point where, wait a minute, I had signing authority. Now I did take it to the CFO, the CEO, and it got delayed. So whatever the cause, the effect was a delay in budget cycle. And it -- what customers have told me when I've asked them is, I would say, general concern about a slowdown in their business resulting from various macro conditions, which would include 40-year highs in inflation, interest rate increases, certainly saw the Central Bank in Europe raised rates recently by the largest raise they've ever seen. The -- I was in Europe actually last week. Lots of concern around fuel, access and fuel prices going into the winter season. And so there's some concern that that's going to force an allocation of capital and OpEx. People that's going to reduce overall remaining expanding capability. And so I don't know that I can -- I know that I can't pinpoint precisely the answer to your question in one area or the other. But the result of it is general concern and that's deferring budget, assuming that spending may dry up to some extent.

Maybe we should export some of the heat wave we had in California to Europe as a gift so that they can rely less on natural gas.

Just need to do it in December, or January, something.

This was the right time. As you're talking about what macro thing you're looking at, I just was thinking, why not just use Anaplan to reforecast and replant very quickly? And why don't you use DocuSign add a few more signatures in the document and then you did the planning, you did this extra level of signature and should, boom, digital transformation. That's what it's all about, right?

I think that's good.

Yes. More Anaplan, more DocuSign. Unfortunately, we don't cover those companies that I can say. Any other question? That's a solution for deal slippage. More signatures inserted on the Sign Here field.

Automate them.

I assume a lot of your customers already have extensive logging sort of software in their sort of base, et cetera. What is the differentiation of yours and what will happen to what they already have? How do you expect that to pay off?

Great question. So a couple of thoughts on that. First of all, we do believe we've been working on logging solution now for 3 or 4 years. So it's been in the process for a while. We are planning to deliver a massively parallel processing engine oriented around log and log monitoring called Grail. It is an underlying data lake house that really is an enormous store providing a high degree of performance scale at lower cost associated with the logging set of capabilities. It is not using data indexing and so it is very efficient in terms of its store and access. We are planning to deliver a Dynatrace query language, DQL. We call it against that, which is a highly efficient language to basically access these logs, and it will do so in a way that doesn't require distinction between cold and warm storage. And so the result of that is very cost-effective access. At the -- having said all of that, while we are very focused on building a great log solution, the real differentiator in our view, consistent with my earlier remarks, which is the integration of logs deeply into end-to-end observability. Not really launching a siloed attack on logging, so much as deeply integrating those logs and log capabilities into your end-to-end observability view. Now we don't think that it makes a lot of sense to attack the logging market in the silo. And so we'll initially get workloads that are directly oriented around overall observability. And then over time, we would expect more of those workloads to potentially move over into the environment once customers get comfortable with the environment. So that's sort of the game plan and approach that we're planning. We're very excited about it.

Any other question? I had a question for you, Rick, on the hyperscalers. I know you mentioned it in the past as to how that is a source of go-to-market leverage. Now with 3 quarters in, when you talk to the people that head up the go-to-market or partnership initiatives on the cloud hyperscaler side with respect to Dynatrace, what are they telling you with respect to demand signals? And how are you effectively integrating your solution with theirs to make the process of the sale less friction-filled?

Well, the good news is that more often than not, customers really do want to buy through the hyperscalers. And the reason they want to do this is they want to use their contract spend that they've already allocated to an AWS or Azure or GCP that they have -- they've signed up to large commits over, in some cases, multiyear period. So we had, for example, and we reported on this in one of our earnings calls, a $10 million-plus ARR customer, new logo come in, and they closed the deal through AWS. Great example of where they wanted Dynatrace, they used AWS as a contract vehicle to get that done, then it probably accelerated the deal by, I don't know, probably a couple of months in order to get it closed through that contract vehicle since it already existed and was in place. From AWS standpoint, they loved the deal because increases spend through AWS. The customer loved it because it enabled them to use an existing contract vehicle and accelerate the contract utilization they've already got, which enables them to get to a renewal faster, which probably enables them to renegotiate a contract on a unit pricing downward. And we love it because it accelerated the sales cycle, increased spend of the hyperscalers who are good partners of ours and the more leverage we get out of them, the easier we can go back to the hyperscalers and say, by the way, why don't you invest more in assisting us in selling Dynatrace solutions in the future. So we sort of view it as a win-win-win partnership opportunity to be leveraging the ecosystem in this way.

Got it. Any notable trends with respect to consumption? I know yours is not a consumption model, but there's certain maybe aspects of consumption. I think Datadog talked about how some aspects of the business is consumption-oriented. So they too noticed a little bit of perturbance with some of the larger customers. Is any of that relevant to Dynatrace?

Not a lot in that -- as you point out, Kash, we don't have a consumption-based model to commit-based model. You make a commit, we draw down from the commit. We certainly are evolving our pricing models, but not really in a consumption-oriented way. We're evolving it more in a cross-platform way through subscription service, really across the board. And we've already got 100 or so customers on what we call DPS, Dynatrace Platform Subscription. There is really good take up, great traction of the model. Our net expansion rate of those customers is even higher.

So what is -- can you tell us more about the DPS?

DPS. Yes. So it is still a commit-based model. You make a commit over the contract spend period and then you simply effectively draw down by accessing any of the modules. So you gain immediate access across the board for the full platform, and you can utilize it as you see fit across the board. You need more application security to deal with vulnerability, you can allocate it to that, and then it will essentially draw down.

It's drawing down credits sort of thing.

Basically yes.

And so is this something -- how long is this initiative been going on?

It's been in place for more than a year now. But again, targeted at just the largest customer. But what you're going to see is over the course of the next 6 to 12 months, it will become a more common pricing method. The one element about logs is that it's sort of by definition is consumption-oriented kind of has to be because we have very small customers that generate boards of logs or large customers that don't. And so on logs, sort of have to think about it as a combination of 3 factors: ingest, storage and access. And so that will essentially draw down DPS credits, if you will.

I want to get to that log in a second, but I'm very intrigued by your DPS comments. As you study that cohort, what are you observing that is a good model to replicate in the future? Is it net retention rates? Or what are the metrics you are observing from the DPS? What excites you?

What you want to see is you want to see broader module usage, number one; number two, because it encourage you to bring up more applications or more infrastructure, so really broadens your workloads; or number three, does it drive more usage of the existing workloads. So one of those 3 dimensions. And what we're seeing through DPS is it's really encouraging all of that.

Got it. Is there any software solution that you have created to -- for the customer to just log into the DPS dashboard and then start to navigate and magically allocate with...

I'm not sure we've come up with magic allocations yet, but we do -- we have put a lot of thought into this. We have a group of people spending essentially full time on making sure that we get DPS right.

Yes. Software is logic. But it's also magic.

It is -- magic. We'll combine the two. Make sure we have magical software.

Anybody else wants to jump in. I just have a couple of things. There's one there. Yes, please.

Digital -- so the question I think was Digital Experience Management, is there change in attach rate?

Yes, if there's any change in the guidance?

Attach rate on digital experience for us is around 80% to 85%. So no real change in that. It's very high against application performance monitoring. Continues to be and is a great business for us because of that high attach rate.

On the other products, same attach rate to kind of historically disclosed?

Yes. No. Well, no significant changes with the exception of infrastructure monitoring, for example, because we really do think -- let me back up, infrastructure monitoring is now in excess of $100 million for us. It's still maybe just $0.15 on the dollar relative to APM for us. And over time, we think that can be 1:1. The infrastructure monitoring is very big. That business for us is growing well faster than our average ARR growth. And so that's going to continue to grow, and we believe is a substantial opportunity. So when you think about infrastructure monitoring is really attaching today to our existing installed base mostly of APM customers, that attach rate is clearly growing.

There's another question.

Given the larger upfront deals, you've mentioned modules and a higher rate of 3 module attached. Over time that changes the growth algorithm, upsell opportunity you have given that you're landing larger footprint out front now.

I don't know that, that changes it automatically by itself. We're still seeing around $100,000 new logo land even though more of the customers are landing with multi-modules. But it's great that they're landing multi-module because then they grow a little bit faster. But the numbers I think of for us are average land $100,000, roughly speaking. The average ARR per customer across our entire customer base, around $300,000. And the average multi-module ARR per customer is about $500,000. So if you can get multi-module customers, they tend to be bigger, grow faster, more attach rate down the road and tends to be a positive evolution of the model.

Can you talk about logging and security, the timeline of the contribution to revenue?

Sure. So in logging, what we have said is that our expectation is that we'll follow pretty closely to what we were able to deliver in infrastructure. And infrastructure grew to $100 million over 8 quarters. And the expectation in logging is roughly the same as that at this moment. Now we're still a quarter or so away from launching into it. So we'll get obviously much better visibility when we get into it. But our expectations at this point are around that 8-quarter ramp to $100 million. In AppSec, we are expecting it to take a little bit longer, more like 12 quarters to $100 million. And that's because the sales cycle is a little bit longer on security, having to bring in security buyers and others. Call it, launch of AppSec in earnest around Log4j. So figure beginning of this year, roughly speaking -- this calendar year. Sorry.

I'm curious. You're in the logging market. Datadog has got in the logging market. Splunk putting up 32% growth rate, OneCloud is 59%. With everybody getting in, is it that the market is actually bigger than we thought and that it's not compressing or crushing anybody's growth rate? I mean the thing went from 64% to 59%. So not a bad growth rate. What are your observations -- if you take a step back, there's an assumption that it's a replacement market only and they're too expensive, that sort of thing. But the facts suggest otherwise, that everybody is doing really well. What is your take? Is it competitive? Or is it a big turn?

Both. I think that it's -- I certainly think that the log monitoring business is ripe for disruption. I've said that numerous times, continue to believe that's the case. I base this not on conjecture, I base this on what customers tell me. And what customers are telling me around the globe is I want a more effective logging solution. I want to integrate it deeply into my overall end-to-end observability. And can you please do this? We'd love to do this and host this with Dynatrace. Great. Terrific. And from our standpoint, it isn't just opportunistic. It's very strategic because we do believe that logs are a fundamental part of overall end-to-end observability. And so therefore, it's a very natural evolution of our model. That said, no doubt, given the cloud ecosystem spend is a transformation and the initiatives are being driven, goodness. It is a huge market and logs are exploding by definition because as your workloads explode in the cloud, you're going to get more logs from that. It's just that -- from our point of view, logs aren't always the right tool for the use case that you're allocating if those logs are siloed. And instead, if they're integrated in terms of traces, metrics, real user data, we believe you can do a much better job of actually getting the answers. And that's, I think, the difference with Dynatrace.

Got it. Got it. With respect to the TAM for your overarching platform, right, observed, let's call it $50 billion, $60 billion or so. Right now, there is a level of anxiety/confusion among the investor base or in people like me, everybody is doing the same thing. So you got Datadog, you've got Splunk, you've got Elastic, and you've got Sumo Logic and so there is a general fascination with observability. If we were to look back, let's say, 5 years from now and you guys have been very successful, what -- I wish I -- sure, you plan on being very successful. How would the differentiation -- because right now, it does not look like it's very clear because everybody is doing well. I mean, based on your math, if you want 30% growth rate, you're getting it and you're turning good profit. The other guys want whatever it is. So how do you really differentiate 5 years from now when you look back, what will have proven to be Dynatrace's lasting differentiation that allowed it to become the whatever?

I mean, I do think you're going to ultimately see consolidation in the space toward probably a couple of players who are going to own it. And we expect to be along them. Hopefully, on top of them. And we're focused on the Global 15,000. We're leading that space. We expect to continue to lead in the segmentation of that space. We do it through end-to-end observability, number one; and number two, a very sophisticated by far in our biased estimation, market-leading AIOps engine. And that AIOps engine does not produce data to glass, does not produce just dashboards, provide the answers. And large companies with exploding data and exploding in complexity, not just volume, need answers to be able to run their business and run it effectively and drive their software to perfection. And that's what our differentiation will be. And you asked me what would make me proud? Make me proud is to deliver enormous customer value by enabling their environments to work better. And for Dynatrace, the result of that should be market leadership, leveraging this AIOps engine in a market that we think of as really broad-based end-to-end observability.

Got it. On that note, I think we're exactly at 15 seconds to count down, and this is brilliant. Thank you so much, Rick. Very, very insightful. Thank you for your participation. It was very collaborative to co-op your questions into the framework. Thank you so much.

Thanks, everybody. Thank you.