Good day, and thank you for standing by. Welcome to the Fourth Quarter Datadog Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Yuka Broderick, Vice President of Investor Relations. Please go ahead.

Thank you, Katherine. Good morning, and thank you for joining us to review Datadog's fourth quarter and fiscal year 2022 financial results, which we announced in our press release issued this morning. Joining me on the call today are Olivier Pomel, Datadog's Co-Founder and CEO; and David Obstler, Datadog's CFO. During this call, we will make forward-looking statements, including statements related to our future financial performance, our outlook for the first quarter and fiscal year 2023 and related notes and assumptions, our gross margins and operating margins, our strategy, our product capabilities and our ability to capitalize on market opportunities. The words anticipate, believe, continue, estimate, expect, intend, will and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. These statements reflect our views only as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our Form 10-Q for the quarter ended September 30, 2022. Additional information will be made available in our upcoming Form 10-K for the fiscal year ended December 31, 2022 and other filings with the SEC. This information is also available on the Investor Relations section of our website, along with a replay of this call. We will also discuss non-GAAP financial measures, which are reconciled to their most directly comparable GAAP financial measures in the tables in our earnings release, which is available at investors.datadoghq.com. With that, I'd like to turn the call over to Olivier.

Thanks, Yuka, and thank you all for joining us this morning. We had a solid Q4 to end a strong fiscal year 2022. We delivered significant new innovations for our customers, we saw increasing adoption of our products and we attracted thousands of new customers to our platform. Meanwhile, we delivered strong revenue growth, margins, non-GAAP operating profit, and we generated more than $350 million in free cash flow. Let me start with a review of our Q4 financial performance. In Q4, revenue was $469 million, an increase of 44% year-over-year, 8% quarter-over-quarter and above the high end of our guidance range. We had about 23,200 customers, up from about 18,800 last year. We ended the quarter with about 2,780 customers with ARR of $100,000 or more, up from about 2,010 last year. These customers generated about 85% of our ARR. And we had 317 customers with ARR of $1 million or more compared to the 216 we had at the end of last year. We generated free cash flow of $96 million with a free cash flow margin of 21%. And our dollar-based net retention rate continued to be over 130% as customers increase their usage and adopted more products. Our platform strategy continues to resonate in the market. As of the end of Q4, 81% of customers were using two or more products, up from 78% a year ago. 42% of customers were using four or more products, up from 33% a year ago. And 18% of our customers were using six or more products, up from 10% last year. Now moving on to this quarter's business drivers. Overall, we observed slower usage growth with existing customers while continuing to scale our new logo acquisition and new product cross-sells. Starting with usage. Usage growth of existing customers in…

Thanks, Olivier. In Q4, we continued to execute well and delivered value to our customers. Revenue was $469 million, up 44% year-over-year and up 8% quarter-over-quarter. To dive into some of the drivers of our Q4 performance, first, we saw existing customer usage growth in October and November at a similar level to what we saw in Q2 and Q3. In the month of December, we saw a slower growth dynamic as the typical slowdown we see at the end of December was more pronounced than in previous years. As a result, the growth rate in usage by existing customers was lower in Q4 than in Q2 and Q3. Next, similar to Q2 and Q3, we saw larger-spending customers grow slower than smaller spending customers. As with Q2 and Q3, we saw relatively more deceleration in the consumer discretionary vertical, particularly in e-commerce and food delivery. Geographically, we saw solid and relatively similar growth across all regions. As Olivier discussed, we experienced strong new logo ARR growth and low churn again in this quarter. We had a record level of new logo bookings in the quarter across customer sizes. Our dollar net base net retention remained at strong levels, above 130% for the 22nd consecutive quarter. And gross revenue retention has remained unchanged over the last several quarters and remained steady in the mid-to high 90s. We believe this high and steady gross retention points to the mission-critical nature of the Datadog platform for our customers. Now moving on to our financial results. Billings in the quarter were $536 million, up 31% year-over-year. Billings duration was slightly lower year-over-year. Remaining performance obligations, or RPO, was $1.06 billion, up 30% year-over-year. And RPO duration declined on a year-over-year basis, and we note that current RPO growth was in the high 30s…

[Operator Instructions] Our first question comes from Mark Murphy with JPMorgan. Your line is open.

Thank you, very much. Olivier, I was wondering if you can comment on the AWS infrastructure monitoring portion of the business specifically. Do you see that trending above or below the 25% rate of the total business this year? And I'm wondering if you perhaps see some of the other hyperscale’s, Azure, Google, et cetera, gaining any share of that mix during this year? And then I have a quick follow-up.

Yes. So, look, we -- obviously, we see -- we get data from our customers using those cloud providers. We also listen to the commentary that cloud providers provide on their -- in terms of their own growth. There's not a one-to-one mapping between what happens on the revenue side for the cloud providers and what we see on the infrastructure side on our end. But we are seeing some of the same trends where their growth slowed down throughout Q4. And we've been listening to their comments when they give guidance for what that growth might look like in the near future, which also inform our own guidance. In terms of the mix shift, we don't see anything that differs from the trends we saw throughout the last year. I think the story there is they're also seeing optimization from some of the customers, that means the largest customers. And on our end, we expect that optimization to continue throughout the year. That's what we built into our guidance.

Okay. Understood. And then, David, I believe you mentioned record new logo ARR bookings in the quarter. Great to hear. I think we're wondering what you attribute that to just given the environment is so challenging. And there was mention of several of these companies landing with eight or 10 or 15 Datadog products and replacing legacy tools or replacing open source. Do you see an increase in those kinds of consolidation opportunities and maybe just a broadening where this landscape is viewing Datadog as the converged observability leader and wanting to consolidate in that direction?

Yes. In Q4, and I think going forward, we continue to see greenfield and new projects, new workloads being the majority of the driver, but have seen over the quarters, and we talked about some of them in our prepared remarks, consolidation opportunities, when a client is already in their cloud journey and has workloads and is looking to get a platform, create efficiencies, et cetera. They have increasingly been consolidating on Datadog and we see continued opportunities for that. Yes. And I'll add to that. We see demand scaling basically. Like we're still early in cloud migration and diesel transformation, and we see no slowdown from companies going from legacy IT to this new world. That's why we get more and more renewals and more volume there. The part of the business we see going slower is the larger customers that are further along in this cloud transformation that have large workloads trying to optimize because that's where they can meaningfully set cost.

Thank you, very much.

We have a question from Sanjit Singh from Morgan Stanley. Your line is open.

Hi. Thank you for taking my question. I wanted to ask about product innovation. And in some sense, you guys have had a pretty impeccable track record of leasing a lot of product that sort of benefited your customers over the last couple of years. But given sort of the environment that exists today, do you feel that in some sense, Datadog gets viewed by customers as sort of a Lamborghini type observability solution, meaning that are you -- in terms of customers may not need all of the bells and whistles that a 17-product portfolio can provide? Any thoughts there on whether Datadog may be potentially overengineered for in terms of customers' willingness to spend in the current environment?

Yes. So, I definitely don't think we position ourselves as the Lamborghini. We are not -- the Lamborghini have a glove box and needs to go to the shop every two weeks. That's definitely not us. Would -- we have been investing heavily in product innovation. We have a lot of products today that, thanks to this acceleration of product and innovation over the past few years, are early in their life cycle. What we see in the current environment is that it is actually helping us get to these consolidation deals that were mentioned a little bit earlier because we can cover more of what our customers need to do and drive more efficiencies. Again, it's still early in that because many of those products are early in their life cycle. So, they might not be applicable to every single type of customer and every single type of situation. But I think this is validating our destination there. And it shows we need to do more of that. not less. At a time where larger customers are very, very careful about their spend, it might be more difficult for some of those products to gain a lot of adoption with any particular customer at a very high level of spend. So, we're focusing today on getting a maximum number of those customers to adopt those products and plant the seeds of future growth as they further consolidate and move to the cloud.

Understood. And just a follow-up on those larger customers who are seeing their usage trends slow more than smaller customers. Relative to the commitment, how are you guys sort of handling that? Are you in a situation where you're rolling over credits? Or are you sort of enforcing sort of the take-or-pay aspect of the contract? Any color there on how you're working with those larger customers in terms of where they stand relative to their commitment?

Yes. We are -- so we always want to partner with customers and build a long-term relationship with them. We've had some customers that have run into very significant business headwinds, where their own businesses have contracted quite a bit. And in those situations, we always work with them to structure the contracts and make sure we get to a better outcome. We've done that with one of our major customers over the past quarter. And we've had similar conditions with some other customers as well. So that's part of with customers also part of the guidance we're giving for the year.

And I just want to add that because we tend, as you know, to go land and expand and our customers tend to undercommit relative to what they eventually get to, we haven't seen across the customer base, a very meaningful increase of sort of unused commitments. And so that's something about our go-to-market that creates flexibility with clients to commit as they see usage.

Our next question comes from Brad Reback from Stifel. Your line is open.

Great. Thank you very much. Just one real quick one, David. I know billings isn't necessarily the best metric to sort of focus on, but 1Q is a really monstrous comp. So maybe any color you can provide as we should think about billings, especially with changes in duration in calendar '23 and maybe lower commits upfront from customers on renewal?

Yes. I think -- again, I think it is really driven by the ARR and linearity of that. So, I don't think we plan for billings, et cetera. We essentially have had billings, as you know, go above and below the revenue based on the billings in that period. And so, we don't see really any change in that type of pattern. But again, bring everyone back to ARR and revenues as the major economic driver.

That's great. And then, Oli, real quickly, if you look back at your business historically, there's been a fairly tight linkage between your growth rate and the hyperscale’s with a multiple on it. As we sort of look forward, what types of things need to happen to expand that multiplier? Thanks.

Well, I mean, look, we're covering more and more of the -- we're solving a bigger and bigger problem for our customers, which means we're expanding our APM [ph] and so, we can have a larger and larger multiplier over time. That's why we're investing in new categories, that's why we keep building up observability and that's why we're doing all these investments. So that's where we're going. I think you're right, though, that the underlying wave that is -- has been a tailwind throughout the of the company was cloud migration and digital transformation. I think that we might be a bit more of a headwind over the next few quarters. But we strongly believe that it will become a tailwind again in the future. We just can't tell you when exactly. We've listened to the calls of the hyperscale’s, they can't tell you when either. We're in the same boat there. So, what we're doing today is we're focusing on the drivers of future success, which are covering more of the customer landscape sort of getting into more new logos, more geographies, more segments and also developing our products and getting those products adopted by more of these customers, which is how we're going to have accelerating growth in the future.

Perfect. Thanks very much.

Our next question comes from Fred Lee with Credit Suisse. Your line is open.

Good morning. Thank you for taking my question. I'm curious about product expansion and what will help Datadog gain share as a percent of hyperscaler spend, a little bit related to Brad's question -- second question minute ago. I was wondering if we could get an update on which products you're gaining the most traction and have the greatest potential in 2023.

Well, so we have a lot of products that are early in their life cycle. Some of them are large categories where we are seeing larger and larger revenue and we have very ambitious plans, such as security. Some others are newer but might be a bit more topical in 2023, such as Cloud Cost Management. So, I think it's really going to be a mix. We see some interesting early signs of Cloud Cost Management, which is still only billed to a handful of customers at this point but already seeing very large commitments from some of these customers. We called that out on the call. So, we think it might be -- if you think of anything that might have more of an impact in the short-term term that might be one of those. But really, the way we think about all those products is how do we turn them all into major products two, three, four years out, how do we win these additional categories, and how do we become the platform of choice for consolidation in the long term? That's what we're driving towards.

And just a quick follow-up on the security portion. So, with regard to the uptake of your security solutions, how would that compare -- how does that compare to the adoption patterns of infra and APM?

Well, it's a bit difficult to compare to infra because it was the very first thing we did in the company. We -- it's actually pretty comparable to what we've seen with APM, where it's a domain with a lot of investment required. We also have a very ambitious and very differentiated approach to it, which requires quite a bit of a build-out and quite a few things to figure out with customers. But we're also seeing continuous adoption and growth, thousands of customers using the platform. We see it being adopted at a very large scale by very large customers, which -- some of which we also mentioned on the call today. So, we're not completely there yet. There's still a lot of work to do, but we think it's tracking well to -- with respect to what we can expect in our plan.

Great. Thank you, very much.

Our next question comes from Andrew Nowinski with Wells Fargo. Your line is open.

Great. Good morning everyone. Thank you for taking my question. I wanted to ask about the usage patterns of large customers versus small customers. I know you said you're -- the smaller customers were not seeing as much of a slowdown in usage. But what gives you confidence that those smaller customers just haven't reached or reacted to the slowing macro yet? And we may see maybe a slowdown in that segment going forward.

Well, it's hard to tell what's going to happen in the future, right? So, we don't really have a crystal ball there. What we see, though, is that customers save money where it matters, which tends to be the very large line items, which for customers that are fairly far along into the cloud, is going to be, first, their cloud provider deals that are, again, one or two others are larger than their observability bills. And then we're going to be affected by that and maybe with some optimization more specific to observability as well. So that's what we see there. That's why we see most of the large customers do that. On the smaller side, I'll point out that many of our smaller customers are actually very large companies that just are fairly new into the cloud and are still growing to the cloud. So, they are seeing exactly the same thing as their peers who are spending a lot more on us. It's just the part of their business that is where the spend is growing as opposed to where the spend is today and needs to be controlled. The last thing I will say is on the very low end of our customer base, we do see impact of the macro environment. We have a little bit more churn at the very, very low end, which is what you see our customer count not going up as much despite us having very strong notable quarters. That's more focused at the very, very low end of the customer base, and it's not moving the numbers at all in terms of gross retention, which remains very high.

Okay. That's great. I was also wondering; your gross margin was surprisingly strong in the quarter. I'm wondering if there's anything you can do on pricing given these large customers focus on cost optimization.

Well, we work with the large customers, obviously, to make sure that they get what they need. We're optimizing gross margin, obviously, we’re doing quite a bit on our end to -- on the engineering side to do that. At all levels, 1% of gross margin is making a very large difference for their business, and we can reinvest that in future growth. Changing prices by 1% based on that doesn't make a big difference for customers. I think when they -- the real way to address their concerns as they keep scaling and generating much more data and sending more observability data to us is to give them more options to process that data so that they can align with what they pay to us with the value they get. And we've been also building that on the product side. So, it's not really a pricing question. It's more of a product and structure question. And I just wonder now that we're on cost, I just want to add a little clarification. I think we talked about the trends of gross margin and what we expect for the future. And we gave some guidance as to operating expenses in 2023. I believe I might have misspoken. The operating expense guidance in 2023 in the low 30s range excludes COGS. We gave the COGS guide separately as far as our comments on that, just to clarify.

Helpful. Thank you, guys.

Our next question comes from Koji Ikeda with Bank of America. Your line is open.

Great. Hi, Olivier. Hi, Devid. Thanks for taking my question. I wanted to ask you a question on the guidance and maybe a compare and contrast here. So, I was wondering if you could talk about maybe how to think about the levels of conservatism embedded in the full year 2023 ready guide today versus when you first gave guidance last year for 2022.

Yes. I think we've continued to use the same approach, which is to look at the history and discount the major assumptions, which are the organic growth or the expansion of existing customers and new logos. I think the difference in the actual results were the periods of times where we saw more than pro rata or more than historical adoption and growth of existing customers, the ratio between that discount and where it ends is up actuals ended up larger. But the intent and the strategy of providing this guidance on conservative assumptions relative to that has not changed.

Got it. And just one quick follow-up there.

To be clear, our guidance doesn't assume that the optimization stops. What we've seen over the past few quarters, basically in the second half of 2022, we assume it's going to continue. We know it's going to end at some point but we don't know when exactly, so we're not building that into our guidance.

Got it, got it. That's helpful. Thank you. And just one follow-up here, a question on sales capacity. Just thinking about hiring plans there. You mentioned in the prepared remarks, overall headcount to grow in the mid-20s but continuing to go-to-market teams at a slower pace. So just is that mid-20s is the right way to think about sales capacity hiring this year, too?

Yes, yes. I think that's right. We are growing our investments in go-to-market and sales capacity approximately plus or minus at the guidance we gave in headcount growth.

In the end, the reason for that is we still have ground to cover. We still have segment and geographies to cover. And also, as we mentioned earlier, we're having actually great success when it comes to landing new logos and new products with customers. So, our sales interactions are productive. Our return on investment is there. So, we need to keep doing that. Again, these are the seeds of future success we are planting, and we don't intend to stop.

I would clarify that because of the ramping nature of salespeople, the growth rate that we had, which was in excess of that 25% in 2022 means that the coming online of that ramp capacity is at a rate higher than that in 2023 as we begin to harvest the investment from that.

Got it. Thank guys. thanks for taking my question.

Our next question comes from Matt Hedberg with RBC. Your line is open.

Great. Thanks guys. Olivier, for you. Any data points around product splits? I know in the past, you've talked about APM and logs. I think it's been a couple of quarters since we had an update on the size of those businesses. But any sort of like rough magnitude of those? And are they still in hyper growth?

No. I mean, we see a fairly -- like when you think of the products that are a major scale today, which are APM, logs and infrastructure monitoring, those are seeing about the same trend in terms of growth in Q4. And I think that's partly because some of the optimization we see from customers happens across this -- because it happens upstream from us at the provider level. And that's why we'll see slightly slower growth of host monitored on the cap providers or APM and also a little bit less log. Some of it happens more directly at the observability level, logs in particular or some aspects of APM that are transaction-based where we see customers optimizing there and making sure they get the best value and cut the noise. But as a result, we see fairly similar trends across the products. So that's why we didn't call out anything specific in there. We -- in the future, I'm sure we'll share more about their relative sizes. But again, the growth rates are not that different in Q4. So, it's -- there was nothing to call out.

Okay. Thanks. And then maybe just, David, on the guide, obviously with kind of a mid-20s revenue guide. You talked in the prepared remarks about having an NRR above 130% for almost two years. Presumably that dips below 130%. Any sort of commentary on how that might progress through the year?

Yes. I think you're right. Implicit in that guide is below 130%. We'll report to everybody as we have that. We've seen it relate to a decel, I would say, on that, that given the change in the organic growth rate that we've been talking about starting in the middle of Q2 last year, it would be -- it's getting past that to the extent that it changes -- that changes that net retention plus or minus, given the net retention is comparison against the year-on-year customers. So, you do have headwinds in the compare through the time that we had the change of the organic, which we had said was in the middle of Q2 of last year.

Got it. Thanks.

Our next question comes from Fred Havemeyer with Macquarie. Your line is open.

Thank you. I wanted to ask, with respect to the slowdowns and that you've been seeing within certain customers, have you seen anything to suggest that these could be related to layoffs in tech, either because, say, that seats have been directly impacted which is because of general disruption to DevOps and engineering teams?

No. We say it's mostly because they can save money on their cloud bills. The -- again, one of the great things about the cloud is that the -- it's an ongoing expense. You can adjust it over time, you can restructure the way you're running applications. So, there are some norms you can use to optimize, which you can't if you're running everything on-prem, as all the costs are sunk already and confined to the future. So, we mostly see that -- I mean, there's a little bit more noise than -- and predictability with some customers because they're having checkups, and so you need to talk to different people and they need to reorganize a little bit. So, it can add a little bit of noise on the conversations. But really, the dominant motion is the optimizing their cloud infrastructure, their cloud bill and their -- that's especially the case if they're spending a lot there. The vast majority of our products are infrastructure usage or data volumes not per seat. So, we're not directly impacted by layoffs.

And then just a quick follow-up would be actually in the prepared remarks, thank you for the context on Cloud Cost Management. Can you perhaps more generally talk about your customers' interest in FinOps and how Datadog is positioned to be able to just help customers better understand both where they're spending, how they're spending and what sort of ROI they're seeing?

Yes. Our customers are definitely interested in FinOps, the larger they are, the more they are interested, and that directly relates to the work they do in cloud optimization. It's a very nascent category today. It's a nascent practice for most of our customers. And we also have a lot of experience internally running ourselves a very large cloud operation across all of the large cost cloud providers. So that's why we believe we can build something that is fairly differentiated there. Our product there is having a great reception from customers, even though it's still early. I mentioned earlier, we signed a six-year deal, annual deal with a large restaurant chain. And we see more of that coming our way. So, we think it's one way in which we can also help our customers as they need to optimize and be more efficient in the short and midterm.

Thank you.

Our next question comes from Kamil with William & Blair. Your line is open.

Good morning. Thank you for taking my question. I want to clarify one of David comments that you're incorporating seasonally weaker growth in the first quarter due to subdued growth in the month of December. Can you expand on how demand and customer conversations have trended in the first few weeks of '23 and whether that's changed since '22 year-end?

Yes. I think you have two different avenues. I think we said in new logos, we have a strong quarter. We continue, as we mentioned, to have a strong pipeline, meaning that for new projects, new workloads, we continue to see a solid demand environment. In terms of the organic, when you have -- and this happens in most years, when you have people going on vacation and sort of reducing the amount of logs or work they're doing, you tend to see a rebound of that in January. We did see a bit of that. But given the volatility in the market, we want to be cautious in reading too much into that. And we'll let everybody know how that plays out.

Mathematically, we -- the Q4 was more front loaded than back loaded in terms of whole recognized revenue. So, we entered at a lower level than -- so that's why we also have the sequential is a little bit lower there. In terms of the trends, I'll just second what David said, we -- when that seasonality was higher than we had seen in previous years, and we can explain that in different ways. And basically, if customers are trying to save money, they're a lot more careful about turning off the lights when they leave for vacation basically. But what we see in early 2023 so far is consistent with what we see in in Q4 or in the second half of 2022 in general. So, it's too early really to pass judgment, but it really factors into our guidance, which is that we don't believe that the optimization has stopped. We assume it's going to continue. We don't know yet when going to stop. We know it's going to happen at some point, but we're not planning it for this year in our guidance.

Yes, that's helpful. Thank you. And just as a quick follow-up. It's nice to see the large wins on the federal side. I realize it's still early, but can you update us on how big of a contribution that could be in '23? And how important are additional authorizations for expanding into that market? Or does FedRAMP moderate likely to address most of these TAM?

So, I mean, I can't give you specific numbers there. I know we're seeing wins low seeing engagements from the government agencies and the committees that serve them. So, all that is very good. We still have some building to do on the go-to-market teams for that. And we also still have some things to build on the product side. Like there's more levels of certification we want to get to reach more of those customers. So, we still What I'd say is we're getting the proof points that we're fit and that customers can use us in those environments and that there is a real market for us there.

Our next question next question comes from Sterling Auty with SVB. Your line is open.

Thanks. Hi, guys. Oli, I'm curious if you have any sense working and talking with customers as to when they started an optimization project, how long it actually takes them to get to that new level. Obviously, it can change if the economy gets worse, but is this something where they started and it takes them a month, a quarter to quarters? Any sense would be helpful.

Yes. So, it's a little bit hard to give an answer that fits all types of customers because they're also all going to -- they organize a little bit differently. There are different scales in there and they're going through different phases with their businesses in the economy. We've seen customers having multiple rounds of layoffs, for example, or having to adjust multiple times what they're doing with their business. But what we see in general is that the fastest thing they can do to have an impact on the abilities to adjust some of the data they send in logs or in APM. And after that, you'll see them do a little bit more at the cloud provider level, which is higher impact in terms of their own savings, but also takes a little bit more time because we need to reorganize some of their workloads and invest more engineering time in doing that. So, we've seen that happen with some of our customers. For a number of our customers, we saw it happen. We think they've done, and that's -- and we see them start growing again. But it's too early to call it for the rest of the customer base as again, they're all going through a fairly different things and different scale.

Understood. Thank you.

And we have a question from Alex Zukin with Wolfe Research. Your line is open.

Thanks for taking my question. I guess, Oli, if you think about the trends that you saw in the second half of last year and what you're seeing year-to-date when you think about optimizations versus time line to spin up new workloads and the effect that, that has on the NRR as it progresses, when you look at the time line that you think that takes and the anniversarying of these headwinds particularly with the larger customers, how does that look from a linearity perspective over the course of the year?

So right now, in the guidance, we're assuming that we're seeing the same trends of growth of rising customer throughout the year. Like we're not estimating any inflection. We're assuming a continuation of that with some level of contribution compared to the actual we saw last year. That's what we are building in. The -- again, we believe that there's going to be some reacceleration at some point as the optimization has on its course. But given the level of macro uncertainty, I think it's too difficult to -- we can't actually tell you when. Again, we've listened to the call of the cloud providers, they also can't tell you when. And so, we're being prudent with the guidance there.

Perfect. And then, David, maybe just one for you around cash and cash conversion, free cash flow. As we look at the year, just curious if there's any kind of different flexibility in payment terms or even just the assumption for the cash conversion from operating income to cash flow for the full guidance for fiscal '23.

We've always said that our free cash flow has been around slightly higher than our EBIT margin. If you look back, you'll see that it's, in some quarters, a little above, in some quarters a little below. We have not seen any changes of -- any material changes in payment terms or the flows of cash. So, there's nothing we've seen so far that would cause us to change our views about cash flow conversion for the company.

Okay. Thank you, guys.

Thank you. That's all the time we have for questions. I'd like to turn the call back over to Olivier Pomel for closing remarks.

Thank you all. So, I just want to take a minute to first thank our customers for trusting us with their business and partnering with us. I know some of them are going through difficult times last year and also early this year. And so, we're working with them. Potentially we all come out of it stronger. I also want to thank our employees, Datadogs everywhere around the world, for actually delivering a fantastic year in 2022, from all of the metrics we control ourselves. We saw some slowdown in consumption with some customers, but we also delivered a lot of value for customers. We scaled our go-to-market teams. We did great in terms of landing new logos, attaching new products, shape new products that solve more problems for our customers. And we think that this bodes very well for the future. So, I'm very optimistic. I'm looking forward to a fantastic year in 2023 with everyone. And on this, I'll close the call.

This concludes today's conference call. Thank you for participating. You may now disconnect.