Greetings. Welcome to Dynatrace’s Fiscal Third Quarter 2023 Earnings Call. [Operator Instructions] Please note this conference is being recorded. At this time, I will now turn the conference over to Noelle Faris, Vice President of Investor Relations. Noelle, you may now begin.

Good morning and thank you for joining Dynatrace’s third quarter fiscal 2023 earnings conference call. Joining me on today’s call are Rick McConnell, Chief Executive Officer and Jim Benson, Chief Financial Officer. Before we get started, please note that today’s comments include forward-looking statements such as statements regarding revenue and earnings guidance and economic conditions. These forward-looking statements are subject to risks and uncertainties depending on a number of factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information concerning these uncertainties and risk factors is contained in Dynatrace’s filing with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. The forward-looking statements included in this call represent the company’s view on February 1, 2023. Dynatrace disclaims any obligation to update these statements to reflect future events or circumstances. As a reminder, we will be referring to some non-GAAP financial measures during today’s call. A detailed reconciliation of GAAP and non-GAAP measures can be found on the Investor Relations section of our website. Unless otherwise noted, the growth rates we discuss today are non-GAAP, reflecting constant currency growth. To see the reconciliation between these non-GAAP and GAAP measures, please refer to today’s earnings press release and financial presentation under the Events section of our website. And with that, let me turn the call over to our Chief Executive Officer, Rick McConnell. Rick?

Thanks, Noelle and good morning everyone. Thank you for joining us on today’s call. I am very pleased with the team’s execution this past quarter amidst a difficult macro backdrop. Dynatrace’s strong third quarter results solidly beat expectations on the top and bottom line. Adjusted ARR growth and constant currency subscription revenue growth were both 29% year-over-year. Non-GAAP operating margin in the third quarter was 27% and free cash flow margin on a trailing 12-month basis was also 27% of revenue. These results continue to demonstrate our ability to run a balanced business that delivers high growth, coupled with strong bottom line performance. They are a testament to the strength of our market, the significant customer value of our platform and the ongoing durability of our business model. Jim will share more details about our Q3 performance and guidance in a moment. In the meantime, I’d like to share my view of the current market environment, our platform leadership and differentiation and our investment priorities to support future growth. To start, our market opportunity has never been stronger. We recently conducted an independent global survey of 1,300 CIOs and senior DevOps managers, 90% of whom indicated the digital transformation within their organization has accelerated in the past 12 months. They also said that their DevOps teams spend on average over 30% of their time on manual tasks involving code quality issues and security vulnerabilities, which reduces the time spent on innovation. These research findings support our perspective that observability is increasingly moving from optional to mandatory. Digital transformation and in particular, cloud modernization initiatives, continue to grow rapidly. Consequently, the volume of data is exploding as is its complexity, making manual troubleshooting and analytics based on dashboards nearly impossible. Organizations need answers and intelligent automation from data to streamline their…

Thank you, Rick and good morning everyone. I couldn’t be more thrilled to be at Dynatrace. As Rick said, Q3 was a quarter of solid execution across the Dynatrace team. In a dynamic macroeconomic environment, we delivered strong results, meeting the high-end of our guidance across all of our operating metrics: ARR, revenue, subscription revenue, operating margins and EPS. Overall, the value of the Dynatrace platform, the resiliency and predictability of our subscription model, the strength of our enterprise customer base and the disciplined execution across the business drove our performance. We have continued to demonstrate a durable and attractive business model and we expect to continue to deliver a balance of strong growth, profitability and cash flow. Now, let’s dive into the third quarter results in more detail. Please note that the growth rates mentioned will be on a year-over-year basis and in constant currency, unless otherwise stated. As we have shared in the past, ARR is a key performance metric of the overall strength and health of the business and we delivered 29% adjusted ARR growth in the third quarter. Please keep in mind, adjusted ARR growth normalizes for currency and the wind down of perpetual license ARR, a reconciliation of which can be found on our IR website. Total ARR for the third quarter was $1.16 billion, an increase of $233 million year-over-year and $98 million sequentially. Foreign exchange was a $29 million headwind year-over-year and a $19 million tailwind sequentially. Excluding the impact of currency and perpetual license roll-off, the net new ARR added in the quarter was $81 million, roughly $20 million higher than the expectations we shared in our last call, driven by strong new logo additions. Moving on to the building blocks of ARR growth for the business, we added 215 new logos…

Thank you. [Operator Instructions] Our first question comes from the line of Matt Hedberg with RBC Capital Markets. Please proceed with your question.

Great. Thanks, guys for taking my questions. Congrats on the execution in a tough environment. Rick, for you. Your comment that Dynatrace directly benefits from cloud optimization, I found that to be a really fascinating comment. Obviously, many investors that we talk to are concerned that cloud optimization could actually hurt observability vendors. Could you talk a little bit more about that dynamic?

Sure. Thanks very much, Matt. In many ways, I think the cloud optimization is precisely what Dynatrace was built to do. Digital transformation is obviously alive and well, and it’s driving a huge number of workloads, as we all know, to the cloud in terms of cloud migration and cloud deployment. But companies increasingly want to make sure they’re getting an ROI. They want to make sure that they are delivering software that works perfectly. They want to make sure that they’re delivering exceptional customer satisfaction and user satisfaction. And this is really all about cloud optimization. And in fact, that’s what Dynatrace does. We bring – we like to think we bring order to the chaos of the cloud. And in many ways, I think cloud optimization is precisely what is going to drive Dynatrace from being optional to mandatory in cloud deployments as we look ahead.

Got it. Thank you. And then maybe one for Jim, obviously, you didn’t guide to fiscal ‘24 yet. It may be a bit early, but wondering if you have any just high-level building blocks, things like sales capacity expectations, new logos, etcetera, as we sort of fine-tune our growth and profitability estimates for next year?

Yes. You’re right. We’re going to provide a lot more color on fiscal ‘24 in our May call. I will say, obviously, I’ve been here a couple of months now, a fantastic quarter for the company. And as I mentioned in my prepared remarks, relative to building blocks that we actually did a little bit better on new customer logos in the third quarter. And so, I think as we’ve talked about building blocks in the past, call it, roughly third is going to come from new logos and call it two-third is going to come from expansion. And you can expect those, call it, approximate ranges going into fiscal ‘24.

Got it. Thank you.

Thank you. Our next question comes from the line of Sterling Auty with SVB. Please proceed with your questions.

Yes, thanks. Hi, guys. And Jim, welcome back to your first Dynatrace earnings call. I’m just going to ask one question, so you can fit as many in as possible. I think one of the questions that I get a lot is when Microsoft reported, they talked about weakening at the end of the quarter, in particular, in terms of Azure growth. Can you just talk about what you saw at the end of the quarter dynamics and how this quarter kind of started?

That’s a great question. So, I would tell you that the linearity for our business actually kind of came in roughly in line with what we thought when we started the quarter. So I’d say, no real change. I will – having said that, I will say that, as we mentioned in our prepared remarks, that there is no doubt that the current macroeconomic environment has certainly resulted in more budget scrutiny, and therefore, kind of sales cycles are certainly elongated, but I would say, not materially different than they were in the second quarter. And so, our linearity kind of came in line with what we thought. And going forward, we kind of expect similar elongation of sales cycles. I will say that the demand environment is quite healthy. Our pipeline is healthy. I think our coverage is healthy. I actually think that now that we’ve been dealing with this for a few quarters, our sales team is much better at kind of responding and forecasting the business. And so, we have pretty good visibility and pretty good comfort kind of in our guide.

Got it. Thank you.

Our next question is from the line of Keith Bachman with Bank of Montreal. Please proceed with your question.

Yes. Thank you. I was going to ask two, if I could. One, I wanted to see if you could revisit on the intent and how it might manifest over time of the change of pricing in packages – packaging, rather. Bundling has been done for years and years and years by many large organizations to try to gain share of wallet. But maybe describe, you said you’ve had success. What are some of the attributes of that success? And what do you hope this accomplishes over a longer period of time? In particular, I am just hoping to get some more granularity on how this enables you to mix up, so to speak or gain incremental share of wallet?

Sure, I’ll take that one, Keith. So our DPS pricing model, which is – I imagine what you’re referring to, we got, as I mentioned, approximately 100 customers or so on DPS. It tends to be our largest customers. They are all multi-module or virtually all multi-module and what they are wanting to do is they are wanting to have more flexibility in scaling up and down workloads and frankly, adding and subtracting modules in a very fluid basis. So what we have in DPS is essentially a committed model, but it enables a spend across multi modules and multiple workloads. And that’s precisely what we’re trying to do. That model enables us to, therefore, remove friction in the selling process. And rather than having to go back and for example, into a customer and selling AppSec, in many ways, a DPS customer would already own AppSec. They only need to deploy it and turn up that workload whenever they’re ready. So it really does create more fluidity in the selling and deployment process, and that’s precisely why we see it as an ARR accretive model.

And just to before ask my next question, do you have any evidence on kind of what that does to your net retention rate? I mean, is it too early to know? Or does it take your net retention rate to 30% or something along those lines?

Retention rates, ARR, all of the metrics point positive with DPS deployment. Now some of that is probably biased by the fact that these are our largest customers. The ones who see Dynatrace being more strategic and so therefore, it’s probably a bit conflated in fairness, but it is a very positive set of metrics that we see in DPS deployments.

Okay. And moving to my second question, you talked about your second kind of strategic areas, real-time data process, getting into log management and analytics. Could you just describe where you’re having success in that area? In particular, what are you displacing in order to generate that success?

On the log management and analytics which is where Grail is really preliminarily focused as a massively parallel processing data lake house. The workloads that customers are looking to deploy are those that observe our observability-oriented workloads. And those are the ones where there’s high analytic requirement. And in particular, that is where Grail really shines most. So that’s where we’re seeing the workloads come to pass and fruition with Grail. They want to essentially reduce cost, improve performance and drastically move to faster near real-time analytics, and that’s what we provide with Grail.

Okay, many thanks. Cheers.

Our next question is from the line of Kamil Mielczarek with William Blair. Please proceed with your question.

Good morning, everyone and congrats on cloud results. I just want to follow-up on the new logo adds. I believe they were at an all-time high and I think the strongest sequential growth in 2 years. Can you provide some more detail around some of the specific drivers, whether around new product intros, ledges cycles or the go-to-market strategy that drove this uptick in wins despite a tougher macro environment?

Yes. I guess I’ll comment on that. I’ll tell you that we obviously had a range of new logos in our pipeline kind of from a low to a high. And I would say we were prudent in the guide for the third quarter, trying to acknowledge that buying cycles are elongated and in particular, they can be even more elongated for a new customer than someone that is an existing customer. And I think it’s attribute to the value that customers see because in many cases, these customers have already gone through a POC. So they’ve already seen the value of the Dynatrace platform. And so, I think what we saw here was that – a couple of things. One, we started to see maybe better close rates than we expected as far as the quarter is concerned. I also think that there had been some adjustments in the selling model for the company earlier in the year to get a little bit more focus on, I’ll call it, hunting versus farming and I think you’re starting to see some traction as a result of that.

That’s helpful. And a quick one on competition, have you seen any changes in the competitive environment whether around increased customer scrutiny on head-to-head deals or in terms of who you are seeing on these deals?

No. I mean, if you’re referring to the competitive environment, I’d say the competitive landscape is pretty similar. I mean, our win rates are quite strong, but no real change in kind of the competitive environment, still very competitive environment. And you got to win based on having the best offering. And I think when we go head-to-head we win the majority of the time.

And I would just add to that, Kamil, that we continue to say that and see that the biggest competitor is DIY over and over and over again. We walk in, we see open source code, we see solutions that were homegrown, internally built, and it really is very consistent with our thesis of moving from data and dashboards and simple displays of red, yellow, green to something much more sophisticated in terms of answers and intelligent automation from that data that these days, we believe, are required to run modern cloud ecosystems.

Thanks, really helpful. And thanks for taking my questions.

Thank you. The next question comes from the line of Joel Fishbein with Truist Securities. Please proceed with your questions.

Thank you and also congrats on a strong execution and Jim welcome to the first call. Rick, a quick question for you, you mentioned app security. It’s obviously a good focus. I know it’s very early days, but it’s really a pretty competitive environment out there. Love to hear what the customers are saying about Dynatrace and how you’re approaching that market and maybe some of the competitive differentiation you might bring to the table, considering a lot of the security-centric guys are trying to attack this market as well? Appreciate it.

Right. Thanks Joel. The AppSec market, as you pointed out, is very crowded and this is why the strategy around Dynatrace associated with this market is really oriented to ensuring that the AppSec areas in which we participate are those that gain leverage from our overall platform deployment. Where observability and AppSec converge, those are the AppSec areas where we are going to be able do most significantly differentiate and add value to customers. And so that’s precisely where we are focused, starts with areas like vulnerability management and extends from there into additional areas that we are investing in now.

Great. Thank you.

Our next question comes from the line of Pinjalim Bora with JPMorgan. Please proceed with your questions.

Hi. Great. Thanks for taking the question and congrats on the quarter. I want to ask you about just the performance across the different tiers [ph]. Did you see the challenging macro environment kind of spill over outside of Europe? Do you see it in Americas? And the second part of the question is just on the fiscal ‘24, since everybody is trying to figure that out. Another way of asking it, I guess what are you seeing or hearing from customers in terms of how IT budgets are being set for calendar year 2023 and observability within that?

So, I want to make sure I have the two questions. So, one, you want to get a bit of color on kind of the geography kind of view of things. And then obviously, I understand your point about fiscal ‘24 not necessarily on our guide, but specifically around customers in their budget decision. So, I would say relative to kind of the geography dynamics, I would say that obviously, the macro environment is affecting all geographies. I will say for our third quarter, we did perform a bit better than we expected in our EMEA region. That certainly has been a region that we had called out previously as being a region that’s soft. So, better execution in the EMEA region. And I would say a little bit softer in North America. But in general, I would say it’s a dynamic macro environment everywhere. But I would say our performance was a little bit stronger in EMEA in the third quarter and a little bit weaker in North America. But I wouldn’t necessarily suggest that, that is a significant change from what it’s been. But I think that we just had better execution in EMEA in the third quarter. And relative to the customers and their budgets, I think your – the way I have kind of seen it, we are beginning our budget cycle. So, as you can imagine, I am dealing with it myself that I think customers are looking at their budgets. They are scrutinizing areas of their IT spend specifically and trying to prioritize areas that they believe are more strategic. So, I would say budgets are probably going to be conservative. But they are still spending, and they are spending on areas that help them optimize. And as Rick outlined, we believe that the space that we are in is actually an area that they are continuing to spend money on. And so to me, it’s not so much a budget question. It’s more of a as you are going through deal cycles, you are just dealing with just a longer cycle, you are dealing with more approval levels, which just slows deals down. And so in particular for our specific guide for the fourth quarter, where you are acknowledging that deal cycles sometimes can push from month-to-month. But in general, the demand healthy is strong – demand environment is strong.

Got it. Thank you very much.

Thank you. Our next question is from the line of Andrew Nowinski with Wells Fargo. Please proceed with your question.

Great. Thank you. Congrats on a great quarter. So, I guess I just want to ask maybe a higher-level question. If you look at your guidance for ARR and new logos and subscription revenue, it looks like that second cut to guidance you made last quarter turned out to be unnecessary. And I know FX is hard to predict, and it’s now less of a headwind. But I was wondering if you could put a finer point on what else may have changed in the market over the last three months that enabled you to bring that guidance kind of back to the original level you gave in Q1?

Yes, I certainly wasn’t here back then. So, I can comment a bit. I do believe that when the guidance was provided in the last call, I think there was a level of prudence to be very frank, on the guidance. So, I think that’s one element of it. I will say that we did kind of exceed even our internal expectations in the third quarter. And as I have said earlier, I think that we had a couple of quarters earlier in the year where the sales organization was trying to figure out how do you forecast close rates in an environment where customer buying is a little bit uncertain and deals maybe take longer. And so, I think we have learned from that. We learned from that in the first half of the year. I think they are better at calling that. And so I think that’s maybe a function of why you are seeing us kind of maybe glide back to what we said in the first quarter. And we have pretty good confidence that we can execute to the numbers that we have outlined.

I would just add to that. Look, we saw increasing strength in Europe during the period relative to the prior quarter. That was good to see. We saw strong positive results in new logos. As Jim mentioned earlier, that gave us confidence as well. Of course, we delivered a strong Q3. So, we put those together and that leads us to the updated view of where we are today. Going back to the prior question, I would also just say that as in prior quarters, we are continuing to assume a fairly soft spend environment from a macro perspective overall through at least the first couple of quarters of our fiscal ‘24. And so we are going into this with a good amount of prudence.

That’s great. Thank you for that color. And maybe just a quick follow-up on the GSIs, you have got 10 GSIs now in a number of different routes to market. So, you have got the GSI hyperscalers are a big contributor. Resellers and of course, your direct sales, I think capacity set is up about 20%. I am just wondering if you could maybe rank your various routes to market and how we should think about that in fiscal ‘24 as being the biggest contributor to your growth?

Sure. Well, it’s – we have had a primarily direct model previously, but we have already reported in the past that more than 50% of our deals are partner influenced and partner delivered. So, we already have a very strong presence with partners. I would say that, that will simply continue. And where we believe we get the flywheel momentum and more movement in the model from a go-to-market perspective is really through partners. And as we indicated in the prepared remarks, we really see those as primarily coming from hyperscalers and GSIs.

Super. Thank you.

Our next question is from the line of Raimo Lenschow with Barclays. Please proceed with your question.

Hey. Thanks. Congrats from me as well. Could I go back to Matt’s question at the beginning, Rick. So, when you talked about the – when we talk about the optimization, I believe like from – like I was on the Maxo [ph] calls as well as their comments were more, like people had overcommitted maybe to their cloud. There were some big contracts and now you are kind of trying to think about how you run that. How do you see that play out for you? And you talked a little bit about that already, do you see that optimization as, like less workloads going to the cloud, or is it more the workloads I have, I want to run them more effectively? And then I have one follow-up.

Well, Raimo, certainly, there is an element of cost optimization here as well as Sathya talked about in the Microsoft call, Azure. So, there is no question that, that’s occurring as some cost rationalization. But there is also, as I mentioned, a key element, which is overall cloud workload optimization, which is making sure that you are getting the most out of the cloud deployments that you have made. And that’s really where Dynatrace comes in play in making sure that you are really getting positive ROI, delivering exceptional end-user satisfaction, that that software works perfectly. And remember, sort of our overall thesis from the beginning is that cloud workloads make it easier to expand more rapidly. That creates an explosion of data, an increase in its complexity and it renders manual management and oversight of those workloads much more difficult. And we automate that. We automate that process to enable you to do more with less, and that’s really what cloud optimization is about. So, we feel that that cloud optimization is a very consistent trend with cloud done right and our efforts to entre.

Yes. Okay. Perfect. And then the other – and there were lots of positive numbers out here today, but the one – nice one that stood out to me was the customer add number. And you mentioned the global SIs. What do you see in terms of buildup of practice, people addition to what the global SIs are doing? And are there more – some that are spending out more? Is it a theme for a lot of them? Can you talk to that, please? Thank you and congrats from me as well.

Sure. Thanks Raimo. The GSIs are, I would say, growing with us at different rates. But as you can see, we now have 10 that we are working with. And those 10 have trained literally hundreds and hundreds of people on Dynatrace. And the result of that is that we have more and more capacity in the GSIs to get Dynatrace deployed effectively for their customers. Now, GSI efforts are time consuming. They tend to be large digital transformation projects for typically larger companies that are part of overall workloads. In fact, we closed a very significant one that I referenced in the call down in LatAm last quarter is a multimillion dollar, multiyear deal as part of a large digital transformation deployment with a GSI. These are the kinds of deals that we believe that we will see over time and that will become a core component of. So, it’s going to take some time, but we believe that working with a number of different GSIs helps to get us there.

Okay. Perfect. Thank you.

Our next question comes from the line of Mike Cikos with Needham & Company. Please proceed with your question.

Good morning guys. Thanks for taking the time here and Jim, looking forward to working with you. I just wanted to cycle back. I am trying to square two pieces here, and I just wanted to see if I could put this in front of you. I think in response to Kamil’s question, there was a comment that new logo adds partially benefited from close rates coming in better than expected. So, can you help us understand what Dynatrace is now assuming for its close rates as we think about Q4 and what’s incorporated into the flat new logo adds that we are looking for on a year-to-year basis? And then I guess in conjunction with that as well, I know coming back to Andrew’s question, it sounds like your sales force is, I think the quote, was better at calling how those close rates play out. And again, just want to see what level of conservatism or prudence we are baking in here? Has that prudence in any way changed just given that you guys are operating in this dynamic backdrop?

Happy to kind of follow-up on that. So, as I have said, that the new logo adds were better than we expected. As you can imagine, we had a kind of a range of outcomes. And as I said, that the close rates were just a little bit stronger. Relative to Q4, I would say we are not assuming a significant improvement in close rates. As a matter of fact, I think we are continuing to exercise prudence in close rates. That’s reflected in the guide. So, I don’t want you to get nervous that we are getting ahead of ourselves here, given kind of a strong Q3. And I do believe that – I obviously wasn’t here in the first half of the year. But I can tell you from the few months that I have been here that is quite significant rigor with the sales force around discussing and forecasting the business. And it’s just a general level of prudence across the sales force around deal cycles, deals being longer and we are expecting that. They are starting to reflect that in kind of the close rates and when they think things will close. And so, as you can imagine what that means is you need to have good coverage, you need to have good pipeline and you need to have good win rates. And I would say all of those things look quite strong. And so, the area we are being prudent on is close rates. But I would say, we certainly have a good funnel, a good pipe and good coverage. So, there is more than enough to be able to offset possible kind of deals pushing from one quarter to the next.

That’s great color. I really do appreciate that, Jim. And if I could just have one follow-up for Rick. But coming back to Grail, just wanted to see, is there a way to compare how that – I know that there is the underlying technology and you have like log analytics and management sitting there. You announced power analytics. What are the adoption trends you are seeing or the customer reception versus maybe prior product launches? And really, what I am getting at is if we are talking about DPS and this bundling approach for your largest customers, is it fair to assume that newer product launches, like log analytics or power analytics, as an example, shouldn’t we assume that they can potentially scale faster because DPS is enabling that greater flexibility for those customers?

We certainly hope so. We certainly hope so that is the expectation around DPS is that it enables full module deployment. That includes infrastructure, which is where log management and analytics typically would sit. So, that is precisely the opportunity ahead. We did talk about a six module deployment in the prepared remarks, which included Grail. And that’s a great example of enabling precisely that motion, Mike. So, we feel very good about where we are with Grail. As I mentioned, we have more than 160 POCs that are currently out there already, many paying customers that have converted those orders. It’s very, very early in the Grail deployment, as you know, we just jaded in October. So, it’s still new, and customers are still testing it. But we are very pleased with where we are in Grail at this point.

Prefect. I will turn it over to my colleagues, but I really do appreciate the answers. Thank you.

Thank you. Our final question will be coming from the line of Adam Tindle with Raymond James. Please proceed with your question.

Okay. Thanks. Good morning. Rick, I wanted to talk about growth for fiscal ‘24, where Jim talked about expect one-third new, two-thirds from customer expansion from a mix perspective. On the expansion piece, you also talked about how budgets right now are generally pressured, their scrutiny. It’s got a tight budget for existing customers, but we need to get a lot of growth from expansion with those existing customers. The two-fold question, one, how do you cultivate growth with the existing customers given that budget scrutiny dynamic? And two, maybe why not pivot more to new customer growth in fiscal ‘24 as a better vector? And I have a follow-up. Thanks.

Well, the – I think the opportunity, Adam, is in both areas. And we focus on both of them equally. We need and want to close new customers. We also want to expand the existing workloads. And if I look at net expansion opportunities with the existing customers, there are a number of different areas. One is the expansion of existing workloads. So, of an existing workload, I am adding capacity and those tend to be a fairly normal order cycle. Then you have new modules. Well, this is where DPS might come in or partner selling could come in to expand those sets of capabilities as well. And then you have other adjacencies, AppSec, Grail and other areas as well that are significant opportunities and/or for new applications. So, we will look at all of those as expansionary opportunity as we look ahead. The other point that I would make on new logos is that we announced last quarter, more than 60% of new logos closed with multiple modules with more than three modules, three or more modules. So, that is something that we are also seeing is more platform selling into the new logo area.

Got it. Okay. That’s helpful. And maybe just a follow-up, Jim. New ARR in Q3 was better than expected at down 13% fully adjusted. I think if I am backing into the guidance for Q4, it implies that metric is going to be down about 20% year-over-year. I am just wondering, we have got this kind of cadence of decelerating growth in that new ARR piece. But beyond Q4, I mean how do we think about the puts and takes to new ARR trends? Do you think Q4 could potentially be a bottom at that down 20%, or do we still have tough comps in the first part of next year? Just trying to get a sense of cadence of new ARR declines and when we might see the bottom. Thanks.

Yes. I mean I will just – we obviously had a very strong Q3, effectively $20 million higher than our expectations that I think we had shared before that we thought net new ARR would be about $120 million in the back half, call it, split 50-50 between Q3 and Q4, came in at roughly 80%. So, Q4 is effectively consistent with what we shared before and it reflects prudence in our guide. Relative to fiscal ‘24, I certainly don’t want to get ahead of ourselves and start providing guidance on fiscal ‘24 on this call. But I will tell you that we will build a similar level of prudence into our fiscal ‘24 guide when we talk to you guys about it in May. And I think we will have – obviously, we will have the benefit of another three months of seeing what the macro environment is doing. It’s pretty dynamic. As Rick said, we don’t expect any significant improvement in the environment. And we are actually managing the business with that in mind. And it’s one of the things that I will just end with that I really liked when I joined the company of the balance of very strong growth in this company with profitability. It’s just a great recipe. And I think you are seeing kind of our peers were not as balanced. And so they are having to exercise some new muscles. These are not new muscles for Dynatrace. And so I think we are in a good position to continue to make the investments where we need to for the long-term opportunity. And as macro conditions improve, we should be able to capitalize on that.

Thank you.

Okay. Well, thank you everybody for joining. I think that Jim’s remarks on balance of top line growth and profitability are exactly where we would like to finish the call because that is how we are running the company. And we are doing so with good prudence. We are delighted about the strong Q3 results that we just delivered and very, very bullish as we look to our market opportunity as we look ahead, not to mention our growing platform differentiation. For those of you joining us in person at Perform in Las Vegas, I look forward to seeing you there in a couple of weeks and I wish you all a very good day.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.