Dynatrace(US:DT)2020-10-28 17:16Financial Data and Key Metrics Changes - Annual Recurring Revenue (ARR) for Q2 was $638 million, up 33% year-on-year, an increase of $158 million [45] - Total revenue for Q2 was $168.6 million, representing a 30% year-over-year increase [48] - Non-GAAP earnings per share for Q2 was $0.18, exceeding guidance [54] Business Line Data and Key Metrics Changes - Subscription revenue grew by 35%, making up 94% of total revenue [48][49] - Net expansion rate remained above 120% for the 10th consecutive quarter [26] - ARR per customer increased to $234,000, up 14% year-over-year [47] Market Data and Key Metrics Changes - The Total Addressable Market (TAM) for the targeted global 15,000 market segment grew from $20 billion to $32 billion in 18 months [14] - 86% of CIOs reported using modern architectures, indicating a shift towards complex multicloud environments [11] Company Strategy and Development Direction - The company focuses on a unified platform approach to modern cloud observability, which is seen as a sustainable advantage [23][42] - Ongoing investments in commercial expansion and cloud partnerships are expected to drive growth [27][30] - The company aims to maintain ARR growth above 25% while balancing investments [87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model and the importance of digital transformation across industries [60][61] - The company raised its fiscal 2021 guidance for ARR to $721 million to $727 million, reflecting strong performance [62] - Management noted that the complexity of cloud environments is driving demand for their solutions [12][13] Other Important Information - The company added 133 new logos in Q2, bringing the total customer count to nearly 2,600 [24] - The infrastructure module has seen increased adoption, with significant automation and AI capabilities [80][82] - The company plans to continue investing in innovation and expanding its product offerings [44][64] Q&A Session Summary Question: Expansion into midsize businesses - Management confirmed that the focus remains on the Global 15,000, as this segment presents more complex environments and higher profitability [70][71] Question: Attach rate of new products - Management noted an increasing attach rate of multiple modules with new customers, with 30% landing with three or more modules [73][74] Question: Importance of the infrastructure module - The infrastructure module is crucial for customer understanding and is seeing rapid adoption due to its automation and AI capabilities [78][82] Question: Partner influence in deals - Management indicated that partner influence is significant, with a goal to increase partner-sourced opportunities [90][91] Question: Demand environment for digital transformation - Management stated that customers are looking for practical, quick returns on investment in digital transformation projects [97][98] Question: Advanced automation and AIOps capabilities - AIOps capabilities are built into the platform, with 10% to 20% of customers extending beyond the basic offerings [104][105] Question: Competitive landscape and disruption - Management emphasized that the company is a disrupter in the enterprise observability space, differentiating itself with a full-stack platform [109][110] Question: Sustaining ARR growth - Management discussed factors contributing to sustained ARR growth, including increased sales capacity and maturing sales organization [112][115]