The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst
: John and team, congrats on the strong results. Very impressive. John, you talked about accelerated digital transformations post-COVID,
which is great to hear and really caught my attention. Can you talk about the level of monitoring for some of these customers? And
I think you called out a large retailer in particular. Where were they at pre -- from a monitoring perspective? And where are they at
now when they certainly go all-in at Dynatrace?
Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst
: That's great. And then Kevin, on ARR, 39% constant currency growth is super-impressive, especially when you consider -- I think last
year, you were at 43% growth. But I believe that saw a benefit from classic Dynatrace customers that this quarter didn't see. I guess,
to that point, can you remind us roughly what the benefit was last year on that class of conversion? Because I think if you were to
normalize for that, you might have even had similar ARR growth.
Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst
: Great. Maybe just quickly on the ARR and continuing that train of thought, Kevin, you mentioned the assumption now is 120% of
net new relative to 115% prior. But there's also a lot of discussion on the focus on new logo acquisition and that being a big emphasis
as we move through the remainder of the year. So can you just parse through, with the increase of ARR guidance, is that purely a
function of the change in the assumption around net retention? Or are you also factoring in better new logo acquisition? What are
sort of the puts and takes there, because it seems like there's a few different drivers mentioned?
Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst
: And maybe just one more from me on that net new logo focus and sort of the specificity on the target there. Did you introduce any
changes in the sales compensation to preferentially encourage them a bit more on net new logo? Or is it more just sort of strategic,
hey, this is where you want to your guys to be focused? Any color there would be helpful as well. And that's it from me.
Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst
: I'll keep it quick. So Kevin, maybe this one is for you. As I think about the drivers of net expansion, what's having a more significant
impact? Are the follow-on deals getting larger? Or are they coming more frequently?
Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst
: No, I was just talking about are the follow-on deals getting larger or are they coming more frequently? Nothing about new logos. I
think you hit on it, it's a combination of both.
Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst
: And then, John, maybe a quick follow-up for you since you mentioned -- said in the response to Bhavan there. Is there a common
incumbent across the federal environment? And just how do you think about the scope of the opportunity there?
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