Jay Kreps: Yes. It’s mostly what I described. The biggest unexpected thing for us has been just the continued strength for us at the commercial business. We kind of ascribe that to the fact that we think we’re just still severely underpenetrated in that segment. So even though I think they are also feeling lots of pressure, there’s just lots of opportunities. And I think it also has a very good product market fit with our cloud offering. And so it’s been nice to see that continue to grow because it was a part of the business we were very excited about coming into this year, and it’s nice to see its continued growth. But beyond that, yes, it was across different industries that we saw pressure we were pleased to see that, like, by and large, we’re not losing deals.
They’re delayed, they go through more scrutiny, they may slip out of the quarter, but a lot of the things that we saw delayed in previous quarters did close, either in Q4 or in the first part of Q1. And so we’ve been excited to see that. It just exerts pressure.
Rob Owens: Great. And then, Jay, I know entering COVID, you saw a few customers actually revert back to an open source solution and then come back to Confluent. And in your prepared remarks, you talked about it requiring heavy DevOps resourcing. So as we’re seeing the global recession happen, are you seeing customers actually choose open source as a viable alternative at this point? Or is that kind of past behavior more so in the past? Thanks.
Jay Kreps: Yes. It’s past behavior. So we’ve been — that was a concern many people had. And the feeling was, hey, it must be cheaper just to use the open source. But one of the really important things to understand about this area is these cloud services are not like a premium offering of the open source. It is actually more expensive to hire a team of engineers to operate this stuff. It’s more expensive in terms of people. It’s more expensive in terms of cloud infrastructure. It takes longer. It’s just more. And so for that reason, once you have a really good cloud offering, it’s not very appealing to downgrade unless for whatever reason the customer is not like actually succeeded with it or somehow not getting the value. But just based on the kind of basic TCO of the two things, it should be a big win.
And we’ve been pleased to see that actually play out in practice. That was the theory early on as we had, I think, a pretty immature cloud offering, we didn’t always see that. We did see some customer losses earlier as there pressure. We felt like we were in a very different situation as we were kind of coming into harder times this year. And we were — we talked about that on these calls, but it’s been nice to see that play out that we haven’t seen the kind of churns at all of the same magnitude. And in fact, gross retention has held very steady throughout this.
Shane Xie: We’ll take our next question from Howard Ma with Guggenheim, followed by Cowen.
Howard Ma: Thanks Shane. So my question is for — it’s for either Jay or Steffan. And it’s a clarifying question about, Jay, a comment that you made in your prepared remarks about near-term spend rationalization not impacting Confluent’s long-term growth opportunity. Because it seems like — so Cloud is holding strong. And in your response to an earlier question, you said rationalization, it was really about optimizing operational efficiencies that I do identify but not necessarily impacting growth. So despite the pull forward profit target, is your baseline growth assumption over the midterm now, is it necessarily lower than before? Or could there still be a scenario where your midterm growth expectations are unchanged, but you just figure out how to do it more profitably?
