Olivier Pomel: So we think the trends of vendor consolidation will continue. So basically customers are getting more sophisticated, more mature in their needs. They’re getting further into the cloud and they are, as part of that, they will want to act less as integrators and they can use one platform instead of 12 different products. That’s something that they all react very positively to and we see that again and again as we expand into our customers. In terms of the broader trends, I think it’s too early to tell exactly what the next couple of quarters are going to be made of. We said it looks like we’ve hit an inflection point. It looks like there’s a lot less overhang now in terms of what needs to be optimized or could be optimized by customers.
It looks like also optimization is less intense and less widespread across the customer base, so all that is positive. Now, there’s still quite a bit of uncertainty in the macro environment, so I don’t think we should get ahead of ourselves either and declare that it’s the end of it for the foreseeable future. So we feel positive about things, but it’s still hard to know exactly what’s going to happen a couple quarters from now. From a buying behavior perspective, we’ve never seen customers really slow down in their intent to move to the cloud and the rate of adoption of new observability platforms, new products from us. We’ve done well, we scaled the new logo acquisition, we scaled the new product DASH, so that has been a constant throughout the optimization phase.
In terms of the users growth and customers scaling new workloads, I don’t think we’re back to the exuberant times of 2021, but maybe we’re reverting back to the mean of what was happening before that.
Raimo Lenschow: Okay, makes sense. And if I can squeeze one quick one in. David, we talked about OpEx and OpEx growth, and this quarter was lower than others. Should I read your comments about next year, and clearly there is a big investment opportunity that OpEx grows like maybe wasn’t quite where you wanted it to be. Just any comments there? I know you can’t guide.
David Obstler: Yeah, I think as we talked about the movement of the top line because of consumption moves more quickly than we can adjust resources. So we’ve taken more of an optimization and cost prioritization this year, but we offset it now, we do think there’s a very large opportunity. So we are expecting to increase the level of investment. But as we say that, we’ve always been looking at the balance between maximizing the top line growth with producing profit and are going to continue to operate on that taking advantage of long-term opportunities.
Raimo Lenschow: Okay. Perfect. Thank you.
David Obstler: Thanks.
Operator: Thank you. One moment for our next question. And our next question comes from Karl Keirstead of UBS.
Karl Keirstead: Thanks so much. Maybe David, I’ll direct this to you. I was intrigued by your comment that the fourth quarter or the month of October was off to a healthy start, understanding that that’s just a month. But just curious if you could unpack that a little bit, largely because investors on this call, we are picking up signals from other tech firms that would suggest a still very tough macro environment, or maybe even slightly tougher. So I’m just curious where you might be seeing pockets of strength if you could add a little more color? Thanks so much.
David Obstler: I think it’s just essentially what we tried to do in the last couple quarters is to caution everybody that we still expect that there will be continued optimization and cost management but give everyone a flavor for the direction. And what we’re seeing, as I think Olivier and I mentioned, we’re seeing the continuation of that, but at a more moderated level. And that was across the customer base. So we’re seeing essentially clients leaning a little more into growth. Again, early in the quarter, too early to call it, but the trends seem to be a moderation of the previous cost management and optimization, although it’s still continuing.
Olivier Pomel: Yes. And just to add color on that. So yes, we had the healthy start to Q4. We see trends that are not as strong as they’ve been for the past year in terms of what happened early in the quarter. That being said, Q4 is a tough quarter to call because it has fairly high seasonality. There is typically a drop of usage at the very end of the quarter with the holidays. And that drop in different years can be more or less pronounced. Last year in particular it was very pronounced. So we’re — we’ve given guidance with all that in mind basically.
David Obstler: Let me just add because this question has been talked about. Like last quarter, we didn’t take the strength of October into account, we took the exact same guidance approach, which was to take the weighted average historical trends and discount, apply conservativism. So like last quarter, we had said that the first quarter looked a little more stable. We didn’t take that into consideration our guidance and we have stuck to the exact same guidance methodology which is to act with that conservatism.
Olivier Pomel: I want to think too, just to comment on the — because I know a lot of you are trying to understand how we fit with respect to the large cloud providers and what trends correspond to theirs. Remember that while our trends are similar in the long run, in the short term there can be differences of timing in terms of when we’re going to see certain effects, where they’re going to see them. We also have a different mix. We have a mix of cloud providers not exactly the same as the border market and a different mix of customers and geographies than the individual cloud providers as well. So things are not exactly one-to-one there.
Karl Keirstead: Okay. Very helpful and congrats on the nice results.
Olivier Pomel: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from Matt Hedberg of RBC.
Matt Hedberg: Great. Thanks for taking my question, guys, and I’ll offer my congratulations as well. You know, Ollie, I wanted to double-click on some of the improved usage trends. You know, can you provide us with an overview on how some of your large, sort of strategic customers think about optimization as really part of an ongoing IT spending strategy, coupled with what’s driving some of this increased usage. I guess I’m wondering, have IT executives from your perspective changed their view on the level of monitoring needed with new levels of workload? No, so they didn’t change their view on the level of monitoring needed. I think they tried to save money wherever they could save it. By far the biggest area they can save in their cloud infrastructure is their cloud bill itself.
As a reminder, when customers pay $1 to us, they pay $10 or $20 to their cloud provider. So there’s a lot more savings to be had there, but these savings flow down to us. We charge commercial rate to the size of our customer infrastructure. They also try to save what they could in the observability specifically. And usually there’s always a bit of that you can cut. You can always sample certain things a bit more. You can retain your logs a bit less. You can remove some of the debug log, things like that can drive your costs up, but don’t necessarily generate a ton of value. And that’s a behavior, by the way, that we see all the time. Like we see it for most customers once a year, maybe twice a year sometimes usually before contract negotiations and things like that where they try to understand what they’re going to need for the next two or three years.
