Yancey Spruill: Well, there’s two points to that. One, because we have a consumption-based model, as we saw last year, as weaker demand happened in the macro, we saw a much faster growth deceleration because as our customers business has slowed dramatically. They’re slowing less today than they were a year ago; their spend corrects immediately; so there’s that aspect. There’s a second aspect about this — so versus the longer-term contract model that others have, where volumes might be lower than committed payments and people need to just correct — that’s not what we saw because we have 30-day contracts. And so our customers correct on spending for what they’re buying. What we’ve been seeing in sort of late last year, early this year, a pickup in customers calling saying, am I using this the right way?
How do I use less but still satisfy my current demand? Did I activate too many compute instances, too many droplets. Am I in too many different locations. Can I use Kubernetes to potentially have a more efficient deploy from my cloud infrastructure. That is the optimization we’ve been seeing. And I would say the first couple of earnings calls this year, we talked about a pretty active customer conversations. That has really slowed in terms of our support and customer success engagements with customers. I think they’re in a good spot and we’re seeing that as we talked about, the contraction is flat over a quarter, flattens or stable, let’s say, it’s at a higher level which I — as I mentioned, I think we’re in a different time as people are in a lower-growth environment, they’re going to be much more vigilant about any new instance or how they are executing operationally because they want to be as efficient as possible.
Our customers tend to be bootstrap company. So they — $1 saved is $1 earned for them. So I think that aspect is here to stay. And that plays really into a key strength of ours which is high support, high-touch we engage with our customers on how to best use the cloud, our community investment, our tutorials are also involved in that. And so I think the churn, that’s why I’m so heartened by churn being flat relative to where this whole slowdown started because it reflects the fact that our value proposition is very high. Even in a challenging environment, we’re able to help our customers through it and they’re sticking with us which is going to be critical. We said we’re seeing their slowdown in their growth, the deceleration in their growth has really slowed and it’s not at a point where we’re going to call a bottom, it’s flat but it is clearly slowing at a much more dramatically slower rate than it was the beginning of this year or this time — certainly this time last year.
And having that stable churn for me is a leading indicator that when things bounce, we’re going to see a significant bounce as the recovery ultimately happens. We don’t know when that’s going to happen which is why we’ve changed the outlook as we reflected today but we’re positioned well for that because we’ve been helping our customers through this process. And the consumption-based model sort of immediately tricks their spend so they can focus on operational efficiency and we can help them do that.
Operator: Your next question comes from the line of Mike Cikos with Needham & Company.
Mike Cikos: I just wanted to circle up on some of the earlier comments but I guess, take it from a different angle. I know you guys have been talking about churn contraction and expansion. If I tie all those up and just think about the linearity that played out over the course of the June quarter and even into July now that the month is behind us, can you discuss how things trended as we went from April to May to June, just to give us a sense of what’s going on in the quarter for some of those real-time data points that you’re seeing?
Matt Steinfort: Yes. So this is Mike, thanks. It’s Yancey. When you look at each of those meters were looking at it on a monthly basis in addition to a quarterly basis, churn stayed relatively flat, that’s in the kind of low double-digit, 10%, 11% range and it stayed there; hasn’t gotten any worse. What we saw though was a continued kind of an increase in contraction which means people are taking money off of our platform and a decrease in expansion, meaning the amount people are adding year-over-year, each month, as I look at it, is getting smaller. But what we said is the rate of change of contraction has moderated. So it’s decelerating. It’s not getting worse as fast as it was in — as it was earlier in this year. And in fact, in the last month that we’ve seen it actually flipped the other direction and we saw it go back on an absolute basis.
It actually — the amount of contraction we saw went down in the last month which is a really positive sign. So, multiple months in a row with deceleration and actual flip in the other direction but the expansion which is the other driver just continued to kind of get smaller. And so that’s why we’re saying when we’re looking at this as we looked at that over the course of those months, we couldn’t call the bottom and we can’t say whether expansion is going to continue to get smaller in the coming months and is contraction stay at the level it is? Or is it going to continue the 1-month trend we have of moderate? And with that level of uncertainty, we just couldn’t continue to go into the third quarter and fourth quarter without providing an update on the on the guidance because it’s providing enough of a headwind that is offsetting the other good growth that we’re seeing through our self-serve funnel and through the other initiatives that we’ve been pursuing.
