So that’s something that we’ve invested in. I’d say that’s still very early innings. And one of the things that we’ve learned over the course of this year and through the slowdown or some of the product enhancements and capabilities that you would need in order to attract the customer off of one of the larger hyperscalers. And so that’s clearly feeding into our product road map and the capabilities that we’re working to develop right now. There’s also the opportunity to expand the partner channel. We have a lot of partners on our platform today, in web agencies and developers building websites for other the companies. But historically, we’ve treated them very much just like a customer. So they come on and they have their own requirements and we meet those requirements, but we didn’t treat them really differently as a partner, and we’re investing to expand the capability there because that’s a great source of potentially us reaching parts of the market.
We might not otherwise reach you wouldn’t self-identify and come to our platform. So we’re — we think as you think about it over the next several years, that the ratio of new sales to self-serve should be — it would be great to get it to be 50-50. But we’ve got a bit of ways to go to get there. We’re still very nascent, I’d say, in the channels outside of the self-serve motion that’s been the foundation of the company’s growth.
Jason Ader: Great. Thanks for the background. Just one quick followup on that. It would be helpful, I think, for investors as you go forward just to provide some proof points on some of those newer channels and maybe anecdotes of customers that you’ve taken away from the hyperscalers, et cetera, just because I think that would be helpful for everyone to kind of just understand how that motion is working.
Yancey Spruill: Great. It’s a good suggestion, Jason. Thank you.
Jason Ader: Thank you.
Operator:
Jaiden:
Jaiden Patel: Hey guys. I’m on for Pinjalim Bora. Thanks for taking the question. Any early feedback on the Managed Kafka service, maybe some of the use cases there and do you think it could be a tailwind to growth next year?
Yancey Spruill: Well, as I mentioned, the feedback has been very good, very positive. We have lots of businesses on the platform that are big data streaming, whether it’s e-commerce or gaming or other businesses where there’s a lot of data and a lot of data streaming, which is the use case or a principal use case that’s highly aligned and very productive or more productive on Kafka than other services. So it’s a natural fit for our customer base. And the feedback has been great because, again, others have Kafka, but it’s not built with simplicity as we cited in the script. The feedback has been very positive as it’s a productivity enabler for our customers because they don’t have to spend as much time managing Kafka, which other solutions are more complex and that’s giving them more productivity to focus on their customer-facing activity.
So we absolutely — it won’t be material or significant this quarter as the adoption ramps was launched late last quarter or just recently, but we will see that becoming a more meaningful contributor as we move through 2024.
Jaiden Patel: Okay. Thank you. And then on Paperspace, it seems like it’s doing well. Are you still baking in less than $5 million in contribution for Paperspace for the second half of this year?
Yancey Spruill: I think what we’ve said is it’s — I mean, we disclosed the actual revenue in the — for the third quarter. And we said that the run rate is 1 million in September. So just extrapolate that, it puts us at about $6.
Jaiden Patel: Okay. Thanks for taking the questions.
Operator: And our next question comes from the line of Wamsi Mohan from Bank of America. Wamsi, please go ahead.
Unidentified Analyst: Hi, this is Mattie Esner [ph] taking the question on behalf of Wamsi. Thank you for taking the question. I was wondering if you could talk more about the underlying drivers in terms of the mix, in terms of the ARPU growth, especially for the upsell and the attach? And how are you thinking about like the trajectory for the ARPU growth?
Yancey Spruill: So the ARPU growth, again, year-over-year, we said was 6%, which was low relative to historical based on the difficult comp on a even the price changes. But if you look at the products that we announced during this year, you talked to a number of them, but we had launched a number of them earlier this year, and we have a road map that is design kind of appeal to the larger set of our customers, products and capabilities like integrated – sorry, identity and access management IM or role-based access control virtual private clouds, certain capabilities that really resonate with some of the customers that have gotten to more scale on our platform. That’s really where the focus is in our development in the near term.
That enables us not only to continue to kind of take a big share of our own customers’ workloads as they grow, so they don’t have to move off to the cloud — the other cloud providers. But it also enables us, as I mentioned earlier, to accelerate the direct sales. If you’re trying to poach customers, longer customers of the larger providers, these are some of the same capabilities you need. So that’s really where the focus is on driving ARPU is on being able to provide the capabilities that enable our customers to continue to scale on our platform as we get better meet and deliver on their requirements.
Unidentified Analyst: If I could follow up, could you guys talk more about like what’s the health of the SMB customer at the moment and if there’s any improvement in the usage trend?
Yancey Spruill: Yes. We talked about this earlier. If you look at it from a macro standpoint, you think of what’s been going on in the market, our customers have not been growing as fast their own businesses as they were historically. And we see that through the expansion that they get with us. A year ago, we were seeing expansion from our customers that were growing in the high 30s. And we’ve seen that be declining month-over-month for well over a year down into the 22%, 23% range, but that’s stabilized.
vein: So we think that just like we saw the downturn perhaps earlier than others because of the usage-based nature of our platform we don’t have renewal cycles and when a customer needs to spend less with us, they just spend less. And so we saw the impact early and we’ll likely see the return early because of the nature of the business model.
