Dynatrace, Inc. (NYSE:DT) Q3 2023 Earnings Call Transcript

Rick McConnell: Sure. Thanks Raimo. The GSIs are, I would say, growing with us at different rates. But as you can see, we now have 10 that we are working with. And those 10 have trained literally hundreds and hundreds of people on Dynatrace. And the result of that is that we have more and more capacity in the GSIs to get Dynatrace deployed effectively for their customers. Now, GSI efforts are time consuming. They tend to be large digital transformation projects for typically larger companies that are part of overall workloads. In fact, we closed a very significant one that I referenced in the call down in LatAm last quarter is a multimillion dollar, multiyear deal as part of a large digital transformation deployment with a GSI. These are the kinds of deals that we believe that we will see over time and that will become a core component of. So, it’s going to take some time, but we believe that working with a number of different GSIs helps to get us there.

Raimo Lenschow: Okay. Perfect. Thank you.

Operator: Our next question comes from the line of Mike Cikos with Needham & Company. Please proceed with your question.

Mike Cikos: Good morning guys. Thanks for taking the time here and Jim, looking forward to working with you. I just wanted to cycle back. I am trying to square two pieces here, and I just wanted to see if I could put this in front of you. I think in response to Kamil’s question, there was a comment that new logo adds partially benefited from close rates coming in better than expected. So, can you help us understand what Dynatrace is now assuming for its close rates as we think about Q4 and what’s incorporated into the flat new logo adds that we are looking for on a year-to-year basis? And then I guess in conjunction with that as well, I know coming back to Andrew’s question, it sounds like your sales force is, I think the quote, was better at calling how those close rates play out.

And again, just want to see what level of conservatism or prudence we are baking in here? Has that prudence in any way changed just given that you guys are operating in this dynamic backdrop?

Jim Benson: Happy to kind of follow-up on that. So, as I have said, that the new logo adds were better than we expected. As you can imagine, we had a kind of a range of outcomes. And as I said, that the close rates were just a little bit stronger. Relative to Q4, I would say we are not assuming a significant improvement in close rates. As a matter of fact, I think we are continuing to exercise prudence in close rates. That’s reflected in the guide. So, I don’t want you to get nervous that we are getting ahead of ourselves here, given kind of a strong Q3. And I do believe that €“ I obviously wasn’t here in the first half of the year. But I can tell you from the few months that I have been here that is quite significant rigor with the sales force around discussing and forecasting the business.