Rick McConnell: Thanks, Ray. I would say a bit of all of the above by way of tool consolidation. AppDynamics continues to be a source of new logos for us in a material way. New Relic going private, certainly has created some disruption as has the acquisition of Splunk by Cisco, which creates certainly some degree of market confusion and apprehension that leads to opportunity for us. Having said that, it’s all still relatively early stage in terms of some of these transaction announcements, and we’ll have to see how they evolve over the course of time.
Ray McDonough: Great, thanks.
Operator: Our next question comes from the line of Gray Powell with BTIG. Please proceed with your question.
Gray Powell: Okay. Great. Thanks for let me ask a question here. So yes, I know you’ve gotten a lot on net new ARR trends. The statistic on $1 million ACV deals, that was really helpful. Is there a way to just help us think through like how much — like what the normal sales cycle is for larger deals? And then just how much it’s been extending in recent quarters as customers take on more like multiproduct deals? Thanks.
Jim Benson: Yes. The — I mean, our normal sales cycle is six to nine months, as you can imagine, that — and it depends upon the — whether it’s a new logo or an expansion. If it’s a new logo, you’re going to be on the longer end of that because customers are doing a much more significant evaluation with the POC and things of that nature. So it varies between expansions and new logos. And as I mentioned, Gray, that both — these growing number of larger deals are not just new logos. We’re actually seeing it also on the installed base side. So it’s actually both. Because even where we have installed base customers, they also are leveraging DIY tools and in other cases, other commercial tooling solutions. So they are now beginning to make more tool consolidation decisions.
And as I mentioned, the funnel is showing a 39% increase in that, and that’s over kind of a year ago period that was very, very healthy. So I think it’s a positive trend. I would tell you that it does introduce a level of variability, as I mentioned, which is why we built more prudence into — and it’s hard to say, is it a month? Is it two months? It varies, right? It varies by — in some cases, it could be a quarter. In some cases, it could be a month. I really couldn’t tell you an average for it rather than to say that when you are doing deals of this size, where — because there is both people and process implications for customers because if they’re using existing tools and they want to go to a new vendor, it has an impact on their organization, and it has an impact on the processes within their organization.
So there’s a serious evaluation that they go through, and you have to anticipate that as you’re trying to determine a close date.
Gray Powell: Got it. So it’s like an extra month to three months, not like an extra six months, is that fair?
Jim Benson: No, no, no.
Gray Powell: Okay, thank you.
Operator: Our next question comes from the line of Joel Fishbein with Truist Securities. Please proceed with your question.
Joel Fishbein: Thanks for taking the question. I have a follow-up to one of the earlier questions around the observability consolidation, which we’re seeing in the market as well. Can you talk about the vendors that you think are positioned to compete with you on those observability deals? We hear ServiceNow making some noise and there are some others out there. I just want to know the competitive dynamics of those — and you went to some great lengths to talk about your competitive differentiation, which we saw last week as well. So I’d love to hear, Rick, from you about who you’re seeing in the market.
Rick McConnell: Well, I talked about some of the competitors already to some extent, I think, that are providing some opportunity based on the disruption in those areas. To extend that further, I would say, again, that I very much like our position recently these trends towards larger strategic deals based upon our core differentiation, especially at the higher end of the market. And you had asked about ServiceNow. We actually still see them mostly as a partner as opposed to a competitor in the market. They just don’t have the capabilities yet in observability and application security that we do. So it’s more times than not, customers are asking us to integrate with ServiceNow versus compete with them.
Joel Fishbein: Are there any other vendors that you think can match you guys from a consolidation perspective from a product perspective?
Rick McConnell: Well, at the high-end of the market, the higher end of the market at the Global 15, 000, I would say that most of the deal flow and pipeline moves our direction. So in our target market segment, I think we have a very strong play and the biggest competitor, as we’ve said in the past, continues to be DIY.
Joel Fishbein: Thank you so much for the clarification.
Operator: Our next question is from the line of Adam Tindle with Raymond James. Please proceed with your question.
Adam Tindle: Okay, thank you, Rick. Good morning, I wanted to ask a strategic question related to Runecast. To start with, the motivation for that was posture management something that customers were asking before adopting AppSec or would you characterize this as maybe the start of a broader push into [XenApp] (ph)? And then secondly, into that, just zooming out your kind of strategic view on cloud security, broadly speaking. There’s been a lot of investment and a lot of growth in that space, a combination of agent and agentless technologies going on. I wonder where you think Dynatrace plays in that market? Do you see a holistic platform like a Wiz type of player over time or attractive areas that you’re going to pick and choose your spots? Thanks.
