Dave McJannet: Yes. I’ll let Armon answer that.
Armon Dadgar: Yes. Thanks Theo. So yes, I think on the Terraform PMP, our goal is really a few things, right? And so this is particularly the Terraform Cloud pricing and packaging changes. The goal was to simplify effectively before we had a few different tiers and particularly, there was a free tier that had sort of a very limited subset of capability that was distinct from sort of our standard and more premium tiers. So, what we’ve done was — and the design goal here was to really bring that into one framework where there’s a standard on a premium tier and the free tier is just a usage capped version of the standard tier. So what the value of that is, as our new customers and users on board, they get access to the full suite of Terraform Cloud capability.
They get a sense for the value it adds. And as they continue to scale up with the product, they cross in from the free tier into our paying tier, but on the same SKU. So, it really simplifies in some sense that motion of users signing up organically using the platform and then growing into being a paid customer. The near-term impact of that PMP shift is you had some customers at the very low end of our paid tier that move into the free tier just given the new structure of it. But the flip side of it, I think where we’ve been excited to see is that it’s driven a substantial uptake in the sign-up rate of Terraform Cloud. So I think that’s kind of the near-term impact of it. And I think an expectation it’s going to make it easier for us to onboard users and then graduate them from our free tier into our paid offering as they continue to scale.
In terms of, I think, the broader question, I think, obviously, we’re constantly fine-tuning and looking at pricing and packaging across. I think our goal philosophically is we want to enable our customers to sort of land small and align a unit of value to ultimately their consumption and their usage, so that as they grow their cloud programs and as they’re getting more value out of the tooling that we grow with them. And so, we’re always looking at how do we simplify that, but that’s sort of the core philosophy.
Operator: And I show our next question comes from the line of Miller Jump from Truist Securities. Please go ahead.
Miller Jump: So maybe thinking about the existing customer base. Last quarter, you all called out the large customer that kind of rightsized to a smaller contract. I’m curious, did you have any more of this activity with large customers in the quarter, or is there kind of incremental confidence now that this is more of a one-off? And I guess, maybe just an add-on to that about Q3, you’re comping against a really strong Q3 from last year. So, just curious for any color on the renewal opportunity that you all have there and — or any headwinds to call out on the flip side? Thanks.
Dave McJannet: Sure. Thanks. Yes. No, I just underscore that customer that we called out last quarter remains one of our very largest customers. And I think more generally, as I pointed out, I think there’s this optimization cycle going on across all the software, and we’re doing the same with our vendors. And I think that is likely to continue for some period of time, but that — what we called out in the last quarter was a very unusual scenario, and I wouldn’t expect that to be representative to go forward.
Navam Welihinda: Yes. Specifically, the second quarter gross retention was a better quarter than Q1. So we were very pleased with that result.
Operator: And I show our next question comes from the line of Michael Turits from KeyBanc Capital Markets.
Unidentified Analyst: Hey, guys. This is Billy on for Michael. I think some of us have been keyed in on the opportunities and risks associated with monetizing open source users. Does your switching of the source code license benefit that monetization in some way, or is this change kind of more geared towards addressing competitive pressures or something else?
