Armon Dadgar: Sure. Yes, happy to. So I think in some sense, the privileged access management market has – it’s a very well established market. It’s been around a long time. I think the shift is really happening at what are the types of applications being built in the cloud infrastructure environments that they’re running in. So I think the backdrop is that the applications have moved to a micro service architecture, there’s a lot more of them. You’re in a cloud environment. It’s much more dynamic. The workloads are much more ephemeral. And so I think that’s the biggest opportunity as there’s – Boundary was really built ground up for that cloud environment where you have these highly dynamic applications being built to manage by many application teams versus I think, the more traditional tools that assumed a relatively static workload, relatively monolithic, slow-moving infrastructure.
And I think that gap has created an opportunity to architecturally solve it in a very different way that’s kind of cloud native. So that’s the core differentiator between the Boundary approach and maybe the more legacy solutions that are in the market. As we’re going into the commercial side of it, there will be a differentiation as well between our open source and enterprise, really focus on what are the compliance and security needs of organizations using Boundary commercially at scale versus kind of more open source practitioners.
Jason Ader: When do you think you will start to monetize some of the Boundary product?
Armon Dadgar: So one of the announcements that we made at our HashiConf event in October was the general availability of HCP Boundary. So HCP Boundary now is generally available, and we’ve done our first set of commercial transactions around it. That said, this is kind of late in our year. So early next year, we’ll go into our sales kick-off. We’ll be able to sort of really enable the field on the product. And then as you’d expect, these are kind of enterprise sales cycles around HCP Boundary. So I think it will take a little while to get the engine spinning, but it is now commercially available in op market.
Operator: Thank you. One moment for questions. Our next question comes from Alex Henderson with Needham. You may proceed.
Alex Anderson: Great. Thank you very much and outstanding results. I was hoping you could talk a little bit about what assumptions you’re making in your pipeline and what you’re seeing in terms of the mix in your pipeline going into the fourth quarter. There’s been seemingly a divergence in some of the other companies that have reported in the security space around the mix of customers in their pipeline relative to new customers versus upsell mix. And I was hoping you could give us some sense of what your assumptions are relative to closure rates and budget flush in the fourth quarter here? Thanks.
Navam Welihinda: Yes. Thanks, Alex. This is Navam. Why don’t I take that one? We mentioned this a little bit during the prepared remarks. We are seeing the macro impact play out in the market. And when you think about where it impacts the most, it’s the Land side of the business, which is new customers doing new contracts with us. And even with those, what’s happening is more of an elongation rather than a loss of that customer. So in any given quarter’s pipeline, there is a higher win rate on expand, extend and a lower win rate on Land. And we’re seeing that sort of occur in Q3, and we expect that to occur in Q4. And our guidance in Q4 incorporates that elongation on the Land side as well. So that’s what we’ve factored into our fourth quarter guidance.
Dave McJannet: Yes. Alex, this is Dave. Maybe just pile on – just add a bit of nuance. I think as I indicated, Armon and I in particular, have spent a lot of time in customer facing environments over the last 45 days. And I think what it tells us is the demand signals for both existing customers and new customers are relatively consistent. What is less clear is how that progress progresses its way through procurement departments as Navam pointed out and that’s really what’s reflected in our guidance. So I think what we see, whether for new customers or for existing customers, our foundational role in their cloud estates is very, very clear. The procurement department is the wildcard, I think that’s why our guidance is what it is, but our conviction is pretty profound for the year for the longer arc.
Alex Anderson: Great. And one last question along the same lines. With the availability of HCP cloud, is that something that will see acceleration as a result of the tighter budgets? Or is that macro orthogonal kind of consideration where it’s not directly impacted by the macro conditions?
Armon Dadgar: Yes, it’s a good question. I think if we look at the HCP audience today, it’s by and large our commercial segments or the SMB kind of long tail of customers. I think they’re probably a little bit more macro sensitive than the larger enterprise customers. So I think there’s always going to be a little bit of variability quarter-to-quarter for us on the HCP line. But I think, by and large, I think the smaller customers are seeing more of that macro impact. So that translates into more of a cloud impact, I think, near-term.
Operator: Thank you. One moment for questions. Our next question comes from Jim Fish with Piper Sandler. You may proceed.
Jim Fish: Thanks for the question. More of a question for Navam here touching back on Jason’s question. On those stronger multiyear activity with existing customers, can you quantify how many customers actually signed up for more multiyear, especially compared to when they were actually anticipated to, sort of refresh that term license come up for refresh? And are you actually considering a pricing raise on your end that may have caused some of this volatility? Or why are they kind of sensitive around pricing for your solution, understanding they’re sensitive around their own cloud costs, but just trying to gauge that? Thank you.
Navam Welihinda: Yes, sure thing. So on the multiyear, there’s a range of contracts new and renew typically that we work on in any given quarter. We aren’t going out and converting things that aren’t up for renewals. So that’s the base that we’re working with and a good group of that converted into long-term contracts for us, which is, as I mentioned, very good for the customer and very good for us because of visibility into the renewal base. So we’re pleased with that, and that does have the impact of revenue that we saw and the strength that we saw on the net retention rate where most of our renewals – most of our expansions came in as multiyear expansions as well. In terms of the, why, there’s a number of factors. It wasn’t driven by a price increase per se.
But there’s variability on the dollar on the FX side and many international customers who are seeing uncertainty there, and there’s uncertainty on budgets and how to utilize the existing budget and locking in a total. So I think those were the factors at play. Overall, a very strong quarter in terms of being selected as one of the few customers of choice for a long-term.
Jim Fish: Makes sense. Appreciate that. License was kind of the main upside for what we were all expecting here. And it’s nice to see that. But HCP, the cloud piece continues to grow nicely. But are you surprised at all by the continued preference for self-management? And as we think about next year, are you guys thinking about trying to incentivize the sales force a bit differently to drive more of that cloud adoption instead? Thanks, guys.
