Armon Dadgar: Sure. Yes. I think maybe if I zoom out and share the philosophical view and then we can talk about kind of the specific capabilities just because those won’t generalize across products as much. In general, the way we think about it is all of our products, there’s almost two sides to it. One is, I’ll call it, the kind of practitioner-oriented workflow set of capabilities. So for the end user, the developer who’s adopting and pulling in the open source what are the workflow features they need to really use the tool and solve their problem in an elegant way. Then on the other side, you have a sort of what we consider kind of system of record capabilities which is really more about a large organization thinking about how do I manage a large estate where I care about visibility, security, compliance, governance, et cetera.
So that’s kind of more system of record type capability. So for any one of our products, there’s a set of features that kind of fall into either of those camps. By and large, the open source tends to be more focused on those kind of workflow-oriented things because it’s about enabling the user to kind of download it, use it, see the value of it quickly, where the commercial side is more focused on kind of the system of record type capabilities. So if we talk about specific features, when we talk about Terraform, drift detection was one of those already mentioned on the call. That’s a good example of when I’m managing a large day two infrastructure how do I across thousands of different applications and workspaces, I need to understand where is the drift in my environment, where do I have things that are running out of date, where do I need to apply patches.
Those are all kind of day two concerns at scale that you really care about if you’re in the CIO office, you don’t necessarily care about that if you’re the application developer, right? So that’s a perfect example of the type of capability that sits in that system of record type function. We also announced improvements to our policy as code engine. So that’s a perfect example, if you’re applying that kind of policy codes either for security or compliance or governance reasons, very much sits in that second category. And maybe a third example might be our low-code framework to simplify applications for less skilled teams, right? That’s kind of an at-scale use case. So there may be some specific the general philosophy. So as we turn the dial more of the development moves to the system of record and less so on the kind of open source workflow.
Operator: Our next question comes from Fatima Boolani with Citi. You may proceed.
Fatima Boolani: Hi, good afternoon. Thanks for taking my questions. Dave, I was hoping to go a layer deeper into some of Navam’s commentary on the slowdown in elongation with new logos and building upon some of the questions you were just asked with respect to the commercialization engine for some of your more mature products. So maybe to ask you more bluntly. With the new customers, what is the factor that is posing the biggest hurdle? Is it either extremely happy Terraform open source users, who just haven’t gotten to that specific tipping point where you can convert them over? I just want to better understand that just because it is your most widely used and most pervasive and most mature solutions in the portfolio. And then a follow-up for Navam, please.
Dave McJannet: Thanks, Fatima. Sure, happy to answer to that one. The – I think it goes back to what Armon described, where people started opting cloud, it’s very tactical. When they start adopting it with a more centralized cloud program, they require a different set of capabilities. I might use Terraform for all 400 of my developers in my company, but they can all provision whatever they like versus no control access to the environment so we don’t overspend through a central share term from cloud accounts. And I think that’s the difference between basically Phase 1 of cloud and Phase 2 of cloud. So the adoption of the commercial version of our product is largely predicated on whether that company has matured to that moment in time where they have established a formal approach to doing this, either within their company or within their business group.
So largely, that is why infrastructure markets move at the pace they do because there’s an organizational reality to this. So I think what we’ve seen is actually real consistent acknowledgment that using Terraform is different from the needs of a team using Terraform. So you’re basically either buying our commercial product or you’re having to build some kind of scaffolding around it to have people work with it. And I think we’re really, really bullish on how that market is progressing, as we’ve gotten larger, as our customer base has gotten larger, we’re actually seeing that time to conversion accelerate at commercial products, but there is a reality of organizational constraints in our customer base that just are the way infrastructure markets move.
Fatima Boolani: Understood. And Navam, you called out the multiyear renewal within 3Q. I’m wondering if there is a larger body of transactions there that are perhaps from a seasonal standpoint up for renewal in 4Q? And your expectations around what type of behavior is embedded in guide, but certainly what you’re seeing in customer engagements now? So basically, should we expect some of the 3Q multiyear renewals and sort of duration impacts persist into 4Q and in terms of the performance and transaction activity? And that’s it from me. Thank you.
Navam Welihinda: Got it. Thanks, Fatima. So very pleased with the third quarter and the activity there in terms of what our customers are doing. Our fourth quarter guidance philosophy has always been the same, which is there’s a range of outcomes and we take a solid execution path and we exclude from it any large transactions where timing is inherently unpredictable and sometimes those may be multiyear deals. So our guidance in Q4 basically incorporates the macro headwinds that we’re seeing here and the high levels of deal scrutiny, which may lead to Q4 sort of seasonality muting. But we’re pleased with how Q4 is going to turn out or pleased with being able to raise the Q4 guidance. I don’t think we’re expecting any change on multiyear behavior from normal ranges in our guidance.
Operator: Thank you. One moment for questions. Next question comes from Kash Rangan with Goldman Sachs. You may proceed.
