Rob Oliver: Hi, thanks for taking my questions. I had two. So Jen, one for you or Howard as well. Just on the sales pipeline for this year, which clearly you guys are more optimistic about and sounds like a lot of that is stuff that you guys have put the work into control. Can you talk maybe a little bit of how we should think about the breakdown between expansion deals, where it sounds like you guys have a really nice opportunity versus new logos, recognizing that the headline customer logo numbers are impacted by the low end. Really I’m just asking about kind of larger customers here. And then I have a follow up.
Jennifer Tejada: Yes. I appreciate the question. In mid-market and enterprise, customer logos actually grew and we continue to see new customers coming to us looking for the ability to both improve their cost efficiency and at the same time increase velocity of their innovation or their time to market. And what makes me very optimistic is a few things that I both see when I’m out talking to customers and spending time with our customers, but also can see in our leading indicators. One is that technology has become a value driver as opposed to a cost center, in just about every industry, whether it’s healthcare, manufacturing, travel and hospitality, retail, et cetera. The second thing that we’re seeing is, like I said, that certainty around what my budget envelope is, and the fact that the Operations Cloud addresses some of the highest priority, already budgeted initiatives that our customers are working on.
And we’re doing a much better job of matching ourselves to those initiatives as opposed to just selling technical features and functions to developers. And that’s been a shift for the business. From a leading indicator perspective, large deal pipeline has improved dramatically. Conversion rates are back to where they were pre the macro dislocation. And like I said, we’re seeing an increase in both multi-product deals. So, Operations Cloud deals as well as multi-year deals, kind of underscored by that RPO growing by over 30%. We also — when I look across what needs to happen in this next year, as Howard mentioned earlier, we’re not relying on the macro to improve. And in fact, there’s upside. If we were able to attack federal more like sooner than we currently have in plan, if generative AI uptake were to come on mainstream faster, we see that as a use case that drives more complexity, more software proliferation, and therefore more incidents, or if the macro were to improve, those are all tailwinds we’re not factoring in to guidance today.
Rob Oliver: Great. That’s really helpful. Thanks, Jen. And Howard, for you, just recognizing the sort of dichotomy between the Q1 guide and the applied acceleration for the rest of the year, and you guys have talked about it. And, Jen, just in response to my first question, talked about some of what gives you the comfort there. You did say that you’re not expecting an improvement in macro. I think I also heard you say that the low-end pressures will ease a bit. And if I heard that correctly, I just wanted to understand a little bit better why that is. Is that better free to paid conversion, better visibility into the cohorting of those customers, something you guys are controlling? Any color there would be helpful. Thanks.
Howard Wilson: Yeah, sure. So, when we look at that SMB segment, we’ve been tracking very carefully what’s happening with respect to churn and downgrade in that segment. We saw that really spike, grow and accelerate through this past year. But we saw that stabilize and get a little bit better in Q4. So that gives us a view that we expect that this year, a lot of that dislocation that happened around subscale enterprises has pretty much happened. And that means that that the impact will be less. We’ve also reduced our exposure to that segment by focusing on our growth in the enterprise and mid-market. So, whereas that segment has typically been close to 20%, that’s now around 16% of our ARR, and we are steadily moving upwards.
And in fact, even with new customer acquisition, you asked the question right around enterprise and mid-market, whilst we have seen impact of churn in the SMB segment, we’ve seen high-single-digit growth in the enterprise and mid-market segment through this year.
Rob Oliver: Great. Really helpful. Thanks to you both.
Jennifer Tejada: Thank you.
Tony Righetti: Okay. Next, we’ll hear from Kingsley Crane with Canaccord Genuity. Kingsley, please go ahead.
Kingsley Crane: Hi, Jen. Hi, Howard.
Jennifer Tejada: Hi, Kingsley.
Howard Wilson: Hi, Kingsley.
Kingsley Crane: Thanks for taking the question. So, the first one is it’s — so it’s interesting that on the industry analyst, materials provided not naming names, I would say you’re neck and neck with some really large traditional IT operations companies. So, you’ve always differentiated yourself in the real time operations use case. But as you increasingly sign these $1 million deals and involve top-down selling motions, how often are you running into some of these companies, maybe this is the competition you mentioned earlier, versus still being greenfield?
Jennifer Tejada: We’re still have the vast majority of, customer lands regardless of segment tends to be greenfield because most customers don’t have an Incident Management or automation platform to manage unstructured, unpredictable incidents. And, and these type of incidents tend to be — also be high value or mission critical to resolve. The other thing that I would say is that some of these large companies that provide ticketing systems or workflow, they’re really designed around longer timeline, lower criticality problems. And so, in the time that it would take to raise a ticket, to push that ticket through a command and control approval process, you could be bleeding transactional revenue. You could be, exposing yourself to compliance risk.
