Andrew Sherman: Awesome. Nice guys.
Operator: Our next question comes from the line of Gray Powell with BTIG. Please proceed with your question.
Gray Powell: Hey, guys. Thanks for taking the question and congratulations on the good set of numbers here. So yeah, a couple on my side, and I was really just hoping to square the ARR and revenue comments. So specifically, how should we think about the sequential growth in ARR in Q4. It just seems like you can probably get pretty close to your Q4 revenue guide with little to no growth, the Q3 ending AAR run rate? And then I know you mentioned a customer downsizing. So I’m just trying to just think through those things and just basically verify that I’m doing the math correctly here.
Stewart Grierson: Sure. I’ll take this one, Gray. So Stewart, obviously. Obviously, we don’t give ARR guidance at this point. But I think just to give you a little maybe color and perspective I think I would look at kind of the capacity we have right, with being down both year-over-year in absolute sales reps and then also from a ramp perspective. That’s what has the impact on ARR in the near term, which is why we talked about how as those ramps — as those reps continue to be on board and ramp, the impact gets greater as we get into FY ’24, particularly to the back half. So that’s how to think about ARR. From a revenue perspective, I think our philosophy has remained consistent on how we’re guiding to revenue is we put out numbers that we have a high conviction that we can deliver on. Obviously, you build a little in and given the uncertainty that we have in this environment, but that’s how we think about revenue guidance.
Gray Powell: Okay. That’s really helpful. And then in terms of like the assumptions for Q4, are you assuming like a stable macro environment versus Q3? Do you think worsen? Just kind of curious what sort of like underlying your view of the world.
Stewart Grierson: Yeah. Listen, I think we’re seeing more discussions around buying decisions and budgets, right, than we saw even as we were in Q3. So we’re definitely seeing more scrutiny. And so we’ve seen that, I would say, tick up from where it was in Q3. And I think we expect that to continue into Q4 and into next year.
Gray Powell: All right. Understood. Very helpful. Thank you very much.
Operator: And our next question comes from the line of Sanjit Singh with Morgan Stanley.
Sanjit Singh: Thank you for taking the question and congrats on the solid execution this quarter. Stewart, I guess my question was really around the really great sort of operational efficiencies you guys have been materializing the business. If I look at sort of OpEx, I think it’s down sequentially quarter-over-quarter. Then I think two of the three lines in OpEx, R&D and G&A are down year-over-year. Sales and marketing is sort of slightly up. I heard you loud and clear on the need to invest on sales and marketing. I guess my broader question is, as we look over the next four to five quarters, is this pace of efficiency sort of sustainable? How structural are these efficiencies that you’re seeing within gross margin, R&D, G&A.
Should we assume that, that sort of sustains going forward, realizing that there needs to be more investment in sales and marketing as you ramp go-to-market and product. Just want to get a sense of how long-lasting some of these margin improvements can be going forward?
Stewart Grierson: Yeah. So our expectation, Sanjit, is obviously, as I said, we’re going to invest in sales capacity given we are lower — listen, we need to invest in across the business as we scale. We recognize that we needed to improve our op loss profile. We’ve still got work to be done there, obviously, as we laid out a picture of driving the company towards first cash flow breakeven and operating margin breakeven and we’re trying to accelerate that path. And so we’re going to evaluate this every quarter. It’s an ongoing thing where we’re looking at hiring plans. We look at where do we hire. We look at discretionary spend, and so obviously, while we had a big impact this quarter and it’s pretty unusual for a business that’s growing like ours be able to take down expenses quarter-over-quarter, I don’t think you should continue to expect that.
But certainly, we expect to have the better leverage and efficiencies relative to revenue as we scale this into over the next several quarters.
