Sales Pipeline and Growth Reacceleration
Q: What's driving growth expectations for the year?
A: Jennifer and Howard highlight that the sales pipeline has improved significantly, especially with large deal opportunities and conversion rates returning to pre-macro levels. There's an increase in multiproduct and multiyear deals, with Remaining Performance Obligations (RPO) growing over 30%. They expect acceleration in Annual Recurring Revenue (ARR) in the second half without relying on macroeconomic improvements, viewing any positive changes in the macro environment as additional upside. ** " , " , " **

Large Deals and Customer Expansions
Q: Tell us about the recent large customer deals.
A: Jennifer mentions signing several 7-figure, multiyear deals sponsored by CIOs and CTOs, involving all four pillars of the Operations Cloud: automation, AIOps, Customer Service Ops, and incident management. These deals often displace competitors' point solutions in the AIOps space. Howard adds they've surpassed 250 customers using their AIOps SKU since its introduction, successfully maintaining a gross margin of 85% despite the consumption-based metric. ** " , " , " **

Customer Churn Stabilization
Q: Has churn among SMB customers stabilized?
A: Howard notes that churn and downgrades in the SMB segment have stabilized and improved in Q4. This improvement is attributed to engaging customers earlier in the renewal cycle and focusing on how they derive value from the product. As a result, gross retention improved during their largest renewals quarter, and they expect less impact from SMB churn moving forward. ** " , " **

Cross-Selling and Multi-Product Adoption
Q: What's driving the improvement in net new ARR?
A: Jennifer explains that the net new ARR improvement is driven by enhanced cross-selling and upselling efforts. Now, 62% of ARR comes from customers with two or more products, a 4 percentage point increase over the previous quarter. Larger deals and a stronger multiproduct pipeline are contributing to this positive trend. ** " , " , " **

Macro Environment Assumptions
Q: Are growth expectations dependent on macro improvements?
A: Howard states they have not factored in any macroeconomic improvements through incremental hiring in tech, assuming the macro environment remains unchanged. Jennifer adds that any improvement in the macro environment would be considered upside to their current growth expectations. ** " , " **

Competition and Market Positioning
Q: How often are you competing with traditional IT operations companies?
A: Jennifer explains that most customer engagements are still greenfield opportunities, as many lack an incident management or automation platform for real-time operations. Their Operations Cloud is designed for immediate, mission-critical incidents, offering automation and action capabilities that set them apart from traditional ticketing systems. They're increasingly displacing competitors, especially in the AIOps area. ** " , " **

Reduction in SMB Exposure
Q: How is exposure to the low-end SMB segment changing?
A: Howard mentions they've reduced their exposure to the SMB segment by focusing on growth in the enterprise and mid-market sectors. The SMB segment now represents around 16% of ARR, down from close to 20%, which should lessen the impact of any churn in that segment. ** " , " **

Seat Growth vs. ARPU Growth
Q: How should we think about seat growth versus ARPU?
A: Howard indicates that while user or seat growth has been a primary growth driver, there's an increasing contribution from customers adopting the Operations Cloud. New products like AIOps and automation are becoming significant contributors to growth, shifting the balance towards higher Average Revenue Per User (ARPU). "

ARR Acceleration Timing
Q: When do you expect ARR acceleration?
A: Howard expects ARR acceleration in the second half of the year. This is based on improved pipeline conversion rates, the ability to close larger 6- and 7-figure deals, and enhanced visibility into a pipeline that now extends multiple quarters ahead. "

Margin Outlook
Q: How are margins affected by new offerings?
A: Howard confirms they've maintained a strong gross margin of 85%, even with the introduction of consumption-based pricing for their AIOps offering. This indicates that new products are not negatively impacting overall margins. ** " , " **