Good and welcome to the DigitalOcean Second Quarter 2022 Earnings Conference call. Please note today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. At this time, I will turn the call over to Rob Bradley, Vice President of Investor Relations.

Thank you, and welcome, everyone, to DigitalOcean's second quarter 2022 earnings call. Joining me today is Yancey Spruill, our Chief Executive Officer; and Bill Sorenson, our Chief Financial Officer. Before we begin, I want to cover our safe harbor statement. During this call, we will be making forward-looking statements, including our financial outlook for the third quarter and full year as well as statements about goals and business outlook, industry trends, market opportunities and expectations for future financial performance and similar items. All of these statements are subject to risks, uncertainties and assumptions. You can review more information about these in the Risk Factors section of our filings with the SEC. We remind everyone that our actual results may differ, and we undertake no obligation to revise or update any forward-looking statements. Also we will be discussing non-GAAP financial measures on our call. And reconciliations between our GAAP and our non-GAAP financial results can be found in our earnings press release, which was issued earlier this afternoon and in the investor presentation on our IR website. With that, I would now like to turn the call over to our CEO, Yancey Spruill. Yancey?

Thanks, Rob, good afternoon and thank you for joining us today. I am pleased to review a quarter that had its share of challenges where nonetheless we demonstrated our ability to deliver against our financial targets despite the macro headwinds we are all facing. Our performance alongside our improved financial outlook for the balance of the year highlights that we are positioning DigitalOcean for strong revenue growth, coupled with rapidly scaling free cash flow, despite operating within uncertain – within an uncertain and challenging economic environment. The durability and resiliency of our business is prominently on display right now. The simplicity of our business, including our consumption revenue model, allows our customers to automatically align strength or weakness in their business to what they pay us. For the market segment we serve, we believe that this is a critical strength as it supports our early stage business customers through good times and bad with the highly transparent economic model that builds loyalty with them. A validation of that premise is that despite a challenging environment churn last quarter remained at similar levels to prior recent quarters. The global nature of our customers and the diversity of industries we serve while not fully unionizing us from macroeconomic trends does make us less vulnerable to a material change in our business since we aren't dependent on one type of industry, one set of large customers or a particular region of the world. The key growth drivers in our business are being somewhat offset by macro weakness, which has resulted in a reduced expansion spend rate on our platform, particularly in Europe and Asia and principally for customers operating in the blockchain vertical. That is to say in aggregate customers continue to grow in our platform, but in certain regions and use cases,…

Thank you, Yancey. And thanks for those kind words. Hello, everybody. And good afternoon. Thanks for joining us today to review our second quarter results. As the Yancey mentioned, Q2 was not without its challenges, but for DigitalOcean, it clearly illustrated the operational leverage inherent in the business, the potential for material cash generation and the opportunity for further acceleration in our revenue growth. While we met our revenue guidance targets and uncertain markets, DigitalOcean was able to soundly beat all of its key financial operating metrics for gross margin, non-GAAP op income, free cash flow and earnings per share. Yancey covered many of the key operational highlights in the quarter and the growth investments we're making. I'd like to focus on how we were able to drive improvements in our profitability and cash flow before providing our outlook for the rest of the year and taking the questions. In the second quarter, revenue grew by 29% at the midpoint of our guidance. Excluding those countries directly involved in the Ukraine conflict, would have led to a slight improvement in growth rates. And while North America held up with growth rates similar to last year at around 30%, we saw slower growth in Europe and Asia versus what we have seen in the previous several quarters. Looking under the hood, we see the dollar churn in these regions remain stable, but it is the expansion rate of our customers that has slowed. So customers are steady and still growing nicely on our platform, but adjusting their spend level somewhat as they are cautious in managing their businesses as well. And even with these trends, ARPU is still growing greater than 20%. Net dollar retention in Q2 declined to 112%, which compares to 113% in the year ago period, and was…

Your first question comes from the line of Tim Horan with Oppenheimer.

Yes. Thanks guys. Can you talk about the price increases a little bit? What percentage of your revenue stream do you think will be seeing a price increase and how does that kind of get layered in over the next couple of years?

Well the pricing went in effect on this no phase-in – it went into effect in July for all existing and new customers. And for our Droplet products it, most if not all of them saw price increase. Obviously we created a new $4 Droplet that's a lower price point as I referenced earlier. Our PaaS applications in general were not – we did not raise prices against them, for example, serverless database, et cetera, and so it was mostly concentrated on IaaS products on the platform.

And can you give us a sense of what percentage of revenue that represents and are your larger customer is not under termed buying contracts? Or one or two-year contracts, or are they all month-to-month?

Yes. The overwhelming majority of our customers are on a monthly subscription and IaaS we just references roughly 87% of our revenue, I'm sorry, 82%.

Got it. Well, I mean, doing the math on that, I would suggest that the third quarter revenue should be substantially higher unless I'm missing something either 20% price increase on...

Yes. Let's just be clear. I mean, this is a very uncertain outlook in terms of Blockchain, which in Q2 represented about 5% of revenue that vertical is under extreme pressure as you know and so you got this dynamic where you have tailwinds of net new customer attracted to the platform working well, new product with serverless working well, pricing working well, and being offset by weakness in the macro principally in Europe and in Asia, a lot of that is Blockchain. But some of our other customers are growing more slowly on the platform, and so we don't control that, we don't control inflation, we don't control rate increases, war or all the rest of it, and so I think our perspective is given that we can't control those factors, that we're going to be very cautious on the outlook. That's exactly what we did in Q2 and hit those expectations, and at the same time what we can control is what money we spend, and we are managing that very aggressively to prioritize incremental spend if there is any on the highest and best uses that will drive sustainable growth or drive efficiency on the platform so that we can deliver against margins and free cash flow. We are absolutely focused on that and we're working with our customers to help them through tough times. And that'll be our operating principle until there's a better clarity in the outlook which we don't necessarily see certainly in the Q3 and that's reflected in our guidance.

Understood. Very helpful. Thank you.

Your next question comes from the line of Pinjalim Bora with J.P. Morgan.

So great, thank you for taking the questions and congrats on a stable quarter. I want to ask you, I think you said something like based on the traction you see in Q3, it sounded like you're seeing some, like green shoots, maybe, I don't know. Could you help us understand the kind of the top of the funnel activity so far in July and August across your various theaters, is that stabler then Q2 or help us understand that?

Yes. Thanks Pinjalim. Let me clarify. So what I meant was that on balance, our outlook for Q3 is for growth acceleration against Q2. And so on balance, we expect the initiatives that we have in place, the product portfolio we have in place, pricing actions we've taken on balance to outweigh some of the uncertainty and that's reflected in our guidance, and that's a little bit more fill in the blank to my point earlier.

Understood. Okay. Then the follow-up as I guess the guidance you're maintaining it, help us understand what are the various components, if it is – if it is possible, what are you assuming for price increase versus what is the macro headwind. Any way to kind of put a finer point and what are you assuming...

You mean for the full year? I'm sorry.

...for the full year. Yes. And are you assuming kind of a deteriorating environment from here? Or are you assuming kind of a state of course environment for the second half?

When we look at our full year estimates that we set in February before the war, hours before the war but before the war, we had an outlook that suggested that we would do better than that and we'd be rising. If you've told me eight months ago, we'd be having the same outlook for the year that we had, that we would set for investors in February that was not in the base case and so by maintaining the outlook, what we're – what we're saying is the headwinds – there's been headwinds to our full year outlook that would've been above what estimates we set in February and those headwinds continue on. It doesn't mean we can't grind through the quarters as we are and doesn't mean that we still feel that we can – we will achieve, which is why we're maintaining that outlook, but there are headwinds and we're managing against that. And I think what we came into this year expecting for a full year revenue and a, let's say being raise a set of scenarios that's not occurring. Obviously we haven't raised our outlook for the full year yet. And that reflects uncertainty that we're seeing in the trade-offs between the green shoots, which there are many and the offset which is macro weakness across many of our cohorts and principally focused in Blockchain. So that's the context. Our original guidance that we set for the year, we expected to be making progress against that and raising that over the course of the year, we are not doing that and that's reflected in the color that I just provided.

Understood. Thank you. I'll get back in the queue.

Your next question comes from James Breen with William Blair.

Thanks for taking the question. You had good, full growth year year-over-year. Can you just talk about where the strengths coming from there? How much of that was attributable to the pricing increases versus customers taking more product? Thanks.

Well, our ARPU pricing did not impact Q2, so it went into – it was announced in the middle of Q2, but actual change to the pricing that people were paying for Droplets, networking, storage, et cetera, didn't begin until July 1st. So it had no impact. So the continuing trend we see on our ARPU growth is volumetrics on our infrastructure as customers grow their business on our platform. The fact that they can adopt more other services like our managed databases, our managed Kubernetes are now serverless. Our marketplace, all of those collectively are extending wallet share for us as our customer’s ramp, and that's a big tailwind towards ARPU growth.

Great. Thanks.

Your next question comes from the line of Vinod Srinivasaraghavan with Turquoise .

Hi, this is Vinod from Barclays. Just two questions. At Analyst Day, you talked about your customer cohorts within three buckets: learners, builders and scales. Can you frame the difference in new logo growth and expansion during the quarter within these buckets? And any color and your thoughts on the price increase impact on each of those cohorts in 3Q and beyond would be helpful? Thanks.

Well, we talk about $50 up customers our builders and scales. So we spoke to the growth there in customer and the revenue growth. So that continues despite the challenges around us to be pretty strong 34% revenue growth mid-teen 16% customer logo growth, and that's 85% of our revenue. So people who move up on the platform from learner and testing the product, testing an idea to launching a product and running a business, the $50 up customer is roughly 85% of our revenue. And again, they spend a lot of proportion on infrastructure that did see pricing impacts. And those went into effect beginning in Q3. And on the learners aside we continue, we talk, I reference the JournalDev, Dot-Com acquisition which reflects building more content in our library. Now over 40,000 digital pieces – digital content that drives pretty substantial people – the number of people each month to the platform between 9 million and 10 million. And then those are right for conversion onto the platform as learners, and those contribute the vast majority of our logos in about 15% of total revenue.

Got it. Thanks. And then can you just give us an update on how CEO is employing a greater degree of AI if within the business both internally to better target potential $50 per month customers, and then also whether maybe productizing an AI offering is kind of on the long-term roadmap for the company? Thank you.

Well the second piece, it absolutely is a product priority for us to offer that to customers to help them target their customers, better serve their customers. So it's something that we are evaluating as a part of our product strategy. As it relates to us using data science and other analytics tools to better target learners early or early stage builders as they're ramping or potentially could ramp, we've developed certain triggers, certain signals, we developed whole workflows, a critical aspect of the sales progress is this area exactly of using those triggers and those signals. And it's early there, we can go much deeper into our cohorts than we currently do with the capabilities we have. I mentioned earlier, we're investing in capabilities in sales. It's one of the – a few areas we are prioritizing right now, and that is a critical area for us. Analytics, being very good at analytics and principally to help us better target those high potential customers early. We've seen enormous success with these early stage businesses who are ramping very rapidly. They're not in optimization mode, they're not in best practices mode. They're just trying to grab every customer and we've had a high degree, a high success rate when we engage with them to get them to think about where they're heading and to think differently about how they could use our platform to better drive their growth more efficiently. And that's been a big success factor in how we're driving $50 enough customers in terms of logo growth and the revenue growth. And I expect that to be a critical area for us to continue to invest in as we go forward.

Thanks. Appreciate it.

Your next question comes from the line of Michael Turits with KeyBanc.

Hi, guys. This is Eric Heath on for Michael today. Congrats on delivering solid quarter despite the macro headwinds. So Yancey just you kind of mentioned on the last remarks, but just given the focus on margins for this year and just how are you thinking about maybe any alterations that outbound sales strategy if at all? And then do you still kind of see that sales and marketing lines staying in that kind of low double digit range that it's been?

Yes, I think that we have – as I mentioned, we have incredibly efficient payback on our customers pay from the build – as we just referenced in how we acquire those learners, the vast majority of our logos, and also the leverage we see from our sales motions, principally our inside sales motion, our partner motions, where we're able to sign up a customer and a substantially higher orders of magnitude, higher ARPU 20,000 last quarter versus the average for the company. And so that offsets the dollar investments and it continues to be efficient. So although we may see sales and marketing as a percentage of revenue move up over time did move up last quarter and yet we still made investments because of the leverage we see in this business. And I think it's a really important attribute of DigitalOcean and it's a powerful contributor to why we're generating meaningful free cash flow that's ramping from here. And so, we're going to continue to be efficient. And at the same time, balance the portfolio of investments to invest where the growth is and it's in sales and it's also in top of funnel, which is why we bought JournalDev. And we'll continue to do – balance those two investment priorities with the goal of driving sales as a higher proportion of revenue over time.

Great. That's helpful. And then just on the net expansion rate, I mean, I know you talked about a lot of the factors that Europe and kind of the tough comp and what have you, but just curious maybe how we should think about that metric going forward given some of the macro headwinds and the price increase.

Well, we expect expansion to be higher in the second half than it was in Q2. And we're not going to provide any specific guidance on that, but the tailwinds around that are pricing some of the growth in the – the efforts of sales. Again sales is up proportionally, pretty materially from Q1 to Q2 in terms of overall percentage of revenue and that helps especially when we're doing inside sales and managing and helping builders grow faster and get a better optimized on the platform that drives ARPU growth in the base and contributes to expansion. So we expect net dollar retention to be meaningfully higher than it was in Q2 in the second half of the year.

Great. Thanks, guys.

Your next question comes from the line of DJ Hynes with Canaccord.

Hi, guys. Yancey came away from the Analyst Day feeling like partners were a big untapped opportunity for you guys. Any update on what you're seeing with managed hosting partners or digital agencies as it pertains to distribution.

Yes, those two aspects of the partner channel continue to be very active for us. Managed service providers are actually managing hosting capabilities for customers, who don't want to manage it themselves, which is a lot of people. And so that continues to be a source and a big aspect of the channel opportunity and then digital agencies, people who are the outsourced chief marketing officers for startups. And so, we – although we're not prepared to sort of quote stats today on it, we're making good progress on signing up new partners by region and by some of these vertical areas, but agencies and people who touch agencies or people who touch MS, managed service providers, or managed service providers are a good opportunity for us to expand channel. And again, what that does is for whether it's the agencies or the managed hosting providers, there is a whole set of SMBs, who don't want to deal with even though DigitalOcean is simple and easy and intuitive to use, they don't want to spend any time on it. And so they outsource that completely. And so that doesn't change the fact that as an early stage and ramping small, medium sized business, we're still the right platform to run your infrastructure. And so what the MSP opportunity and the digital agency opportunity or the channel opportunity in general does is it extends our addressable or serviceable market within the SMB space for people who even though we're simple, easy, intuitive, don't want to do – have anything to do with it, they just outsource it. So that's going to be a critical aspect of the channel strategy as we go forward.

Yes, that's great color. And then Bill, just a follow up for you. So look, I think the question we're all going to get asked tomorrow is, is how much of the 33% mid-point Q3 growth is being driven by price. We can all take our own step of the number, but maybe it's best to just ask you what you're assuming in the guidance.

Well, DJ, as Yancey pointed out in his remarks and I pointed out in my remarks that we are in a very uncertain macro environment right now. We are certainly seeing the benefit of the price increase, but we are also seeing some headwinds that we had started forecasting for everyone beginning with our Q2 guidance. So that really hasn't changed. We're approaching this quarter still 20% to 30% plus growth still in pointing to improve cash flow. And we're basically pushing a number of levers to help us get there and hopefully beyond, but it's early on in terms of the price increase. But the summary, we expect the tailwind from that as well as tailwinds from our investments in sales and we'll deal with the macro headwinds as we did during Q2.

Okay. Thanks for the color.

Your next question comes from the line of Wamsi Mohan with Bank of America.

Hi, yes. Thank you. I have two as well. Are you seeing your net expansion rate vary after your price increase in the U.S. versus international and international obviously there have been large FX moves and the ultimate price to those customers has proportionate –disproportionately gone up, I guess. So are you seeing varying trends over there between U.S. and international on the uptake or churn once you have instituted your price increases? And I will follow up.

Well, again price increase went into effect Q3. We are exceeding higher expansion in Q3 than we saw in Q2, but we obviously for the first half of the quarter where we are today. So want to be clear about that it's consistent with what I just said that we expect expansion and net dollar retention to rebound from Q2 as a low for this year. As it relates to U.S., U.S. has been less impacted by some of the macro than what we've seen in Europe. And Asia, we have seen a little bit, but far less than what we've seen in Europe and Asia. And I think there is a couple points there. One, I think we see more blockchain in Europe and Asia, two I do think and I made a point of making this in the remarks, we charge U.S. dollars and but obviously our – for all of our customers and obviously with the strengthening of the dollar, even though we can't tie directly to some of the macro headwinds we're seeing in terms of our revenue impact we have to believe that the 20-ish percent increase in the value of the dollar relative to other currencies over the first half of the year have to have some impact on our customers' businesses. Many of our – or all of our customers are digital businesses. Many of them have a lot of share in the U.S. And so I think currency is a headwind, not directly for us as many of our peers in tech who may charge at different currencies have been reporting, but as a qualitative matter it's certainly something that we think about.

Okay, thanks, Yancey. And then just to follow up you said, I think, blockchain was about 5%. Was that – what timeframe are you talking about? Is that like a Q2 comment? And just for context, how much was it like maybe in 2021? And as you think about sort of some of the unwind over there what are you expecting in the back half of the year that would be a reasonable amount to think of as a percent of revenue from that particular category? Thank you.

Well, I think, it was lower single digits than 5% and 5% was Q2. It was lower than that last year, but it's been growing rapidly through early Q2. And we would expect it to decline as a percentage in the second half and we'll – based upon what we know today, obviously that's a very uncertain volatile market segment and we'll see how it plays out in the future years beyond where we are now.

Okay. Thank you.

Your next question comes from the line of Jim Fish with Piper Sandler.

Hey guys, this is Quinton Gabrielli on for Jim fish. Thanks for taking our questions. Maybe jumping on the back of that last question, we appreciated the blockchain disclosure. Is it fair to assume that this is the largest at risk vertical in terms of percentage of revenue? Maybe if you could help us size the exposure at between other potential at risk verticals like e-commerce, tech startups, or maybe even just crypto as a whole, that helps?

Yes, we don't do a lot of crypto. It's more on the blockchain. I would say, e-commerce is a big vertical streaming, media, education, gaming or others. What I would say is we're seeing more slowing there, that's sort of more in line with what everybody else is seeing, obviously blockchain just an outlier with what's happening in the volatility of that market. And we called that out specifically because of that I think in the aggregate is by far the most meaningful vertical that we're seeing real impact. The others have just sort of a slower expansion, but if you net out blockchain, it's not as meaningful.

Got it. That's helpful. And then obviously share buybacks in the quarter were strong. Can you talk about how the team is thinking about capital allocation moving forward across buybacks inorganic opportunities and then actually further data center buildouts if customers are asking for additional geos outside of the coming Australia building. Thanks.

Yes. So great question. Our principle primary use of capital is growing the business, whether it's inorganic through M&A where we've been relatively active over the last couple years. You mentioned regional expansion, sales investment, product investment. We have Australia coming online, Sydney, Australia data center coming online later this year. We do have plans to expand beyond that, which we'll be disclosing relatively soon. So we'll continue to invest in that, prioritizing that and getting efficient in other places to help pay for that investment. And then as it relates to the balance sheet and our capital return, I think we've had a good start on driving the efficiency of the balance sheet. We want to make sure we have adequate capital to drive the growth and profitable growth strategy of the business. And I suspect over time as margins continue to expand and we have a lay of the land on what we're able to do with M&A, we'll have more to say potentially about further actions on the balance sheet. But for right now, I think, we're in good shape. Bill mentioned earlier, there's a little bit left on the last $300 million authorization from the board. And we'll continue to find M&A and opportunities and then invest organically. And M&A with – typically in the private markets, we all in the public markets correct immediately and founders who raise money at prior valuations tend to correct more slowly. And so, we'll hope to do some M&A soon, but wrangling the bid-ask has been somewhat of a challenge recently, but we'll keep at it and focus the capital we have on those opportunities.

Thanks. Appreciate it.

Your next question comes from the line of Patrick Walravens with JMP Securities.

Oh, great, thank you. I just want make sure I understand something first and then I have a broader question. The part that I just want to make sure I understand Yancey is, the impact of the FX changes in Europe and Asia is to effectively raise prices for those customers, right. And sort of shifts them on the demand curve. And so things are more expensive. They buy less. Is that the issue we're talking about?

Well, again we don't charge, we charge them in dollar. So what we could say is, yes, it could have the effect of helping them deciding to manage spend differently.

I just want to make sure you said that.

Yes.

Yes. So here is my big picture. My big picture question is all right, with all this stuff that's going on, what are the one or two most important things for you to focus on as CEO in the rest of this year?

That's a great question. I think we have to slim down priorities and get the organization behind the areas that will drive growth and are driving growth. We mentioned earlier inside sales, the analytics, the whole sales effort, getting more productivity and growth out of our cohort and building the partner channel are critical to us. And I think in terms of top line. And then driving efficiencies where we can. And we're investing for those two things. And we are going to have to manage in a challenging environment. And I that we're a very customer-oriented company and so that makes it easier to focus on delivering value for our customers and prioritizing that very firmly. And that's going to be the focus of the near term. And given that there is a lot out there that we can't control, we can control where we're going to invest our dollars, what activities are above the line and what activities are below the line and getting the organization focused and fired up around that is the principal priority for me right now.

All right. Great. Thank you.

Your next question comes from the line of with Stifel.

Hi, this is Mark on for Brad. Just have a quick question on the assumption that you guys are putting in for the contribution of Russia, Belarus and Ukraine in Q3, I’d say it's about 2.4% in Q2. So just wondering if you have anything attributed to that and if so what that is? Thank you.

Well, our expectation was when we did forecast for Q2 that we would be seeing a material reduction in our Russian related revenues, which we have seen fit a little bit slower than we thought. But our expectations for the balance of the year is that will still be under pressure, which again is one of the macro headwinds we're looking at what we consider overall consolidated forecast.

Great. Thank you.

Your next question comes from the line of Gabriela Borges with Goldman Sachs.

Good afternoon. Thank you. I wanted to ask the question on visibility, because I recall that it's something that you've been doing a work on. Yancey and Bill, what are some of the metrics and early indicators that you look at to determine the health of the customer base in any given quarter before you see consumption, flowing? And then my follow-up is your philosophy on pricing. There is a structural tailwind to your business from introducing high value products and the mix shift becoming more positive over time. On the apples-to-apples pricing increases to what extent do you think those pricing increases could become part of your annual toolkit or a more consistent lever to pull, as you think about long-term growth?

Do you want to take the visibility and then I'll take…

Sure, in terms of the visibility Gabriela there is several things that we look at. One is looking at our customers greater than $50 and above where we see the majority of our revenues, as you know, they now represent 85% of our overall revenues and spend. So we look obviously at the metrics that we see for them. We look at the components for each, so we watch very closely their expansion contraction, and most importantly, churn rates in any individual month for us to see what the expectations would be for them going forward. And we're continuing to orient the work that we do internally across this group. Yancey you've heard mentioned several times sales. Sales, in some respect for us is around enablement, it's around working much closer with our greater than $50 spend customers and finding ways for them to increase their contribution. And the feedback that we're getting from and increased outreach speaking more directly to thousands and thousands of our customers is helping inform us directionally where they are going not only in terms of current trends, but also in terms of some of the things they want to see, things like functions, which is one of the most requested items. So, we're gleaning more and more information around those customers. And that's a primary factor that we look at on a month-to-month basis.

Yes. As it relates to philosophy, I love the question because it speaks to a couple areas. One we're getting pricing leverage in the business because of our $50 and up customers. And I put pricing in quotes, because our $50 and up customers, which are now 85% of our total revenue that's up meaningfully from just a couple years ago. As we've added more managed services like managed databases, managed kubernetes, serverless, it's extending the wallet share we can capture from a customer than we could three to five years ago when we were just basic compute, basic network bandwidth and basic storage. And so that has the effect. That's what drives our, big contributor to ARPU growth that has the effect of driving pricing leverages in the aggregate economics of our revenue mix is product mix going from a 100% infrastructure-as-a-service three to five years ago, for example, to 82% today. So we're going to continue to invest in products that are valuable to our customers as they grow in the early stage from the builders to the scaler stages of SMBs. We're going to continue. I mentioned AI earlier. There are other areas that as their workflow evolves, we can be helpful to them while also maintaining simplicity. So that will be a tailwind on ARPU growth. As it relates to a price increase explicitly, for example, mostly our IaaS here, I think that – which was the first price increase or price changes, really material price changes in 10-year history of the company, I think, that reflects we have made a substantial amount investment in community over 40,000 tutorials, free of charge and other documents, our support model embraces our customers, all customers, regardless of price point. Our simplicity, as we add more products and more…

I appreciate the detail. Thank you.

Your next question comes from the line of Josh Baer with Morgan Stanley.

Great. Thank you for the question. I appreciate all the commentary around pricing increases so far and certainly the uncertainty looking ahead, wondering, looking back, what was the impact from pricing in the month of July?

What we've said is I mentioned earlier expansion was higher in July. And so we're seeing a positive benefit in Q3 – pricing on net that's reflected in our outlook. Our outlook is also highly tempered by uncertainty.

Okay, got it. I mean, is like a mid-to high-single digit annualized benefit from pricing, a reasonable range for investors to take away tonight?

Our guidance stands for itself.

Got it. Okay. Thank you very much.

There are no further questions. I'll now turn the call over to Yancey Spruill for any closing remarks.

Well, thank you very much for joining us. We really appreciate the time, the continued support that you all have for our company. And we believe given the uncertainty in the market we want to be available and transparent. And so we expect to speak with many of you over the coming weeks and obviously years ahead. And we want to get through this tough time as we are doing with our customers and our team internally with you all together. My conviction has never been stronger about the limitless potential of this business. A potential that will be realized by enabling evermore developers and entrepreneurs to test their ideas, build their businesses, and realize their dreams. Have a great rest of the day.

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