Good morning ladies and gentlemen, thank you for standing by, and welcome to the Dynatrace Third Quarter 2020 Earnings Conference Call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions. I would now like to hand the conference over to your moderator today, Michael from Investor Relations. Please go ahead.

Thank you, operator. Good morning and thank you for joining us today to review Dynatrace's third quarter fiscal 2020 financial results. With me on the call today are John Van Siclen, Chief Executive Officer; and Kevin Burns, Chief Financial Officer. After prepared remarks, we will open up the call for a question-and-answer session. Before we start, I'd like to draw your attention to the Safe Harbor statement included in today's press release. During this call, we'll make statements related to our business that may be considered forward-looking within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21-E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements, including statements regarding management's expectations of future, financial and operational performance and operational expenditures; expected growth and business outlook, including our financial guidance for the fourth-fiscal quarter and full year 2020. Forward-looking statements reflect our views only as of today. And except as required by law, we undertake no obligation to update or revise these forward-looking statements. Please refer to the cautionary language in today's press release and to our latest Form 10-Q, which was filed with the SEC on November 4, 2019; and our other SEC filings for a discussion of the risks and uncertainties that could cause actual results to differ materially from expectations. During the course of today's call, we'll refer to certain non-GAAP financial measures as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found within our third fiscal quarter 2020 earnings press release in the Investor Relations section of our website at dynatrace.com. With that, I'd like to turn the call over to our Chief Executive Officer, John Van Siclen. John?

Thanks, Michael. And I'd like to start by thanking all of you for joining us today. Once again we are very pleased with the company's quarterly performance, which resulted in third quarter financial results that were better than both our top line and bottom line guidance. I'm especially pleased that ARR once again increased by 44% year-on-year to $534 million, with our new Dynatrace platform now making up 87% of total ARR, up from 61% from a year ago. Fuelled by the continued growth in ARR, our subscription plus services revenue what we see as the best measure of revenue growth on our P&L, increased by 36% year-over-year. As we look ahead, we remain optimistic about the business as our new Dynatrace platform continues to be adopted by a growing number of new enterprise cloud customers, and each quarter, we are proving our ability to expand rapidly within this growing customer base. Our optimism is reflected in the increased top line guidance that Kevin will detail in a few minutes. We're also proud that our solid growth is complemented by strong operating margins. We run an efficient business with gross margin at 84% and a non-GAAP operating margin of 26% for the third quarter. We continue to be cash flow positive on an operating basis while investing across the board in growth. As we've said before, we believe in running a balanced business, a powerful combination of growth and profitability at scale. We believe this balance, combined with our focus on investing aggressively in commercial expansion and continuous innovation provides Dynatrace with attractive durability over the long term. Now let me turn to four major advancements made in our fiscal Q3. New logo expansion; customer net expansion once they are on our new Dynatrace platform; continued progress moving Classic customers…

Thank you, John and good morning everyone. I'll start by providing a more detailed review of our third quarter performance and I will finish with our outlook for the fourth quarter, and our increased full year guidance. Following my remarks, we will open the call for questions. Our key financial metric focused on business momentum is annual recurring revenue. As John said, ARR was $534.5 million at the end of the third quarter, an increase of 44% or $162 million compared to the year ago period. Of the 44% growth year-over-year 5 percentage points of the annual growth was due to customer expansion at the time our customers converted from our Classic product to Dynatrace and the balance of 39 percentage points of growth came from new logos and expansion in our customer base on the Dynatrace platform. As a reference point, this compares to 44% growth last quarter on a year-over-year basis of which six percentage points of growth was due to expansion at the time of conversion and 38 percentage points from new logo and Dynatrace platform expansion. The Dynatrace platform continues to increase as a percent of total ARR and was approximately $466 million at the end of December or 87% of our total ARR. The remaining 13% of our ARR relates to our Classic offerings. This compares to a mix of 80% Dynatrace and 20% Classic at the end of the last quarter. We continue to track the plan on conversions and expect to be substantially complete with moving our customers to our new platform over the next three quarters. As you may recall, we started the conversion program with our sales organisation seven quarters ago, and todate we have converted nearly two-thirds of the Classic base. We are actively working with the remaining customers on…

[Operator Instructions] Your first question comes from the line of Sterling Auty with JPMorgan. Please go ahead.

Hey, guys. This is Matt on Sterling. Thanks for taking my question. So looking at the significant upside in ARR versus what you did in subscription revenue. Wondering, if you could comment on the linearity in bookings during the quarter? Thanks.

Hi, Matt. Thanks for the question. So we obviously attract linearity on a monthly basis. What I will say is for our December calendar year-end quarter, we typically see a moderate percentage of our bookings come in that month three. So yes, it is little bit higher in this quarter, but it consistent sort of with the last few years in terms of linearity. So no real outliers in terms of the flow of the [Indiscernible].

Great. Thanks guys.

Your next question comes from the line Matt Hedberg with RBC Capital Markets. Please go ahead.

Hey, guys. Thanks for the question. Great quarter. In addition to the 44% ARR growth, new customer adds, it was really impressive to us. And I think you added 130 more than you did in the year-ago quarter as well as last quarter. Can you talk in a bit more detail of why new customer adds were so strong? Has something changed competitively? Perhaps could there be some acceleration in competitive replacements?

Hey, Matt. So couple of things. First of all, it was a big conversion quarter. And we've said that we been stimulating the base now for a while and we're seven quarters into the program. And the end of the year its always a forcing function for many things, and this just happened to be a big quarter for moving the base over to Dynatrace. So that's a big part of it. But even with that about half of that growth is still net new logos to the franchise. And that's really coming because the market is now moving much more aggressively to multi cloud environment sort of web scale environment including the modern workloads, microservice base workloads and Kubernetes orchestrated environment and really leave the gen 1 and gen 2 tooling behind. And so our reinvention five or six years ago is now really playing well in the market and so there is a competitive tailwind for us as well.

That's great. And then maybe when you look at your customer base, John, can you estimate what percentage of say an average customers are monitoring cloud based app or infrastructure versus say an on-premise app or infrastructure? And how do you think that differs versus in sort of the broader competitive landscape?

So, from our standpoint, I mean, we've done a little bit of work working back into it and its about -- its in that 70% to 75% range our modern cloud workloads and modern cloud environments that the new platform is monitoring. And the way we go to market is we look for those modern cloud teams and stacks. And then as they get hang and how Dynatrace works in the automation and intelligence build in creating much greater efficiency for their sort of limited IT resources, they start bringing it back, further get back into their sort of legacy of Classic environments. But its actually and that's a pretty high ratio and I'd say, obviously, relative to a Gen 1 or Gen 2 kind of tooling out there, it's much more into the modern cloud environments. So we think it’s a good spot to be. I think over time we'll see that percentage continue to climb because we are uniquely positioned in those environments.

Great color. Well done guys.

Thanks you.

Your next question comes from the line Heather Bellini with Goldman Sachs. Please go ahead.

Great. Thank you very much. I mean, obviously you guys are doing a great job converting the installed base. And I know you mentioned that you look to be done with the conversion over the next couple of quarters. And you've had some very good success on new customer lands. But can give us a sense -- you made a comment on the call that, I mean, getting the sales people, not focused on conversions and focusing on new land will help improve productivity. Are there any changes to be incentives that you're paying the sales force as you move towards the next fiscal year and the conversions become even smaller? And I guess the second part would be when you're going after new customers, how do the size of those initial lands compared to the size of the initial conversion deal? I know you don't change for the conversion, but kind of what you're getting from those when they convert in terms of the uplift. So sorry for complicated question, but any thoughts would be very helpful?

Yes. So, first of all, we haven't set our sales plan for the following year. That's in discussion now. Our approach has been to try to move as much of the base across the line, convert it by the end of this fiscal year, so that we can free up sales and rework the sales incentive plan, so that they focus 100% of their time on new logo opportunities and expansion of the base, especially cross-selling some of the new modules. It’s the base. So that's still our program. We still have to work through some of the details, but those are our thoughts at this time. Relative to a land versus expand the deal, the land deals have been very consistent in 95K kind of range. I think if you look, we've been talking about 92K to 100K sort of in that or 92K to 97K sort of in that range for the last three quarters. So that's very consistent. And the expansion deals, they vary a little bit by time of year. Q3 happens to be a very strong expansion quarter and so does Q4. So that those times of the year, the expansion deals can be track a little bit larger on an ASP basis and then they come down to a little more of a run rate range in Q1 and Q2 for in the fiscal year. Overall, there is not a huge difference between the two. We're a transaction-oriented business. We're not a big deal oriented business. And I think that that helps us to manage a more effective business over the long term.

Great. Thank you.

Your next question comes from the line of Walter Pritchard with Citi. Please go ahead.

Hi. Thanks for the question. For John, and one for Kevin. For John just looking at the expansion that you've seen, I'm curious product wise, getting into things like digital experience, monitoring infrastructure, monitoring versus just app expansion into new apps. What's been -- has there been a trend there in terms of product versus sort of footprint expansion as you've continue to put up that ARR [ph] number?

So, we're still -- I feel like we're still in the early innings of cross-selling. Most of that expansion still comes from more applications being instrumented, mainly because we have such a highly automated way of instrumentation sort of a self discovery, very automatic products and about a 5% of that at range. We are well over that with the majority of our customers. But we are seeing an uptick in the cross-sell as we start to focus on a little bit more. Digital experience is one that we're pretty used to positioning. So that one right now runs a little bit ahead. But we're seeing a nice uptick in the infrastructure side as well. I think that that's really driven by the fact that folks have realized that all that old tooling really falls away when you get to dynamic enterprise cloud. So with those we have a lot of optimism in our ability to scale that out as we go into next year. And that's one of the things we're going to focus on as we sort of wind down conversions and wind up cross-selling as we go into our fiscal 2021.

And Kevin, can you just talked about on the investment side, especially as we look into 2021 sort of where in Q4 in particular you're investing in the business? And then how that pertains to -- how you're thinking about investing in 2021?

Yes. I think that its status quo. When I say status quo, it's continued focus on innovation, right, building out on our R&D organization so we can maintain our lead from a competitive product standpoint. We've maintained that very well over last couple of years. And that's one area of investment that we will continue. And the second big area of investment will -- again, will be continued investments in commercial expansion a lot as well as some marketing programs. So these are two things that we've been doing very well over the last couple of quarters really the last year. And you'll see a little bit more of that here in Q4 and that trend should continue as we try to continue to grow this business at a really nice fit.

Great. Thanks for the color.

Your next question comes from the line of Bhavan Suri with William Blair & Company. Please go ahead.

Hey, good morning. This David Griffin on for Bhavan. Thanks for taking the questions. Two if I could. First, just so last quarter you called out pretty encouraging early interest in the new digital business analytics module. I was wondering if you could just give us an update on the level of interest that you're seeing from customers there? And maybe just talk a little bit about how the early partnership conversations with the traditional BI vendors are progressing?

Sure. Well, it's still early. It takes a sales organization, direct sales organization a while to pick up sort of new capabilities and introduce them to their accounts, the accounts trial and then start to adopt. But I did talk about one of the customers in my prepared remarks about one that sort of picked it up right away. They were having conversion challenges with some of the new applications and bringing new customers online at the bank and it fell right in place for them. It was timely announcement, it was something they needed and dropped right in. So those kinds of examples sort of find their way through the sales organization. I expect over time that the business analytics are going to become a really key piece of our go forward dialog with customers and opportunity in the market. So I'm pleased with where we are right now, but it is early innings of course. As far as how this works with some of the other analytics players in the market mainly those that focus on digital business teams as opposed to the operations teams. We're seeing that the relationships really are driving the opportunity. But the fact that we complement those other analytic tools are out there like let's say in Adobe Analytics, and be able to light up the entire tech stack underneath some of these environments. So it's not just about what's happening with conversion rates, what's happening with revenue. Why is there a drop off or why can't we -- what do we need to do to optimize? We provide the visibility back into the stack as to exactly what to do, to attack some of these things. So it's a great addition for the folks that use those kinds of analytics tools to be able to team with the development teams and their operation teams much more effectively to optimize their digital go-to-market.

Got it. That's helpful. And then, I want to talk about one other recent announcement. So in December you announced new autonomous cloud enablement practice that I guess, the goal is to provide things like best practices, hands on expertise and automation services to help customers, kind of make the transition of autonomous cloud operations which certainly sounds interesting in an area of need. Can you talk in a little bit more detail just about the practice kind of how that's different from what you've been doing on the services side previously? And then maybe whether there are any margin implications associated with that?

Sure. The focus of our service organization is always making sure that customers get the most out of our software platform. As a -- customers will tell you and I believe as well, nobody really wants to buy software. They're trying to solve the problem or they're trying to get sort of some kind of a lead in the market. And our services organization has been fantastic in helping customers drive adoption, explore new cases et cetera. With this new announcement and this new practice, what we want to do is be sort of a little bit more proactive and help customers do what we've done ourselves, which has moved their sort of reactive I.T. organizations, reactive to issues knowing to a proactive highly automatic or automated state. And so this practice is led by a team that's been very close to some of the work we've done with our open source control plane, Captain, and the thinking behind that. And they're now taking that to a number of customers who been asking us for more and more best practices and expertise in this area. And so rather than just try to coach them along the way, we're actually building out program to help them and then help enable them and help do some of the work for them to make sure that they can accelerate their directions and their drive towards cloud which is really an inevitable place for every customer building webscale clouds. Nobody really wants to have lots of humans running around, trying to manage them and deal with them and optimize them and deal with the issues of them. So, we're just at the front end -- front edge of the spear on that one for the marketplace. Its a great place for us to be. And we have a great platform to enable it.

Great. That's helpful. Thank you for taking the questions and congrats on a solid quarter.

Thank you.

Your next question comes from the line of Richard Davis with Canaccord. Please go ahead.

Hey guys. This is Luke on for Richard. So, we've been talking with the number of interesting vendors in the DevOps space. And it seems like they've finally gained some mainstream momentum. Our question for you guys would be, how do you guys think about the space? And do you envision extending into that ecosystem presumably on the op side of things? Thanks.

Sure. Well, we already are in the DevOps world. We've always in a thought of performance and cloud application, optimization and something that needs to go upstream, continuous development -- sorry, continuous deployment all the way back into continuous integration. So we already do this. And that's the value we provide in those environments are fairly straightforward. People have lots of capabilities to drive new function, but very few capabilities to make sure that they have their architectures maintained and the ability to scale is built into the continuous integration, continuous deployment models. And as we see more and more from a dev standpoint wanting to understand what their new code is doing in production. So visibility actually into sort of the early production releases whether they're canary releases or A/B testing and that kind of thing. We see even a broader opportunity to be able to help those DevOps teams optimize code, drive better quality in those early stages prior to when things get out into production. The last thing I'll say about it our autonomous cloud program actually starts with something we call unbreakable pipelines. And we start there because it's more straightforward with the devs to put all this together with the open source pluggable back plan that we built in Captain. And so we'll be bringing even more sort to focus to the DevOps side of things know as we go forward.

That's very helpful. Thanks.

Your next question comes from the line of Jennifer Lowe with UBS. Please go ahead.

Great. Good morning. First question for me. So, the commentary around the improvement in conversion was I thought particularly interesting. And I wanted to pass through that a little bit more. Can you talk about how much of that was a function of market i.e. as companies move to seize more complex environments, it's just a more pressing issue to modernize our APM and observability practices versus things that maybe you were doing differently from a sales process perspective versus anything you're seeing differently from a competitive perspective where maybe your win rates are a bit better in the quarter than they've been. If you could just sort of give a little more granularity that be awesome?

So, I don't think it's anything that we're doing differently. It's just a culmination of a lot of work we've done over the last six, seven quarters. It takes customers a little while to digest something that's new. We're not doing a like-for-like this product for that product kind of a thing we're actually taking multiple tools and we're now providing a platform. And multiple tools are all targeted into ATM for old stack environments or sort of classic stack environments, and the new platform is targeted at new stack cloud environments, which means sort of a new buyer. So, it takes a while. It's a sales process. As I've said, we believe that it's worth all the effort. It's going to pay off because we're now in the mainstream go forward part of all these customers businesses, their enterprise clouds. And this just happened to be a quarter that sort of culminated into a lot of things happening at once, which is great. I think it's a peak quarter for us. The next three quarters will be strong, but not as not as large as this past one. But I think it's just a culmination of a number of things that we've been doing well. And customers as you said, started realizing that the enterprise cloud is a growing part of their portfolios and will become the lion share of their IP portfolios here over the next 12 to 24 months.

Okay. And maybe just to follow-up on that. So if we look at pipelines versus conversions, is it reasonable to think that the pipeline trajectory has been more steady and now the delta is really just converting on that pipeline more effectively or you seeing pipelines expand as well?

We're seeing both pipelines expand as well as conversions remaining strong across the board. So that said, both bode well. Plus, as Kevin's pointed out a couple of times, we've been expanding our sales organization as well. So we're on track for that 25% increase in our sales rep capacity this year and look forward to as they ramp in, they're having some impact and they'll have greater impact as they mature.

Great. Thank you.

Your next question comes from the line of Keith Bachman with BMO. Please go ahead.

Hi. Thank you very much. I had two questions as well. The first is relates to an earlier question. But as you look out and you see your conversion of legacy being zero or close to zero, does that help hurt or neutral to your ARR growth?

It's a great question and as a sort of you need a perfect crystal ball to answer it. So three quarters from now we'll be able to have that a little bit of hindsight. But the way we look at it is this. It's great that we're shifting a customer base across. But it's taking a fair amount of sales bandwidth to do it. Because as I said, it's really like a new sale, because we don't just talk to the team that had our old tooling. We have to find a whole new team on the other side and make sure that they find the value of Dynatrace for their cloud programs. So we estimate that's anywhere from 20% to sales effort maybe a little bit higher given various quarters like this past quarter. But going forward when the conversions run off and we have 100% sales focus and the full capacity of the sales organization focused on new logos and expansion that should give us sort of a tailwind from a productivity standpoint in that regard. So how neutral does that -- do those two sides of the equation work? Time will tell. But we think it will be relatively neutral.

And one other comment, just to add on that. If you look at our ARR growth over the last twelve months, as we mentioned, it grew 44%, five percentage points of that growth came at the time of a customers is converting. So time of conversion they're expanding their footprint. Now that -- if you look at that on a net expansion rate, that is below 120% net expansion rate for that customer base when they're moving. So, we always talk about Dynatrace as being north of 20%. So you can argue or think that once they are on that new platform we do believe that they will expand in a much more rapid pace on Dynatrace.

Okay. Thank you for that. My follow-up question relates to as your expansion capabilities or I shouldn't say, your expansion, your portfolio within the context of APM continues to improve. So the pipeline as you mentioned is getting richer. Your conversion rates are good. But are you seeing any different changes in attach rates to the infrastructure side?

From a standpoint of cross-selling and what we consider expansion. As we've said before we land from a position of strength as you would expect in our swim lane, which is the application performance monitoring focused on the cloud workloads. The expansion is increasing, the attach rate of infrastructure, as well as digital experience are increasing. It's not something that we disclose at the moment. But what does that look like as far as portfolio of emerging products relative to the APM module itself. But going forward, we're looking at when and how we do that. Maybe at the end of our fiscal year beginning of the coming fiscal year.

Right. Many thanks. That's it for me.

Your next question comes from the line of Raimo Lenschow with Barclays. Please go ahead.

Hey. Thanks for taking my question. More on the bigger picture one. Can you talk about like OpenTelemetry, is that kind of coursed out, more and more vendors are doing it, but then some of the Gen 2 guys are not kind of very openly around that. How does that help you in terms of being out in the market with a more modern solution?

It's a great question. You know, OpenTelemetry is a great standard. It's why we've gotten involved in it with Google, Microsoft and some of the other industry leaders. Because we've always thought that gathering data is not really where the differentiation or values going to come in. This is why when we built, rebuilt our platform, we thought about it with advanced automation and an AI engine at the core, because that's where we really see the advancements and the opportunity to drive value. That's where it's more about what you do with the data. And it is about gathering it. OpenTel allows us to gather data over a much wider sets of environments, server-less environments, mesh environments, a number of different areas that are just very hard to figure out how you might instrument or self-discover that. And so it enables a big footprint, means, that you're going to need a highly scalable engine that can process and analyze lots of data to make sense of it to allow sort of the IT teams, the limited IT teams to do more and more as these environments get much larger and more complex. So we see it as a great opportunity to sort of shine the light on our automation and intelligence differentiation, and we think it's going to be a great sort of tailwind for us as we go forward in the business.

Okay. Thank you. Then one quick one for Kevin. Can you just remind us on kind of you'd mentioned the debt situation on the prepared remarks? What's the ultimate -- what's your long-term target around debt leverage et cetera? Thank you. And well done.

Yes. As I mentioned on the call, the net leverage trailing 12 is 2.7 times EBITDA. The way we're trying to manage this is, we're trying to maintain cash around $150 million to $200 million mark, which means we're going to be paying down on a quarterly basis any excess cash or using excess cash to make that payment. So in January we paid down $30 million. Obviously given our cash generating capabilities, we can reduce this $500 million of debt over the next couple of years very nicely. So we're going to continue to pay down consistently on a quarterly basis going forward as we have done over the last three quarters as a public company.

Thank you.

Your next question comes from the line of Brent Thill with Jefferies. Please go ahead.

Hey guys. Thanks. This is Parthiv on for Brent. Just a follow-up on the net new adds this quarter. The half of net adds that were new to the franchise. Anything you'd call it from a vertical or geo perspective relative to past quarters?

So nothing unusual on any of those fronts really. The digital transformation is really across all industries. So there's really no, nothing I could point to that says this industry is all of a sudden accelerating and this one is decelerating or there's some shift. And the same thing from a geographic basis. I mean even the world sort of flattened these days, it used to be -- in Asia Pacific you might think of as two years behind the U.S. or something. It's a much more level now. So there's no real shifts in geographic mix. I wouldn't say there's any shift in industries. It just more a mass movement of digital transformation and the realization that it's going to be cloud first. And that the clouds are no longer sort of static or exploratory. They really are enterprise class, multi-cloud, dynamic workloads. I mean where we're hitting that, a sophistication level and scale level that we anticipated five or six years ago. But it's really starting to hit the mainstream, the enterprise market now which I think again gives us a little bit of tailwind going forward.

Yes. Makes sense. Okay. And as a follow-up, just when you look at the AWS integration that you guys have just done. How would you guys measure the opportunity for host expansion with that integration over time relative to what you're seeing up in the hybrid cloud versus what you've seen on traditional on-prem environments?

Sure. So the AWS move to outposts. Its an interesting move, because it was a religion two, three years ago that everything was going come to public clouds. And it's a bit of a realization that hybrid environments can be around for a pretty long time. We built a unique SaaS platform that allows us to run the same software cluster technology whether it's in the cloud or whether it's behind people's firewalls. That's same code basis, as Kevin has pointed out a number of times, but we're able to use that exact same software to handle sort of both workload environments or both at the same time for hybrid cloud customers. The fact that AWS is now distributed their cloud, so that you can actually run Outpost behind the firewall, aligns with the model we've had for the last four years in enterprise sort of volume production. So it's perfect for us and it's very hard for somebody when the SaaS only platform to be able to cover all the workloads because of regulatory issues, because the data sovereignty or data security issues. And so, when we look at and we think of our TAM as the full TAM of enterprise customers and their workloads as opposed to only the ones that allow for telemetry data to go into a cloud. So we think the move from -- with AWS is actually can accelerate sort of our penetration into the AWS enterprise portfolio. It's early days, but we think it's a great move and we're well positioned to take advantage of that like whether it's AWS variant or whether its the VMware variant.

Got it. That's helpful. Thanks guys and congrats.

Thank you.

Your next question comes from the line of Sarah Hindlian with Macquarie. Please go ahead.

Yes. Hi. Congratulations of the great quarter. Just a quick question for you following up actually on a few of my peers. The international opportunity as you discussed, it sounds like there's still plenty of room for you guys to go there. So, my first question is really how are you thinking about expanding in the international especially with the growth in headcount you just mentioned?

So, we've always had a very strong international presence in our businesses is 60% -- 55% to 60% North America and the balance, international. And we've had that footprint for quite a while. So one of the advantages for us is we don't have to build out that sales support, marketing infrastructure on a global basis. We already have it. So when we talk about sales rep expansion, we think about it as pretty much. Although there's a little bit more in North America since that's the front end of the enterprise cloud. But in general, you can think about it as when we say 25%, we mean, 25% pretty much in each of the four major geographies we think about. We think about North America. We think about EMEA, okay, which is Europe, Middle East and Africa. We think of Latin America and then we think of Asia-Pac. So, from that standpoint think about that as we expand them all sort of relatively similarly. And they all have a fantastic opportunity for us, and we're doing well in almost two geographic sectors.

Okay. Thank you very much. That was really helpful. And as a follow-up I was wondering, if maybe you're seeing a shift, I mean, you're seeing a lot more protection of cloud native as you're moving along. But is there any way you can help us to kind of think about the magnitude of shifts you're seeing from on-premise to protecting cloud applications of any kind?

So we don't really think about it as there's the shift from on-premise to cloud. We think about it as a shift from monolithic to cloud or cloud native environments, containerized environments, think of it that. Because these hybrid clouds will run that with our build with cloud technologies where everything is virtualized, network's virtualized, infrastructure is virtualized, apps are virtualized. And Kubernetes, which is now in about 85% of our customer base is being used to orchestrate across all these various environments. So workloads can literally run on premise or in the cloud or multiple clouds and span across all of those environments. So this is the world that we're in which is this blurring between old on-prem and public cloud environments. So that's why we talk about in this enterprise cloud because it's sort of everything. All sort of knowledge together with an underpinning of cloud technologies and approaches. And from that standpoint, there's a gradual migration to public clouds for sure. But there's so many data sources and environments on premise that are required in order for these applications to actually work properly. I mean, just think of an insurance company, you have your risk management system and your customer system on site. You're not going to put those data sets in the cloud, but yet all the applications, all the mobile apps and some of the other touch points are all sort of maybe running in a public cloud. So that creates hybrid environment which were extremely well suited for.

Sure. That makes a sense. Thank you. Congratualations on a great quarter.

Thank you very much. I think just in the interest of time, we're probably going to have to cut off the questions. And I know, I'm sorry about that. Thank you all for your interest. We're thrilled with our third quarter out as a public company. And I look forward to talking with all of you again in May when we're back with the end of our fiscal year, our fiscal 2020. So thank you very much. Have a good morning and take care. We'll talk soon.

This concludes today's conference call. You may now disconnect.