New Relic, Inc.

Good day and welcome to the New Relic third quarter fiscal year 2021 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Peter Goldmacher, Vice President, Investor Relations. Please go ahead.

Peter Goldmacher Thank you, operator. Hi, everyone. Thanks for joining our Q3 fiscal 21 earnings call. We published a letter on our investor relations website a little less than an hour ago and hope you all had a chance to read our letter together with today's earnings press release. Because of the level of detail we provided across these two documents, Today's call will begin with Lou providing brief opening remarks, and then we'll dive right into your questions. During the call, we will make forward-looking statements, including about our business outlook and strategies, which we base on our predictions and expectations as of today. Our actual results could differ materially due to a number of risks and uncertainties, including the risk factors in our most recent 10K and upcoming 10Q to be filed with the SEC. Also, during this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our earnings release. These non-GAAP measures are not intended to be a substitute for our GAAP results. And finally, this call in its entirety is being webcast from our investor relations website, and an audio replay will be available there in a few hours. With that, I'd like to turn it over to Luke.

Thanks, Peter, and good afternoon, everyone. And thank you for joining us for our third quarter fiscal 21 earnings call. Joining me today are CFO Mark Sackleton and our President and Chief Product Officer Bill Staples. Before we get to Q&A, I wanted to make a few comments about the quarter and the journey we're on as a company. I encourage you to read our investor letter, which we published today in conjunction with the press release. In it, we described some important updates that we're making across our company to better serve our customers. From the beginning, New Relic has existed to help developers build more perfect software. That's an important and noble mission, and we're just getting started. We want to empower every professional developer around the world, estimated to be 28 million today and growing rapidly, with easy access to the power of observability as part of their daily workflows. Over the past year, we've made important changes to our go-to-market and product strategies, all in service of simplifying the observability market. And our financial results of third quarter reflect the early response from customers to these changes. Specifically, there are three key areas I want to highlight. First, we are orienting every part of our business to focus on the customer. Every team across E-Relic has a renewed focus on delivering increased value to our customers. Our product teams have completely reimagined our entire platform experience. Our go-to-market teams introduce new pricing, packaging, and sales motions. And our customer success teams have transformed our onboarding training, all in the service of making it easier for our customers to try, buy, and grow with the new RelicOne platform. The second item, beginning with the launch of new RelicOne pricing last July, we are transitioning to a consumption business model. In this new model, customers love that they are paying for what they use and that they have complete visibility into their spending. No surprise bills or penalties. no shelfware, and a very high correlation between price and value. This is resonating with our customers. And third, we are continuing to make adjustments as we innovate. As we progress through this important transition, we will continue to learn from our customers and use those learnings to refine our price and go to market. We've fundamentally transformed our product, sales, and customer success strategies, and we continue to make changes in the name of better serving our customers. On a personal note, I want to congratulate Bill Staples, who was recently promoted to president, in addition to his responsibility as chief product officer. Since joining New Relic a year ago, Bill has had a tremendous impact on our business, serving as the chief architect of our product and corporate strategy, including the launch of New Relic One last summer and our transition to a consumption business model. I also want to thank Mike Christensen, who, after serving for President and COO for the past year and a half, is moving into an advisor role and remaining a director of the company. In 2019, I asked Mike to step into an operating role to help me in the day-to-day operations of the company. His main focus was to add more structure to our business and to help us build out our business strategy. With this complete, he has decided to step down from the day-to-day operations role at the end of Q4. He will remain on our board and continue as a strategic advisor to me, starting in April. In summary, while we're pleased with your early momentum and feel good about our path forward, it's important to note that we're just getting started executing on our consumption model. We'll continue to focus on making it easier for our customers to do business with us and get more value from New Relic One. With that, let's move to Q&A.