DigitalOcean Holdings Inc (DOCN) 2023 Q4 法說會逐字稿

Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Digital ocean Fourth Quarter 2023 earnings conference call. (Operator instructions) Thank you and I will now turn the conference over to Mr. Rob Bradley, Vice President of Investor Relations.

女士們、先生們，午安。我叫艾比 (Abby)，今天我將擔任您的會議主持人。現在，我歡迎大家參加Digital ocean 2023 年第四季財報電話會議。（操作員指示）謝謝，現在我將會議交給投資人關係副總裁 Rob Bradley 先生。

You may begin.

你可以開始了。

Thank you have a good afternoon and thank you for joining us today to review Digital Solutions Fourth Quarter and Full Year 2023 financial results. With me on the call today, are paddy Srinivasan, our newly joined Chief Executive Officer, and Matt Stein for our Chief Financial Officer. After prepared remarks, we will open the call to a question and answer session before we begin, let me remind you that certain statements made on this call today may be considered forward-looking statements, which reflect management's best judgment based on currently available information. I refer specifically to discussion of our expectations and beliefs regarding our financial outlook for the first quarter and full year 2020 for our actual results may differ materially from those projected in these forward-looking statements. I direct your attention to the risk factors contained in the Company's annual report on Form 10-K filed with the SEC, and those referenced in today's press release that is posted to our website. Digital ocean expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements made today. Additionally, non-GAAP financial measures will be discussed on this conference call. Reconciliations to the most directly comparable GAAP financial measures are also available in today's press release as well as an updated investor presentation that outlines the financial discussion in today's call. A webcast of today's call is also available on our website in the IR section, so that I'd like to turn the call over to Patti.

感謝您下午好，感謝您今天加入我們，共同回顧數位解決方案 2023 年第四季和全年財務表現。今天與我一起參加電話會議的還有我們新任執行長帕迪·斯里尼瓦桑 (Paddy Srinivasan) 和首席財務官馬特·斯坦 (Matt Stein)。在準備好的發言之後，我們將在開始之前開啟問答環節，讓我提醒您，今天在本次電話會議上發表的某些聲明可能被視為前瞻性聲明，這些聲明反映了管理層根據當前可用信息做出的最佳判斷。我特別提到了我們對 2020 年第一季和全年財務前景的預期和信念的討論，因為我們的實際結果可能與這些前瞻性陳述中的預測有重大差異。我希望您注意到公司向美國證券交易委員會提交的 10-K 表年度報告中包含的風險因素，以及今天發佈在我們網站上的新聞稿中提及的風險因素。Digital ocean 明確表示不承擔任何義務或承諾公開發布今天所作的任何前瞻性陳述的任何更新或修訂。此外，本次電話會議將討論非公認會計準則財務指標。今天的新聞稿中還提供了與最直接可比較的 GAAP 財務指標的對帳表，以及概述今天電話會議中財務討論內容的最新投資者介紹。我們網站的 IR 部分也提供了今天電話會議的網路直播，因此我想將電話轉給帕蒂。

Thank you, Rob.

謝謝你，羅布。

Good afternoon, and thank you for joining us today. I'm very excited to be here with you on my first call as the CEO of the solution, as today is my first opportunity to talk to you. I would like to start by sharing a bit about my background, why I was drawn to the digital solution opportunity before providing an overview of our priorities for 2024 and highlighting the focus I will bring to the company to start. I'm thrilled to be here at this solution, having worked my entire career in technology companies and having a professional arc that spans engineering, product management and C-level positions. They have a deep appreciation for the opportunity that this solution has in front of us and strongly believe, but I'm well positioned along with the video solution leadership team to help the company reach its full potential.

下午好，感謝您今天加入我們。我很高興作為該解決方案的首席執行官第一次和您通話，因為今天是我第一次有機會與您交談。首先，我想分享一些我的背景，說明為什麼我會被數位解決方案機會所吸引，然後概述我們 2024 年的優先事項，並強調我將為公司帶來的重點。我很高興能夠加入這個解決方案，我的整個職業生涯都在科技公司工作，我的專業範圍涵蓋工程、產品管理和 C 級職位。他們深深讚賞並堅信該解決方案帶給我們的機遇，但我和視訊解決方案領導團隊一起，有能力幫助公司充分發揮其潛力。

I started my career as a developer and spent my formative years of my career at Microsoft, where he worked on various products, including Windows Server, a variety of developer centric distributed technology, and finally, the Microsoft Office ServerAttach as they progress in the leadership ranks at Microsoft. I had hands-on experience building platforms aimed at developers working with independent software vendors and managing businesses with tens of millions of users from Microsoft. I move to Oracle to help launch its Asia R&D center focused on innovating products for the unique needs of that market. As an entrepreneur at Oracle, I picked up experience identifying market opportunities and developing platforms like mobile embedded databases with extremely small footprint and near real-time performance in a very low bandwidth network environment to meet those unique emerging market requirements.

我的職業生涯始於一名開發人員，並在微軟度過了職業生涯的形成期，在那裡他參與了各種產品的開發，包括 Windows Server、各種以開發人員為中心的分散式技術，以及最後的 Microsoft Office ServerAttach，並在微軟的領導層中不斷進步。我擁有與獨立軟體供應商合作建立面向開發人員的平台以及管理微軟數千萬用戶業務的實際經驗。我加入甲骨文公司是為了幫助建立其亞洲研發中心，並專注於針對該市場的獨特需求進行產品創新。身為 Oracle 的企業家，我累積了發現市場機會和開發平台的經驗，例如在極低頻寬網路環境中佔用空間極小且具有近乎即時效能的行動嵌入式資料庫，以滿足那些獨特的新興市場需求。

After Oracle, I co-founded UPS data and application monitoring and managed cloud services platform. This experience again reinforced the importance of having a deep understanding of developer needs and using that to drive innovation as we work to keep up with the evolving needs of nearly 500 early adopter cloud companies, including most of Microsoft's top Azure customers at that time, following the successful sale of Sara, I spent the majority of the last decade at go to formerly known as LogMeIn SaaS Pioneer, delivering cloud-based software applications with a global footprint for the state of Amazon in between at LogMeIn I experienced Ten-X growth has picked up the Company from a little over $100 million at the time, I joined to over $1.3 billion in revenue through both organic and inorganic expansion. As part of this journey, my team build an Internet of Things platform, which was later acquired by Google to form the foundation of its IoT strategy after leaving for Amazon to be the General Manager of the data and machine learning platform that powers Solexa.

離開 Oracle 之後，我與他人共同創立了 UPS 資料和應用程式監控及託管雲端服務平台。這次經歷再次強調了深入了解開發人員需求並利用這一點推動創新的重要性，我們致力於跟上近 500 家早期採用雲端運算公司的不斷變化的需求，包括微軟當時大多數頂級 Azure 客戶，在成功出售 Sara 之後，我在過去十年的大部分時間裡都在 Go（前身為 LogMeIn SaaS Pioneer）工作，為亞馬遜提供具有全球影響力的有機體，軟體機，為基於 TenX 的工具公司的收入從當時的 1 億多美元成長到 13 億美元以上。作為這趟旅程的一部分，我的團隊建立了一個物聯網平台，在我離開亞馬遜擔任為 Solexa 提供支援的數據和機器學習平台的總經理後，該平台後來被谷歌收購，成為了其物聯網策略的基礎。

I will turn to go to assets, Chief Product and Technology Officer before ultimately taking over as CEO at LogMeIn and go-to, I picked up what it takes to build a product-led growth motion and augment it with a high velocity sales and customer success machine to attract, convert and expand hundreds of thousands of growing digital businesses at scale. All these roles and experiences have shaped my perspective and have nurtured my passion to understand customer needs, especially those of developers innovating on their behalf by anticipating their needs, running modern infrastructure platforms to support global scale products, building efficient customer acquisition and expansion engines and delivering value for all stakeholders, customers, employees and shareholders. I'm really looking forward to bringing these experiences focus and operating discipline.

在最終接任 LogMeIn 執行長之前，我將擔任資產、首席產品和技術官，我掌握了建立產品主導成長動力所需的一切，並透過高速銷售和客戶成功機器來增強它，以吸引、轉化和擴展數十萬個規模不斷增長的數位業務。所有這些角色和經驗塑造了我的視角，培養了我了解客戶需求的熱情，尤其是那些透過預測他們的需求來代表他們進行創新的開發人員的需求，運行現代基礎設施平台來支援全球規模的產品，建立高效的客戶獲取和擴展引擎，並為所有利益相關者、客戶、員工和股東創造價值。我非常期待將這些經驗重點和操作紀律帶到實踐中。

So digital switching gears now there are few compelling reasons that drove me to join this solution, but three standout that I would like to share with all of you today. First is a market that digitalization is focused on the cloud computing market and especially the one that serves developers is one of the largest and fastest-growing markets in the history of technology. This market, consisting of infrastructure-as-a-service and platform-as-a-service is a $114 billion opportunity, which IDC is forecasting and forecasting to grow in excess of 23% through 2027. This growth should continue well beyond that timeframe.

因此，現在數位交換設備有幾個令人信服的理由促使我加入這個解決方案，但今天我想與大家分享三個突出的理由。首先是數位化市場，專注於雲端運算市場，特別是為開發者服務的市場是技術史上最大、成長最快的市場之一。這個由基礎設施即服務和平台即服務組成的市場價值 1,140 億美元，IDC 預測到 2027 年其成長率將超過 23%。這種成長勢頭應該會持續到那個時間段之後。

As the market benefits from ongoing migrations to the cloud, acceleration of new business formation that cloud computing enables and the still very early impact of AI and machine learning and the new generation of applications that these capabilities are all ready unlocking in a variety of different industries.

隨著市場受益於持續的向雲端的遷移，雲端運算加速了新業務的形成，人工智慧和機器學習的影響仍處於非常早期的階段，而這些功能都已準備好在各種不同行業中解鎖新一代應用程式。

Second reason is the strong position that this solution has in this market. Video is the cloud leader, focused on developers, startups and growing digital businesses. This solution has more than 640,000 customers, a global footprint with revenue in over 190 countries and serves customers across a wide range of industries and use cases. Our brand is beloved with a large and loyal developer community that leverages our extensive library of content, including tutorials, Q&A, product photos, video games and articles. This solution has carved out a compelling segment in this market, providing a simple and easy to use developer cloud for transparent and cost-effective billing and the level of support that small growing businesses will not get from the larger hyperscalers. This solution has also steadily expanded its array of offerings starting with core infrastructure as a service with its compute technology called droplets object and block storage and networking capacity with a global footprint to power our customers' apps and services. These are complemented and extended by platform-as-a-service products, including managed databases, managed Kubernetes, it platform and managed Casco for those customers that need to leverage high volumes of data streaming.

第二個原因是該解決方案在市場上佔據強勢地位。影片是雲端的領導者，專注於開發人員、新創公司和不斷發展的數位業務。該解決方案擁有超過 64 萬名客戶，業務覆蓋全球 190 多個國家，為廣泛行業和用例的客戶提供服務。我們的品牌深受龐大且忠誠的開發者社群的喜愛，他們利用我們豐富的內容庫，包括教學、問答、產品照片、電玩遊戲和文章。該解決方案在該市場中佔據了引人注目的份額，提供了簡單易用的開發者云，實現了透明且經濟高效的計費，以及小型成長型企業無法從大型超大規模企業獲得的支援水平。該解決方案還穩步擴展了其產品範圍，從核心基礎設施即服務開始，其運算技術稱為 droplets 物件和區塊儲存以及網路容量，覆蓋全球，為客戶的應用程式和服務提供支援。這些透過平台即服務產品進行補充和擴展，包括託管資料庫、託管 Kubernetes、IT 平台和託管 Casco，適合需要利用大量資料流的客戶。

In addition to our core infrastructure and platform offerings with cloud base. We offer managed cloud hosting that is used to power digital agencies, e-commerce storefronts and a variety of other online businesses.

除了我們的核心基礎設施和雲端基礎平台產品。我們提供託管雲端託管服務，為數位代理商、電子商務店面和各種其他線上業務提供支援。

Finally, to take advantage of a generational technology shift. We acquired a leading AI machine learning application development platform paper space last year, increasing our addressable market and adding a very valuable growth lever. This further extends our platform by enabling developers to test, develop and deploy AI and machine learning centric cloud applications that harness the power of GPUs in ways that have been predominantly available only to large enterprises I just talked about the vast and growing market that digitalization is in the strong position we have with our platform and customers, our customer trust that we have learned over the years.

最後，充分利用代際技術變革。我們去年收購了領先的人工智慧機器學習應用開發平台 Paper Space，增加了我們的潛在市場並增加了非常有價值的成長槓桿。這進一步擴展了我們的平台，使開發人員能夠測試、開發和部署以人工智能和機器學習為中心的雲端應用程序，這些應用程式利用 GPU 的強大功能，而這種方式以前主要只有大型企業才能使用。

But now let me talk about the third compelling reason that drew me to this solution, the growth and value creation opportunity that is still ahead of us. This solution has the opportunity to reach even more developers and expand the services we provide to these customers, driving higher revenue growth while maintaining our strong profitability, enabling us to generate compelling investor returns the plan for achieving this growth centered on understanding and addressing the needs of developers as they build growing digital businesses, we will achieve our near term growth objective and position ourselves for higher sustainable long-term growth by focusing on these very specific growth levers. First, we are enhancing our platform with global load-balancing data resiliency, granular identity and access management, storage enhancements and many other new features that will enable our customers to operate and scale globally.

但現在讓我來談談吸引我採用這個解決方案的第三個令人信服的原因，即仍然存在於我們面前的成長和價值創造機會。該解決方案有機會接觸到更多的開發者並擴展我們為這些客戶提供的服務，在保持強勁盈利能力的同時推動更高的收入增長，使我們能夠為投資者帶來可觀的回報。首先，我們透過全球負載平衡資料彈性、細粒度身分和存取管理、儲存增強和許多其他新功能來增強我們的平台，使我們的客戶能夠在全球範圍內運作和擴展。

Number two, we are investing in both networks and infrastructure, providing increased diversity, lower latency and enhanced speed on our core IP backbone and edge to enhance the performance of our platform to benefit our customers and allow us to migrate more customer workloads from other providers onto our platform. On top of these product offerings and platform foundation, we will continue to expand our managed services offering to serve customers that want an assisted experience with robust scaling capabilities on our platform. As an example of this, just a few days ago, we announced autonomous, a new cloud-based offering that enables growing businesses to scale their hosting, meet dynamically without having to overinvest in infrastructure building or are building on our recent paper space acquisition. We are investing in our AI ML strategy to take advantage of this market opportunity by bringing simple, easy to use AI ML capabilities on both hardware and software to developers. Machine learning engineer an application builder across a broad range of business types as we have done successfully with our core digital ocean cloud services.

第二，我們正在投資網路和基礎設施，在我們的核心 IP 主幹網和邊緣上提供更高的多樣性、更低的延遲和更快的速度，以增強我們平台的效能，使我們的客戶受益，並允許我們將更多客戶工作負載從其他提供者遷移到我們的平台上。除了這些產品和平台基礎之外，我們還將繼續擴展我們的託管服務，為那些希望在我們的平台上獲得輔助體驗和強大擴展功能的客戶提供服務。舉個例子，就在幾天前，我們宣布推出一項新的基於雲端的服務——Autonomous，它使成長中的企業能夠擴展其託管規模，實現動態會面，而無需在基礎設施建設上進行過度投資，也不必在我們最近的紙面空間收購的基礎上進行建設。我們正在投資我們的 AI ML 策略，透過為開發人員提供硬體和軟體上簡單、易於使用的 AI ML 功能來利用這個市場機會。機器學習工程師是廣泛業務類型的應用程式建構者，正如我們透過核心數位海洋雲端服務成功做到的那樣。

And finally, point number five is we will augment our durable self service customer acquisition model with direct sales and customer success motions to acquire, retain and expand customers and amplifying our reach through our vibrant partner ecosystem. For these reasons, I'm very excited to have joined digital ocean at this critical time of inflection company begins 2024 having weathered a challenging macro demand environment where like many large platform providers, top line growth slowed from historical highs, recognizing early in 2023, that near term growth could be pressure, we successfully accelerated the attainment of long-term target margins to build a durable cost structure that will generate attractive free cash flow with plans to improve net dollar retention or NDR through increased customer engagement and continued product innovation and driving higher growth opportunities across cloud base and our new AI ML platform, we are positioned to establish a foundation to deliver low double digit growth in 2024, while setting ourselves up for the future of finished by articulating the key focus areas that will be driving.

最後，第五點是，我們將透過直接銷售和客戶成功措施來增強我們持久的自助服務客戶獲取模式，以獲取、留住和擴大客戶，並透過我們充滿活力的合作夥伴生態系統擴大我們的影響力。出於這些原因，我很高興在這個關鍵的轉折點加入 Digital Ocean，公司於 2024 年開始經歷了充滿挑戰的宏觀需求環境，與許多大型平台提供商一樣，盈利增長從歷史高位放緩，我們在 2023 年初認識到短期增長可能會帶來壓力，我們成功地加速了長期目標在雲端基礎和我們的新 AI ML 平台上推動更高的成長機會，我們已準備好奠定基礎，在 2024 年實現低兩位數成長，同時透過闡明將推動的關鍵重點領域為未來的完成做好準備。

While I'm excited about the Company's long-term growth plans as CEO. I will leverage by product and engineering background and deep cloud experience to bring an elevated focus to two critical priorities in the short term product innovation and efficient go-to-market that we explain quickly. First and foremost, we will obsess over the developer experience on our platform. We will develop an intimate understanding of their needs, whether the use case is an SAP application deployment and scaling running the backend of web and mobile applications, game development for data streaming, e-commerce storefronts or education technology or any other workload. And we will be unrelenting in our quest to understand how to make their jobs easier and to be a critical part of their growth through our platform offerings. We will use this understanding to rapidly develop on our product road map, which includes several important enhancements in security, resiliency, performance, networking and storage, which are really critical to our customers scaling on our platform. We will also increase the pace of identification and development of new capabilities that will drive value to our customers and fuel our growth. Further, our ongoing investments in AI and machine learning capabilities is a perfect example of this. In addition to driving innovation, we will augment our best-in-class self service, our product-led growth customer acquisition engine with an effective high velocity sales and customer service engine to improve NDR by establishing a trusted relationship with our top customers, drive adoption and visibility into our other offerings in our platform and continue providing world-class support and community engagement that these customers have come to expect from digital solutions by obsessing over the developer experience and innovating on their behalf and enhancing our go-to-market. We will take advantage of the tremendous growth opportunity that is in front of us. Our aim is to cement our position in this $114 billion addressable market for infrastructure and platform as a service and be the foundation for developers at start-ups and growing digital businesses to rapidly build, deploy host and scale applications that change the world.

作為首席執行官，我對公司的長期發展計劃感到興奮。我將利用產品和工程背景以及深厚的雲端經驗，將重點放在短期產品創新和高效上市這兩個關鍵優先事項上，我們很快就會對此進行解釋。首先，我們將非常重視我們平台上的開發人員體驗。我們將深入了解他們的需求，無論用例是運行 Web 和行動應用程式後端的 SAP 應用程式部署和擴展、資料流的遊戲開發、電子商務店面或教育技術或任何其他工作負載。我們將不懈地尋求如何讓他們的工作變得更輕鬆，並透過我們的平台產品成為他們成長的關鍵部分。我們將利用這種理解快速開發我們的產品路線圖，其中包括安全性、彈性、效能、網路和儲存方面的幾項重要增強，這對於我們的客戶在我們的平台上擴展至關重要。我們還將加快識別和開發新能力的步伐，為我們的客戶創造價值並推動我們的成長。此外，我們對人工智慧和機器學習能力的持續投資就是一個很好的例子。除了推動創新之外，我們還將增強我們一流的自助服務、以產品為主導的成長客戶獲取引擎，並透過有效的高速銷售和客戶服務引擎與我們的頂級客戶建立信任關係來改善 NDR，推動我們平台上其他產品的採用和可見性，並透過專注於開發人員的體驗、代表他們進行創新並增強我們的市場期望，繼續提供這些客戶從一流的解決方案中獲得這些客戶從一流的支持社區中獲得這些客戶從一流的支持。我們將充分利用擺在我們面前的巨大成長機會。我們的目標是鞏固我們在這個價值 1140 億美元的基礎設施和平台即服務潛在市場中的地位，並為新創公司和成長型數位企業的開發人員快速構建、部署主機和擴展改變世界的應用程式奠定基礎。

In conclusion, over the first several weeks as CEO. I'll spend the majority of my time meeting with customers, employees and investors to gather their feedback and sharpen our understanding of the market we serve. While we will continue incorporating this feedback into our ongoing plans and very confident confident in the immediate priorities that I just outlined. We will continue to invest in our key revenue growth drivers to achieve our 2024 plan and position the Company for further growth in 25 and beyond. We will obsess over the developer experience and focus on innovating to meet their evolving needs with platform innovation and Chris go to market initiatives. We will reignite growth in our core infrastructure and platform as a service offerings. We will leverage the strong margins in the core digital solution business to help fund investment in our strategic long-term bets like AI and machine learning centric cloud application development, we will maintain our long-term focus on increasing operating leverage and delivering attractive free cash flow margins, creating a compelling return for investors.

總而言之，在擔任執行長的頭幾周里。我將花大部分時間與客戶、員工和投資者會面，以收集他們的回饋並加深我們對所服務市場的了解。我們將繼續將這些回饋納入我們正在進行的計劃中，並且對我剛才概述的當前優先事項非常有信心。我們將繼續投資於我們的關鍵收入成長動力，以實現我們的 2024 年計劃，並為公司在 25 年及以後的進一步成長做好準備。我們將專注於開發人員的體驗，並致力於透過平台創新和 Chris 的市場計劃進行創新以滿足他們不斷變化的需求。我們將重新激發核心基礎設施和平台即服務產品的成長。我們將利用核心數位解決方案業務的強勁利潤率來資助我們長期策略投資，例如以人工智慧和機器學習為中心的雲端應用程式開發，我們將長期專注於提高經營槓桿和提供有吸引力的自由現金流利潤率，為投資者創造可觀的回報。

As you can tell, I'm very excited to be here at Digital ocean. I've got a very busy quarter ahead, but I'm really looking forward to meeting many of you in the upcoming months.

正如你們所知，我非常高興來到 Digital ocean。我接下來的一個季度會非常忙碌，但我真的很期待在接下來的幾個月與你們見面。

With that, I will now turn it over to Matt.

現在我將把話題交給馬特。

Thanks, Betty. It's great to have you on board. And I can tell you the entire digital ocean team and I are excited that you joined as CEO, and we're very much looking forward to working with you to achieve digitalizations enormous potential.

謝謝，貝蒂。非常高興您能加入我們。我可以告訴您，我和整個數位海洋團隊都很高興您加入並擔任首席執行官，我們非常期待與您合作，發揮數位化的巨大潛力。

In my comments, I will review our Q4 results and cover the full year 2023 financial highlights before sharing our first quarter and full year 2024 financial outlook and our go-forward capital allocation strategy. Q4 2023 was a good finish to the year with revenue, adjusted EBITDA and net income per share. All exceeding the outlook that we have provided. Revenue was $181 million, which was up 11% year over year and was $3 million above the high end of our revenue outlook. This performance was driven by the stabilization of net dollar retention within our corporate business and strong execution on the cloud-based front. And we got some contribution from our recently acquired AI and machine learning solutions. We also delivered strong profitability as we continue to appropriately manage our investments, balancing investment for growth with efforts to improve operating efficiency in our core business, which resulted in adjusted EBITDA of $73 million, a 41% margin. Adjusted free cash flow was $29 million, representing 16% of revenue due to working capital timing and increased investments in our AI and ML capabilities.

在我的評論中，我將回顧我們的第四季度業績並介紹 2023 年全年財務亮點，然後分享我們的第一季和 2024 年全年財務展望以及我們的未來資本配置策略。2023 年第四季的營收、調整後 EBITDA 和每股淨收入均取得了良好的收官。一切都超越了我們所提供的展望。營收為 1.81 億美元，比去年同期成長 11%，比我們預期的營收最高值高出 300 萬美元。這一業績得益於我們企業業務中淨美元保留的穩定以及雲端運算方面的強勁執行力。我們最近獲得的人工智慧和機器學習解決方案也為我們做出了一些貢獻。我們也實現了強勁的獲利能力，因為我們繼續適當地管理我們的投資，在成長投資與提高核心業務營運效率的努力之間取得平衡，調整後的 EBITDA 達到 7,300 萬美元，利潤率為 41%。調整後的自由現金流為 2,900 萬美元，佔收入的 16%，這得益於營運資本時機和對 AI 和 ML 能力的投資增加。

In the fourth quarter, non-GAAP fully diluted net income per share was $0.44, which was up 57% year over year as we continue to successfully implement our strategy of increasing operating leverage while executing our ongoing share repurchase program. As Patti mentioned, and as it was for many players in the industry. 2023 was a challenging year with slowing revenue growth in the face of persistent macroeconomic headwinds. While top-line pressure lasted longer into 2023 than we had originally expected. We saw a bottoming of the headwinds in Q3 and with stable net dollar retention and steady growth in cloud ways. In the second half, we exceeded the revised full year revenue outlook for 2023, total revenue increased 20% year over year to $693 million. This growth came from over 18,000 new customers that joined our platform through our durable self-serve funnel. And that came from increased spending from existing customers as well as overall revenue per customer increased 6% year over year. Growth also came from the steady performance of our managed hosting platform cloud wins, which increased revenue to $80 million, growing 43% year over year and from our recently acquired paper space, AIML. products.

第四季度，非公認會計準則每股完全攤薄淨利潤為 0.44 美元，年增 57%，這得益於我們繼續成功實施提高經營槓桿的策略，同時執行我們正在進行的股票回購計畫。正如帕蒂所提到的，對於業內的許多參與者來說也是如此。 2023 年是充滿挑戰的一年，面對持續的宏觀經濟逆風，收入成長放緩。雖然營收壓力持續到 2023 年的時間比我們最初預期的要長。我們看到第三季逆風已經觸底，淨美元留存率穩定，雲端運算業務穩定成長。下半年，我們超越了修訂後的2023年全年營收預期，總營收年增20%至6.93億美元。這項成長來自於透過我們持久的自助服務管道加入我們平台的超過 18,000 名新客戶。這是由於現有客戶支出的增加以及每位客戶總收入年增 6%。成長也得益於我們託管平台雲端勝利的穩定表現，其營收增至 8,000 萬美元，年增 43%，以及我們最近收購的紙本空間 AIML。產品。

On the operating leverage front, acknowledging the growth headwinds early in 2023, we proactively accelerated our long-term margin profile, positioning the business to generate attractive free cash flow. Regardless of the economic growth environment, we successfully achieved that objective, increasing adjusted EBITDA margins from 35% in 2022 to 40% in 2023 and free cash flow margins from 13% in 2022 to 22% in 2023. We accomplished this through difficult, but necessary cost management of headcount as well as non-headcount related spend and by expanding our global workforce, setting ourselves up structurally to improve margins in our core business as we grow these strong margins in our core digital ocean platform enabled us to absorb paper space and invest in the generational growth opportunity that we see in AML, while still exceeding our full year profitability guidance.

在經營槓桿方面，我們認識到 2023 年初的成長阻力，因此我們積極加速長期利潤率的提高，使業務能夠產生有吸引力的自由現金流。無論經濟成長環境如何，我們都成功實現了這一目標，調整後的 EBITDA 利潤率從 2022 年的 35% 提高到 2023 年的 40%，自由現金流利潤率從 2022 年的 13% 提高到 2023 年的 22%。我們透過艱難但必要的員工人數成本管理以及非員工人數相關支出管理實現了這一目標，並透過擴大我們的全球員工隊伍，從結構上提高我們的核心業務利潤率，因為我們在核心數位海洋平台的增長這些強勁利潤率使我們能夠吸收紙面空間並投資於我們在反洗錢中看到的代際增長機會，同時超過了我們的全年盈利預期。

Now I want to come back to the solid growth foundation that we have established as we launch into 2024. We have a high degree of confidence in achieving double digit growth on the back of several growth levers. First, we expect new customer revenue, which includes revenue growth from any customer that still in the first 12 months on our platform. That's incremental to the 2023 revenue to contribute 8% growth in 2024. But the majority of that growth coming from self-serve as we are still in the early innings of our direct and partnership motions.

現在，我想回顧一下我們在邁入 2024 年之際所建立的堅實成長基礎。我們對在多個成長槓桿的幫助下實現兩位數的成長充滿信心。首先，我們預計新客戶收入，其中包括在我們平台上使用前 12 個月的任何客戶的收入成長。這將在 2023 年收入的基礎上增加 8% 以貢獻 2024 年的成長。但大部分成長來自自助服務，因為我們仍處於直接和合作行動的早期階段。

Second, we continue to invest in our managed hosting capabilities, having, for example, recently launched our cloud-based autonomous service that you mentioned which enables customers to automatically scale their businesses on cloud waste. And we anticipate Con-Way's contributing two to three points of growth in 2022.

其次，我們繼續投資於我們的託管功能，例如，我們最近推出了您提到的基於雲端的自主服務，該服務使客戶能夠在雲端伺服器上自動擴展其業務。我們預計 Con-Way 將在 2022 年貢獻 2 到 3 個點的成長。

Third, our AI and machine learning solutions will be another key growth driver. We see tremendous long-term growth potential in the AI market, and we are increasing our investment in both operating expenses, adding engineering resources to advance our AI software platform and capital, adding incremental GPU capacity to take advantage of this opportunity. We recently announced initial availability of H. one hundreds and expect additional offerings and further capacity to come online over the course of 2024. We anticipate our AI ML solutions contributing 3% revenue growth in 2024.

第三，我們的人工智慧和機器學習解決方案將成為另一個關鍵成長動力。我們看到人工智慧市場具有巨大的長期成長潛力，我們正在增加對營運費用的投資，增加工程資源以推進我們的人工智慧軟體平台和資本，增加增量 GPU 容量以利用這一機會。我們最近宣布了 H.one hundred 的初始可用性，並預計在 2024 年期間將推出更多產品和進一步的容量。我們預計我們的 AI ML 解決方案將在 2024 年貢獻 3% 的營收成長。

Yes, our fourth and final major lever growth levers. Net dollar retention, as we have discussed, NDR declined over the course of 2023 with a bottoming and beginning in Q3 at 96% MBR as we lap the 2022 pricing. Ndr increased several basis points in Q4, but remained at 96% due to round. And we anticipate NDR continuing to improve as we move through 2024 as we're working aggressively to return NDR above 100% in the latter half of the year as an early indicator of our progress on this front in January, we saw increasing month-over-month growth in customer usage on the core digital ocean platform, and we're seeing similar higher usage growth trends in February as well.

是的，這是我們的第四個也是最後一個主要成長槓桿。正如我們所討論的，淨美元留存率在 2023 年期間下降，並在第三季觸底，MBR 為 96%，因為我們對 2022 年的定價進行了評估。Ndr 在第四季度增加了幾個基點，但由於回合原因仍保持在 96%。我們預計，隨著 2024 年的到來，NDR 將繼續改善，因為我們正在積極努力，使 NDR 在下半年恢復到 100% 以上，這是我們在這方面取得進展的早期指標。

With that context, I will now share our financial outlook for the quarter and for the year. For the first quarter of this year, we project revenue of $182 million to $183 million, with adjusted EBITDA margins of 37% to 38% and diluted net income per share of $0.37 to $0.39. As you may recall, we did not provide free cash flow guidance on a quarter by quarter basis, given it's heavily influenced by working capital. With that said, our 2024 plan is front loaded on capital as we navigate a constrained supply chain and build critical mass in our AI market capacity. So we expect free cash flow margin to dip in Q1 and then increase over the balance of the year. For the full year 2024, we project revenue between $755 million and $775 million which represents year-over-year double digit growth at the midpoint. This range takes into account the early stage of our AIML. offerings and the timing related risks of a constrained GPU supply chain, but it doesn't require any further improvements in the broader macro demand.

基於此，我現在將分享我們本季和今年的財務展望。今年第一季度，我們預計營收為 1.82 億美元至 1.83 億美元，調整後 EBITDA 利潤率為 37% 至 38%，每股攤薄淨利潤為 0.37 美元至 0.39 美元。您可能還記得，我們​​沒有按季度提供自由現金流指引，因為它受到營運資金的嚴重影響。話雖如此，我們的 2024 年計畫仍以資本為先，因為我們要駕馭受限的供應鏈，並在我們的 AI 市場容量中建立臨界規模。因此，我們預計自由現金流利潤率將在第一季下降，然後在全年增加。我們預計 2024 年全年營收將在 7.55 億美元至 7.75 億美元之間，中間值代表著同比增長兩位數。這個範圍考慮到了我們的 AIML 的早期階段。受限的 GPU 供應鏈所帶來的產品和時間相關風險，但不需要更廣泛的宏觀需求進行任何進一步的改善。

With our 2024 investments, we will see modest declines in both adjusted EBITDA and free cash flow margins as we invest to generate a higher growth trajectory as we exit 2024, adjusted EBITDA margin will be in the range of 37% to 38% (sic - see Q4'23 earnings presentation, 36% to 38%) for the year as improved margins from our core digital ocean platform are offset somewhat by increased investment in our AI ML capability. Non-gaap fully diluted net income per share for the full year will be in the range of $1.60 to $1.67. With our increased investments, we expect to invest north of about $50 million alone on the AI and ML machine learning capabilities. Free cash flow margin will be in the range of 19% to 21%. We strongly believe the potential growth opportunity of this new market warrants the near-term investment of one to three points of free cash flow.

隨著我們 2024 年的投資，我們將看到調整後的 EBITDA 和自由現金流利潤率均小幅下降，因為我們進行投資以在 2024 年結束時產生更高的增長軌跡，調整後的 EBITDA 利潤率將在 37% 至 38% 之間（原文如此 - 參見 2023 年第四季度收益報告的增加投資所抵消。全年非公認會計準則每股完全攤薄淨利潤將在 1.60 美元至 1.67 美元之間。隨著我們投資的增加，我們預計僅在 AI 和 ML 機器學習能力上就將投資約 5,000 萬美元。自由現金流利潤率將在19%至21%之間。我們堅信，這個新市場的潛在成長機會值得近期投資一到三個點的自由現金流。

Before concluding my remarks, I'd like to reiterate our long term capital allocation strategy, growing free cash flow per share remains our ultimate goal and what we believe is a primary shareholder value creation lever in that pursuit, we remain committed to driving top line growth with increasing operating leverage while continuing to execute a regular stock repurchase program to return capital to our shareholders. Together, we believe these priorities create a compelling return profile for investors.

在結束我的演講之前，我想重申我們的長期資本配置策略，增加每股自由現金流仍然是我們的最終目標，我們認為這是實現這一目標的主要股東價值創造槓桿，我們仍然致力於透過增加經營槓桿來推動營收成長，同時繼續執行定期股票回購計劃，以向股東返還資本。我們相信，這些優先事項將為投資者創造引人注目的回報狀況。

On the buybacks front, the Board has approved a $140 million share repurchase authorization that we will execute over the next two years, utilizing the full repurchase authorization by the end of 2025. We made strong progress on our buyback program in 2023, repurchasing $488.5 million in stock and reducing our weighted average non-GAAP fully diluted shares by 11% year over year from $118 million to $105 million shares. Stock-based compensation expense also declined materially from 18% to 13% of revenue year over year.

在回購方面，董事會已批准 1.4 億美元的股票回購授權，我們將在未來兩年內執行，並在 2025 年底前使用全部回購授權。我們在 2023 年的回購計畫中取得了重大進展，回購了價值 4.885 億美元的股票，並將我們的非 GAAP 加權平均完全稀釋股份數量同比減少 11%，從 1.18 億美元減少至 1.05 億美元。股票薪酬費用也較去年同期大幅下降，從營收的 18% 降至 13%。

With respect to leverage, we continue to believe that 2.5 to 3 times net leverage is an appropriate long-term target. And with our strong free cash flow generation anticipate being in the low threes by the end of 2024. Based on the guidance that we have provided today, we continue to benefit from the 1.5 zero-coupon convertible debt instrument that does not mature until December of 2026. With that said, we will manage and steadily reduce our net leverage over the remaining three years to ensure that we have an appropriate capital structure flexibility and could take advantage of the company's growth potential while increasing our levered free cash flow per share at attractive rates to close my remarks. The Company achieved a great deal in 2023 and is well positioned for profitable growth in 2024. We have a tremendous and expanding market opportunity and an actionable strategy to capitalize on with Patti. Now in the seat, we're eager to execute the plan and deliver strong results for our investors. Thank you again for your time today, and I'll now turn it over to the operator for your questions.

關於槓桿率，我們仍然認為2.5至3倍的淨槓桿率是適當的長期目標。而且憑藉我們強勁的自由現金流，預計到 2024 年底將達到 3% 左右。根據我們今天提供的指導，我們將繼續受益於 2026 年 12 月才到期的 1.5 零息可轉換債務工具。話雖如此，我們將在剩餘的三年內管理並穩步降低我們的淨槓桿率，以確保我們擁有適當的資本結構靈活性，並能夠利用公司的成長潛力，同時以有吸引力的速度增加每股槓桿自由現金流。該公司在 2023 年取得了巨大成就，並預計在 2024 年實現盈利成長。我們擁有巨大且不斷擴大的市場機會和可行的策略，可以與 Patti 一起利用。現在，我們迫切希望執行該計劃，並為我們的投資者帶來強勁的業績。再次感謝您今天的時間，現在我將把時間交給接線員來回答您的問題。

(Operator instructions)

（操作員指令）

And we'll take our first question from Jason Ader with William Blair. Your line is open.

我們將從 William Blair 的 Jason Ader 那裡回答第一個問題。您的線路已開通。

Yes, thank you. Good afternoon and welcome aboard. Paddy, I wanted to ask you just as you've I guess, I know we've been in the seat for a few weeks, but from your perspective and observing the business so far and talking to folks on, where do you see the low the lowest hanging fruit for the Company?

是的，謝謝。下午好，歡迎加入。帕迪，我想問您一下，我知道我們已經在這個職位上呆了幾個星期了，但是從您的角度來看，通過迄今為止對業務的觀察以及與大家的交談，您認為公司最容易實現的目標是什麼？

Yes.

是的。

Hello, Jason. Nice to talk to you and thank you for the welcome.

你好，傑森。很高興與您交談並感謝您的歡迎。

Yes, this is my day seven on the job. Last week, I spent the whole week in Boulder, Colorado with my management team. And I'm just taking stock of where we are and the plan ahead for 2024?

是的，這是我上班的第七天。上週，我和我的管理團隊在科羅拉多州博爾德度過了一整週。我只是在評估我們目前的狀況以及 2024 年的未來計劃？

Yes, I don't want to comment on low hanging fruit. For me. Everything looks like a great targets two to accelerate our product road map. And as I was saying in my prepared remarks, it all starts with really understanding who our customers are and solving their challenges. So I'm super excited given the breadth of offerings we have the on how much our product is loved by our customer, the community engagement. All of these things are great foundation for us to build on.

是的，我不想對那些唾手可得的事情發表評論。為我。一切看起來都很棒，第二個目標可以加速我們的產品路線圖。正如我在準備好的演講中所說，一切都始於真正了解我們的客戶是誰並解決他們的挑戰。因此，考慮到我們提供的產品範圍之廣、客戶的喜愛以及社區的參與度，我感到非常興奮。所有這些都為我們未來的發展奠定了良好的基礎。

And in terms of my priorities, as I outlined, it's really straightforward. There are two buckets of priorities. One is accelerating innovation and delivering on the product roadmap and there are several aspects of that, whether it is fortifying our core network capabilities and innovating on our infrastructure and platform as a service to the exciting world of AI, ML and everything in between. I think we have so much innovation to do. It's going to be super, super exciting.

就我的優先事項而言，正如我所概述的，這非常簡單。有兩大類優先事項。一是加速創新和實現產品路線圖，這包括幾個方面，無論是加強我們的核心網路能力，還是創新我們的基礎設施和平台，為令人興奮的人工智慧、機器學習和介於兩者之間的一切提供服務。我認為我們還有很多創新要做。這將會非常、非常令人興奮。

And the second thing is the experience that I bring in from go to another places, which is how can we grow not only augment our product-led growth on engine that has gotten digital ocean to Wairakei, but drive positive NDR by really establishing a real, a great relationship with our top one thousands of customers, exposing them to the breadth of offerings that we have in our platform already and building a great drumbeat in terms of engaging with them and exposing them of all the great product capabilities that our teams are going to be rolling out. So all in all, I feel very energized by all of these opportunities. And of course, I'm going to be building a series of operational mechanisms to to ensure that we are looking at all these initiatives one by one and driving execution across the board. So I'm super excited to be here. And thanks for the question, Jason.

第二件事是我從其他地方帶來的經驗，即我們如何才能發展，不僅可以增強以產品為主導的引擎增長，將數位海洋帶到懷拉基，還可以透過與我們數以千計的前客戶建立真正的良好關係，向他們展示我們平台上已有的廣泛產品，並在與他們互動方面建立良好的氛圍，向他們展示我們團隊即將推出的所有出色產品功能，從而推動積極的 NDR。總而言之，所有這些機會都讓我充滿活力。當然，我將建立一系列營運機制，以確保我們逐一審查所有這些舉措，並全面推動執行。所以我非常高興來到這裡。感謝傑森提問。

Yes, one quick follow up on just how long do you think it will take to see the return on some of these initiatives directed by 2025. But do you think we could see some actual some kind of material impact later this year? Just give us a sense of the time line that you're thinking about.

是的，我想問一下，您認為到 2025 年，需要多長時間才能看到這些舉措的回報。但您認為我們今年稍後會看到一些實際的實質影響嗎？請告訴我們您正在考慮的時間軸。

Yes, I think of many of these initiatives are going to be long running, but we will never be done with innovation or of fortifying and enhancing our performance, stability, security kind of thing. So I think a lot of these things are evergreen initiatives in terms of when you're going to start seeing results. I hope it is sooner rather than later.

是的，我認為其中許多措施都將長期實施，但我們永遠不會停止創新，也不會停止鞏固和提高我們的效能、穩定性、安全性等。因此我認為，從何時開始看到成果來看，其中許多都是永久性的舉措。我希望這能盡快實現。

In terms of the outlook that Matt laid out, I think it is a very appropriate outlook for the year given the year that we are coming off of and we will absolutely be laser focused on execution. So there's a great opportunity ahead of us and you can count on us to be very disciplined and come and be laser-focused on execution.

就馬特提出的展望而言，我認為，考慮到我們即將過去的這一年，這是一個非常合適的展望，我們絕對會全神貫注於執行。因此，我們面前有一個很好的機會，你可以相信，我們會非常自律，並全神貫注於執行。

Thank you and good luck.

謝謝你，祝你好運。

And we will take our next question from Gabriela Borges with Goldman Sachs.

我們將回答高盛的 Gabriela Borges 提出的下一個問題。

Your line is open.

您的線路已開通。

Gabriela, we can't hear you kidding.

加布里埃拉，我們聽不懂你在開玩笑。

M&m.

毫米。

Yes, yes.

是的，是的。

Okay. Great.

好的。偉大的。

And clear, Patty, I want to pick up on the comments that Matt made about generating a higher growth trajectory exiting 2024. So Patty, either for you or from that, how do you think about what the sustainable growth rate is for this business and the sustainable margin profile that supports right?

帕蒂，很清楚，我想接著馬特關於在 2024 年後實現更高增長軌蹟的評論。那麼帕蒂，無論對你來說還是從那方面來說，您如何看待這項業務的可持續增長率以及支撐的可持續利潤率狀況？

Yes, Gabriela, thank you for your question and nice to meet you. So you're absolutely right.

是的，加布里埃拉，謝謝你的提問，很高興見到你。所以你完全正確。

My overall philosophy is to find the right balance between long-term growth and profitability I'm a firm believer in the concept of growth at a reasonable price with growth being the ultimate value driver for all of us. And you heard Matt talk about this right I don't want to put an exact exit trajectory growth rate. I think it is too early for me to do that. But given where our core market is and where our developer customers are going. I think there is a tremendous opportunity in front of us in terms of participating in the AI ML market and make the right responsible investments to help us accelerate our growth going into next year and beyond. I think you will find us be very active and busy in our product road map, not just on the AML front, but also you saw just in the last few days we announced on the auto scaling capability of cloud-based call autonomous. You will start seeing a string of announcements and string of releases on our core infrastructure and platform as a service offerings. So I think our job is to focus on delivering for our developer customers. And then once we do that and we become very disciplined at doing that. I think the rest is going to take care of itself. There's no shortage of growth opportunities here, right? There's just so many different problems that developers face today that I'm super excited to start solving in. And I think it's a it's really setting ourselves up for the future. And I think we have the luxury of having such a strong foundational, our financial profile to be able to make some quick and thoughtful calibrated investments to help us are lay the right foundation for next year and beyond.

我的整體理念是在長期成長和獲利能力之間找到適當的平衡，我堅信以合理的價格實現成長的理念，而成長是我們所有人的最終價值驅動力。您聽到馬特談論這個話題了吧，我不想給出一個確切的退出軌跡增長率。我認為我這麼做還為時過早。但考慮到我們的核心市場在哪裡以及我們的開發者客戶去向何方。我認為，參與 AI ML 市場並進行正確負責任的投資以幫助我們加速明年及以後的成長方面，我們面前有巨大的機會。我想您會發現我們非常活躍並且忙於我們的產品路線圖，不僅僅是在反洗錢方面，而且您還看到就在最近幾天我們宣布了基於雲端的自主呼叫的自動擴展功能。您將開始看到有關我們的核心基礎設施和平台即服務產品的一系列公告和發布。所以我認為我們的工作是專注於為開發者客戶提供服務。一旦我們這樣做了，我們就會變得非常自律。我認為，其餘的事情都會水到渠成。這裡並不缺乏成長機會，對吧？當今開發人員面臨著許多不同的問題，我非常高興能夠開始解決這些問題。我認為這確實為我們的未來做好了準備。我認為，我們擁有如此強大的基礎和財務狀況，能夠做出一些快速、深思熟慮的投資，幫助我們為明年及以後奠定良好的基礎。

Okay.

好的。

That makes sense. And then the follow-up I have is a strategy question on how you think about a I know if I were to oversimplify and think about digital solutions value proposition. So much of it is tied to the bread and butter offerings, the ease of use, the getting SMBs and developers off the ground with straightforward configuration and invisibility help me understand where animals fits into that. How do I reconcile the classic value proposition? Have simplicity with something that could arguably much more sophisticated, much more sophisticated and target, perhaps a different customer set from WAVE traditionally participated.

這很有道理。然後我要問的後續問題是一個策略問題，關於如果我過度簡化並思考數位解決方案的價值主張，您如何看待這個問題。它的大部分都與基本產品息息相關，易於使用，透過簡單的配置和隱形功能讓中小企業和開發人員能夠快速起步，這有助於我了解動物在其中的地位。我該如何調和經典的價值主張？簡單中蘊含著某種可以說更複雜、更精密、更有針對性的東西，也許與 WAVE 傳統上參與的客戶群有所不同。

Yes. It's a great question, Gabriela. And that's one of the main reasons why I was so excited to come here and work a bit solution because I feel like the rest of the market is just up making a lot more complicated than it needs to be. And I'm a fundamental believer that the future of any kind of application development arm on the cloud is going to be AI and ML centric for the years to come by. I've had a lot of background in the last few years, both at go to as well as at Amazon.

是的。這是一個很好的問題，加布里埃拉。這就是我如此興奮地來到這裡並尋求解決方案的主要原因之一，因為我覺得其他市場正在變得比它本來的要複雜得多。我堅信，未來幾年，任何類型的雲端應用程式開發部門都將以人工智慧和機器學習為中心。過去幾年裡，我累積了許多經驗，既在 Go To 工作，也在亞馬遜工作。

And I'm a firm believer that we are in the very early innings in this space.

我堅信我們在這個領域才剛起步。

And to your point about, hey, this is a market for very sophisticated developers. That's because everyone is talking about large language models and the the GPU forms that you need to power them. But I believe that there's a lot more to this than just dumb building and training elements. So there's obviously a hardware part to it, but I think the power of this is again, going to default back to software.

正如您所說，這是一個針對非常成熟的開發人員的市場。這是因為每個人都在談論大型語言模型以及為其提供支援所需的 GPU 形式。但我相信，這不僅僅是愚蠢的建設和訓練元素。因此，這顯然有硬體部分，但我認為，它的功能將預設回歸到軟體。

That's where the magic is going to happen. And we at this location firmly believe that the durable competitive differentiator for us long term is going to be in the software layer.

這就是奇蹟發生的地方。我們深信，我們長期持久的競爭優勢在於軟體層面。

And you rightly mentioned that developers are finding it extraordinarily hard to say, okay, where do I believe where do I start my AI ML application development from should I build a model for a train a model? What is fine tuning? What is our ag? Just so many buzzwords in the market today, we have a phenomenal opportunity to do what digital Motion's founding principle was, which is deliver the best cloud computing experience for developers so that they can forget about the infrastructure and worry about the software that is going to change what we have that exact opportunity to do it in AML. And we are going to unleash the same playbook in a different domain of AML and so having said that, I feel the paper space acquisition is very strategic to us. The gradient experience, and I personally played around with gradient over the last few weeks. It is phenomenal. This is exactly what the market is missing today. And we have a lot of work to do to integrate and we are very busy doing that integration between the gradient of experience and the core solution offerings. But as I said, this is super early innings in the world of AI ML despite all the hype cycle. So I think this is an opportunity that we are in the very early innings of. And I feel super energized that this is exactly in the wheelhouse of digitalization and every app developer in the world that is going to build a cloud application will have to consume it and make sense of the complex AI machine learning landscape today. And that's a great opportunity for us to add value to them.

您正確地提到，開發人員發現很難說，好吧，我相信從哪裡開始我的 AI ML 應用程式開發，我應該為訓練模型建立模型嗎？什麼是微調？我們的農業是什麼？當今市場上有如此多的流行語，我們有一個絕佳的機會來實現 Digital Motion 的創始原則，那就是為開發人員提供最佳的雲端運算體驗，這樣他們就可以忘記基礎設施，而只需擔心將要改變一切的軟體，我們在 AML 中擁有這樣的機會。我們將在反洗錢的不同領域實施同樣的策略，話雖如此，我覺得紙面空間的收購對我們來說非常具有戰略意義。漸變體驗，過去幾週我親自嘗試了漸層。這真是太驚人了。這正是當今市場所缺乏的。我們還有很多工作要做，我們正忙於整合經驗梯度和核心解決方案產品。但正如我所說，儘管存在各種炒作週期，但人工智慧機器學習 (ML) 領域仍處於非常早期的階段。所以我認為這是我們正處於初期的一個機會。我感到非常興奮，這正是數位化的領域，世界上每個要建立雲端應用程式的應用程式開發人員都必須使用它，並理解當今複雜的人工智慧機器學習格局。這對我們來說是一個為他們增加價值的好機會。

Brad Reback with Stifel. Your line is open and Great.

布拉德雷巴克 (Brad Reback) 和 Stifel 合作。您的線路已開通並且很棒。

Thanks very much, Patty, given everything you just laid out there around the opportunity, why not invest more and faster, especially given some of the people you're competing against or investing on?

非常感謝，帕蒂，考慮到你剛才列出的所有機會，為什麼不投資更多、更快，尤其是考慮到你正在與之競爭或正在投資的一些人？

First, some that we've never seen before?

首先，有些是我們以前從未見過的？

Yes. Thank you, Brad, for the question. That is a really important question. So I'll start and then I would love for Matt to give us a little bit of color as well, as I said, Matt Blatt, it is very early innings, right? So and I've only been here for a week so on I think the our strategy that we have is a very responsible strategy that balances the right mix of investing for our future while not being carried or getting carried away by the hype cycle of today. And as I said, our long-term competitive differentiator is going to be in the software experience we provide to the developers and we absolutely have to invest responsibly in the hardware that powers this experience but we have to be careful not to go to trial and become a hardware provider, which is not our long-term strategy, but we have to find the right balance. And I am a firm believer that we are going to be very focused on looking at our value proposition, how developers are consuming our services, and we have the ability to calibrate the investment as we go along the year. So that's those are my early thoughts.

是的。謝謝布拉德提出這個問題。這是一個非常重要的問題。所以首先由我來開始，然後我希望馬特也能為我們帶來一些精彩內容，正如我所說，馬特·布拉特，現在還只是個開始，對吧？所以，我來這裡才一週時間，我認為我們的策略是非常負責任的策略，它平衡了對我們未來的正確投資組合，同時不受當今炒作週期的影響。正如我所說，我們長期的競爭優勢在於我們為開發人員提供的軟體體驗，我們必須負責任地投資於支援這種體驗的硬件，但我們必須小心，不要嘗試成為硬體供應商，這不是我們的長期策略，但我們必須找到正確的平衡。我堅信，我們將非常注重我們的價值主張、開發人員如何使用我們的服務，我們有能力隨著時間的推移調整投資。這就是我早期的想法。

But Matt, why don't you chime in, but

但是 Matt，你為什麼不插嘴呢？

I completely agree that it's a very similar model to the model that we have versus the hyperscalers today. I mean, we have a very small footprint of locations and a very small capital budget relative to any of the three hyperscalers I mean, it's because we target a different market that doesn't require that level of sophistication or that level of scale. And then what you're seeing when you see a lot of these companies raising a massive dollars there. They're basically just providing bare metal solutions is renting the GPUs. And in some case running into the hyperscalers, that's not a model that will ever compete and at scale, it's just we won't have the cost structure for that. What we do have is what Pat described is we have differentiation in the target market and we have differentiation in the software layer, and that's where we're going to devote our there are investments. So we're investing more in R&D and in the software layer, and we clearly need GPU capacity. And as I said, we'll spend $50 million this year in GP. alone for 2024, which is a big third of our capital budget. And that's an appropriate amount. I think given that done, we think that we're taking a slightly different angle that we think is perhaps some I don't say more durable, but it's certainly got a long, a lot of legs from our perspective, and we see a lot of long-term growth potential in that strategy.

我完全同意，這與我們今天針對超大規模計算所採用的模型非常相似。我的意思是，與這三家超大規模企業相比，我們的佔地面積非常小，資本預算也非常少，這是因為我們的目標市場不同，不需要那種複雜程度或規模。然後你會看到很多公司在那裡籌集大量資金。他們基本上只是提供出租 GPU 的裸機解決方案。在某些情況下，與超大規模企業相比，這不是一個能夠競爭的模型，在規模上，我們只是沒有相應的成本結構。正如帕特所描述的，我們確實在目標市場上有差異化，在軟體層面也有差異化，而這正是我們將要投入投資的地方。因此，我們在研發和軟體層面投入了更多資金，而且我們顯然需要 GPU 容量。正如我所說，今年我們將在 GP 上花費 5000 萬美元。光是 2024 年一項，這筆資金就佔了我們資本預算的三分之一。這是一個合適的金額。我認為，考慮到這一點，我們認為我們會採取一個略有不同的角度，我們認為也許有些我不會說更持久，但從我們的角度來看，它肯定有很長的路要走，而且我們看到這一戰略有很大的長期增長潛力。

That's great. And then just one quick follow up, Matt, it may be sort of splitting hairs, but the cloud weighs contribution, I think you said 2% to 3% for next year. I believe last quarter you put it at 3% so any specific changes there or is it just rounding things?

那太棒了。然後還有一個快速的跟進問題，馬特，這可能有點吹毛求疵，但雲權衡貢獻，我認為你說的是明年的 2％ 到 3％。我相信上個季度您將其定為 3%，那麼有什麼具體的變化嗎，還是只是四捨五入？

It's right. It's just rounding. We I'm we were, as you would expect, coming out of the year. We wanted to establish a baseline growth rate that we and everyone can count on, and we're going to build from there. And we've tried to be real clear on that, and we're not expecting any kind of major recoveries in the market. So when you look at the exit growth rates of the various businesses and products we have, that's kind of what you get and done. And again, the NDR that's assumed in the and the guide is we're not assuming any macro improvement that all the MBR improvement that we have, which is still not much it's we won't we won't get in the baseline plan to above 100 in our latter part of the year. It's all tied to discrete products and initiatives that we're driving So I'd just say it's it's there's no no message in that number. It's a little bit of rounding, and it's based on the December's exit run rates that we're seeing.

是的。這只是四捨五入。正如您所期望的那樣，我們即將度過這一年。我們希望建立一個我們和每個人都可以依賴的基準成長率，並且我們將以此為基礎繼續努力。我們試圖明確這一點，我們並不期待市場會出現任何重大的復甦。因此，當您查看我們各類業務和產品的退出成長率時，這就是您所獲得和完成的。再次強調，指南中假設的 NDR 是，我們沒有假設任何宏觀改進，我們所有的 MBR 改進仍然不多，我們不會在今年下半年將基線計劃提高到 100 以上。這一切都與我們正在推動的獨立產品和計劃息息相關，所以我想說，這個數字沒有任何意義。這有點像四捨五入，它是基於我們看到的 12 月的退出運行率。

Perfect thank you very much, Kevin.

非常好，非常感謝，凱文。

We'll take our next question from Raimo Lenschow with Barclays. Your line is open.

我們將回答巴克萊銀行的 Raimo Lenschow 提出的下一個問題。您的線路已開通。

Thank you and all the best for me as well.

謝謝你，也祝我一切順利。

Terry, I just wanted to ask more about expansion into new areas and how you think about that. I mean, if you look at the last few quarters, it was more and over M&A to get you into a deeper speeds and cloud-based, et cetera, like how do you think about that balance of kind of having internal product development? And you talked and you've been at AWS and Microsoft versus kind of buying expertise from the outside.

特里，我只是想多問一些關於向新領域擴張的問題以及你對此有何看法。我的意思是，如果你看看過去幾個季度，你會發現更多的是併購，以便讓你獲得更快的速度和基於雲端的技術等等，你如何看待內部產品開發的平衡？您說過，您曾在 AWS 和 Microsoft 工作過，而不是從外部購買專業知識。

Can you just talk speak to that, please?

你能就此談談嗎？

Thank you.

謝謝。

Yes, hello, Raimo.

是的，你好，Raimo。

So nice to be here. And I think my fellow AFFAIRS. We have to do both in a market that is evolving quickly and I don't want to make make this sound like it is all about AI ML. I think we have a lot of core innovation left, both in our infrastructure platform as a service as well as in our cloud-based hosting offering. I think we have a lot of innovation left within the core digital solution. And also, as I mentioned, we are still building the bridge between creating an experience at paper space and the close and the core deal offering. So we have enough to keep us very busy organically. But as you would expect, we are on very diligent in scanning the landscape, whether it is to buy talent as you're talking about or buy new capabilities, which our customers will appreciate on expand from a geographical footprint perspective, there's so many dimensions that we could add inorganic capabilities into our into our offering. So I'm super excited and having the financial structure that we have gives us the opportunity to make the right responsible bets to accelerate our growth.

很高興來到這裡。我也這麼認為。在快速發展的市場中，我們必須同時做到這兩點，我不想讓這聽起來像是全部與 AI ML 有關。我認為我們還有許多核心創新，既在我們的基礎設施平台即服務方面，也在我們的基於雲端的託管服務方面。我認為我們在核心數位解決方案方面還有很多創新。而且，正如我所提到的，我們仍在建立紙質空間體驗與成交和核心交易產品之間的橋樑。因此，我們有足夠的資源來維持忙碌。但正如您所期望的那樣，我們非常勤奮地審視形勢，無論是購買您所說的人才還是購買新的能力，我們的客戶都會從地理足蹟的角度來擴展，我們可以在很多方面將無機能力添加到我們的產品中。所以我非常興奮，我們現有的財務結構使我們有機會做出正確、負責任的選擇，以加速我們的成長。

Okay, perfect. Thank you.

好的，完美。謝謝。

And And Matt, one for you.

還有馬特，給你一個。

And if you think about the environment out there, you mentioned in your plans, there's no assumption of things getting better. But if you think about the linearity in the quarter and the different geographies as well as what has been your observation this quarter? Thank you.

如果你考慮一下你在計劃中提到的外面的環境，你就不會認為情況會變得更好。但是，如果您考慮本季的線性和不同的地理位置以及您對本季的觀察是什麼？謝謝。

Yes, so yes, it's again, one of the things I love about this business is how Joe the lack of concentration we have in any vertical or in any industry or use case or country. And so we're pretty diversified on that front. And we haven't seen any kind of one sector region performing materially different than the rest. But what I would say is while that the NDR was still 96% in the fourth quarter, we are seeing increased usage in the core DO platform, and we saw that continue into January. It's continued into February, and we're seeing we are seeing signs of that, like we said, we expect NDR to improve over the course of the year, and we're seeing good leading indicators at this point as customers are starting picked up their activity on the core video platform itself, which is has been kind of the real headwind of growth over the last several quarters.

是的，是的，再次說一遍，我喜歡這項業務的原因之一是喬，我們在任何垂直領域、任何行業、任何用例或任何國家都缺乏專注力。因此，我們在這方面相當多樣化。我們還沒有看到任何一個行業區域的表現與其他行業區域有實質的差異。但我想說的是，雖然第四季的 NDR 仍然有 96%，但我們看到核心 DO 平台的使用率增加，而且這種趨勢一直持續到 1 月。這種趨勢一直持續到二月份，我們看到了一些跡象，就像我們所說的那樣，我們預計 NDR 會在今年內改善，而且我們目前看到了良好的領先指標，因為客戶開始在核心視頻平台上開展活動，而這在過去幾個季度中一直是增長的真正阻力。

Thank you.

謝謝。

We'll take our next question from Patrick Walravens with Citizens' JMP. Your line is open.

我們將回答公民 JMP 的 Patrick Walravens 提出的下一個問題。您的線路已開通。

Well, great. Thank you. And let me add my congratulations, Patti. So my question is really basic. What is your philosophy and leadership and

嗯，很棒。謝謝。請允許我向您表示祝賀，帕蒂。我的問題非常簡單。你的哲學和領導力是什麼？

Patrick, thank you for your question.

派崔克，謝謝你的提問。

So my philosophy leadership, all starts with the customers we serve. I think our purpose of existence as a company is to serve our customers and if we do that well, and if we understand their needs and we deliver at a group face and solve their cup of problems, I think the rest is going to take care of itself. And I think as I mentioned, those are the couple of things that really excite me here. It's a large market and we already have a very, very strong foundation. And it is a market in which our core customers, which are the developers have an emerging set of very complex problems that are worth solving for. So my leadership philosophy starts with that. Number two is we need to have pure tech business. So our technology has to be world-class. So that's something that I'm going to be super focused on a number three years. Technology has to come from world-class people. World-class technology should come from world-class people. I've been very impressed with the caliber of talent we have here at DISH lotion tool, and we are really excited to get to work. And in my job as the CEO is to A., help us understand our customers very deeply and be put the right people in the right jobs to deliver innovation to help take care of our customers. So hopefully, that gives you an answer, which is not super flat, fluffy or high level but you will hopefully I will come back up these things over the next several quarters with data and with product innovation and some in delivery that backs up my leadership principles.

因此，我的哲學領導一切都始於我們服務的客戶。我認為，我們作為一家公司存在的目的是為客戶服務，如果我們做得好，如果我們了解他們的需求，並且能夠團結一致地為他們解決問題，那麼我想其餘的事情都會水到渠成。我想，正如我所提到的，這些都是真正讓我興奮的事情。這是一個巨大的市場，我們已經擁有非常非常堅實的基礎。在這個市場中，我們的核心客戶，也就是開發人員，面臨一系列非常複雜的問題需要解決。我的領導哲學就是從此開始的。第二，我們需要純粹的技術業務。因此我們的技術必須是世界一流的。所以這是我未來三年將重點關注的事情。技術必須源自於世界一流的人才。世界一流的技術應當來自世界一流的人才。DISH 乳液工具公司的人才水平給我留下了深刻的印象，我們非常高興能夠開始工作。作為首席執行官，我的職責是：A.幫助我們深入了解客戶，並將合適的人安排在合適的職位上，透過創新來服務我們的客戶。所以希望這能給你一個答案，這個答案不是非常平淡、空洞或高層次的，但希望我能在接下來的幾個季度裡用數據、產品創新和一些交付來支持我的領導原則。

Thank you.

謝謝。

And we'll take our next question from Josh fair with Morgan Stanley. Your line is open.

下一個問題來自摩根士丹利的 Josh fair。您的線路已開通。

Great.

偉大的。

Thanks for the question, and welcome, Paddy.

感謝您的提問，歡迎帕迪。

I was hoping you could give an update on the revenue composition between products, like how much mix is droplets or infrastructure as a service versus platform as a service, what products are contributing most in the platform and I guess I'm wondering if with the net retention rate below 100, like looking at the average revenue per customer, if some of the adoption of multiple products is sort of masked by lower consumption overall bringing that average revenue per per customer, keeping that more modest growth?

我希望您能更新一下產品之間的收入構成情況，例如 droplets 或基礎設施即服務與平台即服務的混合程度如何，哪些產品對平台的貢獻最大，我想知道如果淨留存率低於 100，例如看每位客戶的平均收入，如果多種產品的採用被整體消費降低所掩蓋，從而帶來每位客戶的平均收入，保持更溫和的增長？

Hey, Josh, it's Matt. The yes, we don't disclose the mix of Xi has hasn't has solutions like that. I'd tell you is that the path solutions are growing faster than the core kind of infrastructure as a service offerings. So database and some of the other products and Kubernetes laser are all growing at a more rapid clip than is the core kind of droplet and compute business. And that's so the take rate of those services is that is very healthy. I think when you see that, again, the big driver in the MDR challenges that we've had has been, as I've said, multiple times on our last several calls, its expansion has slowed, right that the churn has not James. It's right around where it was even a year ago. That contraction is a little bit elevated, but it's been fairly stable over the last now seven, eight months where we saw the most pressure year over year last year was in expansion and that expansion was the customers' own businesses just weren't growing as fast.

嘿，喬希，我是馬特。是的，我們不願意透露習近平的混合方案是否已經提出這樣的解決方案。我想告訴你的是，路徑解決方案的成長速度比核心基礎設施即服務產品的成長速度更快。因此，資料庫和其他一些產品以及 Kubernetes 雷射的成長速度都比核心的 droplet 和運算業務更快。所以這些服務的接受率非常健康。我認為，當您再次看到這一點時，我們所面臨的 MDR 挑戰的最大驅動力就是，正如我在最近幾次電話會議中多次提到的那樣，它的擴張已經放緩，對吧，客戶流失並沒有發生，詹姆斯。它與一年前的情況差不多。這種收縮有點過分，但在過去的七、八個月裡一直相當穩定，我們看到去年同比最大的壓力是在擴張，而這種擴張意味著客戶自己的業務增長速度沒有那麼快。

And so they didn't need more compute.

所以他們不需要更多的計算。

And so we didn't see as much growth in the core kind of droplet part of the business. And so I think that done, I'm very excited by the product roadmap that we have. And with Patti coming on the ability to even more focus on driving adoption and increase them kind of take rate of our existing products into the into the installed base. Most of the headwind that we've seen though has been in kind of the just the core droplet core compute.

因此，我們並沒有看到核心液滴業務部分有太大的成長。所以我認為這已經完成了，我對我們的產品路線圖感到非常興奮。隨著 Patti 的加入，我們將更加專注於推動採用，並提高現有產品的安裝基礎的採用率。然而，我們所見到的大部分阻力都只是核心液滴核心計算。

Great.

偉大的。

And just wondering on Patty, if you're thinking about all the opportunity in front of you all the growth levers, levers available to you, how are you thinking about potential for future pricing increases over the medium term.

我只是想知道帕蒂，如果您正在考慮面前的所有機會、所有可用的成長槓桿、槓桿，那麼您如何看待中期內未來價格上漲的潛力。

And Matt, just wondering in your breakdown of growth drivers for the year, is there any contribution from pricing embedded in those different categories

Matt，我想知道，在您今年成長動力的細分中，不同類別的定價是否做出了貢獻

Yes. Hey, Josh. I mean, there is no factored in price increase as part of our outlook. And just my philosophy is we will continue to have packaging changes and lineup changes and we will introduce new products and premium capabilities and things like that, but nothing which is on which is already baked into our outlook for this year. And my philosophy is we'll continue. We have to innovate and and trial new packages and different thresholds and things like that. So it's a it's an ongoing thing. And as with any other technology vendor on, we will pay close attention to what our customers are asking for. So at sum, that's my overarching philosophy.

是的。嘿，喬希。我的意思是，我們的預期中沒有考慮價格上漲。我的理念是，我們將繼續進行包裝和產品線的改變，我們將推出新產品和高級功能等等，但這些都已經包含在我們今年的展望中。我的理念是我們會繼續下去。我們必須創新並試行新的方案、不同的門檻等等。所以這是一個持續的事情。與任何其他技術供應商一樣，我們將密切關注客戶的需求。總而言之，這就是我的整體哲學。

Perfect.

完美的。

Yes.

是的。

And we will take our next question from Pinjalim Bora with JPMorgan. Your line is open.

我們將回答摩根大通的 Pinjalim Bora 提出的下一個問題。您的線路已開通。

Great. Thanks for taking the questions, and welcome, Barry.

偉大的。感謝您回答問題，歡迎 Barry。

Just a two-part one question on paper space. Anyway to understand kind of the adoption of the ML Ops platform versus the iOS side of paper space. Is the ML Ops platform landing with customers? Are they using that more versus DI side of things? And Matt, maybe help us understand your I think assuming about $6 million from paper space this year, was that did that land at that point about $6 million or was it more?

關於紙質空間，這只是一個由兩個部分組成的問題。無論如何，要了解 ML Ops 平台與 iOS 方面的紙質空間的採用情況。ML Ops 平台是否已經落地客戶了？與 DI 方面相比，他們是否更多地使用它？馬特，也許您可以幫助我們理解一下，我認為假設今年紙面空間的收入約為 600 萬美元，那麼當時的收入是否約為 600 萬美元，還是更多？

It started off?

開始了嗎？

Thanks, Ben, for the most part, it's Matt with the latter question. Yes, we came in, right exactly what we had expected. We had signaled, I think, around $5 million and we came in around $6 million for the year. And clearly on a IRR basis, it's higher than that. That was just the last six months of the year. And we think that again, that that business should give us three points of growth on the entire business. So it's still it's more than doubling on an ARR basis over the course of as of this year.

謝謝，本，大部分情況下，後一個問題由馬特提出。是的，我們進來了，正如我們所期望的那樣。我認為，我們已暗示了大約 500 萬美元，而今年我們的收入約為 600 萬美元。顯然，按照 IRR 計算，這個數字要高於這個數字。那隻是今年最後六個月。我們再次認為，這項業務應該會為我們整個業務帶來三個成長點。因此，截至今年，其 ARR 基礎仍增長了一倍以上。

And to answer your first part of your question on doing, I think it is a mix of both, right? So the Michilla, the ML Ops platform, nice and steady dose of infrastructure. And as we go into this year, as we start bringing the two platforms closer together, we expect a lot of our ARM paper space, our AI ML customers to start consuming more of the dislocation compute capabilities as well. So it's still early days. It's a little arm. So there are customers that are very heavy users of data. The AML stack and they might use a little bit of compute on an as needed basis. But then there are other customers who are who are in a steady-state inferencing on type of workload. So it is still a little training heavy, as you would expect, given the nature of what customers are on our trying to do with the ML. and many of our customers are in core use cases like tax to image generation or text to video generation and those kinds of things. So it's a very heavy on training oriented mode where it has a lot more of the the AI machine learning ops on marshaling data, getting the data set organized and just start training. The data set is what we are seeing a lot more of now, but once you get to the steady state is where the spillover to the compute side is about to happen in the infant stage. So that's why we are getting I'm ready with our integration of the core deal infrastructure.

回答您關於做什麼的問題的第一部分，我認為兩者兼而有之，對嗎？所以 Michilla，ML Ops 平台，擁有良好且穩定的基礎設施。隨著今年的到來，隨著我們開始將兩個平台更加緊密地結合在一起，我們預計許多 ARM 論文空間、我們的 AI ML 客戶也將開始使用更多的錯位運算能力。因此現在還為時過早。這是一隻小手臂。因此，有些客戶是數據使用量很大的使用者。AML 堆疊，他們可能會根據需要使用一點計算。但是有其他客戶正處於對工作負載類型的穩定狀態推論。因此，考慮到客戶希望我們利用機器學習所做的事情的性質，正如您所預料的那樣，它仍然需要大量的訓練。我們的許多客戶都處於核心用例之中，例如從稅收到圖像生成或從文字到視訊生成等等。因此，這是一種非常注重訓練的模式，其中有更多的人工智慧機器學習操作來編組數據，組織數據集並開始訓練。我們現在看到的是資料集，但是一旦進入穩定狀態，就會在初始階段溢位到計算端。這就是為什麼我們要做好整合核心交易基礎架構的準備。

Thank you.

謝謝。

And we'll take our next question from Tim Horan with Oppenheimer. Your line is open.

下一個問題來自奧本海默公司的 Tim Horan。您的線路已開通。

I think slowed.

我覺得慢了。

Just a few clarifications about, as you said, $50 million on GPUs this year, it's one-third or so. Are you guiding to CapEx closer to $150 million for the year?

正如您所說，今年在 GPU 上的投入為 5000 萬美元，需要澄清幾點，佔三分之一左右。您預計今年的資本支出將接近 1.5 億美元嗎？

If so, how does that square with 20% free cash flow margins?

如果是這樣，那麼這與20%的自由現金流利潤率如何相符？

Or maybe I'm just missing some adjustments and a can you just give us some color on the outlook, the demand for GPUs, you know, how confident are you that you can now utilize that $50 million in GPUs?

或者也許我只是忽略了一些調整，您能否給我們提供一些關於前景、對 GPU 的需求的信息，您知道，您對現在能夠利用價值 5000 萬美元的 GPU 有多大信心？

Yes.

是的。

So the guide for the year for free cash flow is 19% to 21%. So going to 20% in the middle, the is consistent with that. We're not guiding to the CapEx. I gave you general parameters on it so you can kind of sorted out but done. And we're pretty confident in our ability to hit that 19% to 21% free cash flow margin as we demonstrated this year, we had the opportunity to drive material kind of leverage in the core DO platform, and we can use that to offset that incremental investments that we're making in both OpEx and CapEx in in the paper space business from a demand standpoint. And this gets back to the pendulum question before, which is why did we exceed what we thought we would do in them and revenue for for AML in 23. Part of this is a supply constraint. So you have to order the gear six, nine months in advance to be able to get GPU capacity. And even when you do that, the vendors and these are major kind of Tier one distributors, not them not the kind of small shops even then they can't guarantee that you get it all and you get it all at the right time and you get it out with all the right parts. And so there's there's more of us. It's more of a supply challenge right now. To be honest with you, the demand challenges I can get at, can we get it installed and get it up and running. And we're also, again, very focused on the software side of things, which is an integration that we're doing with the between our platforms. And so it's we're not worried at all about the demand. We're worried about how quickly we can get it turned up and available. And when you're starting again, a business from the small size that when we acquired paper space. And if you turn something up two months later in the month than you had anticipated, that's a big hit on the in-year revenue, which we're not fussed about. But that's why we're, I think, being conservative in terms of the amount of revenue that we're going to drive off that capital in 2024.

因此，今年的自由現金流指導值為19%至21%。因此，中間值達到 20% 是與此一致的。我們不指導資本支出。我給了你一般的參數，這樣你就可以理清思路並完成。我們非常有信心達到 19% 至 21% 的自由現金流利潤率，正如我們今年所展示的那樣，我們有機會在核心 DO 平台中推動實質槓桿作用，我們可以利用它來抵消從需求角度來看我們在紙張空間業務的營運支出和資本支出中所做的增量投資。這又回到先前的鐘擺問題，也就是為什麼我們在 23 年為 AML 實現的收入超出了我們的預期。部分原因在於供應限制。因此，您必須提前六到九個月訂購設備才能獲得 GPU 容量。即使你這樣做了，供應商和這些都是主要的一級分銷商，而不是小商店，即使這樣，他們也不能保證你能在正確的時間得到所有的產品，並獲得所有正確的零件。因此我們的人數就更多了。目前更大的挑戰是供應。老實說，我能遇到的需求挑戰是，我們是否可以安裝並啟動它並運行它。而且，我們也非常關注軟體方面，這是我們平台之間進行的整合。所以我們根本不擔心需求。我們擔心的是它能多快出現並可用。當你重新開始時，企業規模從我們獲得紙張空間時的小規模開始。如果當月出現的問題比預期晚了兩個月，那麼這將對當年的收入造成巨大打擊，而我們對此並不擔心。但我認為，這就是為什麼我們對 2024 年從該資本中獲得的收入金額持保守態度。

And then, Patrick, can you and all the due diligence you did.

然後，派崔克，你能否完成你所做的所有盡職調查。

Can you talk about who you think your primary competitors are, you know, Akamai acquired loan note and they seem to be more focused in R&D and enterprise and SMB, do you think competitive intensity is decreasing? Or do you expect that to or expected to increase?

您可以談談您認為您的主要競爭對手是誰嗎？或者您預計這個數字會增加嗎？

Yes, that's a good observation. So yes, I think the competitors are who all of you can get slight. And I feel when we are looking at our arm, our competitive posture, I am always I have a very healthy dose of Founder's paranoia on. So I feel like every dollar has to be earned, every customer has to be earned. So we will go with the assumption that all of our competitors are fiercely coming after our customers. So I think that's really the way I like to operate and push our teams to make sure that our innovation, Arm A., outpaces our competition and also our delivers in terms of ease of use and the ability of our platform to our stand on its own and impress our customers. So yes, Akamai's note, I have also heard what you just said, but that's not to say that they might not change their strategy in the next few quarters. So we like to operate or I like to operate with that philosophy. So And same thing for AML at some point, everyone is throwing the kitchen sink at this problem. But as Matt and I have been repeating ourselves over the last hour, I will focus on. Yes, hardware is an essential means to an end, but our long-term durable differentiator is going to be on the software side.

是的，這是一個很好的觀察。所以是的，我認為競爭對手就是你們所有人可能會輕視的人。我覺得，當我們檢視我們的手臂、我們的競爭態勢時，我總是對創辦人抱持著非常健康的偏執。所以我覺得每一美元都得靠自己去賺，每一位顧客都得靠自己去贏得。因此，我們假設所有競爭對手都在猛烈爭奪我們的客戶。所以我認為這確實是我喜歡的運作方式，推動我們的團隊確保我們的創新 Arm A. 超越我們的競爭對手，並且在易用性和我們平台獨立存在並打動客戶的能力方面表現出色。是的，Akamai 指出，我也聽到了您剛才所說的內容，但這並不是說他們可能不會在接下來的幾季改變他們的策略。所以我們喜歡或我喜歡用這種理念來運作。所以對於反洗錢來說，在某個時候也是一樣，每個人都在竭盡全力解決這個問題。但正如馬特和我在過去一個小時裡一直在重複的那樣，我將重點放在。是的，硬體是達到目的的必要手段，但我們的長期持久差異化因素將在軟體方面。

And we will take our question from Jim Fish with Piper Sandler. Your line is open.

我們將回答派珀·桑德勒 (Piper Sandler) 的吉姆·菲什 (Jim Fish) 提出的問題。您的線路已開通。

Hey, this is Quinton on for Jim Fish. Thanks for taking my question. And Patty look forward to working with you and Patty, maybe for you, you talked about a focus on augmenting this self-service motion, investing more in a direct customer relationship. Is that something that's going to require a further increase in the sales rep headcount as we look to 2024? Or is it more of a rebalance of the existing resources within the sales team?

嘿，我是 Quinton，代替 Jim Fish。感謝您回答我的問題。Patty 期待與您合作，Patty，也許對您來說，您談到了專注於增強這種自助服務動作，在直接客戶關係上投入更多。展望 2024 年，這是否需要進一步增加銷售代表的數量？或者這更多的是對銷售團隊內現有資源的重新平衡？

Yes. So it is so it's all factored into the outlook that Matt gave on. So yes, it is a rebalance and we are not talking about building an army of salespeople, right? So our customers are developers. And we have to this is again going back to my core philosophy of we really need to be our world-class in understanding our customers and their preferences and how they want to be reached. And so we're not going to start dialing for dollars and call our customers day in and day out. That's not what I'm talking about it out, but there are customers that are reaching a certain point in time of sophistication and requirement from our platform, which is required on the platform to be to be rich. Number two is a careful customer success and ongoing relationship to make sure that they are getting the best value from our platform. And many of our customers don't even know the breadth of our how much we have evolved since they started their journey with us. So I think it's a great opportunity for us to wave the flag and make sure that we are engaging with them in a very scaled manner. So on and also using our technology to make sure that we are establishing that relationship at the right time with the right set of tools to raise the visibility and offer them help on an updated basis.

是的。所以這一切都被考慮在了馬特給出的觀點中。所以是的，這是一種重新平衡，我們不是在談論建立一支銷售大軍，對嗎？所以我們的客戶是開發人員。我們必須再次回到我的核心理念：我們確實需要在了解客戶、他們的偏好以及他們希望如何被聯繫方面達到世界一流的水平。因此，我們不會為了賺錢而日復一日地打電話給客戶。這不是我要說的，但是有些客戶對我們的平台的複雜程度和要求已經達到了一定的程度，需要在平台上才能致富。第二是謹慎的客戶成功和持續的關係，以確保他們從我們的平台獲得最大價值。而且，許多客戶甚至不知道自從他們開始與我們合作以來，我們已經取得了多大程度的進步。因此，我認為這對我們來說是一個很好的機會，可以揮舞旗幟並確保我們以非常大規模的方式與他們接觸。除此之外，我們還使用我們的技術來確保我們在正確的時間使用正確的工具建立這種關係，以提高知名度並以更新的方式為他們提供幫助。

Matt, I don't know if you wanted to add any color on the actual expense outlay.

馬特，我不知道您是否想對實際費用支出做一些補充。

So you know, that that is the plan we have already factored in the refactoring and kind of investment in the sales marketing into which part of the guide.

所以你知道，這就是我們已經考慮到的計劃，將重構和對銷售行銷的投資納入指南的哪一部分。

Very helpful.

非常有幫助。

Then maybe a quick follow up on that. I think for you, we've talked about in the past crypto being a headwind to top line. We've seen a little bit of improvement in the underlying pricing has that correlated to any sort of return in usage on the platform? Or maybe what are you seeing from that specific vertical?

然後也許會對此進行快速跟進。我想對您來說，我們過去曾討論過加密貨幣對營收造成的阻力。我們看到基礎定價略有改善，這是否與平台使用率的回報有關？或者也許您從那個特定的垂直角度看到了什麼？

Yes.

是的。

We've we looked exactly at that for the reasons that you described. And we haven't seen nearly the kind of surge that we had seen in the past that we are seeing, as I said, more usage on the platform and and we we saw increasing kind of usage patterns in January. We're seeing that an increase in February, but it's not coming disproportionately from crypto as we had said previously, last year, crypto was down like 2% of revenue. So it's not a it's not it by itself a needle mover at this point.

我們已經根據您所描述的原因對此進行了仔細的研究。我們幾乎沒有看到像過去那樣的激增，正如我所說的，平台的使用量增加了，而且我們在一月份看到了使用模式的增加。我們看到 2 月有所成長，但這並不是主要來自加密貨幣，正如我們之前所說，去年加密貨幣的收入下降了 2%。因此，目前它本身還不能起到推動作用。

Appreciate it.

非常感謝。

Thank you.

謝謝。

And we will take our next question from Mike Cikos with Needham & Co., your line is open.

我們將回答 Needham & Co. 的 Mike Cikos 提出的下一個問題，您的熱線已經開放。

Hey, thanks for getting me on and taking the questions here, guys. I wanted to start first, I know that you guys are talking to some of these investments in direct sales and customer success. Wanted to get a sense here. Could you remind us what is the time to maturity for these reps? And also what's the profile of the customer that you're looking to invest in as partners taking them through the solution to increase attach rates or better serve those customers.

嘿，謝謝大家讓我來回答這些問題。我想先開始，我知道你們正在談論一些對直銷和客戶成功的投資。想在這裡了解一下。您能否提醒我們這些代表的成熟時間是多久？另外，作為合作夥伴，您希望投資的客戶概況是什麼樣的，透過解決方案幫助他們提高附加率或更好地服務這些客戶。

So yes, so first of all, it's not that we are starting from a clean slate. So we do have people in roles that are already engaging with the customers both on the customer success side and sales perspective. So I'm I'm too new to answer your question in terms of what the ramp-up time is going to be for new reps but I just wanted to make sure that I'm not inadvertently signaling that all we have to start from scratch and nobody nobody has thought about this so far in the company so in terms of from just on and the types of customers will go after, it's both a looking at the top arm consumers of our platform with an implicit a nod to the fact that the more you consume the more and you would want to have a trusted relationship with your biggest platform provider. So that's one.

是的，首先，我們並不是從零開始。因此，我們確實有一些人員已經在從客戶成功和銷售角度與客戶接觸。因此，我還太新，無法回答您關於新銷售代表的上手時間的問題，但我只是想確保我不會無意中暗示我們必須從頭開始，而且到目前為止，公司中還沒有人考慮過這個問題，因此就從一開始就考慮客戶類型而言，這既關注我們平台的頂級消費者，也隱含地承認您消費的越多，您會希望與最大的平台建立信任關係。這就是其中之一。

Number two is we are also investing in it. We already have technologies that we have invested in that gives us great visibility into customers, and that are about to hit a certain threshold of usage and consumption that we can get ahead of and be proactive in in building a relationship with. So that's a more of a technology enabled engagement, if you will, to augment on building this relationship to drive expansion and reduce churn with some of our top consuming customers.

第二，我們也在對其進行投資。我們已經投資了一些技術，這些技術可以讓我們很好地了解客戶，而這些客戶的使用和消費即將達到一定的門檻，我們可以領先並積極主動地建立關係。因此，如果你願意的話，這更像是一種技術支援的參與，以加強建立這種關係，推動擴張並減少與一些頂級消費客戶的流失。

And I would add that the third kind of leg of that is as customers and we get millions of visitors to our site every every month and in tens of thousands of those sign up as customers and three, three, four months later, you get kind of shakeout which ones are viable customers and which ones are grow. And part of that sales motion is taking those customers as they come on and trying to figure out which ones have growth potential and is it made they may only be spending a little bit as they're dabbling with our platform, but they might be a part of a bigger company and there's a bigger workload that they could they could bring. And so part of that go-to-market motion is triaging those customers and figuring out which ones are the higher value prospects. And then making sure that you're you're disproportionately helping them through the onboarding and trying to understand what their potential is.

我想補充一點，第三個支柱是客戶，我們的網站每月都有數百萬訪客，其中數萬人註冊成為客戶，三、三、四個月後，你會看到哪些是可行客戶，哪些是成長客戶。銷售活動的一部分是在客戶加入時了解他們是否有成長潛力，他們可能只花很少的錢來嘗試我們的平台，但他們可能是一家更大公司的一部分，因此可以帶來更大的工作量。因此，進入市場的行動的一部分是對這些客戶進行分類，並找出哪些是更高價值的潛在客戶。然後確保你透過入職培訓為他們提供不成比例的幫助，並試圖了解他們的潛力。

Understood.

明白了。

Thank you for that, guys. And for the follow up, I know last quarter, Matt, you had given us some great parameters around that retention. I remember and churn had been relatively stable at 12%. Contraction had improved entering the quarter as the September quarter at 16% and you exited at 15% based on your comments today. Is it fair to assume that churn and contraction were stable and then the big overhang on that 96% are we're seeing today really ties to the expansion rates.

謝謝你們，夥計們。至於後續行動，我知道上個季度，馬特，你為我們提供了一些有關保留的很好的參數。我記得客戶流失率一直相對穩定在 12%。進入本季時，收縮率有所改善，9 月季度為 16%，而根據您今天的評論，退出時收縮率僅為 15%。是否可以公平地假設客戶流失和收縮是穩定的，而我們今天看到的 96% 的巨大懸垂實際上與擴張率有關。

Yes, that's what I consider.

是的，我是這麼認為。

No, no, yes, I think you've got it. I mean, it's just frustrating because it's a rounding. But then we actually saw improvements in all three over the course of if you look at like June, July to January, it's actually a it's a much better than it appears improvement. Part of the problem is the way we define NDR. It's averaged over the month. So it's the July. The third quarter number was the average of July, August, September and the fourth quarter numbers, the average of the three months. But if you look at the actual months, which you can't because we don't disclose that, but there's actually more kind of steady progress. It's still modest. So it's clearly it's rounding as an issue. It's not massive improvements, but we have modest progress on each of the three dimensions over that period. And as I said, January is that was strong and a month in terms of usage and DR for the month of February is looking good as well so I'm I'm confident that it will continue to steadily go up and I would expect it to go up at a faster clip than clearly what it did in the third to fourth quarter.

不，不，是的，我想你已經明白了。我的意思是，這很令人沮喪，因為它是一個四捨五入。但隨後我們實際上看到了這三個方面都有所改善，如果你看看六月、七月到一月的情況，你會發現情況實際上比表面上看起來的要好得多。部分問題在於我們定義 NDR 的方式。這是一個月的平均值。現在已經是七月了。第三季的數據是七月、八月、九月的平均值，第四季的數據是這三個月的平均值。但如果你看一下實際的月份，你無法看到，因為我們沒有透露，但實際上有更穩定的進展。它還是謙虛的。因此，這顯然是一個四捨五入的問題。雖然這並不是巨大的進步，但我們在這段時間內在三個維度上都取得了一定的進展。正如我所說，一月份表現強勁，二月份的使用率和 DR 也表現良好，因此我相信它將繼續穩步上升，而且我預計它的上升速度將比第三季度至第四季度更快。

Makes sense.

有道理。

Thank you for the color there, Matt, and look forward to working with you as well.

感謝 Matt 的精彩表現，我們也期待與您的合作。

Patti?

帕蒂？

Thank you, Mike.

謝謝你，麥克。

And we will take our final question from Wamsi Mohan with Bank of America. Your line is open.

我們將回答美國銀行的 Wamsi Mohan 提出的最後一個問題。您的線路已開通。

I thank you so much, Patty. Congrats on the role. I look forward to working with you as well. You can imagine focus on product innovation and enhancing developer experience. But as Matt mentioned, you have your very diversified customer base. So how are you thinking about prioritizing across these use cases you know, you mentioned several including in SaaS or back end of that game development e-commerce. How much of those? And is there a specific and maybe intersection of that with the product road map that you mentioned between security, resiliency, storage, networking, et cetera, that really stands out or jumps out as the area that you would tackle first? Or how are you thinking about prioritizing these.

非常感謝你，帕蒂。恭喜你獲得這個角色。我也期待與您合作。您可以想像專注於產品創新和增強開發人員體驗。但正如馬特所提到的，您的客戶群非常多樣化。那麼您如何考慮對這些用例進行優先排序，您提到了幾個，包括 SaaS 或遊戲開發電子商務的後端。這些有多少？並且，與您所提到的安全性、彈性、儲存、網路等方面的產品路線圖之間是否存在特定的、可能的交集，而這個交集是否真正突出或成為您首先要解決的領域？或者您考慮如何對這些進行優先排序。

Hi, Wamsi. Very nice to meet you and look forward to working with you again. I think in terms of the on the workloads themselves and the workloads might be very diverse. Yes, you are right, but are the core capabilities that most of these workloads need are fairly finite. So you have the core network, core compute, different types of storage and even in AI and machine learning, then it's a very finite number of work of capabilities that they need to power, whether it is a classification type of on a workload or a large language model or any any other type of AI, machine learning workload?

你好，Wamsi。很高興認識您並期待再次與您合作。我認為就工作量本身而言，工作量可能非常多樣化。是的，你是對的，但是大多數工作負載所需的核心能力是相當有限的。因此，您擁有核心網路、核心運算、不同類型的存儲，甚至在人工智慧和機器學習領域，它們需要支援的功能數量非常有限，無論是工作負載的分類類型還是大型語言模型或任何其他類型的人工智慧、機器學習工作負載？

It is about making sure you have the data curation right and figure out the data pipeline and you have the right training and right inference on infrastructure. So I feel fairly confident having dug into some of the platform capabilities that we have and also spend a bulk of my time last week are going into the customer feedback and looking at some of what our customers have been asking us for. I think the priorities are on our very overlapping between these workloads. So I think if and I think we have enough to keep us super busy over the next several quarters in terms of product innovation and the prioritization of the roadmap. And I think most of what we are going to be doing and most of what we have actually released, like, for example, I mentioned the cloud-based autonomous functionality, regardless of whether you're an e-commerce store or any other kind of posting customer NAM auto scaling and sophisticated rules-based configuration are universal more or less. So I feel fairly confident that our innovation is going to impact multiple customers across different workloads. So as we go along, I'm pretty sure that we will find ways by which we can accelerate our specific workloads as we get into the later part of this year. But I feel fairly confident that we have a robust road map that addresses a broad set of functionality.

這是為了確保您擁有正確的數據管理並弄清楚數據管道，並且在基礎設施上擁有正確的培訓和正確的推理。因此，我非常有信心深入研究我們平台的一些功能，並且上週我花了大量時間研究客戶回饋，並了解客戶對我們的一些要求。我認為我們的優先事項是這些工作量之間高度重疊。所以我認為，如果並且我認為我們有足夠的事情讓我們在接下來的幾季裡在產品創新和路線圖優先排序方面非常忙碌。我認為我們將要做的大部分工作和我們實際發布的大部分工作，例如我提到的基於雲端的自主功能，無論您是電子商務商店還是任何其他類型的發布客戶 NAM 自動擴展和複雜的基於規則的配置或多或少都是通用的。因此，我非常有信心我們的創新將影響不同工作負載的多個客戶。因此，隨著我們的進展，我確信我們將會找到方法，以便在進入今年下半年時加速我們特定的工作量。但我非常有信心，我們有一個涵蓋廣泛功能的強大路線圖。

Okay, thanks that is helpful. As a follow-up, Matt, the incremental quarter on quarter growth of learners and builder seems to have decelerated a bit in Q4. How are you thinking about the trajectory of growth and customers over the over the next few quarters, just directionally come in over the course of the year, maybe?

好的，謝謝，這很有幫助。接下來，馬特，學習者和建設者的季度環比增長增量在第四季度似乎有所放緩。您如何看待未來幾季的成長軌跡和客戶狀況，也許只是全年的方向性成長？

Yes, that's a good question, Wamsi. I'd say one of the things that I've been paying attention to is the incremental ARR. Clearly, I'm looking at the customer count. I'm less worried about the customer count because it's such a broad set of customers that we have. And again, churn is not a factor. So I feel like there's a lot of opportunity for us to accelerate the growth of the customer base and as we drive them these new capabilities into the market and turning to our platform. That's where we're assuming the growth comes from that, not that we suddenly drive tons and tons of new customers on the platform. It's more growing the existing customers. But when you look at the ARR growth and you take out paper space from the third quarter, clearly the first and the second quarter, we're really light in terms of incremental ARR growth. But then in third and fourth quarter, we got back to closer to kind of historical levels at that time at around $18 million in incremental ARR, excluding what we picked up from paper space in the third quarter, $17 million in the fourth quarter and with the increase in usage that we're seeing. It's not again, it's not being driven by we have tons of more new customers is because the customers we have are starting to spend more. That's what is giving us optimism as we we go into the beginning of this year.

是的，這是個好問題，Wamsi。我想說的是我一直關注的事情之一就是增量 ARR。顯然，我正在查看顧客數量。我不太擔心客戶數量，因為我們的客戶群非常廣泛。再次強調，客戶流失並不是因素。因此，我覺得我們有很多機會來加速客戶群的成長，並將這些新功能推向市場並轉向我們的平台。這就是我們假設成長源自於此的原因，而不是我們突然在平台上吸引大量新客戶。這更有利於現有客戶的成長。但是，當您查看 ARR 成長情況並且去除第三季、第一季和第二季的紙面空間時，您會發現，我們的 ARR 增量成長確實很少。但在第三季度和第四季度，我們又回到了當時更接近歷史水平的增量 ARR，約為 1800 萬美元，不包括第三季度從紙質空間中獲得的收入，第四季度為 1700 萬美元，並且我們看到使用量有所增加。這並不是因為我們擁有大量新客戶，而是因為現有客戶開始花費更多。這就是讓我們在進入今年年初時感到樂觀的原因。

Yes.

是的。

Thank you so much.

太感謝了。

And there are no further questions at this time. I will now turn the call back to Mr. Patti Srinivas for closing remarks.

目前沒有其他問題。現在我將請帕蒂·斯里尼瓦斯先生致結束語。

Thank you all for your time and really excellent questions and great engagement.

感謝大家的時間以及非常出色的問題和積極的參與。

As you can tell, I'm super excited to roll up my sleeves and get to work lot of great opportunities to innovate, enhance our product offerings and really augment our great product-led growth motion.

如你所知，我非常高興能夠擼起袖子，抓住許多絕佳的機會進行創新，增強我們的產品供應，並真正增強我們以產品為主導的成長動力。

I'm looking forward to working with all of you and meeting many of you over the next few months. Thanks and have a good rest of the day.

我期待在接下來的幾個月裡與大家一起工作並與你們見面。謝謝，祝您今天剩餘時間過得愉快。

And ladies and gentlemen, this concludes today's call and we thank you for your participation. You may now.

女士們、先生們，今天的電話會議到此結束，感謝你們的參與。現在就可以了。