Nutanix Inc (NTNX) 2023 Q2 法說會逐字稿

Hello, and welcome to Nutanix Second Quarter 2023 Earnings Conference Call. (Operator Instructions)

大家好，歡迎來到 Nutanix 2023 年第二季度收益電話會議。 （操作員說明）

I would now like to hand the conference over to your speaker for today, Rich Valera. You may begin, sir.

我現在想把會議交給今天的發言人 Rich Valera。你可以開始了，先生。

Good afternoon, and welcome to today's conference call to discuss the results of our fiscal second quarter of 2023. Joining me today are Rajiv Ramaswami, Nutanix's President and CEO; and Rukmini Sivaraman, Nutanix CFO.

下午好，歡迎參加今天的電話會議，討論我們 2023 財年第二季度的結果。今天和我一起的有 Nutanix 總裁兼首席執行官 Rajiv Ramaswami；和 Nutanix 首席財務官 Rukmini Sivaraman。

After the market closed today, Nutanix issued a press release announcing financial results for the fiscal second quarter of 2023. If you'd like to read the release, please visit the Press Releases section of our IR website. During today's call, management will make forward-looking statements, including statements regarding our business plans, strategies, initiatives, vision, objectives and outlook, including our financial guidance as well as our ability to execute thereon successfully and in a timely manner and the benefits and impact thereof on our business, operations and financial results. Our expectations regarding the resolution of the investigation, its impact on our financial statements, including our financial guidance, our financial performance and targets and use of new or different performance metrics in future periods, expectations regarding profitability, our competitive position and market opportunity, the timing and impact of our current and future business model transitions, the factors driving our growth, macroeconomic, geopolitical and industry trends including global supply chain challenges and the current and anticipated impact of the COVID-19 pandemic and its effects. These forward-looking statements involve risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially and adversely from those anticipated by these statements. For a detailed description of these and other risks and uncertainties, please refer to our SEC filings, including our annual report on Form 10-K for the fiscal year ended July 31, 2022, and our quarterly report filed on Form 10-Q for the fiscal quarter ended October 31, 2022, as well as our earnings press release issued today. These forward-looking statements apply as of today, and we undertake no obligation to revise these statements after this call. As a result, you should not rely on them as representing our views in the future. Lastly, Nutanix management will be participating in the Morgan Stanley TMT Conference in San Francisco on March 8, and we hope to see you there.

今天收市後，Nutanix 發布了一份新聞稿，公佈了 2023 財年第二季度的財務業績。如果您想閱讀該新聞稿，請訪問我們 IR 網站的新聞稿部分。在今天的電話會議上，管理層將做出前瞻性陳述，包括關於我們的業務計劃、戰略、舉措、願景、目標和前景的陳述，包括我們的財務指導以及我們成功及時地執行這些指導的能力以及收益及其對我們的業務、運營和財務業績的影響。我們對調查解決方案的期望、它對我們財務報表的影響，包括我們的財務指導、我們的財務業績和目標以及在未來期間使用新的或不同的績效指標、對盈利能力的期望、我們的競爭地位和市場機會、我們當前和未來業務模式轉型的時機和影響、推動我們增長的因素、宏觀經濟、地緣政治和行業趨勢，包括全球供應鏈挑戰以及 COVID-19 大流行及其影響的當前和預期影響。這些前瞻性陳述涉及風險和不確定性，其中一些是我們無法控制的，可能導致實際結果與這些陳述預期的結果存在重大差異和不利。有關這些及其他風險和不確定性的詳細說明，請參閱我們提交給美國證券交易委員會的文件，包括我們在 2022 年 7 月 31 日結束的財政年度的 10-K 表格年度報告，以及我們在 10-Q 表格中提交的季度報告截至 2022 年 10 月 31 日的財政季度，以及我們今天發布的收益新聞稿。這些前瞻性陳述從今天開始適用，我們不承擔在本次電話會議後修改這些陳述的義務。因此，您以後不應依賴它們來代表我們的觀點。最後，Nutanix 管理層將於 3 月 8 日參加在舊金山舉行的摩根士丹利 TMT 會議，我們希望在那裡見到您。

And with that, I'll turn the call over to Rajiv. Rajiv?

有了這個，我會把電話轉給拉吉夫。拉吉夫？

Thank you, Rich, and good afternoon, everyone. Against an uncertain macro backdrop, we delivered a solid second quarter with results that came in ahead of our guidance and saw continued strong performance in our renewals business. With respect to the macro backdrop, in our second quarter, we continue to see businesses prioritizing their digital transformation and data center modernization initiative enabled by our platform. However, we have seen some increased inspection of deals by customers, which we believe is likely related to the more uncertain macro backdrop, and this is driving a modest elongation in sales cycles. We consider this dynamic in our outlook for the remainder of the fiscal year. Supply chain constraints with our several partners improved compared with the prior quarter. I'd like to comment on the investigation mentioned in our press release. We recently discovered that evaluation software from one of our third-party providers was instead being used for interoperability testing, validation and customer proof of concept over a multiyear period. Our Audit Committee commenced an investigation into this matter, which is still ongoing with the assistance of outside counsel. Rukmini will provide more details on the near-term reporting implications of this matter, but I'd like to emphasize that we do not believe it will have a significant impact on the fundamentals of our business and overall prospects.

謝謝 Rich，大家下午好。在不確定的宏觀背景下，我們在第二季度取得了穩健的業績，超出了我們的預期，並且我們的續訂業務表現持續強勁。關於宏觀背景，在我們的第二季度，我們繼續看到企業優先考慮我們平台支持的數字化轉型和數據中心現代化計劃。然而，我們看到客戶對交易的檢查有所增加，我們認為這可能與更加不確定的宏觀背景有關，這推動了銷售週期的適度延長。我們在本財年剩餘時間的展望中考慮了這一動態。與上一季度相比，我們幾個合作夥伴的供應鏈限制有所改善。我想對我們的新聞稿中提到的調查發表評論。我們最近發現，我們的第三方供應商之一的評估軟件在多年期間被用於互操作性測試、驗證和客戶概念驗證。我們的審計委員會開始對此事進行調查，該調查仍在外部顧問的協助下進行。 Rukmini 將提供有關此事的近期報告影響的更多詳細信息，但我想強調的是，我們認為這不會對我們的業務基本面和整體前景產生重大影響。

Taking a closer look at the second quarter, we delivered solid topline growth, including 23% year-over-year ACV billings growth, driven by continued strong performance in our renewals business. We again demonstrated good expense management, which helped us generate $63 million of free cash flow, continuing our strong recent free cash flow performance. Overall, I'm pleased with our financial performance in the second quarter. Our second quarter results reflects the value our customers are seeing in both our core cloud platform and in adjacent solutions in our portfolio with particular strength in Nutanix cloud management. A good example is our largest new customer win in the quarter, which was with a federal agency looking to modernize their infrastructure. They replaced their legacy 3-tier environment with Nutanix's cloud platform, including Nutanix cloud management, to run their business-critical applications, leveraging its simplicity and building automation for Infrastructure as a Service. They also added Nutanix unified storage to service their unstructured data needs. We see this as a good example of a customer adopting our full stack offering to modernize and automate their IT infrastructure. Another notable win in the quarter was with the bank in the APAC region, who had been running a key business-critical applications in the public cloud on Red Hat's OpenShift. However, they were having performance issues and were unhappy with the incident response times of their public cloud service providers. So following an evaluation of multiple on-prem and public cloud options, the customers chose to run OpenShift and their critical applications on-prem on the Nutanix cloud platform, including our A3 hypervisors, concluding that it was the alternative that could deliver the best performance and total cost of ownership. This deal reinforces our view that cloud is an operating model, not a destination and that our Nutanix cloud platform is ideally suited to enabling the hybrid multi-cloud operating model, increasingly favored by IT professionals.

仔細觀察第二季度，我們實現了穩健的收入增長，包括 23% 的 ACV 賬單同比增長，這得益於我們續訂業務持續強勁的表現。我們再次展示了良好的費用管理，這幫助我們產生了 6300 萬美元的自由現金流，延續了我們近期強勁的自由現金流表現。總的來說，我對我們第二季度的財務表現感到滿意。我們第二季度的業績反映了我們的客戶在我們的核心雲平台和我們產品組合中的相鄰解決方案中看到的價值，尤其是在 Nutanix 雲管理方面的優勢。一個很好的例子是我們在本季度贏得了最大的新客戶，這是一家尋求實現基礎設施現代化的聯邦機構。他們用 Nutanix 的雲平台（包括 Nutanix 雲管理）取代了傳統的 3 層環境，以運行他們的業務關鍵型應用程序，利用其簡單性和構建基礎設施即服務的自動化。他們還添加了 Nutanix 統一存儲來滿足他們的非結構化數據需求。我們將此視為客戶採用我們的全棧產品來實現其 IT 基礎架構現代化和自動化的一個很好的例子。本季度的另一個顯著勝利是與亞太地區的銀行合作，該銀行一直在 Red Hat 的 OpenShift 上的公共雲中運行關鍵業務關鍵型應用程序。但是，他們遇到了性能問題，並且對其公共雲服務提供商的事件響應時間不滿意。因此，在對多個內部部署和公共雲選項進行評估後，客戶選擇在 Nutanix 雲平台上運行 OpenShift 及其內部部署的關鍵應用程序，包括我們的 A3 管理程序，並得出結論認為這是可以提供最佳性能的替代方案和總擁有成本。這筆交易強化了我們的觀點，即云是一種運營模式，而不是目的地，我們的 Nutanix 雲平台非常適合支持混合多雲運營模式，越來越受到 IT 專業人士的青睞。

Following the general availability of NC2 on Microsoft Azure late in our first quarter, we saw solid momentum with NC2 in the second quarter. A good example is a win we had with an EMEA headquartered provider of global transportation services, looking to accelerate their migration to the public cloud, reduce their data center footprint and optimize their public cloud spend. Following a rigorous evaluation of alternatives, including native public cloud, this customer chose NC2 on Azure, which they found enabled a roughly 4x faster migration, lower migration costs and significantly lower operating costs. This win demonstrates how our customers appreciate the ability to rapidly and seamlessly shift their workloads from their private clouds to the largest public cloud provider with the consistent management, governance and data services provided by the Nutanix cloud platform without the time and expense of refactoring their workloads and with lower ongoing operating costs. On the product front, during the second quarter, we delivered meaningful upgrades to our core platform with the release of AOS 6.6, which offers enhanced data services and a number of networking and security-related features, further strengthening its capabilities to support business-critical applications.

在我們第一季度末 NC2 在 Microsoft Azure 上普遍可用之後，我們在第二季度看到了 NC2 的強勁勢頭。一個很好的例子是我們與總部位於 EMEA 的全球運輸服務提供商取得的勝利，希望加快他們向公共雲的遷移，減少他們的數據中心足跡並優化他們的公共雲支出。在對包括本機公共雲在內的備選方案進行嚴格評估後，該客戶選擇了 Azure 上的 NC2，他們發現這使遷移速度提高了大約 4 倍，遷移成本更低，運營成本也顯著降低。此次勝利表明，我們的客戶非常欣賞能夠利用 Nutanix 雲平台提供的一致管理、治理和數據服務，快速無縫地將他們的工作負載從他們的私有云轉移到最大的公共雲提供商，而無需花費時間和費用重構他們的工作負載並且持續運營成本更低。在產品方面，第二季度，我們通過發布 AOS 6.6 對我們的核心平台進行了有意義的升級，它提供了增強的數據服務以及許多網絡和安全相關的功能，進一步加強了其支持關鍵業務的能力應用程序。

In closing, I'd like to provide some thoughts on our priorities and outlook. First, our overarching priority remains delivering sustainable, profitable growth through judicious investment in the business, execution on a growing base of renewals and diligent expense management. Our strong free cash flow, along with solid topline growth in the second quarter reflects the progress we made to date towards this objective. While the macro environment remains uncertain, we are encouraged that the strength of our business model underpinned by a growing base of renewals and our ongoing focus on profitability, allow us to raise our fiscal year topline outlook and reaffirm our free cash flow outlook. I remain confident in our ability to continue to capitalize on the vast opportunity in front of us while continuing to drive sustainable, profitable growth.

最後，我想就我們的優先事項和前景提出一些想法。首先，我們的首要任務仍然是通過對業務的明智投資、在不斷增長的續約基礎上執行和勤勉的費用管理，實現可持續、盈利的增長。我們強勁的自由現金流以及第二季度穩健的收入增長反映了我們迄今為止在實現這一目標方面取得的進展。儘管宏觀環境仍不明朗，但令我們感到鼓舞的是，我們的商業模式實力得到不斷增長的續約基礎和我們對盈利能力的持續關注，使我們能夠提高我們的財年收入前景並重申我們的自由現金流前景。我仍然相信我們有能力繼續利用我們面前的巨大機會，同時繼續推動可持續的盈利增長。

And with that, I'll hand it over to Rukmini Sivaraman. Rukmini?

然後，我將把它交給 Rukmini Sivaraman。魯庫米尼？

Thank you, Rajiv. I would first like to note that with respect to the investigation Rajiv mentioned, we are in the process of assessing the financial reporting impact, and it is likely that additional costs would be incurred to address the use cases previously noted. As a result, we have not provided financial information regarding expenses in our second quarter preliminary results or our outlook for the third quarter or full fiscal year 2023. While we are working diligently to address this matter and finalize our financials as soon as possible, we do not expect to be able to file our 10-Q on time or following the 5-day prescribed extension period allowed under 12b-25. Relatedly, we are rescheduling our Investor Day we had intended to hold on April 4, 2023 to summer of 2023 and will provide a specific date once it is confirmed.

謝謝你，拉吉夫。我首先要指出的是，關於 Rajiv 提到的調查，我們正在評估財務報告的影響，很可能會產生額外的成本來解決之前提到的用例。因此，我們沒有在第二季度的初步業績或我們對第三季度或整個 2023 財年的展望中提供有關費用的財務信息。雖然我們正在努力解決這個問題並儘快完成我們的財務，但我們不要指望能夠按時或在 12b-25 允許的 5 天規定延期之後提交我們的 10-Q。相關地，我們將原定於 2023 年 4 月 4 日舉行的投資者日重新安排到 2023 年夏季，並將在確認後提供具體日期。

With that said, I will now move on to talk through our Q2 results, followed by our outlook for Q3 and then finally, provide an update on our fiscal year '23 outlook. Q2 '23 was a solid quarter with results that came in better than our guidance. ACV billings in Q2 was $268 million, higher than our guidance of $245 million to $250 million and representing a year-over-year growth of 23%. The significant majority of that growth came from growth in renewals billings. Revenue in Q2 was $486 million, higher than our guidance of $460 million to $470 million and a year-over-year growth rate of 18%. ARR at the end of Q2 was $1.378 billion, a year-over-year growth of 32%. New logo additions were about 480 in Q2. Contract duration stayed flat quarter-over-quarter at 3 years as expected. As described previously, the percentage of orders with future start dates likely due to partner supply chain constraints continue to be a key assumption in our Q2 guidance. This percentage came in lower than it was in Q1 '23 and below our expectations. Q2 revenue also benefited approximately $11 million from the improvement in percentage of future start dates as more license revenue was recognized in quarter than deferred, slightly more than the $10 million estimate we had provided on our last earnings call. Billings linearity was good, and DSOs were 28 days in Q2. Free cash flow in Q2 was $63 million, implying record free cash flow margin of 13%.

話雖如此，我現在將繼續討論我們的第二季度業績，然後是我們對第三季度的展望，最後提供我們 23 財年展望的最新情況。 23 年第二季度是一個穩定的季度，結果好於我們的指導。第二季度的 ACV 賬單為 2.68 億美元，高於我們 2.45 億美元至 2.5 億美元的指導，同比增長 23%。增長的絕大部分來自續訂賬單的增長。第二季度收入為 4.86 億美元，高於我們 4.6 億美元至 4.7 億美元的預期，同比增長率為 18%。 Q2 末 ARR 為 13.78 億美元，同比增長 32%。第二季度新增徽標約為 480 個。正如預期的那樣，合同期限環比持平，為 3 年。如前所述，可能由於合作夥伴供應鏈限製而具有未來開始日期的訂單百分比仍然是我們第二季度指南中的一個關鍵假設。這個百分比低於 23 年第一季度的水平，也低於我們的預期。第二季度的收入也受益於未來開始日期百分比的提高，因為本季度確認的許可收入多於遞延的許可收入，略高於我們在上次財報電話會議上提供的 1000 萬美元估計。比林斯線性良好，第二季度 DSO 為 28 天。第二季度的自由現金流為 6300 萬美元，意味著創紀錄的 13% 的自由現金流利潤率。

A couple of additional notes on Q2: one, we retired the remaining principal amount on our January 2023 convertible notes of approximately $146 million with cash from the balance sheet. Two, last month, we reached an agreement to settle the outstanding securities class action litigation, which is subject to documentation, notice to class members and court approval. We recorded a net charge of approximately $38 million for the settlement. This is the amount, inclusive of legal fees and expenses, net of our expected recovery under our D&O insurance. We expect approximately $33 million to be paid and settled in Q3, while the remainder was already paid for legal defense costs in previous quarters. We ended Q2 with cash, cash equivalents and short-term investments of $1.311 billion, down slightly from $1.388 billion in Q1 '23.

關於第二季度的一些附加票據：第一，我們用資產負債表中的現金償還了 2023 年 1 月可轉換票據的剩餘本金約 1.46 億美元。第二，上個月，我們就未決證券集體訴訟達成和解協議，該協議需提交文件、通知集體訴訟成員並獲得法院批准。我們為和解記錄了大約 3800 萬美元的淨費用。這是扣除我們在 D&O 保險下的預期回收金額後的金額，包括法律費用和開支。我們預計將在第三季度支付和結算約 3300 萬美元，而其餘部分已在前幾個季度支付了法律辯護費用。我們以 13.11 億美元的現金、現金等價物和短期投資結束了第二季度，略低於 23 年第一季度的 13.88 億美元。

Moving on to Q3 outlook. The guidance for Q3 '23 is as follows: ACV billings of $220 million to $225 million and revenue of $430 million to $440 million. I'll now provide some more context around our guidance. First, the topline guidance for Q3 assumes that supply chain dynamics for our server partners would remain more or less the same compared to Q2 '23. It also assumes that contract durations would stay approximately flat to slightly down in Q3 '23 compared to Q2 '23. Second, the revenue guidance includes approximately $5 million of revenue benefit from the decline in percentage of orders with future start dates over the last few months. Said differently, we expect to recognize more license revenue in Q3 than is deferred, similar to the dynamic we saw in Q2. Over time, as our partner supply chain constraints resolves and our future start date percentages normalize, we would expect this dynamic to normalize as well.

繼續第三季度展望。 23 年第三季度的指導如下：ACV 賬單為 2.2 億美元至 2.25 億美元，收入為 4.3 億美元至 4.4 億美元。我現在將圍繞我們的指南提供更多背景信息。首先，第三季度的頂線指南假設我們的服務器合作夥伴的供應鏈動態與 23 年第二季度相比或多或少保持不變。它還假設與 23 年第二季度相比，23 年第三季度的合同期限將大致持平或略有下降。其次，收入指引包括約 500 萬美元的收入收益，這些收益來自過去幾個月未來開始日期的訂單百分比的下降。換句話說，我們預計在第三季度確認的許可收入多於遞延收入，類似於我們在第二季度看到的動態。隨著時間的推移，隨著我們合作夥伴供應鏈限制的解決以及我們未來開始日期百分比的正常化，我們預計這種動態也會正常化。

I will now provide an update on our full year 2023 guidance. We have had a solid first half and our renewals business continues to provide a strong foundation for growth and efficiency. Those factors, combined with our continued focus on disciplined expense management, allow us to raise our ACV billings and revenue outlook for the year while reaffirming our prior free cash flow outlook. Our updated guidance for full year fiscal year '23 is as follows: ACV billings of $905 million to $915 million, year-over-year growth of 20% at the midpoint; revenue guidance of $1.8 billion to $1.81 billion, year-over-year growth of 14% at the midpoint; and free cash flow of $100 million to $125 million. I'll now provide some additional color on our full year guidance. First, we are seeing continued new and expansion opportunities for our solutions despite the uncertain macro environment. However, as Rajiv mentioned, we have seen a modest elongation of sales cycles likely due to increased deal inspection. We have considered this dynamic in our updated guidance. We continue to expect that the significant majority of our growth in ACV billings for fiscal year '23 will come from growth in renewals ACV billings with the uncertainty in the macro environment factored into our expectations for new and expansion ACV billings. A reminder that ACV billings for the full year is not simply the summation of 4 quarters ACV billings because of deals with less than one year in contract duration. We expect that full year ACV billings is discounted by approximately 5% relative to the sum of ACV billings from the 4 quarters. Second, similar to our comments last quarter, the full year guidance assumes that contract durations would decrease slightly compared to fiscal year '22. The fiscal year '23 revenue guidance also assumes that the percentage of orders with future start dates would ease slightly in the second half of the fiscal year compared to the first half. Third, the reaffirmed free cash flow guidance of $100 million to $125 million includes the impact of approximately $33 million in net cash outflow expected in Q3 from the previously mentioned litigation settlement. It also includes the impact of approximately $12 million of cash usage in Q3 for nonrecurring tax obligations related to a portion of our employee RSUs vesting this month and other anticipated cash outflows. These cash outflows were not included in our prior guidance for annual fiscal year '23 free cash flow. Finally, I'd like to note that we continue to expect to generate at least $300 million of free cash flow in fiscal year 2025.

我現在將提供我們 2023 年全年指南的更新。我們上半年表現穩健，我們的續訂業務繼續為增長和效率提供堅實的基礎。這些因素，加上我們對紀律性費用管理的持續關注，使我們能夠提高今年的 ACV 賬單和收入前景，同時重申我們之前的自由現金流前景。我們對 23 財年全年的最新指導如下：ACV 賬單為 9.05 億美元至 9.15 億美元，中點同比增長 20%；收入指引為 18 億美元至 18.1 億美元，中點同比增長 14%；自由現金流為 1 億至 1.25 億美元。我現在將在我們的全年指導中提供一些額外的顏色。首先，儘管宏觀環境不確定，我們仍看到我們的解決方案不斷有新的和擴展的機會。然而，正如 Rajiv 所提到的，我們已經看到銷售週期的適度延長可能是由於交易檢查的增加。我們在更新的指南中考慮了這種動態。我們繼續預計，我們在 23 財年的 ACV 賬單增長的絕大部分將來自續訂 ACV 賬單的增長，而宏觀環境的不確定性是我們對新的和擴展的 ACV 賬單的預期因素。提醒一下，全年的 ACV 賬單不僅僅是 4 個季度的 ACV 賬單的總和，因為合同期限少於一年的交易。我們預計全年 ACV 賬單相對於 4 個季度的 ACV 賬單總和有大約 5% 的折扣。其次，與我們上個季度的評論類似，全年指導假設合同期限與 22 財年相比略有縮短。 23 財年的收入指引還假設與上半年相比，本財年下半年具有未來開始日期的訂單的百分比將略有下降。第三，重申的 1 億美元至 1.25 億美元的自由現金流指導包括上述訴訟和解預計在第三季度產生的約 3300 萬美元淨現金流出的影響。它還包括第三季度約 1200 萬美元現金使用的影響，這些現金用於與我們本月歸屬的部分員工 RSU 相關的非經常性納稅義務以及其他預期現金流出。這些現金流出不包括在我們之前對年度 23 財年自由現金流的指導中。最後，我想指出，我們繼續期望在 2025 財年產生至少 3 億美元的自由現金流。

In closing, we are pleased that our Q2 results reflect our continued execution towards our stated objective of sustainable, profitable growth, and we expect to continue that focus.

最後，我們很高興我們的第二季度業績反映了我們對可持續、盈利增長的既定目標的持續執行，我們希望繼續關注這一點。

With that, operator, please open the line for questions.

有了這個，接線員，請打開問題線路。

(Operator Instructions)

（操作員說明）

Our first question comes from the line of Pinjalim Bora with JPMorgan.

我們的第一個問題來自摩根大通的 Pinjalim Bora。

Congrats. It seems like a pretty good quarter. I just wanted to go back to the investigation that you were talking about. Could you maybe explain it in a little bit of a leaner what happened exactly? And it sounds like it's like an underpayment to a vendor. Am I understanding it right? Or what -- help us understand a little bit in less legal terms.

恭喜。這似乎是一個相當不錯的季度。我只想回到你所說的調查。你能不能稍微解釋一下到底發生了什麼？這聽起來像是少付了供應商的錢。我理解對嗎？或者什麼——幫助我們用不太法律的術語來理解一點。

Yes. Let me start and Rukmini, you can explain the details here, right? But the one thing -- the first thing I want to say is that the fundamentals of our business are unchanged. So this matter doesn't impact our market opportunity or the demand for our solutions. And we are working diligently to resolve it as quickly as possible, and we are very focused on driving sustainable profitable growth. Now with respect to that specific matter, Rukmini, maybe you can just explain the details behind it and what we're doing.

是的。讓我開始吧，Rukmini，你可以在這裡解釋細節，對吧？但有一件事——我想說的第一件事是我們業務的基本面沒有改變。所以這件事不會影響我們的市場機會或對我們解決方案的需求。我們正在努力盡快解決它，我們非常專注於推動可持續的盈利增長。現在關於這個具體問題，Rukmini，也許你可以解釋一下它背後的細節以及我們正在做的事情。

Sure. Yes. Pinjalim. So what we discovered was that certain eval software, evaluation software, from one of our third-party providers, so somebody who provides us software, which is intended for evaluation purposes was instead used for validation, interoperable, testing and proof of concept over a multiyear period. So that is a -- we discovered that, and as we said on the call, that matter is ongoing. And because of that Pinjalim, we weren't able to disclose expense information on the call, and we've announced that we expect to be unable to file our 10-Q in a timely manner, given that we want to make sure this is resolved first. Now I want to also provide a little bit of color that we are -- given this, we still believe that our topline results, our free cash flow as we reported it, are all unimpacted by this. And when we look forward to guidance, we are pleased to be able to raise our revenue and ACV billings guide, and we're comfortable with the $100 million to $125 million of free cash flow guidance for the year after factoring in the potential impact from this third-party software use that we mentioned on the call. And as I noted in my prepared remarks, the free cash flow guidance also includes the impact of the $33 million approximately from the settlement of the litigation and the impact of this $12 million of cash usage in Q3 for nonrecurring tax obligations related to employee RSUs vesting. And these cash outflows were not included in our prior guidance for the full year free cash flow.

當然。是的。 Pinjalim。因此，我們發現某些評估軟件，評估軟件，來自我們的第三方供應商之一，因此向我們提供軟件的人，旨在用於評估目的，而不是用於驗證、互操作、測試和概念證明多年期。所以這是一個 - 我們發現了這一點，正如我們在電話中所說的那樣，這件事正在進行中。由於那個 Pinjalim，我們無法在電話中披露費用信息，我們已經宣布我們預計無法及時提交我們的 10-Q，因為我們想確保這是先解決。現在我還想提供一點我們的顏色 - 鑑於此，我們仍然相信我們的收入結果，我們報告的自由現金流都不受此影響。當我們期待指導時，我們很高興能夠提高我們的收入和 ACV 賬單指南，並且在考慮到潛在影響後，我們對今年 1 億至 1.25 億美元的自由現金流指導感到滿意我們在電話中提到的這個第三方軟件的用途。正如我在準備好的評論中指出的那樣，自由現金流量指南還包括訴訟和解帶來的大約 3300 萬美元的影響，以及第三季度這 1200 萬美元的現金使用對與員工 RSU 歸屬相關的非經常性納稅義務的影響.這些現金流出不包括在我們之前對全年自由現金流的指導中。

Yes. Understood. And Rajiv, we had -- with some of our discussions with some of your partners seem to suggest that the VMware opportunity is taking shape. But I wanted to ask you, one of the discussions kind of highlighted that just the complexity of some very large VMware customers using tens of thousands of VMs, who might be looking at Nutanix as an alternative. It's just complex to kind of move from one to the other, of course. So I wanted to ask you, what can Nutanix do or what are you doing to kind of make those large companies feel a little bit at you to kind of move those large VMware environments over to Nutanix? And how has those -- some of those discussions have been progressing?

是的。明白了。拉吉夫，我們與您的一些合作夥伴進行了一些討論，似乎表明 VMware 的機會正在形成。但我想問你，其中一個討論強調了一些使用數万台 VM 的非常大的 VMware 客戶的複雜性，他們可能會將 Nutanix 作為替代方案。當然，從一個轉移到另一個是很複雜的。所以我想問你，Nutanix 可以做什麼或者你正在做什麼來讓那些大公司對你有一點感覺，以便將那些大型 VMware 環境轉移到 Nutanix？這些 - 其中一些討論進展如何？

Absolutely. As you can imagine, Pinjalim, we are engaged with many of these customers right now. We have a significantly higher level of engagement. A lot of these are prospective customers that aren't existing ones, and they're all looking to explore their options and manage these potential risks related to the acquisition. What you should keep in mind is, for many, many years, we've been doing these things. We've been doing these migrations. In many cases, when we go out there, we insert our solution on top of a VMware platform, right? Customers are running vSphere, we go in there and we insert AOS, which is our software-defined storage. And over time, customers may choose to use our own hypervisor AHV, instead of the VMware hypervisor. So we have a lot of experience with doing migrations for our customers. Now the large is the environment, the more complex it is and we know that. And typically, we will do this one workload at a time, for example. They will pick us for one use case and then over time, we will expand and other use cases. Historically, it used to be in the computing, but these days, we do databases. We do all mission-critical workloads, all of this. So we have a lot of experience doing these migrations. That said, Pinjalim, I think what you heard -- yes, this is complex, it's going to take time, and this is why we are not factoring in any significant benefit in our fiscal '23 outlook. We expect these cycles to be long, typically 9, 12 months for some of the larger deals.

絕對地。 Pinjalim，您可以想像，我們現在正在與其中許多客戶進行接觸。我們的參與度明顯更高。其中很多是潛在客戶，而不是現有客戶，他們都希望探索他們的選擇並管理與收購相關的這些潛在風險。你應該記住的是，很多很多年以來，我們一直在做這些事情。我們一直在進行這些遷移。在很多情況下，當我們走出去時，我們會將我們的解決方案插入到 VMware 平台之上，對嗎？客戶正在運行 vSphere，我們進入其中並插入 AOS，這是我們的軟件定義存儲。隨著時間的推移，客戶可能會選擇使用我們自己的管理程序 AHV，而不是 VMware 管理程序。因此，我們在為客戶進行遷移方面擁有豐富的經驗。現在環境越大，越複雜，我們知道這一點。例如，通常我們一次只做一個工作負載。他們會為一個用例選擇我們，然後隨著時間的推移，我們將擴展和其他用例。從歷史上看，它曾經在計算領域，但現在，我們在做數據庫。我們處理所有關鍵任務工作負載，所有這些。所以我們在進行這些遷移方面有很多經驗。也就是說，Pinjalim，我想你聽到的是什麼——是的，這很複雜，需要時間，這就是為什麼我們沒有在我們的 23 財年展望中考慮任何重大收益。我們預計這些週期會很長，對於一些較大的交易，通常為 9、12 個月。

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

我們的下一個問題來自 Jim Fish 和 Piper Sandler 的台詞。

I wanted to build off the last couple of questions, actually. Maybe could you talk about the push-pull effect you're seeing with the demand environment given that ability to consolidate the competitive landscape, especially on the VMware side and maybe even the traditional storage perspective as well as just the HCI market against those traditional storage guys versus the general macro environment. It sounds like, Rajiv, you're talking about an increased lengthening of deal cycles. Is there a way to think about how much longer deals are also taking? So net of my question is, what are you seeing for the push-pull on all these kind of factors on demand? And is there a way to quantify how much longer these deals are taking?

實際上，我想建立最後幾個問題。也許你能談談你在需求環境中看到的推拉效應，因為它有能力鞏固競爭格局，尤其是在 VMware 方面，甚至可能是傳統存儲的角度，以及 HCI 市場與那些傳統存儲的對比伙計們與一般的宏觀環境。聽起來，拉吉夫，你在談論交易週期的延長。有沒有辦法考慮交易還需要多長時間？所以我的問題是，你對所有這些按需因素的推拉有什麼看法？有沒有辦法量化這些交易需要多長時間？

Yes. Jim, indeed, there is a push and pull on this, as you say. So first on the macro. We see strong performance from our renewals and that's been continuing. And of course, that helps reduce the risk in our business model and the guide that we put out there. Now we have taken into account the current macro environment. As you say, right, in terms of the impact that we are seeing, we have been seeing greater inspection. Now what I would say is, what that means is, very -- I would say, so far, it has been a modest increase in the average sales cycle, right? The time it takes to close the deal goes up a bit, and we're seeing this across both in new logos or new customers and existing customers looking to expand, right? They're just being a little bit more careful, taking some more time to review the economics of everything and looking at the TCO benefits. Now that said, we do have strong TCO benefits that typically compared to legacy infrastructure. So when you look at the dynamics vis-a-vis the second piece of it, which is compared to third party or legacy 3-tier storage, I think those dynamics are largely the same. When there is, for example, time for a refresh or any kind of modernization effort, the customers compare HCI versus 3 tier, and then able to show a better TCO, a much more modern ability for them to go build a cloud platform. And that dynamic hasn't really changed. Clearly, the VMware dynamics certainly will help in the long term, but not in the short term. But in the short term, what I would say, is increase the level of engagement. So there's clearly a push and pull. We have the -- to summarize, we've got the renewals business that provides a foundation. On the new business, small elongation and deal cycles. On the other side, we're seeing more engagement from a VMware basis. And so we've tried to do our best to factor in all of these dynamics into the guide that we gave you.

是的。吉姆，確實，正如你所說，這有推拉作用。所以首先在宏觀上。我們從續約中看到了強勁的表現，而且這種情況一直在持續。當然，這有助於降低我們的商業模式和我們發布的指南中的風險。現在我們已經考慮到當前的宏觀環境。正如您所說，就我們所看到的影響而言，我們一直在進行更嚴格的檢查。現在我要說的是，這意味著，非常——我想說，到目前為止，平均銷售週期略有增加，對吧？完成交易所需的時間有所增加，我們在新徽標或新客戶以及希望擴展的現有客戶中都看到了這一點，對嗎？他們只是更加小心了一點，花更多的時間來審查一切的經濟性並查看 TCO 收益。話雖如此，與遺留基礎設施相比，我們確實擁有強大的 TCO 優勢。因此，當您查看與第三方或傳統 3 層存儲相比的第二部分的動態時，我認為這些動態在很大程度上是相同的。例如，當有時間進行更新或任何類型的現代化工作時，客戶會將 HCI 與 3 層進行比較，然後能夠顯示出更好的 TCO，這是他們構建雲平台的更現代的能力。而且這種動態並沒有真正改變。顯然，從長遠來看，VMware 動力肯定會有所幫助，但在短期內不會。但在短期內，我想說的是提高參與度。所以顯然存在推力和拉力。我們有 - 總而言之，我們有提供基礎的續訂業務。關於新業務，小伸長和交易週期。另一方面，我們看到更多來自 VMware 的參與。因此，我們已盡力將所有這些動態因素納入我們提供給您的指南中。

That's helpful. Impressive on the free cash flow beat this quarter. Just trying to make sure here, how much of this was driven by essentially the operations versus working capital numbers and really underneath, we're trying to understand where OpEx would have kind of come in, barring any of these added expense issues and Rukmini, sorry to layer on here, but you just had mentioned the free cash flow outlook included the potential impact of this investigation. Does that also assume the catch-up potential?

這很有幫助。本季度的自由現金流令人印象深刻。只是想在這裡確定，其中有多少是由運營與營運資金數字驅動的，實際上，我們試圖了解 OpEx 會從哪裡進來，除非這些額外的費用問題和 Rukmini，抱歉在這裡多說幾句，但你剛剛提到自由現金流前景包括這項調查的潛在影響。這是否也具有追趕潛力？

Thank you, Jim. All good questions. So let me try to parse that. So as I said in my remarks, Jim, we are not commenting on expense -- expenses either for Q2 or on a forward-looking basis. So I'll start there. But in terms of free cash flow, right, for Q2, as you said, we're happy with the free cash flow performance in Q2. And I will just say that I think we talked about DSOs on the call, right, which was 28 days. It was unusually low in Q1, and we saw it kind of come back to, I would say, within the range, right, in Q2 because typically, our payment terms for DSOs are 30 to 45 days. And so I would expect it to be sort of in that area. Now to your second question, so yes, we are comfortable with our full year $100 million to $125 million free cash flow guidance, Jim, including the potential impact from -- arising from this matter, right, related to the third-party software use that we mentioned on the call and the other sort of items around the $33 million for the settlement and the onetime $12 million tax obligations we discussed.

謝謝你，吉姆。所有的好問題。所以讓我試著解析一下。因此，正如我在發言中所說，吉姆，我們不會對費用發表評論——無論是第二季度的費用還是前瞻性的費用。所以我將從那裡開始。但就自由現金流而言，正如你所說，對於第二季度，我們對第二季度的自由現金流表現感到滿意。我只想說，我認為我們在電話會議上討論了 DSO，對，那是 28 天。第一季度異常低，我們看到它有點回到，我會說，在第二季度的範圍內，因為通常，我們的 DSO 付款期限為 30 到 45 天。所以我希望它在那個領域有點。現在回答你的第二個問題，是的，吉姆，我們對全年 1 億至 1.25 億美元的自由現金流指導感到滿意，包括與第三方軟件使用有關的潛在影響我們在電話會議上提到了 3300 萬美元的和解費用以及我們討論過的 1200 萬美元的納稅義務。

Our next question comes from the line of Mike Cikos with Needham & Company.

我們的下一個問題來自 Needham & Company 的 Mike Cikos。

I did have a couple of questions. Just to circle back to the Audit Committee, and I want to make sure that everyone had this right. So this investigation that we have right now is totally independent of the -- I'm not sure I'm getting the numbers right now, the anticipated expense in 3Q that you had cited regarding a $33 million for the litigation settlement, correct?

我確實有幾個問題。回到審計委員會，我想確保每個人都有這個權利。因此，我們現在進行的這項調查完全獨立於 - 我不確定我現在是否得到了數字，你提到的 3300 萬美元的訴訟和解費用在第三季度的預期費用，對嗎？

That's correct, Mike.

沒錯，邁克。

And so if I look at the audit investigation specifically, can you provide us like when was the issue discovered? When did the Audit Committee commenced its investigation? When did Nutanix engaged outside counsel? I'd just like to see if we can get a time line for how these events are playing out under the hood? Again, just because we have this limited guidance that we're being provided today.

因此，如果我具體查看審計調查，您能告訴我們問題是什麼時候發現的嗎？審計委員會什麼時候開始調查的？ Nutanix 何時聘請了外部顧問？我只是想看看我們是否可以獲得這些事件在幕後如何進行的時間表？同樣，只是因為我們有今天提供的這種有限指導。

Yes. Thank you, Mike, for the question. If I understand that there's limited guidance here, Mike, and we -- what I can say is that given this review is ongoing, what we can say is that we are working diligently, right, with the Audit Committee and our outside counsel to resolve this as quickly as possible so we can be in a position to share more with you. At this point, we're not able to kind of provide very specific timelines to your question, but we are working diligently to make sure we are resolving this appropriately and in a timely manner.

是的。邁克，謝謝你提出這個問題。如果我知道這裡的指導有限，邁克，我們——我可以說的是，鑑於這次審查正在進行，我們可以說的是，我們正在與審計委員會和我們的外部法律顧問一起努力解決問題盡快完成，以便我們能夠與您分享更多信息。在這一點上，我們無法為您的問題提供非常具體的時間表，但我們正在努力工作以確保我們能夠適當及時地解決這個問題。

And I just wanted to see -- like one of the things I'm struggling with on my side, and again, it's probably just a misunderstanding on all of the legal comportment that are involved here. But I know that you guys are saying that this third-party provider was using software for evaluate. I don't want to butcher it, but I think it was supposed to be -- yes, and I'm trying to see, is there an impact on revenue as a result of this? Or is it entirely expense base? Because again, I'm trying to get it like, is there potential for this in any way to impact your topline results? Like you're giving us the revenue and ACV billings guide, is that untouched by this investigation at this point? And then the follow-up is like, how is it we don't have the expenses here, but you guys are able to refer the free cash flow. I think that's what I'm wrestling on my side. And I apologize for the long-winded question, but I just want to make sure I'm being clear.

我只是想看看——就像我這邊正在努力解決的事情之一，再一次，這可能只是對這裡涉及的所有法律行為的誤解。但我知道你們是說這個第三方提供商在使用軟件進行評估。我不想屠殺牠，但我認為它應該是——是的，我想看看，這是否會對收入產生影響？還是完全以費用為基礎？因為我再次嘗試理解，這是否有可能以任何方式影響您的頂線結果？就像您向我們提供收入和 ACV 賬單指南一樣，目前調查是否未觸及這一點？然後後續就像，我們這裡沒有費用怎麼辦，但是你們可以參考自由現金流。我認為這就是我正在努力爭取的。對於這個冗長的問題，我深表歉意，但我只是想確保我說清楚了。

Yes. Thank you, Mike. So let me try and clarify some of those pieces. So you are correct that we do not believe that this matter has any impact on our topline metrics, specifically revenue, ACV billings, which as you point out, we've disclosed and we're guiding to. So that's one part of it. And in terms of just -- sorry, what was the second part of your question? I think there was one more question after that.

是的。謝謝你，邁克。因此，讓我嘗試澄清其中的一些內容。所以你是對的，我們認為這件事對我們的頂線指標沒有任何影響，特別是收入、ACV 賬單，正如你指出的那樣，我們已經披露並正在指導。這就是其中的一部分。就只是——抱歉，你的問題的第二部分是什麼？我認為在那之後還有一個問題。

Yes. Yes. So...

是的。是的。所以...

On Free cash flow, I think.

關於自由現金流，我想。

Exactly. Exactly.

確切地。確切地。

Correct. Yes. Sorry about that. So I think on free cash flow, we reported Q2 free cash flow, right? Like that's the $63 million that we reported out. Now for the full year, I think this is important. So I'm glad you asked the question, Mike, that we are comfortable with the $100 million to $125 million free cash flow for the year after factoring in a potential impact from this third-party software use that we mentioned on the call and the 2 other items, right? So $33 million, which as you said, a separate matter from a previously outstanding litigation settlement. So that's $33 million that was not factored in before, and this $12 million of cash usage in Q3 for nonrecurring tax obligations related to a portion of our employee RSUs vesting this month.

正確的。是的。對於那個很抱歉。所以我認為關於自由現金流，我們報告了第二季度的自由現金流，對嗎？就像我們報告的 6300 萬美元一樣。現在對於全年，我認為這很重要。所以我很高興你問了這個問題，邁克，在考慮到我們在電話會議上提到的第三方軟件使用的潛在影響以及其他 2 項，對嗎？所以 3300 萬美元，正如你所說，這與之前未決的訴訟解決方案不同。因此，這是之前未計入的 3300 萬美元，以及第三季度的 1200 萬美元現金用於與本月歸屬的部分員工 RSU 相關的非經常性納稅義務。

Okay. Okay. And then maybe, again, this is just me being naive here. There was phrase it how you will, but again, I just want to make sure, with the third-party provider, like how were they supposed to be using the software versus what we're seeing today as far as its interoperability testing? Again, I just want to make sure I'm aware of like the different nuances here for what's causing this investigation in the first place.

好的。好的。然後也許，這只是我在這裡太天真了。有人說你會怎樣，但我還是想與第三方提供商一起確定，比如他們應該如何使用該軟件，而不是我們今天看到的互操作性測試？同樣，我只是想確保我首先了解導致此調查的不同細微差別。

Yes. Understood, Mike. So let me -- so what -- this is the software that we were using from a third-party software provider. It was evaluation software intended to be used for evaluation purposes, and instead, it was being used by us for interoperability testing, validation and proof of concept. So that is the matter that's being reviewed right now.

是的。明白了，邁克。所以讓我 - 那又怎樣 - 這是我們使用的來自第三方軟件提供商的軟件。它是旨在用於評估目的的評估軟件，相反，它被我們用於互操作性測試、驗證和概念證明。這就是現在正在審查的問題。

I see. And so because you -- it was intended for evaluation, but instead you guys were using it for interoperability testing and validation. Because of the different usage of that software, there's potentially a different cost for what you had been paying that provider. Is that a very simple way of putting that? I know I'm probably mischaracterizing a lot of that.

我懂了。因此，因為您 - 它旨在用於評估，但你們卻將其用於互操作性測試和驗證。由於該軟件的不同用途，您向該提供商支付的費用可能會有所不同。這是一種非常簡單的表達方式嗎？我知道我可能誤解了很多。

Yes.

是的。

Okay. Okay.

好的。好的。

Yes, that's right, Mike. So yes, it's intended to be used for evaluation software, and we discovered that was instead being used for these other inoperability, validation and proof of concept, and so that's what's under review right now.

是的，沒錯，邁克。所以是的，它旨在用於評估軟件，我們發現它被用於其他不可操作性、驗證和概念證明，所以這就是目前正在審查的內容。

Yes. And maybe I'd just say one thing there, Rukmini. And what this means, therefore, there might be some additional expense, right, in terms of using usage of that product.

是的。也許我只想說一件事，Rukmini。因此，這意味著在使用該產品方面可能會產生一些額外費用。

That's correct.

這是正確的。

So that's why we are -- until we have -- this is done, we can't really specifically give you expenses.

所以這就是為什麼我們 - 在我們完成之前 - 我們無法真正具體地為您提供費用。

Our next question comes from the line of Meta Marshall with Morgan Stanley.

我們的下一個問題來自 Meta Marshall 與摩根士丹利的對話。

Maybe one question for me or first question for me. Just on kind of the beat and better outlook. I'm just trying to get a sense of the blend of how much of that is from earlier renewals and then how much of that is from the future, less future start dates kind of moving in. So just trying to get a sense of kind of what the various contributors to the upside were.

也許是我的一個問題或第一個問題。只是有點節拍和更好的前景。我只是想了解其中有多少來自較早的續訂，以及有多少來自未來，更少的未來開始日期會進入。所以只是想獲得一種感覺上行的各種貢獻者是什麼。

And then maybe just a second question, not to belabor the point, but just is there a way to contextualize like in fiscal year '22 just how much payments were to this vendor just to kind of get a sense of why you have confidence that even with an increase in those payments, you would still be able to kind of meet the free cash flow target that you laid out.

然後也許只是第二個問題，不是為了強調這一點，而是有沒有一種方法可以像在 22 財年那樣將向該供應商支付了多少款項進行背景化，只是為了了解為什麼你有信心甚至隨著這些付款的增加，您仍然能夠滿足您制定的自由現金流量目標。

Thank you for the questions, Meta. So let me take that one by one. So I think your first question was around just the raise for the full year, right, and what contributed to that. So I mean, clearly, in Q2, we beat both on ACV billings and on revenue, right? And so I think that certainly makes us feel more comfortable raising the guide for the full year.

謝謝你的問題，Meta。所以讓我一個一個地講。所以我認為你的第一個問題是關於全年的加薪，對吧，以及是什麼促成了這一點。所以我的意思是，很明顯，在第二季度，我們在 ACV 賬單和收入上都擊敗了，對吧？因此，我認為這肯定會讓我們更願意提高全年的指南。

On the revenue piece, we did try to provide some color for you in the prepared remarks around the percentage of future start dates. So that does have an impact. So you saw it had about $11 million impact in Q2, and for Q3, we expect that to be about $5 million more of license revenue that gets recognized in quarter versus deferred. And so there was some of that effect factored in, Meta, to your question on the full year.

在收入部分，我們確實嘗試在準備好的關於未來開始日期百分比的評論中為您提供一些顏色。所以這確實有影響。所以你看到它在第二季度產生了大約 1100 萬美元的影響，而對於第三季度，我們預計與遞延相比，本季度確認的許可收入將增加約 500 萬美元。因此，Meta 對你全年的問題有一些影響。

And I think on renewals, as Rajiv has said and I emphasize this, too, that our renewal business is doing well, and so that, again, continues to underpin the significant majority of our growth and lowers the risk somewhat given all of that is based on deals that we've already done that are coming up for renewal.

我認為關於續約，正如拉吉夫所說，我也強調這一點，我們的續約業務表現良好，因此，再次繼續支撐我們增長的絕大部分，並在一定程度上降低風險，因為所有這些都是基於我們已經完成的即將續約的交易。

Now I think the second part of your question was whether we'd be able to quantify some of these payments, and we are not able to provide any specific quantification on that at this point, Meta, given the review is ongoing. But as I said before, we are continuing to work diligently to try and get this resolved.

現在我認為你問題的第二部分是我們是否能夠量化其中的一些付款，我們目前無法提供任何具體的量化，Meta，因為審查正在進行中。但正如我之前所說，我們正在繼續努力工作，試圖解決這個問題。

Okay. Got it. I mean just maybe following up on the renewal piece. Clearly, those are doing well, but just maybe in the past quarters, early renewals have been a greater contributor to upside. So just -- I'm just trying to get a sense if there's no early renewal component that we should be thinking of here as well.

好的。知道了。我的意思是也許只是跟進續訂作品。顯然，這些表現不錯，但也許在過去幾個季度，提前續約對上行貢獻更大。所以只是 - 我只是想了解一下是否沒有我們應該在這裡考慮的早期續訂組件。

Yes. I would say, it's not outside the norm, Meta. So anything we've discussed before, we typically do go to our customers as a lot of other vendors do as well, about even 6 months advance of the renewal date to begin those discussions. So there will be some timing movements here and there. We do some co-terming like most subscription vendors do. So -- but nothing outside of the normal or what we would expect that contributed to renewal.

是的。我會說，這並不超出常態，Meta。因此，我們之前討論過的任何事情，我們通常都會像許多其他供應商一樣去我們的客戶那裡，甚至在續訂日期前大約 6 個月開始這些討論。所以這裡那裡會有一些時間上的變動。我們像大多數訂閱供應商一樣做一些共同術語。所以 - 但沒有任何超出正常範圍或我們期望的有助於更新的東西。

Our next question comes from the line of Ben Bollin with Cleveland Research.

我們的下一個問題來自 Ben Bollin 與 Cleveland Research 的合作。

I wanted to circle back a little bit on the renewals. Could you speak to how much of the footprint was up for renewal or is up for renewal in fiscal '23 and how that develops into fiscal '24? And then I had a follow-up.

我想稍微回顧一下續約。您能否談談在 23 財年有多少足跡需要更新或需要更新，以及如何發展到 24 財年？然後我進行了跟進。

Ben, thanks for the question. Yes. So we haven't quite provided kind of a percentage almost of ARR, right, that's up for renewal, I think, is your question. So we haven't quite quantified that, Ben, but I will say that overall, given where we are in our journey, right, really all we sell now is subscription software, term licensing software other than professional services, which is a small portion of the overall business. So -- and our renewals are starting to flow in, right? So we do expect to see kind of continued growth in that base of renewals as we layer on kind of the additional trims that we -- urgent software that we have sold over time, right? So I would say that is a growing base of renewals, but we haven't provided a specific number or a percentage of ARR that's up in this year.

本，謝謝你的提問。是的。所以我們還沒有提供幾乎 ARR 的百分比，對，我認為這是續約的問題，這是你的問題。所以我們還沒有完全量化，Ben，但我會說，總體而言，考慮到我們在旅程中所處的位置，對，我們現在真正銷售的是訂閱軟件，除了專業服務之外的術語許可軟件，這是一小部分的整體業務。所以——我們的續約開始湧入，對吧？因此，我們確實希望看到續訂基礎的持續增長，因為我們會添加一些額外的裝飾——隨著時間的推移我們已經售出的緊急軟件，對吧？所以我想說這是一個不斷增長的續約基礎，但我們沒有提供今年增加的具體數字或 ARR 百分比。

Okay. And then the other item. When I look at the billings targets into 3Q and then fiscal year, it implies a pretty notable acceleration into 4Q. What are you seeing that drives that acceleration following what you're guiding to in 3Q and then what you're expecting in 4Q?

好的。然後是另一個項目。當我查看第三季度和財政年度的賬單目標時，這意味著進入第四季度的速度非常顯著。你看到什麼推動了你在第三季度的指導以及你對第四季度的期望之後的加速？

So I think a few things. So when you say acceleration, did you mean growth? I think a couple of things, I would say, Ben, right? So typically, our Q4 seasonally is a better quarter for us than Q3 is, and that's because it's the end of the fiscal year for us and so that is expected. We also have -- last year, our Q4 ACV billings provides a bit of a -- somewhat of an easier comp given some of the dynamics that were happening in Q4 of last year. But I think from -- when you look at the guidance for the Q3 ACV billings and quarter-over-quarter, what's implied for Q4, it's, I would say, within the range of what we would expect from Q3 to Q4.

所以我想一些事情。所以當你說加速時，你是指增長嗎？我想幾件事，我會說，本，對吧？因此，通常情況下，我們的第 4 季度季節性對我們來說比第 3 季度更好，那是因為它是我們財政年度的末尾，所以這是預期的。考慮到去年第四季度發生的一些動態，我們也有——去年，我們的第四季度 ACV 賬單提供了一些——更容易的比較。但我認為——當你查看第三季度 ACV 賬單和季度環比的指導時，第四季度的暗示是什麼，我想說，在我們從第三季度到第四季度的預期範圍內。

Our next question comes from the line of Matt Hedberg with RBC.

我們的下一個問題來自 RBC 的 Matt Hedberg。

You guys are coming up, I believe, around the 1-year anniversary from when you had some sales attrition issues last year. It feels like a long time ago now. I'm wondering, though, if you could talk about just how general attrition levels stand today and maybe sort of kind of overall hiring plans for the remainder of the year?

我相信你們會在去年遇到一些銷售流失問題的 1 週年紀念日左右出現。現在感覺像是很久以前的事了。不過，我想知道，您是否可以談談今天的總體人員流失水平，以及今年剩餘時間的總體招聘計劃？

Yes. I can take that, Matt. So in general, by the way, the environment has gotten a lot better over the last year from a hiring perspective as well as the retention given what's happening out there in the markets, both with respect to other large tech companies as well as a lot of the start-ups that our people were potentially going to, right? So from that situation, I think things have gotten a lot better.

是的。我可以接受，馬特。所以總的來說，順便說一句，從招聘的角度來看，去年的環境已經好很多，考慮到市場上發生的事情，無論是對於其他大型科技公司還是很多我們的員工可能會去的初創企業，對吧？所以從那種情況來看，我認為情況已經好很多了。

Now to your question on the sales front specifically, we are doing -- again, every quarter, we've been seeing repatriation -- retention improve actually quarter-over-quarter. And our rep headcount has been roughly flat. We do expect in FY '23 to grow our rep count modestly from where we're at. And at the same time, of course, we are very focused on continuing to drive higher rep productivity.

現在具體針對您在銷售方面的問題，我們正在做——再一次，每個季度，我們都看到遣返——保留率實際上比上一季度有所提高。我們的代表人數大致持平。我們確實希望在 23 財年能夠從我們現在的位置適度增加我們的代表數量。當然，與此同時，我們非常專注於繼續推動更高的代表生產力。

Got it. That's helpful. And then congrats on the -- on that large federal agency wins. Maybe just kind of expand the aperture a bit and just talk about sort of like public sector spend in general, how much of a driver has that been for you? And how do you expect that can continue from here?

知道了。這很有幫助。然後祝賀 - 那個大型聯邦機構獲勝。也許只是稍微擴大一下範圍，然後談談公共部門的一般支出，這對你有多大推動作用？您如何期望從這裡繼續下去？

Yes. So first of all, I'll just say, in the U.S. -- by the way, we only have two verticals. One is public sector and the other is health care. So public sector is clearly very important for us. We are well penetrated into public sector across both civilian, defense, government agencies across the board as well as state and local education. So it's a very important market. That's why we have a vertical presence in it targeted at that market. And I would say, it continues to be a very solid source of business for us. We continue to drive their modernization efforts. We are fairly broadly deployed, but we see continued opportunities there as well. So it's a good and very important sector for us with continued spending.

是的。所以首先，我只想說，在美國——順便說一句，我們只有兩個垂直領域。一個是公共部門，另一個是醫療保健。所以公共部門顯然對我們非常重要。我們廣泛滲透到民用、國防、政府機構以及州和地方教育的公共部門。所以這是一個非常重要的市場。這就是為什麼我們針對該市場開展垂直業務。我會說，它仍然是我們非常可靠的業務來源。我們繼續推動他們的現代化工作。我們的部署相當廣泛，但我們也在那裡看到了持續的機會。因此，對於我們持續支出來說，這是一個很好且非常重要的部門。

Now of course, they have their budget cycles, as you know, every year, right? I mean depending on certain quarters where for the year-end, we tend to see a bump in the public sector sales during that quarter. But that's -- again, it's all as usual, I would say.

當然，他們每年都有自己的預算週期，對吧？我的意思是，根據年底的某些季度，我們往往會看到該季度公共部門銷售額的增長。但那是——再一次，一切如常，我會說。

Our next question comes from the line of Aaron Rakers with Wells Fargo.

我們的下一個問題來自 Aaron Rakers 與 Wells Fargo 的合作。

I have got two as well, if I can. I just wanted to maybe first ask about the ACV piece of the guidance. I know that you talked about the macro dynamics, but looking at the high end of the guidance range, it's still down about 15% or 16% sequential. I know you also talked about possibly a slight decline in duration. So I'm curious, that's definitely below what seasonalities look like over the last couple of years. Is that all just macro? Is there something else that you're factoring in or maybe quantify kind of that slight possible decline in duration? Just trying to unpack that guidance for ACV this quarter.

如果可以的話，我也有兩個。我只是想先問一下指南中的 ACV 部分。我知道你談到了宏觀動態，但從指導範圍的高端來看，它仍然連續下降了大約 15% 或 16%。我知道你也談到了持續時間可能會略有下降。所以我很好奇，這絕對低於過去幾年的季節性。這只是宏觀的嗎？您是否正在考慮其他因素或量化持續時間可能出現的輕微下降？只是試圖在本季度解開 ACV 的指導。

Sure. Thank you, Aaron. So yes, we were happy to be able to raise both revenue and ACV billings guidance. And you're right, Aaron, that sort of half over half, I guess, it does imply a decline in ACV billings like second half over first half. And I would say, one is what you've already pointed out and which we talked about, which is this modest elongation in sales cycles that we -- there was anecdotal in Q1. We saw it. We saw a modest elongation in Q2. And so we have factored in, as I mentioned in my remarks, to write some conservatism as it relates specifically to the new and expansion portion about the ACV billings portion, right, of the overall guide. So there's definitely that. And if you look at a year-over-year growth rate, I think there's still a meaningful growth rate year-over-year for the second half. So that's kind of how we are thinking about the ACV guidance for the full year and implied second half.

當然。謝謝你，亞倫。所以是的，我們很高興能夠提高收入和 ACV 賬單指導。亞倫，你是對的，我猜，一半超過一半，這確實意味著 ACV 賬單的下降，比如下半年比上半年。我想說的是，一個是你已經指出的和我們討論過的，這是我們銷售週期的適度延長——第一季度有傳聞。我們看到了。我們在第二季度看到了適度的增長。因此，正如我在評論中提到的那樣，我們已經考慮到要寫一些保守主義，因為它特別涉及總體指南中關於 ACV 賬單部分的新部分和擴展部分，對吧。所以肯定有。如果你看一下同比增長率，我認為下半年的同比增長率仍然很有意義。這就是我們對全年和隱含的下半年 ACV 指導的思考方式。

Yes, very, very helpful. And then on the free cash flow -- and I apologize for going back to this, but if you look at the first half of the year, you did about $109 million of free cash flow. If I take the adjustments that you've quantified, factoring into, let's just call it, the midpoint of that $100 million to $125 million, factor back in the $33 million and the $12 million that you talked about is still a particularly large decline relative to the first half. So I understand that there's an unquantified element to this investigation dynamic. So I guess the question is, is there anything changing within the free cash flow dynamics, be it working capital that's changed in the back half of your guidance relative to what you saw in the first half? I'm just trying to understand why free cash flow second half versus first half down aside from just those factors that you outlined.

是的，非常非常有幫助。然後是自由現金流——我很抱歉回到這個話題，但如果你看看今年上半年，你的自由現金流約為 1.09 億美元。如果我把你量化的調整考慮在內，我們就稱它為 1 億美元到 1.25 億美元的中點，再考慮到你所說的 3300 萬美元和 1200 萬美元，相對來說仍然是一個特別大的下降到上半場。所以我知道這個調查動態有一個未量化的因素。所以我想問題是，自由現金流動態中是否有任何變化，相對於你在上半年看到的情況，你指導的後半部分的營運資本發生了變化嗎？除了您概述的那些因素之外，我只是想了解為什麼下半年的自由現金流與上半年相比有所下降。

Good question, Aaron, and thank you for asking a clarification question, right? So first is, I think as we sort of -- you just pointed out, actually, we do expect to see lower billings and revenue in the second half which does have an impact, as you can imagine, billings does have a direct impact on free cash flow.

好問題，亞倫，謝謝你提出澄清問題，對嗎？所以首先是，我認為正如我們 - 你剛剛指出的那樣，實際上，我們確實預計下半年的賬單和收入會下降，這確實會產生影響，正如你可以想像的那樣，賬單確實對自由現金流。

And then I think you've done the math right around just the items that we pointed out, and as we said, it does factor in the potential impact from the use of this third-party software as well, which we are not quantifying at this point. So that's how to think about the full year free cash flow guide. We don't anticipate sort of any significant material changes to working capital or anything like that for the rest of the year.

然後我認為您已經圍繞我們指出的項目進行了正確的計算，正如我們所說，它確實也考慮了使用此第三方軟件的潛在影響，我們沒有量化這點。這就是如何考慮全年自由現金流量指南。我們預計在今年餘下的時間裡，營運資金或類似的事情不會發生任何重大的重大變化。

Our next question comes from the line of Jason Ader with William Blair.

我們的下一個問題來自 Jason Ader 和 William Blair 的台詞。

I wanted to ask just, I think, it may be confusing for folks on this third-party evaluation software. I think that -- I think people may be wondering, evaluation of what? What are you guys evaluating with that software?

我想問的只是，我認為，使用這個第三方評估軟件的人可能會感到困惑。我認為——我認為人們可能想知道，評估什麼？你們用那個軟件評估什麼？

Yes. Maybe I'll give you some color, right? So eval software is meant for eval view, right? So you go try it. You go try it out for whatever you're using it for, you try out, and then at some point, you purchase it. What we found was, in some cases, we were using the eval software for doing interoperability testing or customer proof of concepts, validating. So that goes beyond the scope of what the eval software was being used for.

是的。也許我會給你一些顏色，對吧？所以評估軟件是為了評估視圖，對吧？那你去試試吧。無論您使用它做什麼，您都可以嘗試一下，然後在某個時候購買它。我們發現，在某些情況下，我們使用 eval 軟件進行互操作性測試或客戶概念證明、驗證。因此，這超出了評估軟件的用途範圍。

So the eval software, were you paying a very small amount because it was just eval software, and therefore, now you're going to have to pay a lot more because you were using it for things that it wasn't meant for. Is that the idea?

所以 eval 軟件，您是否支付了很少的費用，因為它只是 eval 軟件，因此，現在您將不得不支付更多的費用，因為您將它用於本不該用於的事情。是這個主意嗎？

Yes. So we haven't quantified how much, right? But we can't get into that kind of detail here. But yes, so you're right, right? I mean, therefore, there is some additional expense required likely to -- for the usage and use cases that we were looking at.

是的。所以我們還沒有量化多少，對吧？但我們不能在這裡深入了解那種細節。但是，是的，所以你是對的，對吧？因此，我的意思是，對於我們正在研究的使用情況和用例，可能需要一些額外費用。

Okay. Great. And then another question for you, Rajiv, just on this whole cloud versus on-prem debate. Specifically, are you seeing any slowdown in the migration of workloads to the cloud because of recent customer cost sensitivity just in this environment that we've been in over the last 6 months or so?

好的。偉大的。拉吉夫，關於整個雲與本地部署的辯論，還有另一個問題要問你。具體來說，您是否看到由於我們在過去 6 個月左右的環境中最近的客戶成本敏感度而導致工作負載遷移到雲的速度有所放緩？

Yes. In fact, we gave you an example of a repatriation in our prepared remarks here. Definitely, we are seeing -- especially in many areas of the world now, customers are much, much more cost sensitive in terms of looking at the cloud, the public cloud in particular and saying, when should I go to the public cloud and for what? And they're starting to look at -- this whole cloud economics is a very important part.

是的。事實上，我們在這裡準備好的評論中給了你一個遣返的例子。當然，我們看到——尤其是現在世界上的許多地區，客戶在考慮雲、特別是公共雲方面對成本更加敏感，並說，我什麼時候應該去公共雲，並為什麼？他們開始關注——整個雲經濟學是一個非常重要的部分。

So in the example that we showed, for example, this customer is actually running a production workload in the public cloud because of mission-critical workload, and they decided to migrate it on-prem because they could get a better TCO. They could also get better support experience and response sense from vendors by doing so. So we're seeing that definitely being much more nuanced now. It's not going -- not taking everything you have in going to the public cloud. It's being much more nuanced about what you put where and what is it going to cost you.

因此，在我們展示的示例中，例如，由於任務關鍵型工作負載，該客戶實際上正在公共雲中運行生產工作負載，他們決定將其遷移到本地，因為他們可以獲得更好的 TCO。通過這樣做，他們還可以從供應商那裡獲得更好的支持體驗和響應感。所以我們看到現在肯定更加細微差別。它不會——不會把你擁有的一切都帶到公共雲中。關於你把什麼放在哪里以及你要花多少錢這件事要微妙得多。

Our next question comes from the line of Simon Leopold with Raymond James.

我們的下一個問題來自 Simon Leopold 和 Raymond James 的台詞。

I wanted to see if you could maybe address the elongation of decision process, whether or not there's variation in this behavior between existing customers and new customers? Or whether you're seeing any kind of patterns by customer types, verticals or something discernible like that? And then I've got a very quick follow-up.

我想看看您是否可以解決決策過程的延長問題，現有客戶和新客戶之間的這種行為是否存在差異？或者您是否看到了按客戶類型、垂直行業或類似可識別的東西劃分的任何類型的模式？然後我得到了非常快速的跟進。

Yes, Simon, that's a good question. I don't think we have that level of visibility because a lot of this is somewhat anecdotal, and we've seen it for both new and for existing customers, right? Clearly, for us, typically in the past, expansion in existing customers is generally easier and quicker compared to new, right, net new prospects. But we are seeing an elongation in deal for both, and it's -- but I will also say, it's a very modest elongation at this point. So it's just that, for example, just anecdotally, well, something that a VP may have budget for at a VP level and say, yes, I'm going to go ahead and do it.

是的，西蒙，這是個好問題。我認為我們沒有那樣的知名度，因為其中很多都是軼事，我們已經為新客戶和現有客戶看到了，對吧？顯然，對我們來說，通常在過去，與新的、正確的、淨新的潛在客戶相比，擴展現有客戶通常更容易、更快捷。但我們看到兩者的交易都在延長，而且它 - 但我還要說，在這一點上這是一個非常適度的延長。所以這只是，例如，只是傳聞，好吧，副總裁可能有副總裁級別的預算，然後說，是的，我要繼續做。

Now with being scrutinized the CFO level, say, okay, do you really have to go spend this money now? Can you wait? Is there a TCO benefit that you can quantify for me quickly? So that's the kind of, I think, dynamics that we are seeing. It's hard to parse out specifically as it varies a lot by customers, but we're seeing this as both new and for expansion.

現在被CFO層層審查，說，好吧，你現在真的要花這個錢嗎？你可以等等嗎？您是否可以為我快速量化 TCO 收益？所以我認為，這就是我們所看到的動態。很難具體解析，因為它因客戶而異，但我們認為這是新的和擴展的。

And then just a quick one is, on this third-party software issue, do you have insight into whether or not this affects your cost of goods sold or the R&D line? Or you just don't know that yet? I guess I'm sort of trying to figure out where these charges would show up.

然後一個簡單的問題是，關於這個第三方軟件問題，您是否了解這是否會影響您的銷售成本或研發線？或者你只是還不知道？我想我有點想弄清楚這些費用會出現在哪裡。

Yes. Rukmini?

是的。魯庫米尼？

Thank you, Simon. Yes, at this point, given this is ongoing, Simon, we're not able to get more specific on the types of expenses or where the P&L it might fall.

謝謝你，西蒙。是的，在這一點上，鑑於這是持續的，西蒙，我們無法更具體地了解費用類型或損益可能下降的位置。

Our next question comes from Ruplu Bhattacharya with Bank of America.

我們的下一個問題來自美國銀行的 Ruplu Bhattacharya。

I'm filling in for Wamsi Mohan today. Rukmini, one question for you real quick. Just to clarify on the third-party software issue, do you think that this impacts the historical last couple of years' financials? And will you be restating your financials? And maybe does this impact margins lower and earnings lower? And will you be restating that when you file your statements?

我今天要代替 Wamsi Mohan。 Rukmini，很快就問你一個問題。澄清一下第三方軟件問題，您認為這會影響過去幾年的歷史財務狀況嗎？你會重述你的財務狀況嗎？也許這會影響利潤率降低和收益降低？當你提交你的陳述時，你會重申這一點嗎？

Thank you for the question, Ruplu. Again, this is -- this review is ongoing, and so we really can't comment on any of that, Ruplu, but we are working quickly and diligently to make sure we're able to provide more clarity on all of this. But at this point, there's really nothing more I can add on the specifics.

謝謝你的問題，Ruplu。同樣，這是 - 此審核正在進行中，因此我們真的無法對此發表任何評論，Ruplu，但我們正在迅速而勤奮地工作，以確保我們能夠就所有這些提供更清晰的信息。但在這一點上，我真的沒有什麼可以補充的細節了。

Okay. Okay. Maybe one for Rajiv. You talked about customers inspecting deals more and a slight modest increase in the sales cycle. When I look at the new customer adds, right, this quarter, it was like 490, which really is the lowest quarter for new adds going back to 2017. So can you talk about like any thoughts on that, I mean on that -- on the lower number of net adds this quarter? Any competitive dynamics you're seeing? Or could this also -- any thoughts on FX because you price in dollars and with the dollar strengthening recently, how is the pricing environment? And are you having to price lower? So just your thoughts on the number of new ads and the competitive dynamics that you're seeing and then pricing.

好的。好的。也許是給拉吉夫的。您談到了客戶更多地檢查交易以及銷售週期略有適度增加。當我查看新增客戶時，這個季度大約是 490，這確實是自 2017 年以來新增客戶的最低季度。所以你能談談對此的任何想法嗎，我的意思是 -本季度淨增人數減少？您看到任何競爭動態嗎？或者這也可以——關於外彙的任何想法，因為你以美元定價，並且最近美元走強，定價環境如何？你必須降價嗎？因此，只是您對新廣告的數量和您所看到的競爭動態的想法，然後是定價。

Yes. I'll talk about two of those, and I'll let Rukmini comment on FX. But first of all, we are focusing on higher quality, higher ASP and new logos, more so than new logo comp. So we want to make sure that when we get -- when we put our efforts to go winning a new logo, we make the count, right, much more so and provides us a bigger deal, drives up our sales productivity and also provides more expansion opportunities. So that's been our focus more so than the new logo count. The new logo count shows up in terms of what it is. It's more of a result rather than number that we are trying to focus on in terms of trying to hit a new logo target.

是的。我將談論其中的兩個，我會讓 Rukmini 對 FX 發表評論。但首先，我們關注的是更高質量、更高的 ASP 和新徽標，而不是新徽標組合。因此，我們希望確保當我們獲得 - 當我們努力贏得一個新徽標時，我們會做出正確的決定，並為我們提供更大的交易，提高我們的銷售效率，並提供更多擴展機會。因此，這比新徽標數量更成為我們關注的焦點。新徽標的數量顯示為它是什麼。在嘗試達到新徽標目標方面，我們試圖關注的更多是結果而不是數字。

The second thing I would say is, our -- we are very much holding up our prices, right? Unit prices have remained very stable, and they're not going down in any way. And then the third part of it, in terms of FX, Rukmini, perhaps you can comment.

我要說的第二件事是，我們的價格非常低，對吧？單價一直保持非常穩定，而且不會以任何方式下降。然後是第三部分，就 FX 而言，Rukmini，也許你可以發表評論。

Yes. So Ruplu, your question, I think, was that given that we denominate all of our transaction in U.S. dollars, is it effectively a price increase? Which it is in some parts of the world, right, where the dollar has strengthened. And so what we're seeing is, this is anecdotal, right? In some cases, we've seen it sort of put some pressure on the timing of some transactions, especially in the emerging markets. But overall, I think to Rajiv's point, our unit economics and our overall pricing is in a good place. And so we haven't seen a sort of significant or systematic impact on that from any of these drivers.

是的。所以 Ruplu，你的問題，我認為，鑑於我們所有的交易都以美元計價，這實際上是價格上漲嗎？在世界某些地區，美元已經走強。所以我們看到的是，這是軼事，對吧？在某些情況下，我們已經看到它對某些交易的時間安排施加了一些壓力，尤其是在新興市場。但總的來說，我認為就拉吉夫的觀點而言，我們的單位經濟效益和整體定價處於一個好位置。因此，我們還沒有看到任何這些驅動因素對此產生重大或系統的影響。

Okay. If I can sneak one quick one in. Backlog was very high coming into this fiscal year. Did you also reduce backlog in the quarter? And what's the expectation for backlog for the rest of the year?

好的。如果我能偷偷溜進來一個。本財政年度的積壓非常高。您是否也減少了本季度的積壓？今年剩餘時間對積壓的預期是什麼？

Thank you for the question, Ruplu. So on backlog, yes, you're right. When we entered this fiscal year at the end of July, we did say that we had record levels of backlog, and we expect during the course of the year to use that backlog over time to get to a more normalized level by the end of the year. We did use some backlog in Q2 in line with our expectations, and again, we expect that we will continue to consume that over the course of the rest of this year.

謝謝你的問題，Ruplu。所以在積壓上，是的，你是對的。當我們在 7 月底進入本財政年度時，我們確實說過我們的積壓達到了創紀錄的水平，我們希望在這一年中隨著時間的推移利用積壓在年底前達到更正常的水平年。我們確實在第二季度使用了一些符合我們預期的積壓訂單，而且我們預計我們將在今年剩餘時間繼續消耗這些積壓訂單。

Our next question comes from the line of George Wang with Barclays.

我們的下一個問題來自 George Wang 與 Barclays 的對話。

Congrats on the quarter. Just maybe you can, Rajiv, kind of unpack kind of service provider channel, any kind of update you have. Last quarter, you talked about the SP channel as a new sort of area to kind of land new customers. So just curious if you have any kind of updates on this.

祝賀這個季度。拉吉夫，也許你可以解壓服務提供商渠道，你擁有的任何更新。上個季度，您談到了 SP 渠道作為一種新的領域來吸引新客戶。所以很好奇您是否對此有任何更新。

Yes, I think, George, we are certainly very excited about that route to market because we are relatively new in terms of our using this route to market for us. So it's a growing business opportunity for us. Last quarter, we said, the largest deal in the quarter was done through that SP channel. And it's still -- we're still in the very early stages in that innings there, and we continue to build up our service provider partners. We're trying to enhance the product capabilities to provide a very as broad an offering as possible. So we have -- so it's a continued -- it's a journey, and it's going to take us multiple quarters for it to start becoming a significant chunk of our business. Right now, it's still a small portion of our overall business.

是的，我認為，喬治，我們當然對這條進入市場的途徑感到非常興奮，因為我們在使用這條途徑為我們進行營銷方面相對較新。所以這對我們來說是一個不斷增長的商業機會。我們說，上個季度，本季度最大的交易是通過該 SP 渠道完成的。而且它仍然 - 我們仍處於該局的早期階段，我們將繼續建立我們的服務提供商合作夥伴。我們正在努力增強產品功能，以提供盡可能廣泛的產品。所以我們 - 所以這是一個持續的 - 這是一個旅程，我們需要多個季度才能開始成為我們業務的重要組成部分。目前，它仍然只占我們整體業務的一小部分。

Okay. So I have quick follow-up. Just in terms of the AHV kind of your own hypervisor this quarter is 63% mix, up 2 points sequentially. Can you give some color just on the traction of your own hypervisor? And how are you seeing in terms of the migration kind of customer reception?

好的。所以我有快速跟進。就本季度你自己的虛擬機管理程序的 AHV 類型而言，混合比例為 63%，環比上升 2 個百分點。您能否就您自己的管理程序的牽引力給出一些顏色？您如何看待客戶接待的遷移類型？

Absolutely. And I would say, it's becoming more and more important now in the context of the whole VMware-Broadcom acquisition as well. Now for us, it's always been a blend. We would like to see, of course, more customers using AHV, okay? On the one side, which, of course, will mean that our AHV as a percentage of our workload keeps going up. But at the same time, we see there's a huge opportunity in terms of us inserting into other hypervisor footprints. And in fact, that's the default. It used to be -- if you go back many years ago, that was our default. We would insert it into somebody else's hypervisor environment, like a VMware hypervisor. So we want to continue that because there's still a huge opportunity there.

絕對地。我想說，在整個 VMware-Broadcom 收購的背景下，它現在也變得越來越重要。現在對我們來說，它一直是混合體。當然，我們希望看到更多客戶使用 AHV，好嗎？一方面，這當然意味著我們的 AHV 在工作量中所佔的百分比不斷上升。但與此同時，我們看到在我們插入其他管理程序足跡方面存在巨大的機會。事實上，這是默認設置。它曾經是——如果你回到多年前，那是我們的默認設置。我們會將其插入到其他人的管理程序環境中，例如 VMware 管理程序。所以我們想繼續這樣做，因為那裡仍然有巨大的機會。

So the model with customers has been, in some cases, we will go and start on top of a third-party hypervisor with the rest of our solution stack. So our software-defined storage, for example. And then over time, they will choose to migrate some of that to AHV. We also have a dynamic where in many new customers, they go all in with AHV from day one as well. So we have both those dynamics, and we want to maintain a balance of both because we do want to, of course, have customers on our own hypervisor and sell them the full stack solution.

因此，在某些情況下，與客戶的模型是，我們將在第三方虛擬機管理程序之上開始使用我們的其餘解決方案堆棧。例如，我們的軟件定義存儲。然後隨著時間的推移，他們會選擇將其中一些遷移到 AHV。我們也有一個動態，在許多新客戶中，他們從第一天起就全神貫注於 AHV。所以我們擁有這兩種動態，我們希望保持兩者的平衡，因為我們當然希望讓客戶使用我們自己的管理程序並向他們出售完整的堆棧解決方案。

But at the same time, we want to be able to go after those customers that have other hypervisors and be able to insert into their environment as well. So I'd say -- so that's the blend that we're trying to get comfortable with, but overall, it continues to mature. More and more customers using it. Ecosystem is being -- becoming broader and broader. We have third-party certifications like Red Hat and others on it now. So it's becoming, let's call it, ready for all mission-critical workloads at this point.

但與此同時，我們希望能夠滿足那些擁有其他虛擬機管理程序的客戶，並能夠將其插入到他們的環境中。所以我會說 - 這就是我們試圖適應的混合，但總的來說，它會繼續成熟。使用它的客戶越來越多。生態系統正在——變得越來越廣泛。我們現在有 Red Hat 等第三方認證。因此，它正在成為，讓我們稱之為，在這一點上為所有關鍵任務工作負載做好準備。

Due to the interest of time, our final question comes from the line of Thomas Blakey with KeyBanc.

由於時間關係，我們的最後一個問題來自 Thomas Blakey 與 KeyBanc 的對話。

Nice quarter. I just wanted to maybe just simplify a lot of the questions that were asked about renewal trends. I mean it's very important for hitting some longer-term free cash flow targets. Could you just speak to the trend? No numbers in fiscal '22, fiscal '23, what you're seeing from a renewal opportunity in fiscal '24 to fiscal '25 to hit those targets? Is the trend moving in the right direction? And just start there.

不錯的季度。我只是想簡化很多關於更新趨勢的問題。我的意思是，這對於實現一些長期自由現金流量目標非常重要。你能談談趨勢嗎？ 22 財年、23 財年沒有數字，您從 24 財年到 25 財年的更新機會中看到了什麼來實現這些目標？趨勢是否朝著正確的方向發展？從那裡開始。

Tom, thanks for the question. So look, I think we've emphasized a few times and I'm happy to, I think, clarify I think for you, Tom. It's a good question on just the overall renewals work stream. We've talked about how it's a driver both of our growth and efficiency, and it continues to perform well. And yes, we do believe it's going in the right direction, not just for fiscal year '23, as we talked about in majority of growth coming in, in '23, but also more generally, right? And that's why we did mention that we reiterate our sort of $300 million-plus free cash flow number for '25, and so we continue to believe that, that thesis still holds.

湯姆，謝謝你的提問。所以看，我想我們已經強調了幾次，我想我很樂意為你澄清我的想法，湯姆。這是一個關於整體續訂工作流程的好問題。我們已經討論過它如何成為我們增長和效率的驅動力，並且它繼續表現良好。是的，我們確實相信它正朝著正確的方向發展，不僅僅是 23 財年，正如我們在 23 年的大部分增長中所談到的那樣，而且更普遍，對吧？這就是為什麼我們確實提到我們重申了 25 年超過 3 億美元的自由現金流數字，因此我們繼續相信，該論點仍然成立。

And given the commentary around the macro, maybe a downtick in my opinion from what I'm hearing from the last couple of quarter calls here and combined with the solid results. Can we get some feedback in terms of what maybe the higher kind of net dollar retention rate was on some of these renewals? What are -- where are those numbers up? And what was driving that?

考慮到圍繞宏觀的評論，我認為從最近幾個季度的電話會議中聽到的觀點可能會有所下降，並結合可靠的結果。我們能否就其中一些續訂的較高淨美元保留率獲得一些反饋？什麼是——這些數字在哪裡？是什麼推動了這一點？

Right. So I think if your question on NRR, our net dollar-based retention rate metric, Tom, is that the question?

正確的。所以我想如果你的問題是關於 NRR，我們基於美元的淨保留率指標，湯姆，是這個問題嗎？

Yes. From the renewals, yes.

是的。從更新來看，是的。

Yes. So thank you for that. So I think I want to first clarify that when we talk about renewals billings, we're purely talking only about renewals, right? It does not factor in any of the expansion that is factored into our new and expansion portion, right? That's sort of incremental ACV. NRR, to your point on, we don't actually disclose on a quarterly basis. So what I will say, though, is if we look back to our last Investor Day, we had given some ranges in that 120 to 125-ish percent sort of range, and it is still in that range in terms of the NRR number. And so yes, and as we've also talked about how for new and expansion is where we are baking in some caution as it relates to the full year guide, given what we're seeing in the business.

是的。非常感謝你的幫忙。所以我想我想首先澄清一下，當我們談論續訂賬單時，我們純粹只是在談論續訂，對嗎？它沒有考慮到我們新的和擴展部分中的任何擴展，對嗎？這是一種增量 ACV。 NRR，就你的觀點而言，我們實際上並沒有按季度披露。所以我要說的是，如果我們回顧上一個投資者日，我們給出了 120% 到 125% 的範圍內的一些範圍，並且它仍然在 NRR 數字方面的範圍內。所以是的，正如我們還談到了新的和擴展的是我們在一些謹慎的地方烘烤，因為它與全年指南有關，因為我們在業務中看到了什麼。

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

女士們，先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。