Sudhakar Ramakrishna: Absolutely, Sanjit, thanks again for your question and your continued support of SolarWinds as well. What we are looking at — when we talk about migrations or conversions in almost — not every instance, but a majority of the instances, it’s not just a plain conversion as I described previously, which is we don’t simply give up maintenance dollars and convert them to subscription of HCO or our observability solutions or database or service management for that matter. In almost many situations what happens is that the customer is also expanding with us. This is a consolidation of tool sprawl or reduction of tool sprawl, improvement in alert packing capabilities, getting them ready for the cloud and so on.
So even when we say migration or conversion, there’s an expansion involved. And then separate from that is what we call completely new deals. These new deals can be cross-sell of observability, let’s say into database or service management customers or net new to franchise, which are deals that we may have displaced a competitor, because we are more modern and more cloud-ready for that customer. So we segregate internally between conversions as well as new. And we are seeing robust growth in both dimensions, but we don’t really split out those financials externally.
Sanjit Singh: Understood. And then maybe we go back to just some of your comments on SME. If we think about the business across geos, if you look at how the SME business performed, was there any sort of themes there between North America, Europe, APAC or were they sort of, you saw broadly consistent trends across the region?
Sudhakar Ramakrishna : It’s broadly consistent, Sanjit, notwithstanding some of the macro challenges that we are facing in EMEA due to all the reasons that, war and economies and so on and so forth. But even there our overall transaction count is actually increasing, so, which is an indication of the robust demand environment that we are therein and the criticality of our solutions. And the reason why I highlight the whole SME angle or the mid-market angle is conventional wisdom would say in these situations that you’ll face a lot of pressure, because of lack of traction or ability to invest in those segments and large enterprise so to speak, is okay. We believe based on our experience, the exact opposite is true, which is large enterprise deals and larger deals in general take a little bit more time, more approvals in place, more scrutiny.
So delayed cycles as you’ve heard from many different software vendors. And that’s where a focus on both mid-market and selective enterprise allows us to drive very diversified results.
Operator: Your next question comes from the line of Terry Tillman with Truist Securities.
Unidentified Analyst : This is [Scott Busser] on for Terry. Thanks for taking my question. Just one for me. Curious on the new ESM product you recently announced. Just curious how the initial reception’s been amongst your customer base and maybe how we should think about the profile of a typical customer that will look to deploy ESM across different departments in their organization. Just how we can think about sizing that customer?
Sudhakar Ramakrishna: Yes, so previously our solutions were largely focused on the IT department with ESM of course can traverse inter-department. But in terms of the sweet spot of a customer, I would say that it’s still call it the mid-market customers, including the upper end of the mid-market where the CIO has a significant role to play in deciding the technology solution and the stack across the organization.
Operator: Your next question comes from the line of Kash Rangan from Goldman Sachs.
Jacob Staffel: This is Jacob Staffel on for Kash. Thanks so much for taking the question. Really solid results. So really good to see that continued execution. So, just one or two for me. First one being, I realized that guidance has been raised and Sudhakar, I think you put it well how the low end of the new fiscal year guidance is above the high end of the initial fiscal year guidance. So, that being said, how much potential to the upside do you think there could be in 4Q given that’s typically when budget flushes occur? And companies might be a little bit more willing to spend just given uncertainty on budgets heading into next year?
Bart Kalsu: Yes. Jacob, I’ll start off and then Sudhakar you can come in after that. I was just going to say Jacob, when we set Q4 guidance, we kind of followed a similar methodology that we did for setting both the full year guidance back in February as well as the updated guidance that we provided last quarter. There’s a lot of macro headwinds right now, so we’re trying to be somewhat cautious when we’re providing guidance. But the plan is for us to try to exceed that number, but obviously, there’s a fair number of factors at play right now.
Jacob Staff: And then just last one. Is there any specific vertical that you might call out that showed maybe outsized strength or weakness in this last quarter?
Sudhakar Ramakrishna: No, Jacob, we had I would say consistent results across all the verticals that we participate in. As you know we are a super diversified company when it comes to both customer count as well as verticals. And then of course we had the call it traditional traction in Fed that you would expect in Q3, notwithstanding some of the government shutdown related issues.
Operator: [Operator Instructions] There are no further questions at this time. I would like to turn the call back to Sudhakar Ramakrishna.
Sudhakar Ramakrishna: Thank you very much again. With this, we conclude Q3 earnings call, and I appreciate everyone attending, asking your questions and supporting SolarWinds.
Operator: This concludes today’s call. You may now disconnect.
