Clearly there was seasonality in Q4. Adjust for that and I bet Atlas is crushing it. Because if Some customers temporarily increased spend for Q4, Atlas still achieved all that seasonality increase plus another +$4M in this most recent quarter. If my theory is correct then this coming year will see a similr Atlas seasonal expansion due to busy holiday compute requirements and it would be larger than last year due to Atlas being larger.
Unless someone has a better theory.
It looks like you described what’s going on really well. In the past, prior to the subscription licensing model, we had to be a lot more careful analyzing growth. Companies using a perpetual, pay in advance licensing model would be able to oversell capacity in any given quarter to make (or exceed) the numbers. But the commercial conditions attached to those transactions stay with the customer forever. This works for a while as long as the product is in need. But eventually, there is not enough growth to compensate for the oversold forward capacity and more generous terms and conditions already sold (think Y2K). For every great existing customer you oversell, you need to go out and find a lot more customers to attempt to replace the loss in revenues. This is a lot harder in the long run, because it’s time consuming and expensive.
So if management is aware of this, they could ensure they establish compensation plans that do not promote such sales behavior. The subscription model makes this work a lot easier, because it eliminates most of the incentives that lead to bad terms and condition, which live on forever, being written into contracts.
If we start seeing a lot of longer term prepaid Atlas contracts, we can pretty much assume that they’re being done with worse conditions than the monthly, pay in arrears or annual pay up front contracts.
As there are different teams with different compensation plans selling to the Enterprise than selling Atlas, it appears as if management is doing the right things. We’ll be able to follow this on the earnings calls.
DJ