The plan for absorbing the Undefined Labs product set is to sunset their existing products and rebuild them on the Datadog platform, so that full integration is realized off the bat. Undefined Labs tools are leveraged by developers when they are creating the first pass of their code and testing it locally on their own machines. “But so far from what we can see, we see a lot more reliance on online [usage]. Also, the amount of greenfield opportunity in observability and security will fade as most large customers will have an existing commercial solution in place. DBNER for for Q4 of 116%, compared to 131% in Q4 of FY2019. I see more parallels with MongoDB, as an example, and will wait until ESTC reports on June 3rd to provide an update on my Elastic thesis. Q4 EPS was $0.14 vs. $0.03 expected, representing a beat of $0.11. Named a leader for completeness of vision and ability to execute in the Gartner Magic Quadrant for APM for the 10th consecutive time and simultaneously earned the highest scores for 5 of 6 critical capabilities in the Gartner Critical Capabilities report for APM. An example is Tinder, where Elasticsearch not only generates all profile matches through an extensive application of faceted search, but is also used to process 17B user events a day to track product performance metrics. In setting my price target, I try to anticipate the peak price for that year. The game-changer is the cloud evolution that is unfolding. Splunk offers SIEM, in addition to observability, and therefore can compete with Datadog on this broader playing field. Year-over-year improvement of gross margin was driven by efficiencies in cloud hosting. They also added support for Kubernetes environments, the ARM Platform and native mobile apps.

These wins show that even in the face of challenging times for these customers, investing in their migration to digital experiences is a top priority. Q2 Billings were $160.1M and up 62% year-over-year, relatively in line with revenue growth. Q1 FY2021 EPS of $(0.01)-0.04, versus $0.09 consensus. Returns as of 10/17/2020. Q4 Non-GAAP operating income of $3.5M, representing an operating margin of 2.2%. Founders Olivier Pomel (CEO) and Alexis Lê-Quôc (CTO) set out to provide full monitoring and analytics of an organization’s entire IT stack, and they are successfully executing on this vision.

Management noted that some customers asked for shorter billing durations, due to COVID-19. This has resulted in a number of unique customer applications, which go beyond standard monitoring of Internet-delivered applications. The common application components of the platform allow for sharing of functionality across the different data types, whether metrics, logs or traces. The fact that Splunk also has a strong security offering puts it on par with Datadog for customers looking to consolidate tooling for application and security monitoring. The company is benefiting from industry tailwinds, as cloud usage and app adoption continues to grow since these markets are relatively untapped (under-penetrated). On the Oppenheimer call, we received some insight into future growth opportunities. Qualys (QLYS) has also developed its cloud security and SecOps capabilities to play in the DevSecOps market.

Q3 revenue is estimated at 50% year/year currently. The CFO’s mention of Dynatrace in legacy markets likely refers to their “2,400+ Blue Chip Enterprise Customers“. They are leveraging their platform and engineering-led culture of rapid product development to continue to lap their traditional competitors in observability. Datadog isn't cheap at nearly 50 times its estimated sales for 2020. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit. Datadog sells products that monitor and analyze every element of cloud-based and in-house IT (Information Technology) infrastructure. RPO was approximately $860M at end of Q4, an increase of 56% over Q4 of last year. Gartner claims that Datadog’s pricing is lower than other competitors, with host-based, per unit pricing for APM. Datadog is applying a similar hiring approach to sales and marketing to keep attracting new customers.

The Q4 revenue growth rate for this year is obviously challenged by the large outperformance from Q4 2019. New Relic will likely cut into business from smaller customers, given that their perpetual free tier would be beneficial to bootstrapped companies just getting started with building their business. Scope allows developers to execute unit tests, measure performance, tie test failures back to source code and view summarized results in a consolidated dashboard. While there are several competitive offerings, Datadog claims that most of their new customer wins are greenfield opportunities, where they are not displacing a commercial product. Another seven-figure expansion came from a European automotive company, which is modernizing their infrastructure and migrating to Microsoft Azure. Datadog also introduced Mobile Real User Monitoring for mobile apps. Powered by Analytics and Machine-Learning: The platform ingests a massive amount of data into a unified data warehouse. International represents a growth opportunity at 24% of Q2 revenue.

This is an important consideration. They missed revenue expectations for the past quarter and issued forward guidance for the current quarter was far below expectations on revenue. For comparison, in the Q1 earnings report, Datadog raised next quarter’s revenue guidance (Q2 estimate) by 10% and full year guidance by 7%. This is a real competitive advantage. Players like Palo Alto, IBM (IBM), Check Point, FireEye (NASDAQ:FEYE), Zscaler (NASDAQ:ZS), VMware (NYSE:VMW), and Broadcom have mostly acquired or developed capabilities in cloud security and security operations.

Q1 FY2021 EPS estimate of $0.09-0.10 vs. $0.07 consensus. Splunk similarly focused on extensions to existing products over the course of the quarter.

Datadog shares are now up more than 80% since their public market debut. With DDOG, it is obvious that didn’t happen. Sept 24 2020 - GoodRx Holdings: Great Numbers, Great Business? The two men, French natives who met as undergraduates at the École Centrale Paris, previously worked at Wireless Generation, another New York software-as-a-service company that was acquired by News Corp in 2010. FY2021 EPS of $0.39-0.42 vs. $0.33 consensus. Q2 estimated Non-GAAP operating income of ($1M) – $1M, for an operating margin of 0% at the midpoint.
Datadog’s new products failed to be as successful with customers as previous product launches, reducing product adoption, lower dollar-based net retention, and lower ACV. And then we want to make sure that customers have the levers to align what they pay to Datadog with the value they get. When asked about the potential future opportunity for security, the CFO thought that the TAM for Datadog security offerings could be as large as that for observability.

These represented significant additions, and a few will generate incremental revenue streams: Overall, I think these additions represent thoughtful extensions to Datadog’s product suite.

This can generate redundant costs and different views of activity. As a result, CEO. Growth is expected from their new application-oriented observability suite, referring to the APM offering acquired from SignalFX last year.

This was rounded out with tracing through another acquisition of Omnition in September 2019 . YOY = year over year. Analyst Brent Thill provided the following commentary. This is likely driving Datadog’s expansion into adjacent categories, which will fuel incremental revenue growth outside of their core observability solutions. One separate consideration around these announcements is for investors in PagerDuty (PD). Q1 FY2021 Revenue estimate of $148-150M vs. $149.5M consensus. If DDOG reaches these targets, we could see their market cap hitting $65B by end of 2024 (of course, not accounting for share dilution). Coverage metrics are surprisingly low for observability at enterprises in general. I'm a reporter at Forbes focusing on markets and finance.

This could represent a future product expansion opportunity for Datadog. After establishing their leadership in observability in 2019, Datadog has expanded into other areas. This compares to the consensus estimate of $117.7M, representing growth of about 68%, and the company’s guidance from Q4 of a range of $117-119M.

Additionally, only 25% of current applications workloads are in the cloud, which is expected to increase to 49% by 2023.

Seven rated the stock at a buy equivalent and four gave a neutral rating. If Datadog can check all the boxes around various aspects of monitoring and observability, for both production and development environments, then they can press the single vendor value proposition with customers.

A downside scenario would be revenue growing only 50% over FY 2020, which would result in FY 2021 revenue of $895.5 (11.5% differential). This company has made the decision to increase investment in observability and broader use of Datadog both with new products and by scaling up on existing products. By leaving out security, competitors are forcing engineering organizations to contract separately for security monitoring, which will be increasingly difficult to justify, when vendors like Datadog (plus Splunk and Elastic) offer a full set of monitoring tools. Datadog also introduced capabilities in compliance security. In Q1 2019, Datadog had 508 of these large customers, for annualized growth of 89%.
These industry surveys tend to influence the more mainstream enterprise buyers and certainly make for a good product marketing headline. DBNER in excess of 130% for the twelve quarter underscores the ongoing growth that we can expect from existing customers, once they are on the Datadog platform.

This site requires JavaScript to run correctly. Continuous Profiler was launched as a new stand-alone product with a separate revenue stream. New York City-based Datadog, which offers a cloud analytics platform for customers that include Cornell University, Samsung and Whole Foods, reported revenue for the first quarter of $131.2 million, up 87% from a year ago and more than 10% above average analyst estimates. We can gain insight into overall market dynamics by examining the financial performance and product development direction for each of the major players. Datadog’s speed of product development, along with their strong engineering culture, will be a competitive advantage. Datadog observability products are well-suited for customers with traditional Internet-delivered experiences that want a plug-and-play solution that immediately generates value with little configuration. Because of this, Datadog will have access to all code changes and application behaviors from initial code creation to the finalized form for deployment.


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