Datadog (DDOG)

A.J. Ljubich Director of Investor Relations
Olivier Pomel Co-Founder & Chief Executive Officer
David Obstler Chief Financial Officer
Sanjit Singh Morgan Stanley
Chris Merwin Goldman Sachs
Sterling Auty JPMorgan
Raimo Lenschow Barclays
Brad Zelnick Credit Suisse
Matt Hedberg RBC Capital Markets
Brent Thill Jefferies
Brad Rebeck Stifel
Robert Majek Raymond James
Bhavan Suri William Blair
Pat Walravens JMP Securities
Jack Andrews Needham
Call transcript
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Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Datadog Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to conference like speaker to now Mr. today would hand over the your I A.J. IR. of Director Ljubich Thank you. ahead. go Please

A.J. Ljubich

Thank you, XXXX afternoon issued to we Jimmy. Good in after review us for announced market Datadog's today the joining close first today. press quarter our financial of which and results release thank you

our are Joining Datadog's our is CFO. today Datadog's earnings from and locations. Olivier conducting separate call me on the CEO; Co-Founder This first Pomel, call and Obstler time David

technical your glitches. appreciate if understanding encounter any we So, we

of During will under our benefits impact securities capital provisions full of second our usage the pursuant including or we statements Securities opportunity, this that laws business for to year our and including Safe of potential quarter pandemic customers XXXX, rate XXXX contribution results. operating Private the potential related made performance, run well our and the business, our investments, annual customers, our our to R&D our call, on Litigation market, our related outlook $XXX,XXX COVID-XX statements of make products, with of the products, strategy financial the the Reform are as size our greater, as anticipated and are for hiring go-to-market Harbor federal forward-looking of of ARR of market the the to Act of and their or future and expenditures, expected

of similar uncertainties of any from to statements today cause expressions results of and our The words date. future as only reflect intended anticipate statements similar a subject estimate not to to of believe These could views are continue and and forward-looking will materially variety expectations. are These expectations. risks statements intend identify that actual expect differ or subsequent indications as

on that XXth, May on filed December with a current actual XXth, XXXX. affect XXXX the XX-K report our please on of the our material SEC factors filed important SEC could Form February the with ended on XXst, risks results, discussion XXXX refer annual Form X-K other to for report and For year and the

in Form from report filings the XX on Additional will to that for file SEC. may time XXXX be quarterly made available ended information with the our March we and time other and period quarterly reports XX-Q

the Our the website. of with SEC are filings Relations section on Investor available our

of replay for available A limited call will this also there be a time.

information may that and other we our to made file time be in from SEC. available reports Additional also may time with filings the

can the be measures. will call. financial Relations our portion in measures Investor of this discussed directly most find on these to a refer for our Please financial non-GAAP which of website release GAAP Additionally table to conference comparable the you on earnings the measures reconciliation

With that, call I'd like Olivier. the over to to turn

Olivier Pomel

you for you joining Thank A.J. all thank us and today.

facing intersects pandemic and our situation April future. the ways all Before the the the I'd also with seen well our for as some perspective which as stance year business address March take and data some with like reviewing of and in the our the quarter, the internal time in on in our we've to the response we're COVID particular pandemic to to the crisis but

times objectives and citizens at good. response. collective our for be to down and contribute members So, innovation health and last, of be three challenging customers sane; serve communities and and economic We to our do least, starting as level what success; internally: healthy second keep we as with safe to our well employees good communicated but best not and to our the our first

from March work home mandated have we since objectives, those XXth. with keeping In

donate a employees to And elect their with at COVID that three to could charities support In a and portion to that or all help allocated grant have our addition grant to their productivity each relief. to we of employees discretion safety. of

from already reflects we operate. our has program commitment which with this that the in and say to communities go of generosity to together this donations proud employees the through in and crisis million very I'm resulted our $X

to extremely through Datadog been innovation have that productivity, I also impressed say I've with employees' time. continued this resilience, and

to pivoting a business. being demonstrate the remotely of success cloud-based digital-first operate does Our advantage in

important affect Regarding business. may the about Datadog, way there the are pandemic to a points structural few understand our

First, we customer diverse base. have very a

We in of estimate as that XX% entertainment. most negatively categories personal ARR less airlines travel COVID than comes by hospitality our such from impacted and and

food have delivery On increasing the have also streaming media that other as collaboration. to categories such experienced e-commerce hand exposure we and traffic gaming

have Second, diversity great of we customer sizes. a also

We from of ARR more. XX% Also approximately have long from or ARR pay low of $XXX,XXX of businesses. XX% our and tail us comes a our concentration than less comes customers small that

according price customers' footprint not and we to infrastructure our seat. Third, per

reductions usage So, affected by product workforce. in is not directly the our

on and we from Fourth up. platform our and the our cloud there makes and bottom effort model our low-friction enterprises is on physical is dependent land expand and then front as meetings frictionlessly small efficient business land deals. This fast reliant often is extremely begin workloads more We and move sales larger makes and expand migration model adopted less as less cloud. our their to

or are we and implementation. SaaS require Lastly, pure hand-on-keyboard no professional services

seen Now, and April. turning we've in March to what

containers the the with of historical first continue to the traces logs, materially quarter, for across platform we of the financial example, affect escalation have in late growth our all, to hosts, results. of First and remained COVID the metrics happened increase saw number trends. quarter enough not and Throughout consumption consistent

collaboration, substantially up and in But this industries other from in customers as We gaming, airlines. environment. as travel, negative media, operations effects streaming such these impacted started categories delivery see also such to their seen we've some increased scaled usage hospitality and as food

that time. accounts a nature usage saw in in expect could more March be over of transitory in COVID in we and may surge surge response and normalize also to We

have strong with In limited terms of the new quarter deals, from we did end impact a COVID. of

churn. have that prudent impact the to impact uncertainty, delay the QX with is prior given know projects and could new on on it still consistent cloud as Because but to as of pipeline is COVID quarters, of far expect is As our early macro robust well goals, relatively some it migration road. too the as and some

been discuss, of will incorporated our COVID has effect David guidance. the As in

on To dynamic, look and year stance COVID on the at the future. our and perspective of rest the let's back the step close for

While online, much and there over economy transformation industry and the the even very ever more accelerated the believe migration across for lot long-term may and amplified. the certainty near broader a is be of more remain operate we trends in than important is the businesses very it intact to digital and cloud that term, or

an we the business, efficiency the to of in or innovate sheet, whether balance is beneficiary be difficult our We of believe primary advantage believe unit trend to our market. and also it positioned that our market. will And a are this continue a we to win well economics ability be in

As clear. such remain our plans

of We targets are aggressive advantage across and including taking the products attract would R&D the opportunity investing on talent We're and existing market. investing board. recruiting be otherwise that new to the in development the of not

sane across employees the important to crisis. of investing and we're customers this our relationship in go-to-market more investing our investing times existing to them digitally. We're through it ever team growth We're geographies. And is our and segments in through and difficult than some them for them of with safe operate keep go in as

that on these have fast the investments return macro would I we'll this same see point, historically. on I conclude say while as we that can't To incredibly reasons promise for

in and front to confident opportunity and are live in We mid our up in it. very the strategic us long-term of to plan

sales strength new to once on our channels. pleased across again performance by across driven Now and very quarter. logos Results QX, broad-based as are as expansions were we with well in segments the customer and

QX, increase ended last an which approximately These of ARR increase XX% from with revenue the year. of ARR. with customers summarize $XXX To an generate of of year-over-year. XX% XXX was million, quarter XX% our is customers or more, $XXX,XXX We

tax a or We and payback of be with efficient is around also million continue less. to free $XX cash flow that year still capital a

We increased past newer ended in X,XXX last in last dollar-based as net we over we customers rate about XX,XXX the retention our adopted customers, our which customers their number usage XXX% from the which means And was added year, year. is as products. new quarter, XX% the and which quarters, about about was X,XXX added with growth twice net quarter

perspective, unify innovation. We our security pace recently Security R&D across to of teams. an announced availability general visibility of Monitoring rapid products From the continued a dev we and ops

available same simple-to-use As the products, integrated is it in platform. with all our SaaS

beginning We ops, and response plan this I'll on most break are history. just the the journey the to that dev for between has we pleased initial with this continued and security been category. innovation in to company silos product, and the demanded are remind we you in it But beta

VMware and new security crossed Tenable, like Carbon recently we our a the support among to call which and XXX out of And use box I'd Nessus out Additionally, integrations. number Black, cases. new improved, of

continues to usage, resonate strategy customers. product at Looking with our platform

more end XX% As of or of of XX% and XX% products, the two QX, year. up using last customers from in our QX were

In has using platform tripling the or products. QX, nearly landed resulted XX% of in sorry in cross-selling our or our our two products approximately more logos And with two landing new both of year-over-year. and number customers success more

initial expand grow We are our Network very do we have pleased portfolio I earlier, a addressable And further Monitoring. newest uptake our Performance our and we of products, continue to which adoption significant and product of believe market. Monitoring to as includes User platform, Real mentioned continued strong with this opportunity our

adapted the go-to-market. I have are continued personally X,XXX with in and productivity sales during who of video. more very particular, to Now, our have than successfully teams this been let's by on across companies Enterprise time. move phone impressed teams employees, selling to serving

and canceled know, been tradeshows events And going you as virtual. marketing have or

those have and we webinars activities. advertising, online into redeploying So, investments been other

Dash likely conference is virtual QX. user own in going Our

wins review quarter. in our the of let's some Now, key

exciting embarking their an adoption every migration can win on platform DevOps through teams dynamic The and teams seven-figure a with First, company, up from didn't executive cloud. mass a keep we logo Datadog pharmaceutical hybrid and Fortune container-based that across use day. allows single observability incumbent for had legacy tools XXX all to stack a new new a

insurance deal alliances multi-cloud announced our six-figure of of By migration. on is the This of way, system we in after Partner and logo monitoring world's were deal about provide is new we won closed go-to-market. that is the just it I example days was with a health What's largest partnership the course, a early to both integrators. it new of signed through still company, the for deals end embarking this for new Next channel though, interesting one very Datadog great Network March. really of a mentioned large success a logo at January, a

in management a spends since customer customer a then million XXXX, Synthetics, Today on-demand logistics now with had we and using sizable upsell XXXX. more year with has a NPM started adopted company and which a than and monitoring Security been company $X us. both APM Next also to log this is mid-market Monitoring. This infrastructure

really What's this quickly issues customer logistics it avoided that noting collaborate operations, detect build to with interesting that products in us in scanning also case security has partnered found its up with scaled value all engineers all with COVID company enabled demand has is logs Datadog. remotely this worth threats. its this has is to dramatically and security support It out increased and experienced successfully from performance and to

extremely over Lastly, an Datadog for This This across upsell of years, and of its to customer of monitoring to clouds. public is capabilities. security serverless multiple adoption its with largest applications migrate standard out institutions. the large our being interesting single plans I'd and the note both customer a to global requirements world's six-figure the one private stringent thousands financial coming

would like David to over call our Officer, Financial I the that, to Obstler. David? turn With Chief

David Obstler

Olivier. Thanks,

as driven results $XXX.X with by was results. QX existing customers, detail. and As segments adoption. first by platform pleased year-over-year. quarter continued mentioned, review strength our million, Revenue I as success in sales The broad-based, and channels, driven will quarter's we across very up were was XX% new now well

To provide context. some more

regions. First, channels contributions in strong new with sales saw we across logo QX, additions and

we strong XXX% quarter. dollar-based XXth continued for Additionally, above the retention consecutive expansion saw net our the rate In was first quarter, of customers. existing

to products, as primarily Our rate as driven usage cross-selling is existing newer well products. robust increased by of retention

initial newest our and of As pleased we Olivier with NPM the RUM. uptake mentioned, are solutions

I However, immaterial products note the were would results newest of to that quarter. the these first

segments, we large well deals as including broad-based robust with across across In in Lastly, March, and mid-market in We net many -- SMB and continued this closed strength we were from our encouraged gross each dollar customer strength see rates enterprise, growth retention of quarter, SMB. to base. the enterprise these as strength, segments. similar which rates saw saw

here XX% turning which Now out. two million to to There dynamics are call $XXX.X and billings, I'd was up like year-over-year.

billings and our I quarterly result upsells some payment prior contract from clients duration move that in merely of terms quarter, saw want we semiannual or duration annual come in the reduced our renewals First, a note the while of payment to some terms. this not bit as in to in length, of did terms,

due was planning impact The to the This preferences. billing to and $XX duration flow COVID our amid on their quarter was customers' cash approximately of to accommodation million shorter billings.

efficient still dependent multi-year on payments Given not land-and-expand upfront however, our for we very deals. are model, large

year-over-year. was smaller calculated QX of a for the invoiced was that this there then $X existing timing in Next, second have a was a would impact year. million year from billings growth time but invoiced due in invoiced two been XX% invoice customer, last was in to growth QX sizable impacts, XXXX, and these not approximately Normalizing

RPO QX, XX% higher growth billing increases even million billing in the end of indicates terms commitments as longer-term commitments was or RPO RPO may addition, The In year-over-year. $XXX rather measures Obligations our than Remaining grew Performance altered. and be terms. of when of

previously, of billings tied our accurately momentum the discourage as indicator a discussed of portray consumption not our and As that as is tight the better directly the given and between due business. we growth to gauge relationship is our Revenue ARR. revenue does growth of use revenue to a it of

review income more statement Now the let's detail. in

all reminder, unless otherwise metrics noted, non-GAAP. a As are

of We earnings reconciliation have to release. provided financials a in our GAAP non-GAAP

ago XX% Improvement the Gross in our XX%. efficient cloud quarter in This to XX% gross margin period. million quarter of a margin margin gross the profit and year was hosting. by $XXX.X of in gross driven compares of a representing use was last

well As we product data of may fluctuate the prioritize our within as quarter-to-quarter newer cloud said margins before, acceptable as build-out as in centers and range gross we an innovation development geographies.

$XX the quarter. XX% R&D year revenue was of ago to or XX% compared expense million in

engineering including We headcount. have continued R&D growth invest in our high significantly to in

revenue substantial of outpaced even has growth the our However, investments.

our continue continue therefore to in opportunity see R&D. We platform to meaningful and and investments to expand meaningful plan innovate making

Sales expense Similar period. $XX.X and has the XX% make investments ago compared or to growth we in in R&D, marketing, this and million was pace also investment. sales to but year of marketing of revenue XX% to outpaced the continue substantial revenues

due one-for-one While not to we budget have experienced have cancellation events events other redeployed activities, but advertising quite of COVID, to on generation we the of marketing and a basis. much successfully lead

X% negative XX% loss $XX year the expense $X was was revenue the or Operating XX% with $XX.X million in margin ago to of period. margin income than G&A ago million of or quarter slightly a in in the a compared lower XX% year period. operating operating an million

Beyond the and like contributed COVID I'd in operating above, I'd margin also reduction factors overhead margin that improvement. also discussed gross facilities T&E to other and improvement note to related slightly the the in --

million income average or Net the weighted was XXX in $XX.X based $X.XX share quarter per shares. on million diluted

experienced We have our model marketing a highly R&D. and and on and high sales in business investments efficient a return

that aggressive to positive in of quarters consecutive three investments growth. top-line continue operating delivered our and intend breakeven And income, remains go-to-market. we have to we priority While R&D we note

have hiring We interviewing and very successful in onboarding remotely. been

our and investing before the result, as for corona outbreak. the largely a As plans remain hiring same

We well-positioned are across our and execute are we investing plans to growth. board believe the of on

positive cash Turning to and flow. million margin flow Cash expenditures flow quarter XX%. consideration free million in the the operations $XX.X and cash software capital was the flow quarter. $XX.X cash the was cash or equivalents, marketable a After of sheet in and taking capitalized $XXX into ended positive million a from free balance of with quarter restricted securities. cash, We cash a

the quarter full to our would for XXXX. year I the turn now second and outlook to like

our see expect COVID-XX in and is of deal revenue recurring model, new felt logos. early in particularly top yet quarter will our the not we on have we we It that line results. the Given effect slippage some

net expect see also relatively the rate We pressure some net we quarters. high that despite two retention in may rate, a in next retention downward

some believe adjusted in usage the pre-COVID soon and remain to know a effects rest somewhat guidance. potentially into from It likely the QX QX of to will the the in As March too our it client Olivier surged some model. is given Therefore, And of impact result, of the have April, we have is expect and the we but above throughout as for trend in mentioned, this our quarter. levels. remainder incorporated and year prudent ratable usage how above most

the Non-GAAP year-over-year our with to Beginning to midpoint. be at share growth loss to of XXX the expect is to Non-GAAP operating per $X the breakeven per second weighted million. net to in quarter shares. a million expected revenue is income guidance, represents on million which we $X of $X.XX XX% range be share a expected million in to be million range income approximately diluted of average income $XXX of $XXX based of positive

full Turning year. to the

our quarter we the on for environment. about strength comfortable guidance first and we raising our what drivers Given macroeconomic feel business, and of COVID-XX know our the XXXX today based

be For $XXX expected be $XXX the to year-over-year in million, Non-GAAP share at be operating XXX the XX% $XXX of million, is the revenue net based is to $X.XX per a to to of Non-GAAP $XXX the positive million million XXXX, income to in on average share sorry, of million shares range midpoint. $X.XX represents positive. range income full year is million growth the positive expected $XX outstanding. expected range weighted to to which in breakeven per

cash and into that together talked metric cost the towards we've note guidance, account discourage margins, for our key we while A top not related about plan likely gross our in few our is long-term putting target. are of to as amid would billing running the billings while to for a shorter seen couple of take we the continued QX we as continue to drivers, improvement we do flow continue things in customers to quarters in when impact to this next duration guide models, your COVID-XX,

we vendors may our cloud acceptability. gross fluctuate margins prioritize and As regions, within and our product diversifying development range of hosting a

intention is marketing. invest and and to our sales continue in do so and Next, meaningfully R&D to

been income. below intend we successful operating of neutral to will COVID. in be Then liability. tax non-GAAP $X.X noted, benefit QX, As we we expiration normalize Similar non-cash hiring results. some In related payroll GAAP it during XXXX tax a notes a non-GAAP the adjustment have an it our but on-boarding is therefore, and to And, approximately QX income, for expect operating in million this to to operating income. to

We income expect throughout our approximately $X cash million of based on quarter interest per and XXXX investments.

Next, we to international not have federal entity. a be a expect but provision taxpayer related to do tax our

of the the provision year, are our both full non-GAAP we a given and range forecast profitable expect For diluted, to we full million. be of tax for $X.X a that $XXX,XXX QX Note to that company net a expect share periods. for income year

cash to Lastly, a QX we're Related from about giving employee operations guidance in and $X an while flow in purchase we've both program, things million flow stock cash few note. not QX. to realized to of our inflow

there will cash operations increase $X cash whereby, program decline million, by by no geography, in from effect. flow first from the financing and As is in flow net will a change concludes, $X cash activities resulting million

new our million operations positive million addition, QX. ESPP to will $X flow new cash of in from In produce $X

generation Lastly, which lower and billings in may near-term. we pressure related potentially expect on cash DSOs cause to on duration the COVID,

on flow generation, sheet and the on have no model, balance our efficient cash will cash proven impact liquidity. our meaningful Given this

were the quarter. we business pleased with very performance the in summarize To first

our continue efficiency at in few scale to demonstrated have and a We growth can match model. deliver

the capitalize believe continue environment we well-positioned opportunity plan and of for long-term us. challenges we on the to that investments macro the continued and large to may are the While we ahead that present, for COVID-XX recognize

the we questions. call begin now that, Q&A. With the open Operator for will let's


Instructions] [Operator Singh first Sanjit Stanley. comes Our you. with from Thank Morgan question

Your line is now open.

Sanjit Singh

those all doing questions, a the that is the taking just on headquarters over the a Thank given net and a trying what's well, couple you to And seen in of of last short-term now the impact more and customers two what of the for what guys longer-term XX% start understand challenges -- less are employees through strong with terms the in QX verticals. through than York have I'm is, seeing results. hope been we've business you're in -- early going the impacted March everyone the in term some are seeing and see doing question sort QX. and I for congratulations are the well, from spending April that of I guess of the the in other New one I less one To of XX% of you're ARR what of the -- months, more shorter-term great customers versus from the May, in in short more question Olivier. the you the of customer of some to that question, trends questions, sort so spending ARR had increased the than

to net does neutral sort So that a are terms of your in -- of year? Or you out seeing net the for it positive is effect? business plans

Olivier Pomel

So I'll answer that.

April So some what and see we growth. is are robust And going impacted month. is actually in -- that, we slower. March, see we customers April a are far,

up. customers been have Some scaling

scrambled We have in operations after of then some the parts the seen questions we that the normalize on call in some April future on late and going as and discussed to are in normalize which we've that. may end since QX reorganize customers scale-ups to the on our

operations. their reliance we online. side. cloud. that around up. going been actually the I see say on estimating on couple operations more All up. story far over need And see, move too would it's what a can a have their could think, early to so of to where the quarters. everything next investment scaled cloud and more The we what nets We in able happen prudent lot these I But companies tell see would we success we see be scale from to

So you second a story that's far. And question? so the had

Sanjit Singh

now when of terms to of in for is really And trying is we pace guess of like have drive pillars COVID. sort like I follow-up -- coverage, look in maintain across is the about portfolio, next key a buying like I'm that you across four it criteria time. My to continued to going you have rapid seems what all be. post the it sort at the long understand innovation. place product going Yes. to a seems security, products to And guys healthy trying think of world growth the the

where So as action the we go be of Are from do you and to can as the start maybe do be products you where taking -- get going where place monitoring And you customers can of is observability, the there start to an portfolio going in taking more past environment? beyond their a just prescriptive simply, right? see said product action we element have in Or terms even data? going alerting, COVID?

Olivier Pomel


added already we are look -- hands, I products should just into recent of example there's right? product. lot that in investment hyper we've And growth. our after a our still we that products that on including monitoring The goes products lot core like are all APM a like Synthetics more these restate So very for of fact the logs our fast. infrastructure growing and So have

doing we have So a that lot we're still there.

map. to early. still a in is We're comes that And road long happy traction. intend we very very there's we has to a very, that we're We're happy early lot it first more it's and is But GA. it that the very it's still security, have product. it around When it. build getting What

like do to areas. exactly developments there. a us you've internal going really when on. we you tell some interesting product things that definitely have be that lot going can't mentioned I have some presented of are a And regarding in customers in now number the there we to and is are of So to categories

Sanjit Singh

it there. QX. Fair enough. Congrats on I’ll leave the

Olivier Pomel

Thank you.


with our next And you. Merwin Goldman from Sachs. Chris Thank comes question

line now open. Your is

Chris Merwin

Great. on Okay. results. congratulations the question and much Thanks for taking so the phenomenal

true the talked I to were in for from same, prepared unprepared of the accelerate workforce. particularly the that there's delay for perhaps impact But at guess customers a So pace of some time recovery. actually projects. transformation an a that's the about in digital And remarks, for you remote opportunity

in you topic can So, a on impact talk about COVID and these particular your think customer how and you bit how conversations post could trends about Datadog that recovery?

Olivier Pomel


So, brick-and-mortar now. these our in see happening would that right foot and with have in digital foot I world. physical parts and they customers -- I in the the digital we scaling art They're what's one like -- see mean investing world heavily say look crazy one

is not is transformation the broader to going we going down. actually accelerate to that for think slow that And industry. So the

at pretty the is trouble Now, time and companies constraints choices cash and term. transform time this make in some same of difficult very make a have new it and is in modernize where or hard are short them at happening investments many to big stern investments on for and to have the

and are mode urgent that success become going the that transformation fact once the our in trying -- the the trend have these the survival urgent the term of starts as go to here the not this just to So digital companies other underlying is, or before transformation this and this cloud and world we're companies accelerate is past weeks. recovering. new. uncertainty discussed Many is short what move that over prevalent past few more But underpin to balance think I

would basically. act, given the the So balancing it guidance in we've end up

Chris Merwin

I one it. was guess related that Got themes a of question seen is as and before space think actually convergence true I the COVID. in we've the

time to I the a Just to have seeing the any of through from that? perhaps a as are they mean actually some there think curious cross-sell tailwind about. they that could think for be got you when benefit So mean specific go tools products? motion I customers consolidating you about particularly how

Olivier Pomel

customers COVID. this now. appealing not like was as definitely more to to customers appealing before It's is This – if

short of ways into look might customers Some costs rationalizing term. the in

to point going So these – these these year. over of data we a of building We've on don't towards it's the to you none or not At that. this tell are whether to any the all be this factor have be strategy. rest big opportunities. of – been our Look is

in it. in obviously the term we believe So long

Chris Merwin

so much. Got it. Thanks


Sterling question you. Thank from our next And Auty comes with JPMorgan.

is now line open. Your

Sterling Auty

net coming kind of would some large get the of the orders level? new that high-level is added CIO terms of transactions characterize in curious at kind you I'm guys. ARR hi, more much how day-to-day how of you that thanks. in versus maybe from Yes, departmental or you divisional quarter that a complex

Olivier Pomel

land – we the when Well in and we in CIO mentioned land And earlier a these customers. are large start bottom are some over is conversation Even product total even I grow seven and on always like small way we opportunity significantly of those the the deals bottom time. deal when represent is Even looks the still we up. the level sell even when start call And end it this the that land of we adoption six at at we deals like small. to adoption figure level, the or these CIO bottom-up general fraction up. some the going to enterprises what

So still that's That's work. it's as far as QX. working to in the we the way it way tell can used

Sterling Auty

XX% in of products s ense. with then on give terms two qualitative of color the And but makes us business give landed versus terms the you us of gave in infrastructure just That or that can some APM the strength mix quarter. versus of logging the in more color you maybe some us

Olivier Pomel

around they're growing. all companies look mean SaaS logs. of APM be alone the one Infrastructure best would and I Well,

faster of hyper say different products you like But products a that growth – if that's could They're another. and between we fungibility we bit hasn't attribute – grow a to slowed like one products in lot those the attribute And down. those to those So do or the were still single that the scale-up because growth. which the don't to case. at and to are when products. quite used really you than of we as there's out we look to That growing

friction growing still mentioned thought much results. long but is it we Synthetics our would. a earlier is initial it's pleased for runway. get We product to And a that faster it with a it material than not of very a NPM example has adopted it's it product great Synthetics but but We're higher than has still to for the uptake us.

product. So we're investing that in

portion some charging We of it. of started adoption some for seen We've March RUM. in

being of of customers' committed charging contract is we a usage So is our for as driven. started to opposed it that – part part

haven't material So started in security more QX for QX. charging of And yet QX. it's to in see still QX we but we we should also the not product started in it

we yet. to say So have it anything about don't

David Obstler

I to Sterling very have the in been had and from continued. and were the cross-sell. also new The products trends really QX consistent contribution retentions net think usage they what and

what much retention in with contribution effects has strong So been QX really quarters and of those two cross-sell. to continued both in from usage of we've the last saying net

Sterling Auty

Makes sense. Thank you.


you. Thank

Barclays. with Lenschow Raimo from comes question next Our

open. Your line is now

Raimo Lenschow

be to a that going The you bit you about – Thank you're talked far? if more net talk there retention probably about there's you making as space. you it's of to if crisis and so you. seeing the in you're Can remind little SMB first going us the then assumptions your – question. continues. kind – Can exposure churn more be It's the what my and the

of where terms you. idea in us the remind biannually you can side, like quarterly that billing the about on David versus get versus talked Thank what's annually just mix. the about monthly an to you then And

Olivier Pomel

David about talk Yes. maybe billing the can about mix. and I'll SMB

within on So financially. as footing before solid that we discussed and actually between – even SMB. ARR very is But evenly on revenue companies and what side we the from most of – comes that are enterprise mid-market split SMB or we is larger

from the are the came traded companies than there. that them to which are be of XXX tend of Some to than our less on less limit closer that is XX% employees. smaller XXXX-employee publicly call We mentioned side revenue the and on

at on we're higher-risk actually the look SMB our the less some of around categories diverse. customers, And exposed COVID. side they're you to SMB very If

did big we few in trends. in a churn far quarters I seen in change just a tiny uptick SMBs, see mean, with we so actually seen levels haven't it's a we've ago. And but consistent

saw same retention out So of the the same an time, net that there's ordinary. increase nothing at And of of cohort we for SMBs.

before. see don't conclusive anything we We it So has there. nothing see didn't that

can are we'll guide try to where for to guess the feel where and We'll pain more we we going exposure is to and see have the that have to going more SMBs be and be our when to be guess future, Now churn. to what are weaker. try going

our incorporated do you we've what billing mix? take want guidance. David, that's to so And in the

David Obstler

– the annual when longer. related average a more three-quarters discussion. the are of billings ARR acceleration bit greater. with annual resulting And average two-thirds you commitments in to an little of annual of Yes. or about of But was, we in three-quarters that associated period came commitment in resulting more. length in add What commitments our usage our to related associated before billing And three-quarters, duration our is are commitments of so went RPO. out in or our in slightly with And said billings the billing of or quarter


you. Thank

next Brad question with Credit Our from Zelnick Suisse. comes

line open. now Your is

Brad Zelnick

hope as much. and think well. follow at what to so question alluding Congratulations the and has listening And on strong I I everyone Great. start okay up these everybody days. Thanks is to a Raimo to doing wanted My is as well, first asked Datadog Sanjit I on year.

the Just on the impact COVID. trying understand to business from

it slippage hear I coming deal on and more that on April? potential that in to extent pressure conversions And trends versus expansion see the downward net what pipeline new with and you consumption pressure you are compare seeing if pipeline logo maybe, if seeing comments the your you progression the March obviously perhaps versus and Specifically, might about business into you it? on and preparing contrast that could for can just you're for

David Obstler

Oli first in? go weigh to I'll want and you Do

Olivier Pomel

Yes. Yes.

yeah. So,

closed them right was of not every not slipped ordinary actually would uncertainty are QX was And few deals part were and of have did actually out that slipped what have COVID. it's the we're a few of there for slip of slip. to to that may a slippage after. the marked. say in good that And that end the because most previous it's deals So QX, And compared too quarter or At have around a not. it's quarters. I sense of deals for The look early like quarter reason several the number we in the guessing

might have don't but do will we So some. really we anything see to we we anticipate see quantify the that effects

a again, have the companies changed a When it reorganize. comes little also bit difficult to patterns usage bit some as because compare to scrambled to have more little usage, it's of

predictability little our of also is which there, we're why in into a less baking some bit there's that guidance. So

and and us So in that add QX overall, some that on concerned be have if you I worried, look, do anything? pressure we didn't uncertainty QX. some do anticipate happen. particularly us some front makes David, want fronts now. of would right But in to we don't anything

- A Obstler David

agree. I Yeah, Yeah.

don't the – consistent. Oli happen as harvesting Our We is percentage remains is quarter. pipeline what's going what to said know this

in going going think know So of quarter our expand other and on model don't model we land less we as the usage logos were that our than what's some That's happen main of gotten seen The chunk progresses. a deal, we've given request our it But in this models either far bit. can you that modest large three-year new more. little so but has hasn't builds point. up at little to been particularly ARR land and to a what probably significant again, a been we've a been our dependent percentage

Brad Zelnick

is If But point, it. in just you RPO I quick question just period or Thanks I growth? can XX% RPO for to at any very way duration-adjusted a strong follow a That's a both you a up growth you us with much. by the David, about very can finer up RPO look current think just give housekeeping put helpful. even

David Obstler

just two commitment than we fact release pro commented broken billing that, forma haven't publicly. making really three comments duration that don't the that. in up but We're contract year deals, the and and to was on due higher We longer it

Brad Zelnick

my Okay, thanks taking for questions, Dave.

David Obstler

welcome. You’re


Hedberg Markets. Our next with question RBC Matt Capital comes from

is line open. Your now

Matt Hedberg

taking I'll my quarter. the for echo thanks guys, strong questions. this Hey results

can examples some for while? do, maybe are logging. adopting logging you of run obviously other customers GXK largest are Your APM two when and APM seeing often how some more and is ability are products impressive. of off your in in you customers or to of sell these particular they I'm share parallel solutions? And they wondering vendors' migrate Or a if

Olivier Pomel

when replace that. still world do world start, So customers those whatever is a using where because they're and in. of our we we their still come are on-prem have logs. they that adopting GXK all Their is don't using the which were we In on-prem net APM we which separate number cases cloud is actually from new of

very the migration in these those where early footprint. So very footprint cloud with more we their growth grow we early products We're and in our in solidify cases land of or cloud. we is still typically in to are in usually which that two most that because the customers

as standardization And But whole cloud. set not set -- the still being footprint us offer there we of to ourselves on their basically much later tool later of on with these most the customers. the up majority up of ends we're

Matt Hedberg

That's understood a helpful. And I then make I little better bit just to wanted sure Oli. churn

inside go that by You customers think noted might earlier some side? the seat-based might higher smaller in on contraction that embedded that impacted Or you're reductions. not of of when point? see being out of your business assumption we But we existing guidance some is at workforce some level churns customers

Olivier Pomel

per don't seat. sell So we

there's billion. these to component one are -- -- no don't we user-driven So account-driven

effect But keep customers most to affect some to customers infrastructure actually doesn't What contracting have And directly. customers. is to limit up serve that part see in So what us might our there's can contract infrastructure. cases a from our we own their they their there. that

we've far. effect an not seen that's so So

think businesses number don't that I it where know a to churn the exactly disappear. going is if come assumption comes. It's are small we going from fair to of a

We large affected to survive. some all some also see businesses form of we'll of that. bailout We're and and medium or aware are that need help

happen. might that of some So

fact customer a the that to be some to So as considering We the very of we we fact economy be cautious. affected going a base. cognizant if us to want broad-based it is the whole ripple want have is to of that

David Obstler

that the comments Yes but world. said logo David. have happen retention we some haven't some is might materially said we implied we in in to what as that We rates lower trying really do prudent guidance. we yet, relative this said the we're seen to be new And and -- the in accumulation

Matt Hedberg

Well guys. done. Thanks


you. Thank

Thill from comes question Jefferies. next Our with Brent

is now Your open. line

Brent Thill

just can back if And after brand security that. give any is the you but the a us color quick I SKU just field? just follow-up realize from I have new, initially Thanks.

Olivier Pomel

buy uptake with scale. customers and they some had the still beta at we've some happy while Well we're customers did to the product already very product there. was buy had actually wanted the It's that and in that we adopted

good. So that's very

we early it's -- the customers make to both the still product super for and also terms it. of in all the else inside very Now what's the of early set integration the way or everything go in market feature

be a going lot lot there's So for a to to assume that interesting these going to should get products time scale. more new we to now and us more take investment

Brent Thill

Are as on? to hiring changing a into of or follow-up. here gone given any tracking going are you the from plans Or product everything plans that's of still quick your just year? then kind original plan And you

Olivier Pomel

we great that's in mostly to time didn't to plans. where office a of tracking hiring around few think meet actually adjustments have to to management. it's less for we areas it office -- made a building Obviously an marketing original ambitious and hire topic or things for that's We're team. and time But organizing when we not make We've plan. example events And a sense you the have local else great be can't be our up real everything life. people we stick And to plan. for a don't

the the be But an it's to we business. in might about was think take on to might more a a on bit strong efficiency market and – side. for warned They call of investments our I the stand longer ground uncertainty. we be of opportunity are for bit the platform us the pay-off it thing softer might customer those The earlier that, because our

Brent Thill

Thanks. Great.


Thank you. with from And Rebeck Brad our Stifel. question comes next

open. now is line Your

Brad Rebeck

anything a Thanks. smaller a said very ask in David, and to up for anything lines? you payment you amounts, or like along do to chunk comes as you Thanks bite-size customer return, a those asks, much. longer Great. contract in when

David Obstler

-- try a try customer. have around We extend we do -- contract Yeah. And we discussion with Yeah. or with something products. to the the contract

with our do we over our given, them, having what grow seen care is with we've time. we here grow also And that. we're keeping to But what us clients about clients. So and

something So we try extend contract get have a to or discussion. But else. we

Olivier Pomel

we a We're on product We team. But investing some not are also be what that. difficult customers. co-investing mentioned relationships. I Yeah. We're spirit going think we in our two-way And there partnerships our our customers. And of We're And and call in that's comment I really. know it basis partnership can doing of some only our we're with that that. in case-by-case in them on do through are too, the this on time. in investing very built to a the

Brad Rebeck

Excellent, thanks much. very


Raymond Thank from And James. next Majek with question Robert comes our you.

Your now line is open.

Robert Majek

your question. from and some Thanks you of more break exposure I one what Hi. travel vertical the out of the customer on congrats specifically, And the have contribution more strong base? is entertainment? results. perhaps And and including Can macro-sensitive follow-up the sectors,

Olivier Pomel


call me back. And up Let my number. pull

David Obstler


go doing, Let me Oli's that. Do me or... -- to want you you're while

Olivier Pomel

ahead. Go yes. Sure,

David Obstler

in We XX% hospitality, that Yeah. to the most and travel have types. subject we dining which or -- are said, are exposed those that less are

deliveries about others. and have on side food and some XX% to the collaboration a exposures of other So, work-from-home, exposure the and we

above in industries. impacted So, we're And have XX% diversified not is those, We've we concentration said pretty customer base. diversified. a always our

Robert Majek

Thanks guys.

an modern potential more, to deployments, conversations touched customers you one prior perhaps some it with uncertain and customers, us But environment? questions. earlier the macroeconomic insight, these new Just new you in on can more qualitative into of just your give pursue willingness in

Olivier Pomel


So actually, to I speak that. can

spending cases, uncertainty, not on customers. cash we also in for some which are these So, terms -- particular, payment discussed and some so is careful is scrutiny Obviously, face cash, In some outlays. any why in far about different of is some the everybody different. there conversations

conversation they and we have less time an -- reach to some see Because operate interesting because they future the the affected where very prepare as invest basis. customers But so day-to-day on actually effect now. are a out saying, actually far have they industries I'm will for in to less

we've happen. So some that seen of

that we can't happening. But before we going still actually In It not we're tell impact be to the recovering. that general, not. really is come be -- in don't QX world's There's really fast the of been But we fruition and guidance. to the early any that cycle of way if if to going is anecdotal. see that, felt or if the careful, -- know we still in will we've in there's QX set some

Robert Majek

it. appreciate I lot. a Thanks


Thank you.

Suri comes question William from next Our with Bhavan Blair.

open. line Your now is

Bhavan Suri

Hey guys. Sorry. me Can you hear okay?

Olivier Pomel


Bhavan Suri

and for a on you great some Thank I to quarter. wanted touch stuff. congratulations the of quickly guess product I

It's days a fairly You product. product, early last little Security about talked Monitoring for new the bit obviously that quarter.

charging You for the it weren't time. at

to But understand. I'd love

obviously available interest that's just is became given access going. big remote it with traction security towards think everything given early how generally happening else a April. how out? And COVID, part that playing that's is Early I

Olivier Pomel

actually we So -- have the customers some the -- turned and to far beta customers it of of are some paying good, customers, users that beta paying already. of turning part have been so to are so them the using

more happen we're lot needs So with But that happy the traction. there. there's again, to a

sides side. the one ops One thing trying in were seen also side, that's We've interesting but we on bring to us some is other that, the seen we've together. adoption and from from to security -- adoption both dev folks

early, very future calls. lot that's And I'm talk but So again, again what happen still shooting to in to about sure it. is interesting. we're it a going we'll for. But that's

Bhavan Suri

AppDynamics, cetera. And New Okay. and Dynatrace pricing on one given Obviously, then the question quick others Relic, the environment. conversation with et

conversation now? something is people is now? an kind comes conversations. Would in How pricing driver as the you in say -- a the are price what understand right the especially to there. sales would guys this of customers love really Like of important most attractive as out sort it these view right You thinking that decision point of seeing that often up environment? point And about pricing are are

Olivier Pomel


we the the do have through pricing have. certain less outcomes can the that way comes so price general, and differentiate integrated we value So we the pricing that products especially it that. pay they align like give our we that -- when so and the is logs with they and the customers and in our data model things We platform elements disaggregate and to get, through a matching

any we The -- environment. might by be that also advantage is we one think with in that haven't we seen an we customers. say, I thing would starting changes is and small operate that growing our

environment model upfront large they're very trying where is that predicated an something And to multi-year on that's to not manage customers cash. in attractive is deals. especially Our

Bhavan Suri

an obviously those have that's conversations, as you talked given Thank issue color. you you. It's you appreciate the exposure Obviously, interesting seen constraints. small haven't Yes. cash but SMB today. But about


you. Securities. question JMP Thank our Walravens next And from with comes Pat

now open. line is Your

Pat Walravens

and Great. Thank very much, tight ship congratulations on you running a such over there.

how love been you've Oli, thoughts is for different this think I XXXX, So to years recession XX XXXX. and similar you little your doing maybe to on a more. hear this would

Olivier Pomel

a I going previous from one Well, I that's really question. until Pat, think one you is they're the over. the they're know that don't hard remember thing where

why that's So prudent. been we've

far so there from We tell still successful everything call is through thing is that Another the we can healthy. is this wanted business communicate we are very that see that our to we look us -- We and growth. drivers working. made -- everything

the we're the everything come that At world the be much same on time, XX% XX%, Everything we've will right? work that. together. pretty growing fire every end that now of guarantee is of And to not COVID. this -- needs cylinder, part impacted every come to XX%, you been And if together almost need cognizant for And year-over-year. in to single by to trying

Pat Walravens

of ask couple growth last of Great. I less QX, David the in the ballpark in if has quarters And one you been QX. RPO X% less sort revenue X% as can then same in

David Obstler


Pat Walravens

reasonable diverge? should Or for that about think to a that way us Is it going forward?

David Obstler

extension -- Well, out commit We've door to wanted developed as and had of three of had number who we've the mentioned to a companies I they've average with contract. long-term years. and partnerships we together

of happened depend that's not periods other as like see that because period in of that individual to extension. in contracts for on the to some I going you'll much mainly renewal are timing think during contract So billings I or that up those think renewals. And period and

Pat Walravens

both Great. much. very you Thank Okay.


Thank from our last question you. with And Jack Needham. Andrews comes

open. now is line Your

Jack Andrews

core Network on to me Do squeezing see you're results. call and you and in User than these Or markets? how -- this perhaps seeing about the I APM And do if Monitoring displacement is your opportunities? these market are congratulations wondering for trends Monitoring. as ask you also what opportunity think that around want big the of products? a in just Real Thanks terms different point more I and Great. the given greenfield you infrastructure was Performance pricing

Olivier Pomel


cases, in cloud environment. same of customers to it's And rest also so they to aligned strategy which the those with is environment, using are and of But the the the be we customer net is there control tend the charge which In So charge is giving while products the as the for cases, philosophy, we some price they vast majority cloud -- get. back from our did. most the cases our the align product is products. pay other which start is they of with value the rest the pricing can new. per way new In the they usage,

Jack Andrews

Got it.

in or trends about of noting just of regions? terms follow-up. that other thinking a Are And Thanks. worthwhile resources just regions areas in quick changes of any in as are specific aligning there international just you're then pockets terms strength Okay. international that of particular

Olivier Pomel

mean differently was the at an with have some even we whole point, any makes success country down. while of mean I large example. -- think that at new success very we've we but in -- us don't logo of the point. even COVID, anything I in is some see from fairly that's Even to sort region I'll when you though some deals this think everywhere, locked have going any of other impact regions this give We all don't recent. closed are completely Italy, that enterprises behave you -- No. we had

-- really to different world no is point no today. in to there's part any there's going tell anything So the of data us be

Jack Andrews

Thanks Got much. very it.


call to Olivier remarks. you. over turn Thank I'd Pomel like closing And for to the

Olivier Pomel

closing, that you. with All results we pleased QX. to are In the repeat like right. Well I'd thank for very

in for and course, supporting In our we trust thank are for through in dedication We for and want thank for positioned been their it. employees want time all. to we invest time. I customers opportunity has businesses continue Datadog believe our And to I of Thank challenging all you a long-term an resilience. to their of us, what very well their unprecedented


your conclude thank participation This and your program you does and Ladies you conference. gentlemen, disconnect. for today's may on now