Datadog (DDOG)

A.J. Ljubich Director, Investor Relations
Olivier Pomel Co-Founder & Chief Executive Officer
David Obstler Chief Financial Officer
Sanjit Singh Morgan Stanley
Sterling Auty JPMorgan
Chris Merwin Goldman Sachs
Brad Zelnick Credit Suisse
Raimo Lenschow Barclays
Matt Hedberg RBC Capital Markets
Brent Thill Jefferies
Robert Majek Raymond James
Brad Rebeck Stifel
Jack Andrews Needham
Ittai Kidron Oppenheimer
Bhavan Suri William Blair
Andrew Nowinski D.A. Davidson
Call transcript
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Ladies and gentlemen, thank you for standing by and welcome to the Datadog Third Quarter 2020 Earnings Call. At this time, all participants' line are in listen-only mode. [Operator Instructions] After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference maybe recorded. I'd now like to hand the conference over to your host today Mr. A.J. Relations. Investor of Director Ljubich, Please go sir. ahead

A.J. Ljubich

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

Joining are Pomel, and call Datadog's CFO. today Obstler, and David Datadog's the me Co-Founder on Olivier CEO;

financial the expectations. customers and future future of and our the date. this Private reflect related the the cause our are Harbor could forward-looking as continue, differ from our and our intend, under from identify we the using are can These and call, the business our views to benefits trends estimate, and benefit materially that industry for today our or statements variety Safe Act Reform ability subsequent investments forward-looking subject only performance; strategy expectations. These and of as The to any to we products market full are During that opportunity anticipate, uncertainties statements not Litigation to statements trends. expressions similar to a pandemic the of our our these including securities Securities will, will made on ability laws well risks indications words platform; as of to intended and provisions of statements partnerships to expect, actual our similar as results outlook make from of fourth quarter statements COVID-XX capitalize related of including pursuant of our impact anticipated federal XXXX for year XXXX, hiring; and to our

actual quarterly August that differ, risks important ending factors on results the June refer on XXXX for the Form XXth, discussion and to period the XXXX. of with SEC could material For report quarterly to XXth, filed a XX-Q please other cause

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

tables SEC release Investor our portion this a Olivier. website. A on turn you Our the on find to for Investor measure. limited on be will to available the can discussed to call. in of with call our the refer available measures of like there Relations Please the a the I'd financial Relations most filings With conference GAAP earnings comparable are these website over which the directly time. replay this reconciliation measures for be Non-GAAP that, will our financial of section of call to

Olivier Pomel

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

the at features performance with It are in which products We starting which and ability continued was very of we with our high user announced efficiencies. product pleased high showed delivery an growth DASH, at exciting scale QX our our quarter in maintain and annual demonstrated new conference.

on the record track platform. building lead and strong and of innovation are our We observability end-to-end most our complete cloud-native expanding as

With by to I productivity. employees our the of work home, majority from impressed am our continuing extremely

and Our solutions. continue to build innovative engineers ship

sales to R&D to value continue and our efficiently across customers to teams go-to-market Our deliver hire and ourselves continue position rapidly and future. the to we for best marketing

and to to is like before invest companies as more importance strategic being customers never to and to in digital-first it. than execute migrate become platforming We the continuing massive driven are a has market their outcomes. migration the against time and partners so has everywhere by And of our opportunity are operations our as ability The agile ever. to during cloud pronounced this cloud these digital clearer achieve

customers increase $XXX ended above a our the These high last with end ARR. more To of XX% about up results. XX% with $XXX,XXX million revenue level, range. ARR a to XXX an year. We million of of high guidance customers on XXXX generate summarize from and Now, QX of at was review our or year-over-year of the QX quarter

customers in XXX We QX. XXXXX more from X,XXX quarter have than we means customers the X,XXX about in about meaningfully which up the about added last year

million. with We dollar-based capital-efficient was also quarters, free rate continue cash over as be our flow to in of adopted newer as And usage their increase XXX% products. customers $XX retention net past our and

usage line more a of growth quarter Now, with robust return growth to levels was to user after detail. usage QX. review QX be more levels. historical pace of To more pre-COVID which in customers was broadly specific, was slower in in the expansion existing in normalized the Throughout QX

a that industries. we've that now the was usage from have of of within transitory customers returned those consecutive to some we our sizes As in and of growth was feel broad-based many seen in QX customers cloud multiple different steady Strength rationalized also markets. customers different across result, comfortable larger as

that, churn record remain new to with of the additions all the new making Taking this historical logo generation of robust for account, a ARR was levels pre-COVID and total addition this very with In a consistent at be end quarter. with line company in into quarter continued the rates. to customers successful

and Next the market. resonate continues strategy win our in platform to

Synthetics available not is out of customers And to product the platform. exceeded by today that and thousands of from including the it hyper landed Adoption in year. had itself end only X% with expectations As two are will of using more has has ago. been the which from Approximately or quarter our products in the will continue more pleased we has of figures newest XX% year. be Synthetics reached eight continues up from another is QX, products NPM are be to growth. new of and logos of is used I and which a year up two ARR of combination more or XX% XX% uptake And the of using with security. XX% of four of approximately commercially or customers products to which attribute for strength about of last point We a our products. customers which the Synthetics

a frictionless products. review my As is land key what a sectors of time most all expect of all expand the that of our turning our industries the segment of to their of been a quarter strategically all platform both conclude value we are of challenged important proposition which To as even and operations adoption companies the of ability in and during sizes is important their has uncertainty demonstrate business. most across to would benefit reminder, digital our as

R&D. to on Now

proven products record overhead the introduction and and the of eight in to features a track Datadog long new major team lived introduction include announcements have standard enable top of our Continuous of expanding We with Those at general the that continuous our innovation up and cloud-level QX to Profiler DASH. on applications partners always-on technology pipelines platform; to build an measure deployment Marketplace integration the user triage the better development of mobile which bill and extends to monitors and and and and testing on low security to of to for launch Synthetics misconfigurations compliance notify ended a beta availability for solution; performance And application the security customizable of to incident to the threat. solutions preconfigured suite prioritize The proactively recommended process. our content the of in teams, cat compliance of Android earlier beta monitoring develops introduction launch launch lastly iOS; alerts. which of ERs; the of availability management monitoring general tracking both of aggregate aero and

will Platform Google Datadog collaboration directly with Microsoft to of will existing and features implement Cloud the of just public strategic DevOps between our an our the partnership leadership well Rather announced strategic currently enhancements shipped increase from make listing with AWS with These as few which R&D main in in conclude We sales a quarter. GCP. alignment of two preview for new I'll collaborative relationship extends this and and presence announced this sales enhance new public recently available we into takeaways. partnership go-to-market all Azure Today with Azure cloud on purchase expansion teams environments Additionally Datadog console demonstrate are which and enterprise than collaboration partnership our along regions clients. a cross-selling the with and GCP we nature our believe them our we alliance also our and and cloud vendors. as with the use

Together continued to down times. able And to allowed throughout slow not the very successfully teams. been First, also I at hire and have challenging have am our of map. we proud pandemic work-from-home productivity and of road scale our the the we onboard

Second, to only of are most cloud-native continue end-to-end getting started. and we the yes deliver And complete observability we platform.

Now on marketing. to sales and

As hosted this know user our we annual you conference. DASH quarter

events discussed format quickly it hosting count. last products XXXX of the earlier. this more an I was a vital That thank to success enabled a and reach together partners first in and of bringing over for and time broader us prospects virtual of year's to great than Xx execution you audience is customers attendees environment. to excellent show this which power a our was to community want all special a in new many our teams Datadog the And our give While

some our let's Now of this quarter. wins discuss

digital First, ability our I'll been catalyzed with our move to that up that to pandemic the scale channels highlight demonstrate the broad notable and has three customers. by sales rapidly

handling First the of company X-figure around of the upsell users Datadog IT hundreds has orders. record e-commerce brought silos collaborating America This the that Latin stack. level view down share of has now company and in large been with a

threat of featuring commitment X has last in company more to Next to that company a The times. seen a including and U.S. seven-figure material a and platform has monitoring its Datadog has European than real-time business on-demand our company has detection. grown seven-figure on security of from that seen with now products, enhance standard more growth gaming has last, deal, than a their platform all seven And usage doubled standardized Datadog. year

support they In metrics three advertising are business machine anomalies report finance Datadog and learning server-less our addition using teams. on they occur to pillars, to they key our detect using before harness of architecture, to to they all also their and

organization its industries Europe. good to logo also customers four had are products in customers, old across new with had postal need on-cloud success front-end a from transition We win on-premise transform. to traditional while monitor environment. a a aims undergoing including to service containerized services digital that deliver to and and six-figure to both environments. back more to years They XXX This from Synthetics a multi-cloud We using

company increased upsell had Datadog on just Next, to financial a year After exceed ARR. spend service X their more ago, times a million sizable to this European a monitoring joining $X consolidated as than customer now institution. in for over a we

mentioned cross-selling seven had RUM, a this of digital new for motion mid-six as infrastructure not on QX. we only call Datadog are of company, customer this customer's Synthetics example a we monitoring. Today global last year's shipping logs, crossed into APM, ARR companies then, transformation, spending an and monitoring, powerful figures, XXX-year-old infrastructure undergoing was has of figures NPM Finally, with which upsell on but how also market. great stages This introduce is to we using our products Security. all Back

on moving Now outlook. our to

quarter migration unit across like look challenging to times. some clear confident we the which return greater ahead are cloud is and about digital to to Companies may ahead final cloud continued the the winner clear strategic the current we've to we And performance grow continue never and a our ability term. all and is XXXX, cloud excited only through globally agility innovation. we As be was of the is of strong not resilient a even operations normalized seen It but given enable are market us in rationalized execute, usage to environment, opportunity After of stronger in growth. before. longer QX, in industries apparent prioritizing that

both the Datadog in the call we We sustain positioning. over can believe in environment term that, in win continue Chief and macro opportunity Financial the we remains David? this beneficiary would primary Officer, to the bumps we very uncertain growth, David are and near-term near market. in the continue could very Obstler. In our we over and is trend positioned like well time. to turn With to long-term that And strong the to I our cause other believe remain confident while of words, to along way, a and that

David Obstler

Thanks, Olivier.

third difficult continued top line after in macro be million, were Revenue backdrop. quarter robust mentioned, we was traction normalized year-over-year. that return XX% growth strong. delivered we and pressure and Meanwhile, trends the As platform saw a to up QX. to Usage results, $XXX.X amid strong more bottom

scale growth efforts And in logo consecutive and New provide historical was context; the churn in quarter pressure more characterized quarter, our on at pre-pandemic to saw environment. was customers dollar-based to provides with To sustained remained norms. XXX% customers. was was we robust. XXth some quarter. existing us rate seen we retention experienced with transitory more related usage throughout by the usage optimization This first, some larger above broad-based was levels. line quarter. usage, cloud, was historical in QX, QX a and robust optimization in Throughout by After from trend from were return line what was third the in that generation decisive for confidence The more customers driven growth the our effort the net from that QX normalized a macro existing that challenging with

number in the may periodically, and comparisons further while year-over-year QX we about perhaps Recall was levels, quarters. happen cloud experienced pressure usage of term. feel that seen in is our very can much a While model. longer have we've optimization still growth SaaS ratable QX confident for previously, a as back talked Therefore, that even be pre-COVID intact we strengthening to migration

to Our the our well cross-selling by both be powerful expand continues of products, model as newer driven to usage land growth as and solutions. existing

we in customers from our only third quarter, two of customers using platform in products, a four and or now more products strategy over Next, ago. strength X% or saw the of XX% our XX% using year continued about up our more with

being them still land initial adoption many results well Continued such early continue well NPM contributions I as as of that the RUM, to product quarter. products and in run traction as newest the strong quarter-over-quarter. cross-selling. driven small are note is and growing by to therefore Security in rate The perform

additions and solid And strength levels seen line from with in lastly improved in with historical was were results regions. pre-COVID and churn channels logo new the sales in customer across and levels stable, slight Next, with elevation line QX.

Our unchanged retention has remained in to dollar-based rate gross largely the low mid-XXs.

which million, exceptionally were year-over-year to against turning XX% an $XXX.X compare. billings, up Now difficult

there affected to the billings and said have we economics We clearly growth quarter. a growth and align with of duration business. in billings a timing the pro QX number the And of that that of were will more provide growth the forma in differences

by First, year's timing on disclosed that bill billings would was invoice million. forma have difference, QX $XXX.X million. Pro $X we been call, an had last increased that there excluding billings which

few from Next, we renewals. a impact continue to deferred these revenue had billings from in an long-term million and shorter customers moved upon customers, billings their Notably to quarter, semiannual the annual large of duration $XX smaller talked last or which breaking been timing the on bills an these as pro basis. would XXXX up increments. forma annual simply we If commit to effects, QX for their on $XXX.X They're billings we about call into have million. all

the the growth XX now, to growth. XXX.X%, comparing pro was of year line apples-to-apples pro the performance RPO So XX% $XXX.X Current forma to was Remaining is RPO million, revenue billings per or growth. ago obligations of growth $XXX up with in forma billings million similar relatively year.

can customer the fluctuate As usage. discussed and of RPO a based reminder, as on signing billings revenue revenue and just customer incorporates of contracts we've versus invoicing while timing

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

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

discussed. of million quarter year period. by we a margin We from financials in in Year-over-year margin Gross of of compares representing The minor non-GAAP platform slight efficient due sequentially driven $XXX.X release. quarter products last as a the to XX% have XX% gross inefficiencies in margin XX%. to in have was improvement cloud investments to created innovation gross provided GAAP margin more profit a of This ago in gross was and use decrease our was gross and infrastructure. the reconciliation

deliver We've newer as $XX.X high hiring reminder, range R&D our continued year ago. of and attract including onboarding, of XX% in cloud and as quarter-to-quarter data quarters a growth quarter we an been product million of the centers as the able build-out in margins or innovation headcount. was our R&D XX% invest a on of expense significantly to additions. to fluctuate engineering revenue gross to As within headcount record enabling to and in geographies. We've prioritize compared talent execute multiple may development well engineering acceptable us

the continue investments and $XX.X million, was platform XX% meaningful quarter continue plan expense Sales year expand revenue to pace compared or R&D, to our and in meaningful to of and was to We XX% investments to investment. therefore marketing, substantial innovate trade R&D. a marketing for no or see make of that continue period. but Similar quarter to This we to marketing the of events. the outpace to shows in ago and growth revenue make another in-person sales continues opportunity in

activities, G&A a operating While was successfully it was or operating X:X redeployed operating year X% in we And budget have events lower to much of period. $XXX,XXX the on other compared or revenue, and slightly the lead-generating ratio. to quarter. ago million, in ago X% than million income expense was $XX.X margin, or X% advertising the the not of $XX.X income year X% of

marketing contributed line In income due addition travel, $XX margin, net Headcount improvement and overhead to and shares. diluted Non-GAAP growth to million, the facilities XXX quarter. revenue in average the gross growth entertainment margin. was or weighted share with reduction in for in the continued quarter the COVID approximately million in a was events, $X.XX to operating on

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

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

of our from turning in the $XX.X into of quarter, strong sheet billion consideration or the $X.X margin equivalents, solution testament COVID, collections the customers. importance cash the quarter. very operations securities. to $XX.X been CapEx and our capitalized flow, software, have a taking free amid After was cash XX%. in the was to Cash flow to million marketable a cash, Finally, cash and cash flow restricted balance we in million and with ended quarter Cash

the fourth XXXX. outlook year our turn Now, I and to would quarter like full the for to

QX net range growth approximately consistent QX usage guidance, million R&D based the still the $X $XXX And income on We growth non-GAAP to notes we in million of a a fourth quarter, saw migration be year-over-year be Usage $X.XX pre-pandemic we $XXX,XXX our for And to XX% assumptions, and continue we diluted that and pleased usage which outstanding. and to securities with some the income of Non-GAAP the convertible of QX. income midpoint. and we impressive levels, share to to trends in and strong at was marketable strong, weighted quarter. ever, conservative being in entity, taxpayer summarize, based XXX the expect our results we Therefore, by debt. to growth million $XX.X expect XX% to operating expected do the million approximately the and other approximately in revenue into less the with prudent range continued in of on share as net income, we an level. factoring that the historical a is positive federal cloud pandemic share expected which velocity execute as uncertainty are $X.X quarter, $XXX expected are but again, interest range the we have we the the growth the to tax well per share seen year midpoint. per approximately and expected is To below represents is million, XXXX in million product million the per XXX weighted to an to remains. is new our average sales digital provision investment While on are $XX.X which than of revenue of a be is delivered to at more million marketing. with be of and and Then Beginning growth have expense prioritizing non-GAAP $XXX range continue high interest not as $X is shares. in what to quarterly be estimate cash ongoing was we transformation record. in to in are for international innovation expect to at business be Non-GAAP investing average be net diluted including and shares companies the operating income, track per expected share related be to $X.XX to represents full operating in which million, $XXX range of million in the non-GAAP per income on year-over-year to is million, below income $X.XX $X.XX

and with the what Q&A. now opportunity. to growing macro related very we well let's to questions. is capture positioned will we environment uncertainty market large begin While Operator, open remains, for feel call the the that, long-term a And


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

Your line open. is now

Sanjit Singh

Hi, to and congrats thank you David, start for QX results. taking just you. the maybe the questions with on

that off cloud became from I message guidance I pre-COVID heard trends an They was think of certainly Expansion you improved. levels. gotten that the to view pretty less look the the a saw issue. back script like rationing emphatic perspective they've your

or If XXs, you low mentioned could Olivier the the just the I if you mentioned, versus kind growth bookings, slower the at bridge an acceleration RPO sort XXs new it there's there. time of quarter. – for record the based in like think of same but a look And I ARR revenue seems think I us, at

and the just slower metrics versus give us growth? how of whether you sort seems understand a together of sort what could of business tied those If truly revenue three rebounding sense us help like is

David Obstler

continue had, rebounded, sales that have that we we as growth contributor the the ARR is contributed strong It's trends. very mentioned, new particularly more Yes. to a customers in combination the in And record We of line. to historical organic the and growth. to larger two

the main always organic factors. those majority is in the so the the the of new The complemented And growth quarter by are business.

Olivier Pomel

Olivier. is this that, on complement to just And

last it year. compare you to If

So remember model. SaaS a have we is ratable one thing to

in bit. makes actually ARR incurred it's same we to compare. year the acceleration growth be is revenue And up with comparison in which the going in time the tougher usage. going Last us had at in a when increases they're the we year-to-year only to did show forego QX also, the – for So it in an a

put flexibility So depends also added the we the in was and QX. when those quarter ARR on of in it

you were So the revenue basically ARR record. not with bridge is record the this how as it

Sanjit Singh

sense. Olivier, Okay. today, signed Cloud And partnership and follow-on with partnership you on with Azure you strategic then signed that intra-quarter. partnership Understood. makes the sort then front, a you That Google of announced another

Datadog, of the front, here? draw out you Give business of much opportunity of of of or credits Azure that part be using what sort great. Azure to for what sustaining down how an the opportunity revenue the revenue can just is with us opportunity of to this Azure is growth this sense the ability If accelerating the can frame a their of on frame as And terms partnership? of growth you us On Azure in would today. sort potentially customers out sort with represents

Olivier Pomel


we should providers. them working already with customers before. I We've all have non-stop first So, [ph] say been

So cloud distribution a the bit little today our customer follows providers. arrival of the

that what's do AWS, interesting So than more We and get homogeneous this for be first in with do example tightly bit mostly be homogeneous we're there and itself Microsoft. technology a we into they or base is Azure for What's user bit Azure we in vendor partnership a more on used – the tends is still the to the more console to the Azure. revenue more have volume customers more that. use for interesting we new many integrated to

help and And our be reduce Microsoft to platform. ability can onboard the customers with onto more new so integrated friction the really

more their as usage opportunity So are growing diversifying Azure to Azure and we customers a for one stack. that, as itself cloud get working providers we're more that should this customers tech their and is I say with. see as only great of the is

partnership the on we're announced today. another We GCP platforms. have of active – other all We with

AWS. one with have We another

So the an team. customers can there involved also our is some a evolution cross-selling not their will revolution. Microsoft be Azure To credits point with your this and use

about remember So there. in is excited go-to-market this in thing One that the we're preview. to lift is still last

over -- going quarters. That's we in don't something that's fallout the in kick term. the volume significant expect few near the next to So any

Sanjit Singh

Understood. Thank you, it. Appreciate Olivier.


Our from question next Auty with JPMorgan. comes Sterling

Your line is open. now

Sterling Auty

we of it make you you kind with of revenue? terms not of announced the that comment timing How Google we the of only just Thanks. sure timing ramp what Yeah. for the also that in Azure, guys. to want Hi, should answered I with last but into Oli, of think set there, your partnerships flowing as but well. of level the

Olivier Pomel

Azure not all not some now. to things So in to just involves the new we're going place. preview be of also GCP is completely one a motions but It's yet. in new technical right? It's immediate, number go-to-market live The happen, putting right partnership

an there's impact, being that meaningful immediate but not the see be to to going as long-term. So we potentially in contributed mid

Sterling Auty

at makes for And just to that. specifically sense. looking one the both That perfect pillars just three follow-on Thanks. infrastructure of Are on or we across these partnerships?

Olivier Pomel

call, it But another products. in in the point of Well, the our mentioned cases the XX% also with we is in the infrastructure. of -- as entry earlier for most of usually our customers comes

that customers products then the us as use see all to platform we and the four end. into a really have way a So for or get way three in

Sterling Auty

Thank it. Got you.


question Sachs. Merwin next from Chris comes with Goldman Our

now Your line open. is

Chris Merwin

for a much about bit the could quarter. segments talk question. across saw hoping you in I what very taking the was you Thanks Okay. customer

with you think offer? strength more guess of now that obviously, see I infrastructure I course mentioned specifically just of segment But And pretty log the was the not platform the you suite within but there's broader you that standardization are much APM? products around enterprise to Datadog starting much, broad-based. the

Olivier Pomel

all see I integrate of very then mean, they need for desired definitely top think, the we it's and -- together on I that outcome. same Yeah. see. to various that customers obvious we what observability That's is platform having parts of

not and more see happening So see we enterprise. more We that, point. that over of all this at specific segments it's to but the

Chris Merwin

a just maybe follow-up. And Great.

up In back encouraging terms stepping very hear. of usage it's to

would as evolution there thinking well any not really on think it is but I unlikely there customer to given back have Or usage any here. you're how been be step something that mean, customers, about base is pricing? what model like pricing As that works that? Thanks. pushback those you to talk here, saying for you're curious from is I conversations of and up there's the and your just

Olivier Pomel

millions price. thing Yeah. they're the one customers just end said a job. of how Look that we're at the doing for you price. charge should ask anytime enterprises built is dollars, that think that for day questions value much the I whole of in you deliver say It's department I being That are is for what the that. pretty about going the matters to for good And

all been as the you is all with and cloud paid. and of have. at and they reasons grappling the is security customers align product what look the for the when think to really data, the the applications that and used we're thing applications And we've align really needs with doing way price reasons, added I offering generate adding and SKUs why to to one more that with other to observability how these what our with with so to buy new being value that's align unbundle for moving we've more can data what's more being reasons everybody is the best more those

sense so the only to retain in pay put customers data a long-term. These but is with doing can get. announced We're that they treating they amounts large we customers are more it the with our infrastructure product. they basically with to example, limits, value We've thing For APM, we before. makes retain without done the part and control want way align of the which of actually way what our something extremely same to send recently our they to

Chris Merwin

Great. Thank you.


Credit question Suisse. next Brad comes Our with from Zelnick

line Your is open. now

Brad Zelnick

digital normal to I great all to and get deeper And to come, you're by clearly, against to this? for think Microsoft cloud migration. we about the and see as returning you're perhaps themselves the really that from levels. you algorithm next Datadog should how another to for try levered not look to this curious we the much, congrats for the and hire David, of large growth Great. to years in Thanks in be you're to with environment? the perspective, usage But us investors how guidance on framing year, strong and transformations can proxies growth the quarter the about although growth and way it to rates opportunity a to would clouds of going about more this the And rate ability along public which partnerships now so nice see with give right how think how know you characterize I'd planning opportunity? how And that investment think Google. internally many

David Obstler

Yes. question. Yes good

about said revenue, on XX% customers. our growth that comes So from -- of existing revenue we over

inorganic. expand So think we And referred we and trends. pre-pandemic land historical I at at and start cohorts looking with those the to look and

opportunity of even So the tends lynchpin that's business size, at uncertain we sort making not the And then market the relatively which at times. be the limit. in look predictable a to

growth. at how many in use execution, in we them some that the is, so experience salespeople looking those And etcetera. essentially is what understanding we And and we how understanding algorithms get the ramp we productivity. ramp in can are have then And

very I think again a over market we very over said and and that feel on. we're early this and there's big we

to lot there's of are also of So both feet of the market out. that have areas There go successful territories more a lot of street. put in are in we are a building opportunities. investment, There lot where we to product terms still a on but

bottom-up headcount. talked capacity and success in see on sales we XX% them So we sales in bringing in And about and that our that's build based see that to to with as growth. And XX% productive. we and that tend getting and in resulted the from we've opportunity people a

been successful really and throughout continue to and the Oli do pandemic. mentioned COVID have opportunity lot it a us hasn't back. of in We've hiring held that in good seen we As

Olivier Pomel

I'll complement that. And Yes.

while think the now growth optimizing that we Sorry, way year. side. opportunity going to isn't team long-term grow them short-term the both the we grow growth the we're mean I'll I the really we're so right complement think on it just way get fast and related the next how terms to way growth. of early directly for we think about about we of We can in that our in

are are basically we on R&D sales growing as the think And it. justify both are true opportunity and the side fast we and we we side and we marketing enough team and So as on in that's which the to there's can little very mean just frame the growing would a we're a bit there. plenty a get. And convinced than whole lot of -- that as providers plenty, to that opportunity to into is that to which the faster put cloud us for market

Brad Zelnick

portfolio growth you just product how top growth, especially evolution as point perhaps line a this new the DASH the continues on should a sales to recently the with and think follow-up finer we expand Thank cross-selling just for to different -- the about sales correlation there having with changes announcements, that. Maybe all go-to-market? significant all headcount product that force put drive might the envision order in of the any make you and required base? within the to capabilities buyers all be and specialization of customer do cover Are to efficient in hit the of

Olivier Pomel

is It's some very that Every at which sales point scale their a company and start grows possible. large force. specializing --

that the would do we're the optimistic of one at very sell having team be observability sales this that. at stack we'd that at to I for part had haven't say, successful We this point. And point

the future. on specialize the base come these need the different. and these security think the a might such be for enough little the something that's for new enough. to we're might are where again not products group I minds new entering don't There a the XX that as And years say would are I enough for group definitely customers we which bit the that's is categories are small our products these targeting customer barriers products mature issue for first for

Brad Zelnick

the Congrats much thorough today. Excellent. again. Thanks so explanation for

Olivier Pomel

you. Thank


next comes from Barclays. Our Lenschow question Raimo with

open. is line Your now

Raimo Lenschow

well. crazy on what me to with Olivier you portfolio of terms competitive cloud space bring seeing you are word Yes. we a the kind Two in like some just free in a as guys of new quick like are doing broaden Other So – wonder like seeing one lot and broader down trying coming what dynamics? questions product up just and pricing had in stuff. are from it's space? the of in congrats that your – is

Olivier Pomel

So We don't cycle. same don't anything about time. past But few We is We see with broadly, about adoption anything earnings there's been in much lot as for see around today the the The it it. customers. so hear different very change. it's a years. no that's the different space

Raimo Lenschow

Thank are you. extra more in of Perfect. like you at new the mentioned of up? motion what terms customers at then a – motion all and of look have et landing observability you But the in the Thank around change than kind of in seen terms And kind Okay. as You people and a landing couple cetera. just think observations see about taking of the of you as understanding more whole your people stats more like call, modules infrastructure thing your going there? about this you with and kind from of holistically. beginning change just how nature do many a thinking you. What better are

Olivier Pomel

we At number the pretty needs slowing or to Yeah. why around This between having the day also which understanding what it down say. definitely is two I to The has the the products. would products there. same that, when more infrastructure, include on just there. It's them use than land one, XX% customers time, more expect better with is customers, get been the of balancing land act definitely do observability landing stable with is more field but

and the important we've part one now in it's been a between Again, business of fast and particular. to with landing infrastructure our fast corresponds with that very right right landing product. critical. successful more our very think is than balance I Like landing products

Raimo Lenschow

you. Thank Perfect. Okay. Congrats.


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

is line Your open. now

Matt Hedberg

doing interest of build trying awareness you're open for application up GA developers do talk you build your a halo from platform. for the is sort effect nice At vendors really little deliver software about going developers? to for my think first-party don't ultimately, to more to having it DASH, of more you you're what taking it more on application Can in Great. Or as not that And bit alone you was features features a monetizing marketplace question. good How Thanks really additional this. hear seems about to yourself? just up this?

Olivier Pomel

these, in if a serves point, we run. this it's right? all go think, we're make make collection successful, long define we're way in that Well, of we make first in them that working the still very partners we to a super to we – this. the them. think, successful develop few At our of sure I platform with they'll early us And

out successful what about more worry monetization as and we want far than about get them to we as make this of they're us in, sure just at they point, it. So comes they worry

in innovation early, many, important. dividend we to deliver have think to going business. it's many, of come play fully it's a on the to but super the on more we So We future think these quarters

Matt Hedberg

David, great. of your That's helpful. maybe And then super for just was one billings explanation

to impacted quarter to that from looking of and guess, we a I Just QX but kind to answer not sequentially though, that anything obvious revenue from a all sequentially maybe this the deferred I'm normalized – trying basis this. year-over-year on curious of there last there's it an this nuances QX Was But necessarily looked on kind flat. QX? of just deferred year. look quarter when basis think at about given

David Obstler

pro which in from in Yes. It's had to billings billing. the analysis. were of that were large up the $XX customers some forma billing, chunked that from would factor same – anywhere have monthly XXX% million resulted There been semi-annual

same So mid-XXs the deferred metrics that at look like do the reflects way economics, which revenue be would in to talked other we about. and you'll the that that, see $XX at the the million, and apples-to-apples the

Matt Hedberg

it. got I

renewals? last of what a happened year really year relic repeating the then So this itself just

David Obstler

accommodate grew last staying up environment customers, with is. are long chunk that its It's them that's work clients, this with Exactly. it the to in to to and large annually These some said as time who build keep and deals term renewed their but commitment. very what in that trying we're we – us, are request our

Matt Hedberg

it. sense. a Got guys. Makes Thanks of lot

David Obstler

Thank you.

Olivier Pomel

to we of we more point us want align of customers upfront; pay just the the that. that beauty them We'll that. on in if of a right? with because go-to-market, our is of see our don't I care actually mean the on And model future, efficiency

we're so grow. pretty I'm we'll see sure -- that as of And more we


Our Thill from Brent next question Jefferies. comes with

open. now is line Your

Brent Thill

if just on And of from drill in customer security little you're a to business what add you to that comment, overall the could you from seeing curious the mentioned standing you. just I'm on I'm normalization down you metrics there also and out unit? Thank behavior. expand you terms David, could what QX just initiative more if detail curious QX are

David Obstler


go the and some over just Security. to organic me then around Let Oli metrics of growth

that QX we customers in said some rationalize. larger what had So we was of the

grow pressure. of in in up. pre-pandemic also organic those, medicine that -- So, that the impacted meaning continue to the taken and in in the was was rates. and ARR concentrated and also QX was larger XX% slightly optimization larger about we was normalcy in the customers of base of customers now after And stable where industries some return what saw impacted was there customer And we they COVID impact therefore, the the saw was to continue first to our that be slowdown sort taken to

exhibited was types in was which organic customer it across large seen company over small the period of growth, across effect we've QX. what also customer SMB. and the the but long on a is similar saw the it essentially different that And Oli enterprise So in mid-market Security?

Olivier Pomel

a nicely. adoption to early customers share is it's there, I getting stories quickly product On think have growing from too We're but but very from it's very lot Yes. a the growing very number. Security, to great small

and still it's life -- in its So very cycle. early

you out offering on happy some very month-to-month QX. so let's any to growth growth QX the security, QX it existing QX really would just could like a more the both in product. right what slowed and in most we're at the for I DASH on David look with there. at sit month of we've the showed QX month they It ARR a early. sorry in with compliance said There's in the have -- new restate fleshed of we still And lot to growth, for So of base bit mean a normal the little seen reversion the if QX say have or it's base we're on the or working in growth. this

the that because what we're with don't we're question still of we've same not towards I very happy seen. backdrop, happen -- So the end in still the think macro we about can careful QX. what very we At time, it's

Brent Thill

Thank you.


Our next from question Robert Majek Raymond James. comes with

is now line open. Your

Robert Majek

Great. Thanks.

the elaborate shift for log As multi-silo a the as could of curious late continual experience further part more on of pillar? to you've the approach, results had if monitoring you penetrating into

Olivier Pomel

log said? you the monitoring, Into

Robert Majek

That's correct.

Olivier Pomel

one is useless they customers control in hyper get. for Yeah. I value of the products, the made the to more fairly customers the which lot were pay it, giving innovations generate growth lot log challenging align around data and have mean also product And to why because one of for with the exciting and to on for it's pay look a is product they right? is easiest of a we've what initially a a it's very which that

that. we've of quite done a So bit

been that by As features into would getting on from all lot situations extremely pulled platform customers not add we're standardizing we a their for they confidential to their they enterprise product data that And of observability us the including that customers all into. basically are expect growing we've keep of our enterprise logs. and a where of

doing we've lot to do what been So recently. more that's a

Robert Majek

so of new been far the with I just And What's has we're feedback products announced the resonated of DASH, but customers? know three how features? some and most months out customer and

Olivier Pomel

we've we've which announced interesting excitement bit for profiler the new they beta. got on would got of We've in attention. management only say -- many products eyes the incident a a quite and product. few product because got is new quite all it's I lot of a It's

there's of So, number that a DASH. about customers from things are different excited

those it's products. I all cases have those still for think in of we still early

So, we still have market. to fully to bring them

But build align grow promise controls have deliver these make so we they The we build basically that's build, the the their and on those of way customers way they with to work what with to the is we our We then sure our see products those our they fully still they most products. vision. customers. customers value them with We pay we charge And that sure make the put on right? the for For we can have get value. products have sure we in them. and their make hands. they We to

Robert Majek

Thanks. Great.


Our from next Brad question Reback with comes Stifel.

open. now is line Your

Brad Reback

Great. Thanks term? you set product to gross as it, impact margin has the very diversify Thanks. much. and on Ollie think continues longer with your stream do that revenue any

Olivier Pomel

push some think no the don't more so because between reason and see of going the to products this far. infrastructure least both fluctuation and to our we're in might reason We because back mostly like we and same optimizing down and things a the engineers Today new a and no use There's geographies different of still data our there's get because model have forth little that bit. at believe of think we the they not to into completely that we're building new might so. expansion But headed today. that do there which also are ZIP sets code

Brad Reback

very Great. Thanks much.


Needham. Jack Our next with question Andrews comes from

Your open. now is line

Jack Andrews

partner could perhaps Great. logos frame on think congratulations could we of results. generated the the should January are deals that in us new sourced from of how about be year. for of partner today just if I your what percentage your just given Thanks partnership be this you thinking your and network and ecosystem launch I was wondering

Olivier Pomel

is that part business Yes, today partner-sourced. it's a our very of small

launched business. those. basically of think thanks partner see but there's for year. these We number in investing of all can we're so get to it's us. We are part a the we all general. why to It's starting discussed program partner still that's bit a investing success upside in And the of small And our in this organization of the partners. we're all earlier we've amount partnerships a of And

Jack Andrews

other Okay. changes relative scale describe make big in and could about could business as quick a to Thanks. to need if you how vertical of to go-to-market how then some some some ask should your could particular And be we business you markets? follow-up if I the of this your thinking federal become

Olivier Pomel


it's We to we And customers things team are for other that ways FedRAMP be right? as in you other going number of the many we and et have know think and few sell different in started similar we in cetera. a we for a a to building way ways. process So to

big can think if the part in it of a other like of but we observability. business spaces providers is or part And terms other at or big business, of importance the be In of their it the communities security you look a business. in vendors comparable

a believe good we there. really that So, there's opportunity

So, again, this us. is all upside for

Jack Andrews

and it. Got Thanks taking for for your questions. perspective my thanks


Our next with question comes from Ittai Kidron Oppenheimer.

is now Your open. line

Ittai Kidron

partnerships two, of of the cloud – Oli, mentioned what in way or on easy before. guys? it Thanks. will number to first of relationship what's And depth you there those talked quality exclusive and competitors that the start relationships, you've Or relationship all of you the in replicate some the those is for client either difficult either your or with be unique? with Can one? number anything I'll about highlight the

Olivier Pomel

of really exclusive nothing depending is in there's they're these But different And the way they are the mean most what right? in relationships, provider cloud we many with. [indiscernible] I like implemented the also work different. and Well on situations

integrate with console the their cloud we the plugs – with directly the So Azure of for integrate we're example, providers. is to going way which case to not other some

So interesting there. that's that's something

to hard others in I it. do it's software terms do believe it. to Now I mean comment. could or what me it's so we might that can able be could not for of do Others

adopt partnerships. what end. base again by all the having of our being guide products, proven our customer run way time and to lot the I and product in go our has up that, think end would a traction a easier we've And what more not the think to of successful more market, of ends I because the and a of is lot – time is because structure overall customers that that's basically we structure widely and adopted up we those that we of

we decided us So the there. friction that's partnership why first. ability the that reduce to in invest to to And with what edge attracted

Ittai Kidron

you to those Can expanded by that splitting a your trying have make large isn't That's this the he David for at sorry back taking taking going a net duration confirm roughly half sure it half? at on expansion you – to great. And customers, then by again, bill that but and splitting it customers a least that bigger $XX million. your just and question was dollar rate? Just bill that

David Obstler

customers Yes. No they've been substantially. that have grown

that's the over them or a than of customer One is more doubled year so. last

but is with they us So have this changed that the growing few that been the we billing over terms customers are merely have years. last all

Ittai Kidron

then on in pretty your assumption for lastly softness XQ underlying wrong. It the been And X.X has months, usage like that Got there it. correct guide, usage softness doesn't in me much I'm your in unusual sound if some half quarter. any into

you So the so little mean I here? that left what conservative in worries aren't bit scenario being you just the quarter? a is time little it too truly with

David Obstler


than guidance accumulation in tended seen I be I new around think given lower wanted pandemic that are logo to continue we have time, that just And velocity usage the what last rates lower. that think that said predict forward. that conservative conservatism that's to to we we world, incorporate and and we've to overall growth our fact in roll the can't might what the and happen we're we

what So said on the that call that the particular in at the of anything rather that's guidance it's seen different today. than we that than we've core really

Ittai Kidron

luck, Very good. guys. Good

David Obstler



comes with question Bhavan next Suri William Our Blair. from

Your line is now open.

Bhavan Suri

question. lot first help about investors. even talking touch bit little guess technology I'll Hey, in for the Thanks my taking Maybe on comes This Olivier, to little a a up understanding. we're gents. architecture. I a

would sampling the space sampling model that So not data. data you way today can think monitoring difficult other infrastructure it is But in saying, it data with that when and even you data? and that? getting all makes the logs, data markets absorb the you all Is absorb for the the much in you're be or all with How of do some with works data the doesn't. look which the….? are about sense at idea of this the sort we vendors to too And

Olivier Pomel

take volume data. something all data. we We we even to go ones millions We sampling. -- our extremely of one infrastructure actually want in to and But no and Absolutely. if to us high without totally allows actually treating our data. in It take to real-time with the we the we're don't of announced and be the can recently they where product. choose only sent second. then absolutely There's environment everything. to And the Sampling of customers store totally and available the actually they're is absorb millions data environments retain keeping the absorb absolutely, all do requests limit all to thing everything XXX% per track

that the and that not So do. we other it's do vendors something don’t

pay longer they my we that. for and developers without keep having way just decide, for for the the see customers to many them as hey, for written checks there's sampling it's and are millions So sending, I Sampling that a debug no millions -- required. to XX% only in of storage need to logs, time to going of what's on

Bhavan Suri

second my it's And clarity. longer-term more a learning. kind of machine the appreciate but I Great. the one is about question,

other of Watchdog vis-à-vis point introduced ago. that love focal customers, I'd some And vendors last the automatic so maybe seeing how learning. So, you competition? of of about machine months marketing sort to service you year, anomaly what the think XX And extent the APM news understand in to heavily especially are detection leverage you

a understand there. the thought love process bit I'd little to So of

Olivier Pomel


the of case. So, couple a ways in

strength cases the the use problems don't. of data we data. we think We fully is because one the of and model or machine all see it's we ours, train with is we want machine a learning, the of because is So the actually which to all the choose we seek actually are learning SaaS, we that a first of ones to can solve and the can algorithms that of

So general it But specific fall going being structural not we teaches what there That to and all of of products And that's we find deliver. true don't we actually states do. everything the number great demo. to short a strength promises the today. think look you, those said, strengthens under that what because lead the for long-term -- the promise in AI with of promise to we They for like an pretty them in you're see the then want. that's much you

and to of line data long-term strength there in is So our structural of products competes because over-deliver or have something approach see, the we which basically the most us can under-promise think have. of we that do way is and not run and that we

they adoption, we've rely that with on see by selective and that's the in something of situation terms real we we the cases it situations But we in -- see purposefully building saw upon. keep use Datadog and customers without in Now used being been in our today. we

Bhavan Suri

it. you've done. color. thanks for Got the commentary for it. the Congrats Got and Thanks

Olivier Pomel

Thank you.


Davidson. Nowinski of last comes Our D.A. question line the Andrew from with

is line open. Your now

Andrew Nowinski

right. in. Thank for me you squeezing All

quick on a I at and understand levels companies clarification are the the customers pre-pandemic billings. your up. Just growing larger COVID-impacted are slightly

up improved the basis sounds you at sequentially usage on QX. to normalizing a even billings in wondering QX million your cloud But it after is usage, after environment look sequential and that only despite I'm from significant improvement like So environment. that significantly if -- the $X the the

given there factors other So should I'm million? there the $X billings is that we up went consider, wondering only that any

David Obstler

the times billings -- the that to that's away of what then something. No, which drives out. The and the of doing clean the noise the linearity. quarter, And main with for XX% we XX% quarter that the that's revenues the a And bill went trying don't to isn't fact growth to despite business. What the the and with of and went out we versus do is, or some germane multiply business. bills we're this to when all XX sort quarter take top run then by of that's advice we're has billings, line along said that, is when

top say, in we're et line back and here, So of ARR revenue the all urging the percent and giving with growth. RPO, formas I pro sort would are and more which everyone is approximation towards basically the in XXs line cetera, which just

Andrew Nowinski

Thank if, wondering as the And APM log competitive the both as space, just -- touch I'm well landscape you you. could for on management? then, just Okay.

Olivier Pomel

the much to used be, same community know in a it mean, it's boring. like to we'd bit little a very or as I Yes, unfortunately, space. fortunately

particular the space? any question on So computing

Andrew Nowinski

Splunk because usage win wondering your Dynatrace is like Well, just Relic, have the rate if and Elastic improvement better? they or rates get New space, pricing improved sort of different competitors changes. have win certainly and you that management log cloud versus any your getting I'm and seen now

Olivier Pomel

our of right? Most our business new. of Most is is replacements, not business net

most The environment, that's rates, see often So moving to at using don't if time, we the some replacements start have world will do but Most I'm and is to in that. rate win that's companies Actually, us don't drives to a cloud. for rate. are look environment are they the us. to report, new for this small and a new and but anything the win to have yet improvement maybe about end. cloud Most not -- don't that of cloud. minority of observability unhappy accounts time that companies I on-prem because also have even I even they acquisition not what win the from

Andrew Nowinski

Thanks. Okay.


today's back to call to I'd remarks. Pomel question-and-answer for concludes turn Olivier like closing the That session.

Olivier Pomel

the incredibly we’d created, our calculation of deliver But the proud more opportunity. We and to of summer. a value said excited we recently strength about that proud want magnitude customers. of with old one-year the the I anniversary team from what case, My what I'd closing, like pleased execution was you apologies. My in. I do we second. third home. you One get in just to do any of even to performance in with for quarter. you. very for our -- the That's XX Thank thank about barging years In I'm work, strong very incredibly productivity our and proud say, we And of they've that reiterate I'm shown to employees are culture quarter. the I'm that this our of our during want future, our the working the

So get is call started also excited just from in Thank other that words, should the and about all very we're message we're this you it. attending. you getting for