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Datadog (DDOG)

Participants
Yuka Broderick Head-Investor Relations
Olivier Pomel Co-Founder and Chief Executive Officer
David Obstler Chief Financial Officer
Raimo Lenschow Barclays
Sanjit Singh Morgan Stanley
Brent Thill Jefferies
Matt Swanson RBC
Bhavan Suri William Blair
Michael Turits KeyBanc
Jack Andrews Needham
Andrew Nowinski Davidson
Chris Merwin Goldman Sachs
Yun Kim Loop Capital
Gregg Moskowitz Mizuho
Call transcript
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Operator

Welcome to the Q1 2021 Datadog Earnings Conference Call. My name is Karen. I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. now Investor call Relations. will Broderick, to I of Head Instructions] turn over the Yuka [Operator Yuka, may you begin.

Yuka Broderick

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

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

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

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

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

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

Olivier Pomel

strong features demonstrated had Sqreen been we Welcome the of us was Thanks has today. you at all Profiler, year which and year, our team a our new and strong are start performance thank again It and become to high Incident closed with the a busy scale in joining and Datadog. efficiencies. at acquisition for Continuous available, QX, innovations continued to Yuka. all two business and the products and We across platform. start of And the pleased had We And to generally Timber. release very parts showed the Management. across of growth we

very rapid addition, at to build continue team In and we our hire a pace.

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

customers added the it ago adds another quarter. quarter XX,XXX the about quarters. means This consistent XX,XXX about X,XXX for about of strong and have in making We from in year we customers, quarter, up last the few

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

QX. In addition from to that, have in recent continued positive business the trends quarters

growth above was are as and historical in stronger from other of expected of last factors, back logos we customers Among existing usage levels. benefit new their into the half than seeing First, grow they signed year the commitment.

line Showing ARR investments go-to-market account, third, we to very is rates. had churn seasonally in and continues with And quarter factors Second, very what ARR logo a new all added. strong Taking these paying of low our off. was normally are slower in remain into a strong historical quarter.

as the first milestone, an of single important million ARR $XXX In in we a fact, time. we added over for hit quarter

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

of of the which year. end more using up last from are QX, customers is XX% products, or of two As XX%

and ago rapidly, and our generally Monitoring also like Monitoring XX% Real and both Additionally, generally are and Monitoring excited which it's available have Monitoring, growth. important on we are Synthetics we an logos But Network And contributor high continued Both recent And more I’d User eight also year that using to became And are this new shows than a Performance products. nine two We of in an products, opportunity bit still XX% more provide products, it’s products. more of with are customers base. an or grow is had sell figures customer which only more proof a to Synthetics. think of update a User landed quarter Network ARR, up six our to showing using at another from customers approximately available more of or four interesting Real ago. increasingly in some year our to revenue. that is continues XX% and of hundreds early. of the point approximately we share or Performance

I To all logs, three and spend some whole are a customers. we our platform. our the time. core at ARR often performance give reached continues of platform customers our greater before model a both at strength integrated logs that healthy have amounts of on from first quarter, the adopted scale As ARR adoption our Well, scale, in for grow the single our a ago. of are reminder, And last enables more just logs hypergrowth also very proposition newer to one adoption to of newer showing quarter the the sense with and base. this value a year scale, APM while by APM our key added small products a you observability platform. record infrastructure and our land-and-expand want Infrastructure, pleased APM business time is selecting and as remaining products, added over together did frictionless of

that time. leader that enough first strong best strong their APM quadrant improved was highlighted own. Gartner the for in ability to report. the Gartner’s breed Magic is last of Quadrant us these that as products a it rapidly. And And market bring fact, to of So products for each the recognized history XXXX in our or position leader Datadog were are clear to point to to on to have and the product we only vendor its the in specifically development, solutions

and sampling four The entered has including ago. distributed our market with set, of and triage observability. As no as which also our our seamless time. robust is ability APM to transparent highlighted end-to-end a a also trust. just reducing APM customer was And resolution with recognized And with the end-to-end website, correlation pricing, traces assisting cause helping unified feature to was problem a on product tracing available reminder, we analysis strength lastly, years root build platform as in

Insights, across for and AI-based investments including recommendation We resolution. is features Watchdog, times Watchdog behind outliers faster the always and announced allowing which that QX, we automates enhancements, brain manual anomalies make investigations also by detecting a the the a is continue which in platform. engine In automatically is to Datadog and on few

We cause. root cause closer also which Watchdog relationships across pinpoints between the announced infrastructure, the issues automatically beta analysis, root identifies applications and different of

releasing in XXX addition, for continued integrations. include to very QX innovating XX crossing platform, In across Performance Windows, the differentiated Network features and A Microsoft is Monitoring box which highlight Datadog features a for our NPM. of feature few out we

as launch including our official the the as onboard in marketplace GovCloud customers of instance Oracle New early government space. us allowing integration, well to Cloud,

want We on application April. exploits Ops and discuss upstream. to well. an product Stream and between attacks discussed and to in that we actively are track silos breakdown trace we’ve closed security is the response that Dev of development, prevents which teams impacted I Sqreen, as solution can application across Datadog teams to down to function call. the side, it previously, early security security and briefly working enables extend acquisition and find Lastly, detects as our them It security to

little allow integrating protect additional are we of updates APM our our expect as APM external to applications excited And with platform. submitted progress very and to with customers will combination at with we We we the Sqreen security share as friction. offerings, very it

very I continued move Now, gears switch let’s am go-to-market our proud marketing. on of sales and the productivity to team. from and

As productive. sales last hiring a have seeing reps across becoming and we we mentioned our at order, quarter, pace teams rapid more been and are

our quarter. wins of discuss let’s this Now,

with world’s functions. a by had than they was cloud monitoring of consulting multi-billion we stack, into one have First, firms including costs seven-figure their their XX% land largest greater several a dollar the migration. more reduced of Datadog layer every visibility undergoing With

proliferation towards a culture, Next, company we and siloed of deal now facilitates have but After hindered platform or land single use underutilized mass DevOps to tools. The engineers I by was adoption. company. say, a easy was tech figure, should implementing a six-figure high transportation had a moving major monitoring is that a Datadog

supermarket and IT reduce process cloud. the help time Azure from by in chain. stores we a XXXXs based Next, is Datadog company from resolution this to largest had and to land up platform enable migration of has the to of an migrating mean six-figure XX%. The unified legacy

all Next, up to spending and responding of and all systems. usage up look company up its customer business is executives Datadog sales source time million eight online had financial plus to an to discuss in truth This to used a tools seven-figure seven-figure visibility Last, a Prior to from reduce gaming we too also company. teams a by EVA one services. CEO. existing units Datadog dollar to the I the single way observability across incident the sale much for and want were

workloads to transformation their tools digital they it migrate Synthetics. and and large During they the NPM have cloud digital as accelerated like enhanced adopted Datadog more as with presence. money newer its grow continues and to COVID products journey enterprise And this

on to outlook. Moving longer a term now

world. we impact We with environment, are a priorities starting its are is move in unified stages. While early post-COVID forward businesses transformation massive we be in the to will digital to digital projects, the in observability pandemic turn position continues still believe platform. to great expect macro Business which is must the a IT platforming first,

in confident our in While there to is by caused term the execute possibility for macro and ability near increasingly opportunity. volatility we more long-term environment, the our are

David, management Before to are the would changes to bring call handling there like to your two to the team attention. I

Dan of hard First, well Fougere off few some out quarter Chief decades this Officer, take the company to our after transition Revenue of a deserved will time work.

world for a are We grateful and growth very class of developing Dan organization. many to for quarters

that We expectations, will the carrying are the and data way. torch built confident the will team exceed the is continue

new now a also We search evaluating CRO, internal running both candidates. for and external

call that will announce Chief platform by scale at the office to over With Officer, a functions. GM successful an Financial number our our Officer. us be a and pleased that, we Operating I'm joins our SaaS Adam company first I who ever Chief will tenure front oversee Salesforce. Adam help joined as of as after and to would soon EVP Blitzer, to Second, like will a turn David? us

David Obstler

had and Usage year-over-year up comp. XX% the trends $XXX.X year Thanks, was challenging against ago strong very show strong revenues the to We a broad-based growth. Olivier. million, were start year

and and New again, continues was retention be platform. adopt across our base above customers first, customers to products more logo context provide the consecutive of To growth net dollar some XX to more rate generation remained existing strong the quarter. continue for XXX% robust

to of platform the pleased even macro are with customers, of the our and in continued which indicates adoption migration pressures. continued growth the We face cloud usage of existing

land than stronger customers. Also, base. added customer model, and was and was XXX,XXX across and majority customers expand As our usage historical quarter the Oliv levels broad plus in ads base mentioned, a existing were record number growth of above expected our usage growth given these of a we

in in had a strong million customers. the In uptick dollar quarter addition, we

Next, logo our were strong. results new

new strong was across it that ARR embracing projects. quarter more into wins given for and logo our Remember new revenue immediately logo, traditional our wide commercial sign translate meaningful Olivier best as across transformation uses industries based shared across and were QX. revenue. record companies fact, new model, several logo a a spectrum, not generally and encouraging enterprise start digital do large In wins Earlier channels. Contributions ever, second our sales

customers saw continued or now first Next from two strategy, in for XX% as year platform up more with and our quarter Olivier ago. our discussed the customers XX% we more strength, products, our of using a only using of in XX% products,

consistent of importance was customers. with churn our historical Next This solution our the to levels. demonstrates

Our gross and each And rate infrastructure, log was retention unchanged segments, in dollar largely this and base in remained customer of products. across mid-XXs. the APM has true our

Taken resulted in up QX and of quarter over million together, versus this record at ARR a last significantly year. $XXX

and at by period. as billed Remaining strong increased year-ago high that force annual billing. RPO was multiyear high is strength million, $XXX there the in sales XX%. call out important commits. those know as XX% year-over-year, It not major Contract few also XX% the deals were And RPO incentivize be we RPOs year from multiyear worth an Billings commitments, $XXX up driven obligations in proforma our are up commits continued was retention. growth a Now Current impacts is the million, to billings given turning to multi level quarter. well year-over-year. strong no net our for do to large to duration performance are annually.

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

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

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

$XXX in a last product our We margin our million, gross quarter non-GAAP compares to and XX% reconciliation discussed XX% in XX%. profit to slight we've quarter of have innovation. The of Gross the provided ago This representing period. investments and to platform release. was of a margin in margin gross gross the is in a year as decrease due in GAAP financials earnings before

development. year be as ago the down XX% centers prioritize expect to We was the and from of continue compared out to remainder in of to gross slightly XX% build product year the margin data revenue, expense last $XX or million, cloud quarter. we year, new in R&D

growth quarter year lead was period. while share, in or R&D, another able COVID. We events. or is $XXX in of continue slightly period. of including in margin XX% marketing the sales head the advertising million redeployed and revenue, to of high expense to continues of operating attract G&A ago the Sales much successfully compared head million the and invest expense shows in pace trade XX% X% executing to make on million was And income count. investment lower $XX and in-person $XX pace X% in weighted talent But a ago of outstanding. ratio. budget we revenue quarter pace substantial plans, Non-GAAP income growth. other shares or it a the of in and and was million or the to our ahead to slightly have operating not our for continue we are compared year income no to based marketing and growth events activities, Engineering the and we count operating of one-for-one $XX on an diluted marketing. $XX investments revenues, been significantly to year R&D, revenue despite outpaced million, million grow the ago generating hiring engineering This onboarding than XX% $XX was the quarter average and Similar $X.XX to was of growth or has have XX% a net on a successfully

and capital free our $X.X strong to turning million was in Free $XX cash the by operation flow. cash We equivalents, in quarter. of billion taking Cash the cash, from marketable consideration a into strong restricted capitalized driven from $XX million After was balance flow cash with for in was software, margin flow cash expenditures securities. the strong and XX%. and QX. QX ended and Now, cash sheet quarter billings stemming collections

market our against second a and to turning growth the well the year Now we believe foreseeable We can quarter are large future, deliver addressing for high greenfield we opportunity. as and XXXX. executing for very full that are outlook the

We our into have are account guidance long-term as an business growth. in and updating uptick driving metrics usual our with opportunity the this optimistic conservativism implies, follows. seen our about we're Taking

expected to weighted million income share to expect in $XXX second $X.XX to million growth an of net the non-GAAP the million. XXX million the shares the is $XXX be For midpoint. in approximate million, range be in $XX to outstanding. based quarter, represents expected we average range revenue per per Non-GAAP of a income $X $X.XX be range, diluted year-over-year to on XX% And operating at the which to is of

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

on growth notes was more guidance, conservative while QX, some we use in usage as when strong providing assumptions. our usual, Now, guidance

we long-term. to to of Next, for our our we to We long-term. a throughout are are efficiencies sizeable investing are XXXX. and planning continue materially business strategic over company in aggressive R&D believe focus our the the ability remains go-to-markets and optimize investments the confident be profitable evident, Therefore, in and

and to in-person Additionally, a travel year. the the half office resumption second events our the return in model and of the assumes of

to topics, on but it's prudent incorporate believe this outlook. our have in We visibility limited these

Finally, acquisition our of April, closed we screen. in early

today an our team cash in million dock. the screen members that our than income to cash of statement pleased has are we more reflect the will flow impact on paid $XXX acquisition for the And QX acquisition. immaterial We to welcome statement. XX of The

Now operating line. below income the

net marketable interest We a have related less our on XXXX, but taxpayer in approximately $X debt. to and international do which the the expect federal income QX provision of million securities, We income, other tax expense convertible non-GAAP on including is expect entity. cash a be to not interest our our

We expect for QX million the $XXX,XXX the in full and tax provision to approximately be year. $X

strengthened we to Customers of strong. and with execution to We continue in are the both very terms usage our with of Operator, transformation. be migration now, we'll and of Datadog, begin results of to call cross importance long-term And the selling and products, the more pleased that, for quarter. the open summarize, trends only newer will the cloud believe solutions consume continued Q&A. digital the let's by Now remained the questions.

Operator

Thank you.

We [Operator Instructions] And Raimo from question first will the our now Lenschow Barclays. begin do question-and-answer from we session. have

Raimo Lenschow

and thanks in from – quarter. are little Hey, in industry the growing Olivier, APM an you where adoption you that about some the guys congrats the of used the about we number are are base legacy you APM getting on recognition have APM? you amazing properly and you getting terms you you talked get talk where of experts? your maybe around for are of of can a Can are monitored? where client bit of momentum terms Thank applications in what seeing traditional used in terms getting And you.

Olivier Pomel

great question. Yes, so

more we from think become when back of seeing more took than long I probably longer a and company a had a are it, very think saying today. bit we eternity more APM the APM, cloud an but that critical, and adoption the fuse what were and runway we we ago, we lot that's public, see anyway, I had a move applications of as to happen to

in APM or of application, recycling instances call – covered the applications ratio among up penetration of infrastructure monitored. ratio In with monitoring. terms is our of There that that that that bit Quadrant a famous customer from the let's containers are for being total with see containers X% already the the quite is there, we but the Gartner it higher keeps than runway of

applications targeting in major cloud environments. think we're So we build clearly to

that’s applications to we as more customers. of starting but our would are of have a that X our as opposed we to say We with with on-prem and start from of some I APM see being customers, what some adoption larger Phase their of are enterprise instrumented how well,

Operator

Thank you. Morgan our next from Stanley And have Singh do from we question Sanjit

Sanjit Singh

and APM questions, a out think frankly, but the quarter, the adoption, some follow logs, sort what product category, and networking on called see maturity being of congrats networking products. of that just what's multi some it How Thank of in mentioned competitors growth? really the strong you some good the you APM year to like To on so the you for of When the driving the Raimo’s do opportunity, and for that you attack? is really the the to other Or I of other you some team SolarWinds, a course about relative think SUNBURST networking see the of the two newer me benefits some as taking product of also start product? products? question, year. and exceptional impressing Is well, from of opportunity did sort new you Datadog to

Olivier Pomel

of And small and great fraction announced to a is great of for we what customer in – and we of being do larger number data. which the it market When I something off from a form there a mentioned that call environment, lot in that customers companies is combination the in be it's market cloud in larger Microsoft, networking, and switching is is especially prem, in today, – goes the Windows, for one not cloud especially our to next-generation of foot customers covered have for works a think in well part have better the hybrid that out, very product better, foot performance one as cases, big turns that so because means is need, of our and that it's there. product covers you the lot Windows. those mentioned, it works which differentiated and And and and the is, is getting on monitoring of with network understanding, there helps performance more deployment. product terms second cloud-based is monitoring a Microsoft, also monitoring it a very it use today I also more of as mean, of need and maturity, that

Sanjit Singh

then the market think the new great you sort is right a Olivier. a sense, of a certain question, the to thinking now is there where that us you What’s the follow-up board, ton the Can new a of of with on time a to as through on Makes And around today’s segments the the position. about businesses walk Chief about announcement CEO as we of hire why for thinking bring bringing want doc? in was CEO target? Officer it terms sort Operating in scale, behind

Olivier Pomel

Well, the will thinking a there is we to way. team. along solve we'll to like company stages need bigger, fast of And forward some years management it need going to with platform, into to a a on to also to is that experience the here. there – growth lot We companies, the which there scale the times making that, be you companies, right SaaS and a we're scale and thought the the bring number grow later that be was platform things always is number – as a we number SaaS bandwidth the and to we building need a of we given look do, is we're of senior explains few of hire for team. And especially embarked of and

Sanjit Singh

again. lot of a Makes Thank sense. Congrats you.

Operator

Jefferies. from Thill have our next Brent from we question do And

Brent Thill

some COOs, a of most taking the And curious, just activity. I Adam, follow-up But company running lot company I'm for understand, where and think his huge most to to the around of the Thanks, question the inside folks effectively obviously at Can of outbound was is be least of Adam endorsement on the the he the role a customers a care just the versus you founder inside, you interaction on there the of versus spending definition wanted was outside on guys. just in time? the talk to and trying his the I to outside. is – going with of

Olivier Pomel

our how growing fairly focus And go model. with going teams customers. idiosyncratic we do friction customers. details much a are our we our is with too a serve lead low to and actually on And But, I of and Yes, these customers – like, function. [indiscernible] servicing a it's is learn That to teams. lot how – great Adam question. and the we won't for our aligned of the into have a have those is number setup expand going to go-to-market are

Brent Thill

Okay, great.

Olivier Pomel

And focus inwards. is outwards instead

Brent Thill

up. is year quick Can A what duration one you now the remind great. just you you is ago? versus that's a what David, us for duration saw Okay, mentioned

David Obstler

Yes, saw the around so in nine and what increase increased. duration duration contract billing, we billings towards that and contract And said, seven then multi-year over last a it's out – the plus towards it's maintain spread the and the annual more months. the the contracts the given seven was – couple year months duration we quarters, of

Brent Thill

color. the for thanks Okay,

David Obstler

Yes.

Operator

we And Hedberg question our have do next Matt from from RBC.

Matt Swanson

Yes. is Thank you. Matt. This actually Matt for Swanson on

us currently of type have opportunity. give capabilities your color potential environment opportunities, you what of competitive a customers customer, more of this little address greenfield another needs? within these cross-sell And the of your to think on could the you screen thinking a about as and So if solutions it's

Olivier Pomel

of actually quite that or they And the plug have a there's opportunity. and there's the the APM In lot mean, incurred plus reason bit something inside Datadog right. proverbial with deployed. Where friction the the really it's we the I of have security. we've APM more one the Today, APM don't to security, is that the combination a a we to three with Sqreen. for And anything inject should with by already happens is directly of really that's friction. adding makes one application be equals in not Datadog. to And we same. think at step sense is of it's point rest detection the the want protection application the – application, is security Sqreen we instrument say, application I typically to more do the customers level to where with start, it's and So first going infection greenfield only that that to our need

Matt Swanson

to go to what to to other of kind arise are the transformation. of that your get And seat for pain then I which of front areas you my Olivier, you of security And also guys see leads for customers? that is, those really security some obviously from some points digital a that have maybe challenges row question, second directly you're what so seeing as wanted are into that

Olivier Pomel

world there's information big would system There of Sqreen. then at a the around the month, happening few the that infrastructure we we one way way Look many. seems it of it the the a we're addressing into this an be putting large products world security important application and applications it there's a other has together shipping the is last that it into level, Well, team. different started think aspects on-prem important a part the attack the still with cloud. focus. new which that aspects – that, leads all that every And to to level. we that scale array have we that, brings do see for of like to of happen developing record. focusing there's what with there us, in on are it, actionable year. And And In we're of that are we're But and at are

precursor We there a monitoring into product, is yet. team that building that's a security a also product not that have a a to we're team

current are applications use security. going think and you specifically spectrum So when to bring specifically problems intend cloud, that this in for the In together cases to cover and have to the companies of general, environment. DevOps we that really for whole

it's friction, platform in or hard really because we first security tooling that and to The operationalize that that's difference if doesn’t other right same work to is companies the in it that security together. be most bare most is developed, can doesn't bones, of products exist thing build use the get get make the ops deployed. on really, and is high I those the and hard is our get we think happens And way big right. it But to we where of doesn't very a if page one it too that the

Matt Swanson

Thank you.

Operator

Blair. Bhavan our from have Suri do And question we William from next

Bhavan Suri

congrats and network. executed well question my want the to I another taking for touch on on partner quarter. thanks Hey,

network companies. you're not of things in that. the implementation heavy you lot you're go-to-market, because just of about of launch traction or lift a You services There's here. for early the service talk the of not expands interest Can the and announced seeing implementation kind sell a there, January partner former kind like

So how driver? think does long-term is that? of that of we growth playing of this out? how sort driver? medium play And term, Is of more channel really a about kind a this efficiency How strategy. into that Is should sort

Olivier Pomel

growth So for driver, really us, it's right. a

we efficiency. Datadog, the we products of biggest we at customers think do get all regions we all how when you I is the market, build we And about everything think that's be it. way the the have of segments we to there plenty going need is across to get think do which that? we to in reach think about all look do gigantic? get How that so all How how to we part

like the partner some But to mean, and program, to expect a we we've need with quarter. our do very early, at lens, when year. adoptions we of are so, we've we this more in do in very we I But I it's number the wins, had it of There's look there. next I that I specific that see there's over would happy lot still, would say a still calls. those we talked about it talk we'll update things build validating again. have So we to more want say previous about

Bhavan Suri

your just model. you wondering, some of a at just seeing you In Are of after you quarter, sense sort you're vendors. scale, any there is having pricing last all a concessions? pricing models have seeing modern whether you, get said last price enterprise the months. pricing got like enterprises, are then, the at, Anecdotally, a number. really customers big expensive XX you that touch into level? confidence attractive or pushback were is you sort different, have If I'm the terms you're you're to of way even little as at of to as pricing and viewed enterprise pricing you, having But of a pricing cheap got as level, kind a you. some New made kind about Relic, Got on accounts. maybe is And combined. around you want Sumo, competitively as pricing a you're again, those guys, it and at in given how the a that, scale price non-issue becomes what the seeing guys look but or given deployed in of point then I think being to the Splunk, adjustments I'd understand of in sort into general, love use get FUD to I bit to competition And

Olivier Pomel

spend price on very is than leverage a them and a end the day, million million at to customers. about their is year. asking all $XX think pay this our think this top than first going for have we price. the to these But the is on everything high way going models They're these and I of back. Look, faster time. us it pricing what we engineering exponentially grow so that are that send data pricing way customers somebody’s customers us and thing we not And look, line for for to about on knew teams. year more a for practical lower paying all, that Yes, compared their of is they they purposes. push and a over tiny all is And grow $XX infrastructure the the

we in are more customers interpreting about will or have is especially getting, website. there data, products a competitive you that not have there's see illustration competition control Also see if conversation in retention room pricing There's each kind this you imagine and competition. while mid-XXs. and structure our say more we individually, model smart how read how the of across infrastructure numbers. pricing of price the little of products might is in across I you care don't had the that ones, we adapt, is us. that customers, gross segments lot that David would very the same the pressure, so the how that large to goes marketing with best And that stable and APM of our the with stable price-driven be, take customers. The we will logs of we that What do if you for various And mentioned away. this call tells you we

Bhavan Suri

for Got helpful. taking Thank Thanks you. questions and Super my you. great job again.

Operator

from And Michael we do our next Turits from have KeyBanc. question

Michael Turits

Hey, recently; front directions. OpenTelemetry; secondly, obviously, like not vendors any of or Open-source announcement the a AWS. from guys, all there’s whether from of regulations. of third, to and first on the relative couple to continue Splunk impact One, announcement I’d quick change cloud the competitive recent

Olivier Pomel

Splunk if any really competitive have I usual the to boring comment bit change landscape. me for that could early So, answer, the just because from of see, see the the It’s did we had to for that yesterday, which it a and announcements, seems is the we don’t they from what in we seen but be the been market. announcement repackaging to few product that they past quarters, the doing somewhat on had

somebody it. is, market. out we The where that go condition day – are see productive given don’t from impact else, it. competitive to on We don’t explain to don’t what’s side, we going that is big big a there’s I of biggest and about figure know of see surprise. also anybody that’s not and no typically the change given And of announcement the condition has our us we document, we see much. in on other the is any change So impacting announcements And

Michael Turits

further, So that. down maybe that OpenTelemetry, to any is let brought with those open commoditize me essentially up drill the just is on energy agent that there up sense is that I follow

or in focus analytics so even of So call forcing to terms stack you other the any more, is that in let’s way up value at.

Olivier Pomel

end. these it something that turn applications technologies the just we different the see hit show we we in obligations the the everything to them end make solve not we from and all not long right, number we changed, And We problem and instrument problem technology already. know easy OpenTelemetry everybody, get here and plug for the in that will our the – what open is we first and we a lean matter. all our that – a large so into competition all, to is change into to Open-source what device what for mess as source us the see That’s we middle without were our and that possible everything effort. mess, this as has is matters libraries it in pieces very Also market to with us, We of it’s to libraries it that’s any to and free to And don’t was time. and of change, like gigantic understanding a was to well. everything to will just is fully else. use only as ordered, well format’s agent there. the else customers. format for our including all like to and everything appear What support and not we its end of work clouds, It’s change And matters them. The bits is And doesn’t for with get way a reduce.

Michael Turits

Nice very much. quarter. thanks Okay,

Operator

Needham. from question Jack Next from Andrews

Jack Andrews

But just apologize, afternoon. I been for broader Thanks Good had a jumping taking around my I’ve I question. question. calls.

terms just that think proliferation have appropriately would introduce, characterize Just and this to when you the ability offer? that can and about just we new continue all your products understand – their functionality you Salesforce of knowledge sell to where in to of how is you really

Olivier Pomel

so it’s Well, far working.

I adopt have customers those products. we product, hope land. to We’ll about fairly to and internally, your we how do learn way look, where organize with end and differentiated which think, a market we the they go and know

every every having single every product product, it wouldn’t little single doesn’t practical. understanding have sales that in on be we feature rely So, rep, to

the at So have before. might a we we might we’ll we’ve when it not with of buyers. I’m is I And more But market, to we discussed think say, that tweaking the security actively I in we’re do what to we’re I selling be there start market. And as way this yet. specifically to which thinking more there’s different point go that. working, would very to consider think have confident

that buyers we today our make security to product. day. to have win with pushing But a might actively the tweaks, We’re not some happens, when

Jack Andrews

Okay, thanks.

cloud you here. So entering from vendors, I partnerships of the new your maybe clouds how relationships quick much today perhaps with believe, public can a three generated big just as have talk year just the business the is with all strategic follow up, about of

So, their about how we should be forward? relative contributions moving thinking

Olivier Pomel

there’s any formal to So, in been has things numbers to agreement in no and RevShare going or everything historically like the on committed alongside have around will of but I of informal lot that any, But more that. say the that recently, that. to a we the we don’t started lot provider, have work on share a that, anything else. place those share didn’t we jointly, for put to We market of resources some that.

Jack Andrews

Okay, thanks. Congratulations the result. on

Operator

question from from have And we Andrew our Davidson. Nowinski do next

Andrew Nowinski

you customers deals million Customers, you QX quarter? any I outsize that have call in just this give a he those think do ARR. had in us the you uptick spent And in quarter? over in Can the then around any more XX did color what strong

David Obstler

comment Let were some and me once just flavors. take that year give said to going that metric. as announce on a we a We

the – give $X a uptick. lot a we it has about, talked with the number was it’s a but, strong to into as expansion it customers million we’re And So, of do not to range. going that

labs, land quarter, the ordinary, some in we as and of the produces and given have of a we concentration quarter. don’t nothing on but model a concentration As needy customers continue a far number expand bring to very out have the that the

Andrew Nowinski

than great. then going abnormal back margin gross come side, expect lower side? up there you follow on little Was a And margin Okay, up the forward? the just to Did you ticked down bit on that a anything gross maybe question expected.

David Obstler

way the we It’s see.

Olivier Pomel

David. ahead Go

David Obstler

sorry… Yes,

Olivier Pomel

we’re is they with gross and margins about a on margin, this working us teams happy gross think work so fluctuate, are, development, instead where the product Yes, way to on we so optimizing, still product having still they on due might the bit changed we around fluctuate probably other busy optimize to the if do nothing And there’s they were they wish. fundamentally can a than margin. we’re we things so very there’s product. year But in because building our would lower many last of future

the focus grow – get that out of top-line the we’re on is hand some So if spend the side, things making we and we’ll time making margin more sure development, we call on we right short we on and the gross now focus then optimization. in mid-term product on

Andrew Nowinski

Got it? you. Thank

Operator

And we from Goldman Sachs. do Merwin from have Chris our next question

Chris Merwin

mean All the organization? your you. company. of should of think right, relates as that evolution that read mean, go about question. Thank think it And what we thanks I position, person what enterprise Just the of prepared type in you we motion about with we perhaps market a wanted for? if remarks I the anything to take curious, queue for should to of you’re to in as the to sort any looking my focus of CRO more go market taking that I to one. mentioned is for ask new more an looking even

Olivier Pomel

there’s nothing Yes, read really to it. to

Right for and I leadership have to going a deep in for on course externally to change with desire we willing leadership have internally going that, think looking new or we be be we’ll fundamentally we’re still there’s now no at we be where and looking happy where we the of bench place. the both looking very have. at but to a candidates CRO, a it’s side, we’re from were. anything continuation what different And

Chris Merwin

in used has work was do has this the I recovery like if in certainly, it that, Got it, were we that looking thank customers higher. in just into been but know mean, get in the anything quarters, all it of seems apologies changing as to business, prior And that duration, coming shorter like going I terms seems here deals, to you. been on front? asked,

Just could comment duration? curious, if you on

David Obstler

that it same in and we nine, preferences. have said in, And in basically, Yes, happened. in pulled management we as in QX billings, that back talked with, duration that. eight had it in And about we around duration in and contract seven And sort and of billings XXs client QX. we the has pulled contract risk then both to QX, duration do QX continued to to out

trend talked but we there the approached contracts is similar it's the So which and on wasn't contracting. year-over-year in much QX time, clients very last change between duration the QX, way more really to about

Chris Merwin

Got much. it. Thank you very

Operator

And we Kim do Capital. Loop Yun next a have from question from our

Yun Kim

Great.

of happened David, new that driving qualify existing congrats just it's on strong Thank how in relatively in came quarter deployments only the contract First, a cause strong provision, you the above is trend, that versus, much I deployments, volume. a any on usage quarter contract usage in customers Oli quarter, renew mentioned usage, well usage in that But came joins that captured results strings higher or to that and ramp in in from, to there contract so know strong at then to of a and that the usage way was whether already the also, kind QX. you.

Olivier Pomel

Do that. start you with want take? I'll to

it we it in because to that very of customers second ramp combination QX and and we had, So transformation lot on us year, we We expand. for are with had in new a based was workloads. more we think have the broad customers and across strong industries, land do their activities. us increase And half of using with the the were increase begin digital that a activity brought logos and year a on has the to been of or already using

sell in of using of previous products two new a the and in the or more increase quarter. purchased the in they cross about third period the about quarters, that from previous was thirds was As of continued had customers usage and one

of So selling increased usage cross robust it the logos, existing and of very one. bought combination of and products, was a new adoption

Yun Kim

great. Okay,

wasn't from previous usage quarter, outside any different that quarters. in the se there the trends necessarily per in the So of draw kind trend

Olivier Pomel

that, it positive of usage very, the of was It the both of brought in the all of products. were and cross-sell those new scaling terms customers, increased was all three existing

Yun Kim

Okay, can trend last expect great. talk especially that question there you Thanks. any you're you Europe. that out just year, geographical about me, this for for just in then And to seeing see

David Obstler

Europe Europe, for let strong us. me been take has that.

growth across we there's have We'll fairly all to good and saw vaccination it work to seen, in variation attract have We back have to as because we not continue geographies. to QX regions. uniform of strength across pretty and office but watch slower back to the relates the the resumption QX it and seen

Yun Kim

great. Thank much. Okay, you so

Operator

Mizuho. Moskowitz question next Gregg we from our have And do from

Gregg Moskowitz

and nice Okay, really quarter thank you much guys. very

profiler what seem so seen First in of question is visibility getting It activity? would and it's far? of But a COVID and on sort Datadog interest there be paid now into lot continuous GA, be early you like ongoing Have would there? helpful anecdotes that performance. trial would any

David Obstler

the of with just product share. to Yes, in so have of explore very And gate. early very strong cycle its still We that happy is being any things number the to numbers to out is product so need it it. works well a to that who this put beloved But very use by the wants it's way. to we that it that, everyone do users product for its don't

feeling strong can So give it's fan, you. got a a they very that

Gregg Moskowitz

that metrics, yet? would you say in an are And metrics Okay, pandemic internal your earlier uptick great. mentioned that's then, you you levels back pre or saw quite that not to

Olivier Pomel

I'm Well, pre what we're I at to losing point, that this track of level. think it's comparing pandemic

the QX back, QX. We having very business, far going we is good to same very what happy the and with feel going we QX. a think, just don't We about feel time. the uncertain. There think look, same the know had way, we're over macro because love still to the, affected but who what impact a strong we very, still the bit QX, to We more but are right. we is happened be, all So an us customers used

just increase full we think year. for I the the guidance

from to about business. That we the close went should XX% it are we that in think tell forget I where so you about XX%.

Gregg Moskowitz

helpful. that's Thanks, Olivier. Okay,

Operator

over remarks. question call the the turn Pomel concludes and portion. now Olivier answer closing for to I This will

Olivier Pomel

Thank Thank very you or all year. work. performance the very all. for you. want continued reiterate in start thank of closing, Datadog’s that hard our I execution And That I we're very, that the of am pleased employees our personally proud want to I would with just our to to

Operator

participating. this Thank concludes and Ladies you today's you. for Thank gentlemen, conference.

disconnect. may You now