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Datadog (DDOG)

Participants
Yuka Broderick Head-Investor Relations
Olivier Pomel Chief Executive Officer and Co-Founder
David Obstler Chief Financial Officer
Raimo Lenschow Barclays
Kash Rangan Goldman Sachs
Fatima Boolani Citi
Sanjit Singh Morgan Stanley
Brent Thill Jefferies
Kamil Mielczarek William Blair
Matt Hedberg RBC Capital Markets
Michael Turits KeyBanc
Brad Reback Stifel
Gray Powell BTIG
Steve Koenig SMBC Nikko
Joel Fishbein Truist Securities
Adam Tindle Raymond James
Call transcript
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Operator

Welcome to the Datadog First Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please also note, this event is being recorded. And I would now like to turn the conference over to Yuka Broderick, Head of Investor Relations. Please go ahead.

Yuka Broderick

Thank you, Tom. morning. thank XXXX joining announced financial press issued and Datadog's to in everyone, release quarter first results, this morning, you us for review our Good which we

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

financial call, and future R&D, the and forward-looking XXXX, of gross our and this fiscal to to will and our indications make of statements we operating opportunities closing acquisitions. statements, risks and the reflect increased intend, capitalize office words our and future expectations. ability estimate, and marketing, These product anticipate, margins the from uncertainties views CapEx of could differ will today year actual are materially. go-to-market, believe, of that variety including During outlook statements the margins only related for statements market expressions as forward-looking a and of our to performance, expect, identify quarter impact or on continue, our including similar second our activity strategy, results our are cause similar The to to subject intended capabilities,

discussion of that affect to risks actual and the other could ended refer for important our XXXX. results, factors please the XX-K material our Form year a XX, For December

filings of in Relations These with a Additional and SEC. along reports filings other upcoming this section information may quarter Form with of be call. XX, made the XXXX, and our on ended website that will available available XX-Q March replay the our for the file are we Investor

in earnings at most directly measures, which in release, financial which that, reconciled over comparable the like investors.datadoghq.com. Olivier. also turn I'd With their measures available discuss to the to to will non-GAAP We is GAAP financial our call tables are

Olivier Pomel

for with above profitability was high with of continue cash all growth, $XXX million and this QX generation. along To saying increase we ended range. XX,XXX high customers by that execution ARR and XX% our thank with I'll ARR. up us strong QX our We about revenue customers, year we an to revenue quarter. the are Yuka, and the customers drive more, performance, year-over-year of of had $XXX,XXX pleased These quickly morning. summarize start you our in joining X,XXX ago XX,XXX about quarter Thanks, year X,XXX We as our generated in up XX% ago strong with from about financial in or about end the of from quarter. guidance the

margin was from customers a transformation strong of business our and as model XXX% we Usage trends consistent million newer business their as We are saw and historical cloud value. $XXX in to continued high flow the level, free products. continued growth continued and usage dollar-based increased customers customers in cash with retention cash platform And existing trends expand more efficiencies seeing QX. and and our over our free be on journeys, strong digital net flow to deliver of rate Datadog their and At adopted with positive XX%. migration

remained led QX churn best second fact, line rates. factors of and strong these low All to added quarter robust with very was beside ARR together in XXXX. our and ARR ARR of logo New was, It quarter from in added. another historical of

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

up or XX% in more last more We products, or of more ago. or were saw our customers growth from products, XX% using were QX. platform year using X And ago. a our strong XX% products a across X% year. of QX, the customers of of from of were the in year products, XX% up end XX% from customers As using X up X

in QX. monitoring and X/X dollars exceeded clip infrastructure of in rapid a a billion continues to example, ARR For grow at

and growth are quarter Our APM mode. a suite and in log had hyper strong management products

in rapid our days, a suite growth. through very product, we getting in pleased with on strong hire. growth Datadog core million As continue studies We're And monitoring still security, exceeded coverage of together growing which thousands of we but QX. we're continues a synthetic are ARR APM, and are These specifically. products to monitoring base, with and the also in very adoption our seeing experience early reminder, and our $XXX user security smaller the see off It's platform. customers relays more APM includes on synthetic

Now of R&D, let's delivered our teams where move products innovation. another strong and on quarter to

last of we months availability we after XX security announce monitoring week. general the application Just acquired Sqreen, to are pleased

and common no have good applications detect data breaching, than could attacks, less for be days some most yet APIs of weeks. the they ways to effectively typically of or sources Some are companies so

relationships Security the Security these and the sorry, given metrics, approaches Cloud from Cloud logs insights platform. to far in log Root leverages specialist further data Cloud much Application we issues faster. of with analysis Security code an on Some now services also in that path. security security Datadog this efforts Workload but cycles and stages services, version in as before have This from platform automatically of not automatically Management. Anomaly proactively allows progress problem with and baselines negative new and to is but running cause anomalies product we Watchdog fourth with and patterns applications meaningful and month, that as product which and security root these This Security are cause across we customers. our production. and X -- is and solves impact still Detection otherwise this, Datadog provides remediation between surfacing these out Monitoring easy this attacks and issues. identifying to monitoring discovers have monitoring to is full identifies with XXth down within announced solutions early are and reuse log platform, patterns, Remember logs, pinpoints production. aim and force But impacted, the and other we infrastructure mobile across do hand our different of include Team, organizations. of expanded Watchdog using changes our we find product, means that the pleased infrastructure our fix are detection. application offer causes. the alongside analysis and on automatically getting take root usage teams the to matter build Last these their in and identifies product that patterns so cause understands customers' exact also Posture issue new execution normal are capabilities With the patterns, positives our consider way Log to would our only By context AI to security affected. also and of minutes, products. across a altogether that vulnerability actionable users actually the Cloud traces are prioritize provides our This Cloud Anomaly The development applications Security fine the business overwhelm such slow systems anomalies focus unusual any capability Log things outliers. Application hours immediately teams often by other in Datadog in other and Detection in we no

to Security general this improvements iOS To User examples, give Monitoring, and AWS across and a reports management, released and now for C, of the in of the platform. Datadog, customers as posture announcement, problems performance. and In numerous And customers help users’ Cloud in a In support our data tracking, QX. the Posture and and without end to place. In Real addition in from engineers are analyze number Profiler, to RUST, features couple PHP used announced the Azure addition we support platform, added availability their across expanded rules, Continuous enabling error commonly well languages, Azure their dozens capabilities solve including of compliance customers of of enabling one as to leaving crash all our .Net. Watchdog sources understand product integrations Datadog understand to we C++, we end

highlight line area, product, strong security vulnerabilities and is platform, is very into an Datadog team provides vulnerability so highly Hdiv’s application that coming capabilities, enabling we runtime. will security I And we're interactive tie product focus to to a hard positive of morning, are many and this call. thank as customers on update testing I teams up, engineering signed will I agreement be forward an this can to we detection of announced and and when a this Hdiv. offers Hdiv’s integrating regulatory only Finally, as There to that want which product application an in code. in our to part file work. It capability false them requirements looking the low, the soon acquisition vulnerabilities Cloud quarter. which of to in Hdiv features new at capabilities are this for closes rate met. our excellent exact believe this Security solutions few their continued switch unlike and other actually We our numbers matter. accurate

continued to on marketing, quarter. execute a moving our Now and sales and to delivered strong team sales have

Let's QX. discuss some of our in wins

X on which an ever for was signed its in fintech explosive experiencing next-gen basis. deal This we X-figure products, with largest an First, growth is and ago a infrastructure with our customer availability their company us upsell demand ARR monitoring, its customers critical just system is now started to includes avoid and of our of products. performance of loss expansion and revenue. years These X with

Next, is them migration. with with Datadog we X-figure company. global had their to This shipping expanding customer move a forward with upsell a help Azure high

new disparate adoption. to business as help involve of X Datadog increased XX Datadog. our practices that to customer expand monitoring to addition expects This number using they In team a are working Datadog implement tools services consolidate initiatives they now with best products, use of their on

customer achieved had Moderate were we federal a upsell we entity. X-figure deepen status. U.S. We a this with able after our with Next, relationship to FedRAMP

and database and and both this long siloed stack single are truth. source enabling infrastructures, caused replacing expansion, and had customer visibility they customer Datadog, applications, this the of times full DevSecOps monitoring, experience networks, resolution. commercial are and tools a cultures across observability spots this With homegrown a to blind with Before

from blind, up also hours within Next, to log regained getting these we a visibility payment only regain went upsell visibility year, quickly, meet to Datadog. engineers of able identifiable to Datadog work Management of the products customer’s signed were security scrub by expanded them with were to in few the have Datadog, who use products now tool able logging to of able solutions Not Earlier and uses crash. as cut customer X-figure reassign making and very this a a customer maintain engineers they been the did Log platform information this And but this this renewal, company. homegrown requirements. organization. running and print compliance personally in-house down and they have that Datadog other they they to source number With leading open XX with

U.S. unified had AWS monitoring this its towards land existing management its embarking globally. we and And visibility during we needed move existing of with with with on customer company Next, time, millions a a By X-figure to visibility expects figure consolidating with tools efficiently. more an to AWS X finally, At environment. same half and customer were their car major not incidents was hotel users was lost its future-proof into This it needed. European COVID sometimes the of which had company. a them its major impacting use manufacturer. providing across and on-prem limited This Datadog, engineering a it team its left staff Migration the cloud land and strategy tools, frustrated end-to-end

our own this work used consolidate multiple their I and give enabling expects after our As commercial successful take that issue within platform. very tools they customer start delivering able they end making days. to across a our with XXXX solve solutions were teams expand and were of to in and strong support want it this Datadog, to With busy teams on-prem also year. to quarter's I special them thank the want and That's a stacks. to for source open hard to them trialing our customers highlights. to for to minutes Datadog, tech AWS for a go-to-market shout-out

the look for we outlook on, companies Moving migration and that of digital that transformation And in life the term, and changed. long believe is I complexity that on platform we And trends strategic can Datadog very our multiyear over feel our modern to CFO, turn and stacks good more remain their the customers help improve their to customers. and medium faster these cloud ever review comes it confident And David? create are call as move cycles. competitive we about demand performance environment. for this With of our as enable and that, their are secure differentiation, and the hasn't We opportunities will it still drivers critical transformation. embark believe our a order in serve We is change early unified manage in businesses. our we increasingly guidance. understand, than long-term critical to journeys to financial over with

David Obstler

good the QX. particularly million, performance strong customers up in QX. in And ARR given in our and to logo quarter. we again Usage healthy, was XX% slowness quarter-over-quarter. new see delivered financial Olivier, was morning we with Thanks, and $XXX To that everyone. this XX% once existing Revenue year-over-year up growth was strong typical summarize, growth

into go detail. some Let's more

the consecutive dollar-based growth trends. line across our growth XXth remained of platform customers and quarter. historical was for net above retention Usage First, existing XXX% strong in the Datadog in was with QX, and strong

strong growth each In and QX, service EMEA. shutting saw was in customers Belarus. geographical across region, similar to Russia geographies ARR also and we We off including began early growth in

We have contributions in countries to their and customers X about revenue immaterial. these is XXX

Total grew XX% or strong of with quarter. year-over-year. grew year-over-year customers more $XXX,XXX Our delivered XX% customers go-to-market teams ARR another and

addition, in saw we million-dollar strong In growth customers.

worldwide serving more we We to early opportunity the stages are our are early be customer in still and in pleased customers of acquisition. believe --

usage-based particularly New transfer not in given model, beginning sales that logo robust, sales generally meaningful at QX. into planning of and logo do kick-off other new ARR processes very teams revenue. wins was participate immediately Remember our the that given our revenue

customers products end using of Our with more products, our continues using XX% customers, X now products, platform or at more to QX. resonate XX% of and XX% with or more X strategy X the or using

churn has Finally, low. remained

it's obligations, million, deals Our historically. were to -- retention closed than RPO the Remaining range quarter. Olivier growth several duration quarter-to-quarter. quarter We segments Billings the in Billings growth and to deal which growth year-over-year. XX% duration to in was seen was billings QX. led continues similar customer was our that and in dollar-based up year was QX year-over-year, products. performance large or being in similar to revenue high by gross $XXX QX, ago contract the XXs And earlier, the year the in across rate mid-XXs to and Current year-over-year. RPO, $XXX mid- million, within major stable similar including $XXX largest XXX% million and up ARR higher we've the discussed ago was be

fluctuate than We continue to or believe those revenue is a better the indicator of based RPO of our business can contracts. billings of customer timing on trends revenue duration and to relative the as invoicing

some let's are Unless results. Now metrics key noted, review otherwise income statement non-GAAP. all

million, to ago of in margin release. reconciliation quarter our quarter last gross a the earnings Gross a provided have year GAAP XX% of We the to in $XXX gross This was XX% and financials of non-GAAP the profit a quarter. compares XX%. representing in margin in

this expect in our margin XX% costs $XX cloud or in efficiencies income gross XXs operating to income mid- XX% $XX compared to cost Operating experience to the operating range. quarter. be of quarter. we reflected long ago of the high in was or term, to year million continue a continue In the margin in We margin million a to goods sold

events meetings, are back to in strong yet significant not the And on revenue We in growth. or QX, in-person had we returned fully are experiencing fully efficiencies business -- office.

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

outlook the our second long-term about in year quarter fiscal We XXXX. for opportunities. remain optimistic the for Now our growth

still to and are digital and executing aggressively We are and as migration opportunities. we see continue relatively these stages, are transformation cloud that trends successfully investing against early in long-term

the the per growth revenue expected $XXX is to an be second is million, share of outstanding. expect outlook operating million XXX XX% million, the follows: of Non-GAAP approximately diluted $XX is midpoint. applied, in the of to $X.XX as net the in range year-over-year $XXX to share shares we range average on at which million be to With be income conservatism the our weighted For in usual range quarter, and expected $X.XX income per non-GAAP million to $XX to represents

net full the midpoint. income the year-over-year growth to For fiscal billion range expected be billion, in per an weighted represents the to be which $X.XX approximate operating to is million diluted Non-GAAP of $X.XX shares. expected is year we revenue expect $X.XX million of share range range share of XX% be in average XXXX, to the at in per $XXX $X.X to XXX $XXX to non-GAAP and the million on income

Now some guidance. notes on our

assumptions First, more historical conservative as performance. usual, when guidance, use we providing than

focus Second, optimize QX, hiring we to In R&D to throughout to had XXXX. in to we invest continue of remains aggressively growth. our quarter aggressively are plan hiring, strategic have and go-to-market and best-ever our pleased for long-term

Our the employees returning North and EMEA the during QX. office QX, America our and are at office employees to APAC of to returned end

In shows In in-person other is T&E we trade travel. points to as XXX are and of basis XXX framed in as the the addition, marketing employee and QX, events impact. stopping COVID of during up events margin past, have benefit picking

embark in-person as return more QX fully marketing We remain expect growth events, from on even impact investments we these COVID, our our return And headcount to our to guidance. QX. office we profitable, as in as indicated by margins our relative and and increased well to as solidly

our as related in provision $X our provision, we to expenses million typical entities. related have well about as of Sqreen international tax a income regarding to acquisition will Next, the QX, mainly

a to compared double XXXX up build-outs discussed quarter, QX. roughly of sales last to catching in with expect CapEx are XXXX. on office pleased and as conclusion, in as we very our In we are percent Finally, results we

more attract to to continue customers We Datadog platform. the

and monitoring our platform's launched in We observability application QX. are and security broadening we capabilities

We for are efforts. questions. Operator, working and I their that, our want call thanking let's worldwide opportunities, the we'll very With Q&A. hard to conclude to Datadogs begin execute for by against the open

Operator

from [Operator Barclays. Instructions] The first Lenschow Raimo question with comes

Raimo Lenschow

Congrats that a investors, wanted a quarter. from I an ask get I first question as amazing Olivier. to lot well,

the of complementary? competition? your Is do that? out should If on long you the other is how how think on ongoing thing then being security talk bit it cloud on-premise little players like in about into just same to How think you a getting have provider move that to and quicker Are you're investments around could kind -- Can speed in playing turf? security, pure-play Is that like of you efforts than et pure do you cetera. and run second cloud hence, your R&D, we against potentially about the just see from work innovation And the players? that the a benefit moving environment? about

Olivier Pomel

so changes we the On of field compete many subcategories in everyone want securities, of that the different in we environment to there relate There's with that the and ourselves and see operations role cycles the security iterative play production development all, and first production, there, all of in categories a securing don't very to in terms wide. the environments. the is these in way and major ecosystem like to we is where life applications

where starting. that's So we're

of and We there. not. development information that's iteration, there. We point and not we other To being data used of that from lot up systems being how use come the these benefit the place different from get of already do having it, being we having end-to-end what and you companies, what's strength definitely immediately what's the and SaaS teams cloud-native from customers only. with in us around in about what the active compete our expect actually come lot a brought working operations think they being deployed see integrality or with on to all those and a we of gives and observability a the others product speed users, and from We we

fast. that us iterate very helps So

the what see first used we're but from single a being and the part a day of of benefit more than typical single also by answer, house lot security mentioned having you I on products. lot developer my users. that We every person. in every That's

to you you you level. prop the gives can do it also actually that more so secure of our issues information at the to the a solving when you what leverage can better. more comes value about what And do that's lot customers. And give and part It gives we

Operator

Goldman question next from with comes Rangan The Kash Sachs.

Kash Rangan

on to that David. one And hyperscalers. Datadog I'm phenomenal the are product is take curious the suite conversations quarter. broadening on Congratulations given the you, get And undertaking, a with these hyperscalers? for changing how Maybe your

growth of As should the wobbly about with we outlook economic little continues think rates, a consumption GDP and for the the be how environment the Datadog to higher business? bit defensibility

Olivier Pomel

on the question about hyperscalers. So

and we with hand-in-hand So work more more. hyperscalers

I more So say, we also faster. to are be help lot the would the cover surface We management a customers. their who customers the, their customers more successful of and for our cloud move

generate revenue and We with on such, And works as well help so developing them. we why and those that's partnership this improving partnerships for the them. so keep hyperscalers,

Azure example, would Pass for cloud. question? think announced by Azure you thanks David, quarter Golden -- to we migrating onboarding, that. some take part presented to improvements And would this to for partnership, customers some the say, great the we're of to other the where I the like now I are we've our seeing

David Obstler

are still thanks, not Kash. being that believe projects We Sure, deprioritized. cloud and high are very digital priority and

We We haven't on. early still we're seen that. think

base. strong So with think there customer so will the our always data continued investment. far, volatility is we There we have some across be

across Our well is very from diversified customer time. and industries, we that base benefited over

we believe be sensitivity, still cloud in long-term that forecasters, migration whereas be may So the not will we're strong very digital there well throughout macro and and trends some cycle.

Operator

Fatima comes The with next Citi. Boolani from question

Fatima Boolani

I'm is the massive gravity the very as I you, for you're space And why that in the observability relates quick in more data because kind security. versus the meaningful to arena. and please. DevSecOps have just your wondering alone? it peers a one thesis some penetration strategic with technical use of within you it parlay And as quick data a much deeper critical for to to that at partner go relates cases, then it follow-up mean, it way and David, One like your not for your able sounds of

Olivier Pomel

question. a so Yes, good that's

things we security. to applications gravity So as data mentioned, infrastructure One table X the our of and bring everything is and relates have, which the is in that we there's own path their you pretty the in users, for to customers much we're obviously fantastic.

The other thing that -- being security operations. we the all other in in and that's have typically or security bring for. is are used built development -- And we not everyone the we're typical by products day something products

partner, purely it's products teams. are hard to built if security product a for that's it's to wanted those for So people. -- find hard built actually you security Most

So of that. that's lot why a we've been building

problem – the our different at solving Of end, we different with a take resources X that lot lot throwing leverage that have customers more this and the come on day other chance still not us industry. we actual and journey of course, we an on is we spot, at issues, the in have it. the partner software think from a we because in a just we -- the we players embarked offers in think But

where we come So from. this is

Fatima Boolani

to to quarters. X recent commentary X that would imply between and billings, invoicing believe meaningful delta given of your bigger your months. to stable, respect And with in still just that relation revenue stayed delta to billings it's having curious growth. one the revenue growth above probably duration you'd in we've be see as David, reported I -- around seen And why would shoulders pretty head I'm such a in as acceleration that

unpack when you and just that that If you little a us could narrow? bit expect to divergence for

David Obstler

I versus to still go as contracts pretty larger We part, out. And in for based the have on I bills have, most and is when revenue our in annual -- variability RPO billing. mentioned, much there billing

the quarter, fact sending not billing little out causes And and strong of the some very bit, that we but might that business, the move lot. billing a complemented annual indicative the bill the annual a for of the duration the the was strong performance, and large of the a So was it variability. out bill this upfront by contracts in timing sent large

and that growth that over We billing, revenue the year, metric balances the the progress with growth the a timing and is the better everybody that revenue growth. the of converges of ARR and we out Over with of average business. implied course billing remind of believe the

Operator

The next question comes Stanley. with from Sanjit Morgan Singh

Sanjit Singh

Olivier, another the adopters in your industries of observability of you were perspective, greater a observability about hearing in, can kind should participates e-commerce -- you see that of the Datadog you different ramp. look of we industries versus the on for is become if some at the which of partners, do some the kind script, traditional which I technology your Fed sort from mentioned in that your of topic of underpenetrated penetration From have brought industries.

Olivier Pomel

much depends exposure to changes of for shows their their look, industry the leading really industry pretty with moved the think. online. The edge Well, cloud on moving users of appetite order single signs we've has and seen which in to I this some technology their already, being interacting at every

what in saw So coming the cloud. example, we so for -- which see of obviously, we finance, of in the first, general, categories what ahead the the range sort thing. -- like we to in full actually is media, was e-commerce, or that online see technology Today, things industries

plumbing companies, previous in coming hotel the mentioned part much calls, example, in mentioned single of auto there. We the For we economy we supplies is an in chain. pretty every mentioned mentioned cloud, our manufacturer

than You're right, to though, in your the comment others. game that those some late are of

why parts penetration, the -- little not less only bit is less It's a focused tech-focused technology more we can And industries, FedRAMP-certified, that to we're more similar transitions, of of is into in the of more of for the also keep FedRAMP was but it which can in where we in conservative so say, moves and limited investing to also case but I regulated very more also are they more would in more in these particular, in terms coming what less so everybody certifications, this more get in also which there's tech categories important purchase, the confident the go government, traditional part us is in party. industry why industry, are geographies.

Sanjit Singh

X a And on was it guys of called DIY their European you of I the just moved and wins think of sort solution. think follow-up was of engineering then they manufacturer sort constrained who I one that off talent out,

worse. because for the if we so think the talent broadly, demand you’d take And that out is to more going get topic probably

observability the And market think that provide, of value like DIY of much so for more you converting commercial an do could be more terms out-of-the-box in business? Datadog how the opportunity the to,

Olivier Pomel

think -- part always value makes been of prop even our what really opportunity, the in attractive I the and it's of Well, that's future. that's more part

correctly from I in XX pointed need. years, engineers as years, There's X you be there's year, it's be there's as X now. out, going X less years, many to think not years general not going the -- not will to to case the this As software be market even going

actually as and differentiating building a direct existing differentiated customers more to So a will infrastructure. be going to need them what way our for what them is to staff opposed be to different is for their to way productive and

benefits us So play -- trend a this that the end. clearly we is in

We have. for customers The software what other with make that nature. in is up thing And they to that's also is us. our deflationary more general the help bring case in

automate. them have We

We use interact better. make help We them people with them more them their help customers better. that help projects ship own have them infrastructure their We productive.

where that's So play. we

Operator

question Next Brent Jefferies. from Thill with comes

Brent Thill

taking Are for but your rate seeing you're on the relates your guidance, guiding a are it you I mentioned year? conservative more you issues, half you're the back pipeline? as similar of close know really David, in what not you a assuming macro to close the to

David Obstler

Like we've guidance, all more i.e., historically. -- tend new all about, as like we've talked usage take of conservative close to rates, more experienced and logos our than we conservative

what that done guidance with continues So consistent we've and principle is in our past. with the

Brent Thill

can $XX just the seeing your that you're what these million transactions, to as And of Olivier, pipeline expand? you customers larger upsell, speak

Olivier Pomel

with with, our more the curve riding solve the in they where scaling. bigger more us, right? Well, and start of themselves are and So use more we problem them, in for They see more range, products. of many more to move we adoption cloud they and customers and customers that the are this bigger infrastructure

footprint increasing our them. all these multiplayers are So and with

of we a actually calls, a expect a the have every not -- again, few in be think definitely one and that those it's we don't isolated case. isolated that in pipeline a those. is -- of millions to mentioned I handpick customer of an And healthy we We So case. that's tens but an

David Obstler

strong continued the mentioned, though I quarter, we the customers millions. of $XXX,XXX-plus And million that's growth growth don't give And that. even every mentioned and continued indicative out of we X in think strong mentioned

graduating customers class many X as above million who are has and the along. smaller and to the from lands our the model class We all have XXX,XXX, XXX,XXX been

Operator

The comes next William from question comes Kamil Blair. from Mielczarek with

Kamil Mielczarek

made changed modules levels cost about any great around question where your quarter. pricing, pushback the scale of years? largest recently you on in on particular changes given And pricing? some X Datadog, in relatively your how higher have the seeing standardize and by growth rapid the there competitors as pricing data the of you're conversations on Congrats last on talk A can are customer and

Olivier Pomel

to at of of for align them. Yes, that That's features when applications. biggest a , so item the very them more because natural. the where scale flexibility from are APM, at to you this a decorrelated which fully pay of give there's from more to be conversation to in with at we've somewhat of that's is that many, with you more the infrastructure the data with we the a -- it's deal, their the because volumes value any price up. time do company for get so wallet us, of line of with just the expect expect the about future. and logs what's or around of that's more going can we sampling, millions But time that of part to can get. the We be a send in That's most somebody past is the they value the revenue linearly us. do more is data a shows many back the But some -- customers they customers many healthy as to healthy. share paying they part there for more other the bringing negotiated -- tens controls, from in Typically, we is shipped data X new year conversation. give of levers, grow a is as and size the customers approach And tiers the storing them is possible time, same customers, for some is give look, won't in that much get company way doing ways grow archives to archiving, dollar the more infrastructure, and as really going that And data, our

Kamil Mielczarek

I Is a cash of and see the maybe been How at flow, forward? about generation XX% tight for just flow level? are think, you margin XX% do XX% up very free And thinking Or on I strength growth cash and margin market? a labor sustainable could you if high going quarter, follow managing strong, has XXs, in year. just free the last better-than-expected a function

David Obstler

cash free long-term flow be experienced higher to we've slightly EBIT. think than I

have the growth the So it with is of correlate and it we EBIT, the business. the of business. our of -- indicative efficiency

be events QX we whether we it be cetera. in more et to returning, mentioned, marketing investments, will the As we in office, believe,

the business, would to continue we as to it higher be been expect in where it EBIT So performance. evidence to efficiency the it has slightly than be the correlated

Operator

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

MattHedberg

go wanted I to security. to back Oli,

your a And at lot even Hdiv had of of there see you're quarter. overlay obviously a some maybe time? evolving you success the team security How adding force this sales and do over thought You've point?

Olivier Pomel

so we're Yes, to there. open anything

we products products are products We of us as focused them the with maturity and possible as that. right getting of in still existing the to drastic we adopt before on those to any clickable customers haven't as getting of front And with now amount paying game we're terms and skin of go-to-market of on are. on development. for get the lot the where veracity accelerate of a be. and where products writing made we changes in a our happy they broadly these We're Actually, lot to very we customers make sure with to want exactly with We're the great in and them. a eyes

-- it's We us. app a actually where on quarters, but the things We are and early expecting things, things with this few to we in might successes and already side today then see the leaves might few the a think some see tell. still little test I coming few mobility, say, go-to-market turn accelerate would we'll to in it bit, different a

Matt Hedberg

model then guys a have use. had easy you And so services-light very always to

up the more you there GSI GXK, maybe do scale to enable within are continue you community? to even steps can As in a additional synergies

Olivier Pomel

we're there's so things X Yes, doing.

So one partnerships investing general. with and SI is we're in the with channel our in

also one So doing the more We released productizing offerings. in we customers we're And of started one out there. call. the some service we actually called in

way need accelerating the help, that sure packaged has with around a We are running transform around we mostly things that have a businesses today few adoption Datadog their customers offerings and Datadog. that that revolve making small services team help of

whatever then and will investing we're mean, sides. be on own others. I our scaled with third-party GSIs So team, package ourselves we partners, both obviously, through

Matt Hedberg

strong Congrats QX. the on

Operator

Turits The with from next question comes KeyBanc. Michael

Michael Turits

towards you pipeline. of that static the about terms observability or said, application left be of how of announced including around shift source You're just code development towards will doing more and side more Can security code. possibly you things, developer talk left And you've some for as going shift a developers? I far in in things

Olivier Pomel

talked bit, are a security, big question. part which a Obviously, that definitely of bit application of is great on the more side. a a and left a we've about doing category. and that's and So developer more We is shift known security quite

So the you it's it's CICD different that but in different received very, category. by how think in the with categories, We're category are we I also bit I we approach there charging been is started we we in market a has in there, have the little wasn't and it, before. brand-new don't new this And That's a actually but actually bit investing have a observability. little a before. And numbers there very cloud, customers. for. product way the today, pleased any share we to the today being product mentioned

around but overall, have announce that. there. to source to you more I don't be do. closer think things and right any in There up Hdiv, also more There's vulnerability a code the mean the there, will more management going which want brought So like we brings direction we we anything do to we're and we to want today. bit

Michael Turits

terms as success And more offering? Anything think in broader be or and product ask, to take engineering complex I line. customer that or a professional Matt's changed broader or question post production area your I of has in just services can an have facilitating you expansion to the more

Olivier Pomel

Yes.

many those refining constantly are segmented can in So specific situations, we're they a not some product. so teams of we're teams situations, types scaling target bit, and and customers, those the also of also quite way types setting

the the solutions, of side. tech customer success, on that's the scaling part we the teams on on support So --

about teams portfolio scaling today. helping product doing So fantastic because customers I to those out successes broad gave job we're investing will there. been be our a a quite really, I there. a there very think heavily shout And they've come more at

Operator

with The next Reback Stifel. question comes from Brad

Brad Reback

force the team the as land with as deals? that of in sales events, face-to-face and installed marketing new the the as return think see to part level of reason shouldn't to larger we to Oli, to bigger base upsells acceleration the potential some even any well

Olivier Pomel

everyone again to past just for that. that that. to definitely, particular. it's mean, return would I some doing it's on for or again things whether too early X investment in-person we're in on we that table us years side in upping whether in were investing we're returns of tell it's say expectations gives have the possible. doing with we that for an I it definitely But edge events look, stakes the the It's not

Operator

question next The with from comes BTIG. Gray Powell

Gray Powell

the on strong Congratulations results.

market? up enterprise move end yes, against that How then environment should change I seeing clearly Or And of we do and you've traction competitive into up how accounts. impacting begging you there XXX as very does of different good So mean off sales vendors? think the Fortune been moving a you set cycles? just larger

Olivier Pomel

largest still We see year. small and change. but we there land a the as is last it answer give even those growing So enterprises. to and The much new fast I'm mostly, end the at we you quarter and sorry, on was going lot focus with last environments. no the most I'm quite boring up We cloud situation ever, customers net largely very same and

these but not all Sometimes, players tools in suite and a of majority homegrown start all the or of going some that the we're the because to displacement -- the these or And they of a APM of still of be things. other log customer infrastructure start or to makes this time, of tend above. usually this bunch are they big acquisition. existing they replace and a go-to-market the lands larger do is But not larger -- the as

focus still sorts of shows new our it cloud think that is wins on all I net but the product about situations, environment. and

Gray Powell

just And on side, there maybe the the if more Is it's just talk more you do then you included map like okay. the be road as be space, more address could or move in say case? use of security security most just specifically, you natural the the you that anything -- capabilities scenario about one, a directly start can X but And could quick security on follow-up guess I to -- the this tough see a a into Version might where platform. endpoint and security just

Olivier Pomel

not mean I it's intersection of problem a the to mind it's today, we and what at applications. I gigantic today. plenty handled not right? so one space we Well, environment -- do well have is that's endpoint, DevOps Like production want think, in there's

that -- are in today. sights our we have definitely So

that not part do in of we are actually the things a In road security interestingly, products are other can terms are role that there in security. of play we're today big many branded what that doing map,

the part last mentioned for one in so And security Developed which we mean, confuse it way actually suite for how of scanner example, the do of around have a cases, rest the questions product. our I of in product, platform management the used but line is actually versus security use call, that draw everyone. it's we or we currently log internally, sensitive the data the doesn't

that security data We network but similar of security uses and have it's part product our to listens offering. for use some also it situation monitoring our with cases, not

answer So there ourselves and that have packaging branding we'll and are some to questions there. product suite

Operator

comes The Koenig Steve Nikko. next SMBC with question from

Steven Koenig

a pricing scale how in which need storage, need good management I'm But and does those -- in angle, they you infrastructure how hyperscalers more And model to does price more do performance of Datadog. is the down? Congrats curves their I help you to a also hyperscalers out guys. And cost I from have the costs time check well, over asked to quarter. time to Congrats thing. charges. of space, on the it wondering, with pricing do down on think over quarter, compute kind those relatively change how prices That's angle. host-based pricing, the as data on hyperscalers a -- very over do some ride from their different come become about it's in have pricing, performing. wanted your customers If a on log little time perspective for about a pleasure their keep covering your as you as price as again manage as improve simple again, be your you with the you helpful. costs with And different thanks color as

Olivier Pomel

to consider there. few Thank you. things a there's Well, so

hyperscalers. to So is also years that even costs from changing is the is buy over little customers on instances reduced maybe getting that our by they're that more though and price also same larger and larger X a hosts of type the time, more, different like bit cloud the the for the CPU going providers one get

and a what managing our the is of running complexity. overall, is from it, I the software is infrastructure lot still we overall, say, understanding increase providers factor the at what with from to improvements that shifted consider a all actually it other means this in And The do. the from the cloud which industry even customers' itself value gets large, experience to dramatic would and the, that

them So position our for more end, and a where can while we in money. selling we more even are the in value or still increase delivering prices customers maintain

general the here. that's dynamics So

gigabyte more they when things is go in and fast run, at that Now can there customers of so over to time. we it But points. who going down -- with do would to the years, same XX wouldn't many, different you for you course, I point. look are price forward that form many now, years gigabyte expect many, per very same per are keep Right a units, course, price our do things some the is say giving that, you But XX takes than the of in in more specific options different you you that more the the are things time at at thing to price also and will for like today. tied long pay like others the if time, have the gigabit so managing data example,

Operator

next Fishbein from The question Truist with Securities. Joel comes

Joel Fishbein

with give areas different lot you a us potential the to guys address a internally. that might plan new pipeline you the hoping regard with mid- developing maybe you you longer-term about color products as Olivier, plans more spoke to products. I'm bit in about and are little several

Olivier Pomel

a to value about for customers, you'll observability. products There's We come. want been new in we're lot our show areas security investing in Obviously, we massively market. have very costs our still of do up quarters going the the particular. for after, We're to more more open works, and and plenty of to do we bring observability. a going to more that's early we're The a have in that show we large obviously, that, to down that it's the we've doubling conferences. do in we're and Well, but expect in very fact these to -- on events can lot

more So you'll us see on from that.

things CICD might our pushing show. that and We're other We as security user behavioral in experience aspects of some extending Suite as analytics as APM we workflows with we also and pushing some and analytics. the user towards products in investing developer well had or business also are mentioned, to

started that functionality more we which BI. towards So takes area, keep expect And and also in should us and pushing you more we products that details. into see real-time more any response you us see that, should as us products are finally, then you area incident more from future ITSM-minded with to in give investing from in to can't resolution. Again, I more expect And the incident in and well.

over in We have We're privileged it flight. ecosystem surface the we large application, lot have customers opportunity. at right see a of think in a of about lot their infrastructure, benefiting where We year year of gives now, time of we operations their year of very goals -- teams cash a their such other today. products larger problem bullish increasingly margins part our the a the adoption frictionless contacts, flow as them their we've teams, free can and their well about and that securities which as an solve what developers we talked for over platform, is while that from

today. So again, we're and products of very more bullish, announce nothing but working a to on, lot of lot things a

Operator

next Raymond comes Adam question with The James. from Tindle

Adam Tindle

about server point fit? spotlight product Hdiv. within VM the acquisition that on Could So this assets like are want competes critical us Olivier, vulnerability and and today RapidX in with like the does where The and just vulnerability stack? advantage where And this stack like players Qualys the data help focus. or end to the bring. where competitive CrowdStrike on center specifically, and fit talk I start focused a announced we Tenable, with they'll categorize you

Olivier Pomel

our the mix the applications. our and these that build that applications. And customers into It various the are brought are well libraries focuses on customers dependencies build as these applications as as

So by of as approvals But team much platform. have the did technology, this a is and are -- don't on great and the perspective. our this this great with the to to security from has way, be will more regulatory find application companies, side side. combined add great as the add we is share the our to it see on way there some to [Indiscernible] on its to place it case cloud momentum right will get often We security security also the And disclosed. product expertise product

Adam Tindle

that investor And It it. forward? last past going us a know based constant since you're David, the out a questions I'm quarter, answering intra-quarter about total as bunch on consider second now billion-plus half a I seasonality of has time. like is seems of than Anything a percent I'm guidance. to seasonality topic. you're been be a little just organization of lower for moving to $X years on sure

David Obstler

No, -- always it's been type where to fourth -- a acquisition. on customer thing strong it's tends be similar of quarter the

have a getting as little like And didn't have that strong new in We we in slowness start much. of slower didn't hold first as last mentioned, very, very In QX you a the as had, acquisition we you customer every quarter, a have company quarter, year year. It this little was going. and bit in generally, the QX. that

to seasonality, types which is same the years. of minor really previous quite relative it's So the

Operator

for I'll hand session. Pomel, to question-and-answer any remarks. our CEO, closing the concludes back This conference over Olivier

Olivier Pomel

had you thank And you I and I Datadogs QX. the all many everyone remind we've to All all right. there's most again for that should quarter our in of want more Thank hiring successful attending call. out there,

you be here, excited to and thank all you and see we're all, next we'll quarter. So

Operator

presentation. you attending now for has concluded. today's Thank conference The

You may now disconnect.