DDOG - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Datadog Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions]

I will now like to hand the conference over to your speaker today AJ Ljubich, Director of IR and FP&A. you. Thank ahead. go Please

AJ Ljubich

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

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

safe XXX,XXX the this we will are business Securities under outlook for go to greater, forward-looking investments, XXXX, are laws Act call, products, of including make of opportunity. and our of of performance, R&D expected the During year market our the and capital statements our federal market pursuant our quarter of made fourth the our harbor potential Litigation Reform the related the to customers size that Private future statements or full related strategy, provisions including of securities XXXX of benefits to for financial to and our contribution expenditures and ARR with

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

call section material available please of other of Relations XX, replay could Rule with there time. important available which September and a in discussion to risks our be this refer SEC limited A website. to the XXXX, for results, a perspectives our dated For of XXX(b) factors pursuant actual our will the that affect Investor is filed

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

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

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

Olivier Pomel

Thank our silos business provide and infrastructure call, a can their insights that and all exist performance and ops and so My I IT you as We dev, between us to public QX and deliver is exceptional an issues. We co-founder, mission IT that time. user thank nine all down which experience Today, in are we clarity provide AJ, monitoring a our for started platform real today greater for developers first earnings Alexis years company. our and them stack about you, users. achieve and enabling happens to actionable for ago with resolution software analytics customers technology Datadog innovation, teams. in operations break the and applications faster of into everything understand joining

company While of have the a we for of excited ahead we’re more even very opportunity tremendous proud are and us. built, the future we

business quick with I financial would review like of start results. our a to and

million, of is an an We or revenue, run ago. Non-GAAP was a of $XX.X ended from payback. or XX% $XXX,XXX, achieved X.X%. or ARR, revenue operating tax the For maintaining more, $XXX,XXX margin annual year XX% rate this increase with was quarter third quarter, with customers the which efficient a increase year-over-year. XXX We income a while

third efficient be retention increased was provided go-to-market, quarter, XXX% quarter and dollar-based over like public past of also to continue an $X.X I few by as our operating as products. opportunity, in our net our product, million our to our would call was is capital a I company, first new and our our overview rate highlights. market activities cash review our minutes and year-to-date And we $X.X million. usage a Since, our QX spend As this adopted as in customers providing before

agility increased shared teams is around moving a better are for also as in IT serverless newer like come private containers, it of Meanwhile, ITs IT These order but all know, other massive you and platforming as view innovation, in together and from and ephemeral historically underway. developers microservices chaos IT compound architecture static and As separate role. manage operations technologies complexity cloud and stack. well the Companies to technologies computing. collaborate on-premise must public to allow IT a

becoming As affecting early we be we bottom-up are market at companies very businesses billion believe and calculation. stages which based across on We industries, the of more essential to challenges more $XX these are are opportunity, our sizes. approximately digital, all and geographies estimate

was in perspective integration from founded actionable time as chaos turns that into a product digestible platform sources XXXX data and disparate real a Datadog From insights. the

single would a Our with and ops across users common teams, vision dev was and a technologies. platform that provide sources, view

monitoring. environment and everyone. broad with more on-premise that gave containers including hybrid and we multi-cloud Starting across across In words, well us everywhere ubiquity by deployed users. initial other used environments. XXXX, infrastructure case initial and environments have in launch, across we innovate and our infrastructure, to deployment In launched were serverless we product Since dev as as ops use continue

web of launched to added or API rarely need application, Earlier We we it APM year what the problems Datadog we in a the by to Synthetics full-stack observability. Management endpoints. and call we we applications their three Log letting XXXX. extend our in completing user this Datadog simulate stop customers and experience pillars monitoring on also for user like to journeys Application Performance launched saw boundary in XXXX Datadog thus quickly at management Because observability infrastructure between

common the we for for offering platform All we we are business end-to-end frictionlessly integrated Two, and truly are One customers not add-up end same simplistic, customers tightly products a for use from model. modern but no or And our our designed by innovate to powered interface easy solve the services. data can professional across We end-to-end functionalities problems a this in in few and a platform offered features dynamic products, believe Three, built are were win within operations to collaboration new market team. and development and we are us or install with four integrated visibility. reasons. allowing simple rapidly. stack we the user

With model From an we approximately perspective, enabled in and marketing since model strong significant very review mind, a third cash efficient for let’s in problems pay only and modest in Despite a product have and and our had burn. sales performance. operating we best-in-class business burned us invest our that quarter customers. This in and more $XX we allows have We cash million achieve R&D to back. growth which to solve continue began. to ongoing investment very has cash us our

results. broad-based driven our as logo robust Strength well Overall, we very are additions by as continued growth new customers. pleased was both of with existing

product the and platform resonating new over initial at quarter. our uptake Our continue synthetics this functionalities perspective, Dash, of in is we From our the conference. strong annual including announced products, to And we invest in R&D XX July features clearly strategy product suite. user

Network club customers that without flow providers traffic cloud It lightweight major of to an One flexibility environments. sacrificing performance. Performance products giving and is was both base on-premise and solution the network visualize we the traffic Monitoring extremely is to hybrid in servers, of with network the customers compatible to allow all announced monitor

compliments the It customers Real for Another synthetics the user experience analyze by to was of experienced applications User which monitoring. allows end new Monitoring, performance users. product directly

We to on solutions. continue iterate existing also our

from a Rehydration as full Log catalogs the reminder instance, indexing And us chart into ingestion. load allows to For to platform, allows and customers for to analysis. indexing enable our separate our the data Datadog model

added our analyze coalition is unusual APM within easily metric several automatically incoming outliers objectives machine customers all that new exiting engineers enhancements always infrastructure search another We pattern. users. actively our our spot APM learning any detection Watchdog, to level are our similar easily will platform, additionally, meaningful business traffic in we And now will which a to Metric analyze and both AI trace to the on who surfaces engine, portable track are allowing others customers automatically outliers. service feature and for displaying following to trend anomalies SLOs, announced And that platform. relevant capabilities. and

currently in the is to FedRAMP Last market very by potential to we that we’re is but for excited not certification. U.S. announced addressable And least, our another Datadog exciting extend October process in agencies. Federal development and departments

at beta we As in our a and announced products Dash not yet charging to customers note, quick are for them.

very switching new to product for enough already traffic began introductions Now we without charge allows This with has to to start. platform SaaS talk is good as strong products, for. gears in adopt any we our about of products a synthetics, unified customers cut new QX our In friction. which charging line

strong products saw we from new both and customers. newer of In our QX existing adoption

which end year And quarter X.X of XX% approximately products adoption, platform XX% using up than is strong or last newer from old. more the no ago. point customers our years of our QX, more a XX% at about two evidence that products As are our out were of we and

As I R&D. continued to before, mentioned invest we in have

R&D XX% efficiently That’s For our the revenue, which increase XX% an record selling invest products, R&D. meaningfully and was for developing track to continue non-GAAP proven newer in platform Even and QX period. to expense plan of period the of ago it year-to-date from is products. year our we to strategy in

existing well side. as additions third In the as quarter we strong the go-to-market saw Onto new from logo extension customers.

from of customers X,XXX end ago, more, XXX the year XX% we more had the quarter, year from an up a an alone. quarter of the up ago. We of X,XXX XXX increase of with than with customers in approximately ARR As $XXX,XXX or ended third at

customers of ARR of this Given is future be our generated growth. customers than to over of expect driver large from a that more $XXX,XXX, XX% we our cohort

let’s in our quarter. review wins the some key Now

telecom new provider new support Datadog of a of one customers ahead the This is First, adopted iPhone e-commerce our to site launch. customer multinational the Europe. of out

lens as Our established as outages other without country six-figure surges. This logs a major them infrastructure, six-figure the of have synthetics, website an a pillars, three issues, second, any performance successful XXX because Fortune in APM traffic initial launch includes experienced carriers all well retailers and upsell. platform enabled to but had

believe in and both with we is more our Azure adopted recently spend more and in us customer are container has there synthetics. their technologies. still teams and Xx followed lot grown as by growth. adopt Microsoft deal they XXXX XXXX, internal a initial room more customer since This than APM logs using Over and This of for infrastructure XXX monitoring Datadog

new digital support companies our higher businesses. education of These X,XXX company. as employees a seven-figure they the as come power QX even one with of than fewer largest customers from midsized to partner services mid-market spending and was the three Datadog strategic deals a Next, to pillars the software logo demonstrate

to provider cloud dating logistics quarter. origins built-in large This a over ability a of correlate monitoring XXX transformation. in And Datadog back-end the was lacked the digital which upsell powerful origin companies is company, issues. industries example Finally, who years tools of how the back Europe shipping had are and a was enables this previously middle company front and based in and six-figure in their using

includes IPO, year-over-year. XX% As by reps the we to said our we invest growing during quota carrying in go-to-market. continue This

of of investments and experience QX, high and As business on efficient from our very model the end we benefiting sales go-to-market. returns driven marketing by more our do land-and-expand

business efficiency, our globally. continues marketing to of in cash our continue investing to model evidence intend one be and payback sales year our approximately and meaningfully we As efforts

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

David Obstler

Olivier. Thanks

the products subscriptions multiple to would a this are quarter I our full of our sale generate fourth and option guidance SKUs QX quarter and platform. then from with like logs revenue I including results. well mentioned, year. overview containers, third have SaaS review Customers strong Since for custom anomaly earnings pleased we as financial packages, to very detection. with and call, begin to is infrastructure the of our additional performance our such APM as our provide monitoring, model. purchase will brief metric the and our first We as As

or Customer all typically subscription Our required monthly services professional either have products. our implement annual revenue contracts as commitments. to is are not

arrears. in usage are billed their for amount, typically committed customers excess on-demand of Additionally, monthly in

of and investors billings the calculated the believe billing, not the to Given monthly invoicing that we do annual variability and mix useful metric evaluate in most performance. business our is for

substantially vary As can revenue in any growth growth. one period, billings from

QX up year-over-year. to $XX.X results, revenue was Turning million, XX%

initial As as and Synthetics. existing based, mentioned, broad as new platform quarter well strength and adoption by Olivier was driven strong of customers uptake the

additions logo with channels To in third seasonally more the provide you across new notable we is first, summer. This context; in is QX, some what particularly strong typically and sales both a quarter, saw regions. involving challenging

continued strong customers. saw of existing we Additionally, expansion

of time. can of first ninth a for The the to the dollar-based are by cross-selling well products quarter. of as rate of consecutive us retention increase driver on products, the Synthetics is our our XXX% is including expand above increased quarter, inclusion customers use was products of third they rate. the as In the rate platform, net with A Once for usage newer robust driven frictionlessly existing retention Datadog newer of more platform. recent our cross-selling the retention net

strength now are EMEA. many This impressive the quarter in specifically particularly still the strong teams we’re given sales region ramping. Lastly, of internationally, a in is

Calculated billings sequential up million, as revenue revenue defined plus year-over-year. in deferred $XXX change a XXX% was

variance to to growth on an we for among the monthly a mentioned, our billings to and can want to plan a But be and As because substantially growth one give metric revenue revenue in annual going customers. billings business a growth, to billing the terms vary regular add any from not you mix comments. do we few believe focus calculated nor of And basis forward. billings our due do between example period, we comment of

a had was dollar we billed QX in in year. First, customer multimillion was billed last XXXX. not deal three renewed QX This and which

large had our QX but approximately would for and XXXX, not in normalized calculated prepaid which still billed was again in been one QX In strong in QX growth was billings deal two-year QX Adjusting customers, strong XXX%, of addition, sales. thus XXXX, XXXX. billed two very generally reflective have these we

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

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

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

accelerated of of products, As delivering we cycle have geographies. data well as cloud the middle an the newer out new discussed previously, we in centers of are in build innovation as

and investment margin. balance to time over our will manage gross We optimization

in of R&D QX, expense was revenue from slightly or XX% XX% the year $XX.X a million up ago.

led investments platform. from product We adoption and extensive continue have made to benefit in our

Dash. evidenced This product the earlier launch plus Synthetics XX the in is it and made of by the year announcements

opportunity in expand make forward. continue to plan to We platform, meaningful see and continue to R&D a meaningful and to going our further therefore our innovation investments

nine outperformance the million XX% of QX Sales in than timing September period. some down trade expense of ago revenues XX% as XXXX. was and change We XXXX or marketing XXXX, due the the period between showing of revenue months expense percentage of marketing in sales more $XX.X of revenues both versus was and was show note in from of ago development and pronounced year that down The the a end usual XX% to sales and for XX% from marketing. leverage events year in the the

strong operating or period. our loss go-to-market negative X% related IPO see an from to the plan operating given was ago X.X% We slightly revenues compared expenses. expense or $X.X ago Operating our of continue investments year some to expand than a to in of year and was to a a positive and margin or invest X% returns $XXX,XXX $X.X marketing income million G&A continue globally. X% million to higher sales

for or $XXX,XXX XXX million income diluted on weighted per average share quarter outstanding. Net shares the breakeven was based

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

of ahead outperformed market in to we have breakeven we invest see the large and on to us. opportunity While around opportunities QX, continue profitability ample operated in

million a a Turning proceeds. we and cash After $XX.X $X.X flow cash, was cash the positive and a million cash. to includes negative a consideration and was expenditures year-to-date. flow, the million quarter equivalents restricted flow into million positive IPO with balance for negative net the for software, approximately ended from million quarter year-to-date. Cash capitalized in quarter sheet taking $X.X $XXX the and million operations and $XXX free This cash capital $X.X

to projects Our capital of therefore build-outs estate payments in and we QX slightly CapEx. of quarter shifted of Paris of York was to Paris expenditures New real slightly The elevated and and offices. consist New and build-outs for primarily timing York our expect elevated due another some the

Given P&L, in entirely the the not costs our hosting we CapEx. through hosted cloud, are flow

operations negative from per $X.XX be $X.XX for to be range expected XXX on to loss the range revenue approximately Non-GAAP a year-over-year $XXX represents fourth of in million is be to quarter the loss we operating outlook turn of which of shares Beginning to $XXX million, is at based quarter, negative share the now the and outstanding. Non-GAAP million full per $X to of $X the expect our year share the XX.X% with the million. would range to growth in weighted average like fourth XXXX. I of to million in to negative expected midpoint.

things to A few account our guidance. in into take

third existing the saw time. we synthetics accounts and first in of quarter, for growth a for the First, meaningful bill

While challenging a new and have we can short meaningful have products, seen existing to growth of periods. over over time history accounts of sustained this launching and more be predict

the Second, expenses. sizeable well will on we quarter costs, as as full insurance, profitability. public of D&O show In particularly company trade QX, some first have

million For the expected XX% range million, to at of range based $X.XX per operations expected $XX be of the million $X.XX revenues to represents is mid to negative million of growth per outstanding. which in net negative in range year year-over-year be the negative $XXX the negative loss Non-GAAP share is point. weighted full to loss XXXX, to Non-GAAP in the to $XXX million. be average on $XX from expected approximately shares XXX share

very quarter. business with pleased performance the To third the we are in summarize,

analytics built growth at platform match. few that and scales the age generating for companies leading are can and have monitoring We cloud the

company of stages very market and continued a making successful feel multibillion to a We we are growth large opportunity good for ability time. very future. early build about in the our at the investments we over foreseeable are and We believe dollar

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

Operator

Instructions] from [Operator question of Sanjit the first from Singh Stanley. Your line comes Morgan

now Your line is open.

Sanjit Singh

successful the your you for first strong set Hi, questions team a to congrats and earnings taking the IPO of call on thank very results. a and and

So wanted displacements? this coming or quarter. Did of to there. congrats a from I about to off on you competitors see the strengths performance start Q&A, you follow-up. to you just and maybe continuing are displacing then coming all ask the the quarterly lot seeing Are growth a expansions Olivier, competitive Greenfield see fronts had from

Olivier Pomel

Yes.

solutions new environments, other net especially, have went cloud is it’s the you mostly mostly for by it’s talk still They solutions, business our new definition customers So customers. all about mostly and Greenfield and existing and when are large they large which a they for but the legacy cloud but few competitive see that’s do enterprise have new of what customers, for displacement, make not the majority their also do. environments, we environment. decisions We

Sanjit Singh

had follow-up, for as it seems strong seems seeing And tractions And of Understood. looks you international it additional you’re some with signs like like to said some opportunities an there. then new you. is good products, some Synthetics a early be also and in really momentum like opportunity

So of off Sort think just near-term, drive the of of ranking terms see the you or biggest it’s you medium-term stack whether near-term opportunities? Performance the of Synthetics? the or that comes it’s can maybe Network than years. in you of that that opportunities Monitoring, with of the and traction continued or over stack could opportunities more beta some two next what one near-term some the the if opportunities more sort rank what of are are And growth

Olivier Pomel

a is core with Well, products our know figuring very, still our fast and of lot product. other with use product very customers what infrastructure core and we near-term conjunction – is our that we in grow product most have –

log they’re are our In and hyper-growth. recent APM in management very in that both addition products to and also

of our So and short-term they drive lot near-term success. a

getting within developing we now, don’t a our like the of in Synthetics been but past still add, Newer pillars Right bulk the outperformance the have we’ve are represent products growth. bulk still products us market it’s the this of years basic, few the three the quarter. that nice the are and over

years think a the As great It’s by the we we’ve that be of particular, the sign. in great again, we It’s more or – when come. we all quarters sign, Wink we happily to products mentioned the surprised very haven’t of in out But have the of right the charging for. in new in it call, been a will Synthetics performance that’s gate. material started in

Sanjit Singh

Great. Thank you.

Operator

you. Thank

question Next Auty Sterling the JPMorgan. comes of line from from

Your line open. is now

Sterling Auty

to going that are multiple better out How both understand the new mid Yes. the how products, much Thanks. in Hi, coming guys. would existing. customers of you of that enterprise? terms versus I with and characterize market is of large wanted success

Olivier Pomel

It’s that. same. of We to same comes the parts see it all about when market in the behavior the

and products up, have where the us earlier places been using the their we’ll have that customers When where used opportunity which three migration, and opportunity into our fact, an while once. have two initial as of vary. and cloud immediate four customers for starting at everything to there’s companies of the then they’re In do has other enterprise to we newer customers that most everything is not as cloud once. everything at see they a on well mid any or don’t to the are will the the that the higher of displace products set end market for land That’s case or of is

Sterling Auty

of those seen pricing competition as what changes. for logging starting your then think one question. make some you’re to market Wondering all I competitive in has dynamics sense. we’re of to with The very using their makes see that follow-up That seeing you’re pricing. changes And And the the disruptive.

Olivier Pomel

in see We don’t any competitive dynamics yet. change the

conversations changed we’ve vendors. from But the some had ultimately seen in for far. think so hasn’t the I customers dynamics we’ve some central pricing other their and it

Sterling Auty

great. Okay, you. Thank

Operator

Thank you.

Next Merwin Sachs. question from line comes the Chris from Goldman of

Your line open. now is

Chris Merwin

factor I a your just Is all? you increasingly you containers workloads? customers? win it, these competitive guess, monitor of for increasingly you terms landscape can has that the with bit how in determining very to ongoing talk Okay. in to Is Thank the you changed important why important shift about ability much. an Maybe at

Olivier Pomel

Yes.

what just of that. and when years the to many guard of at one containers like big it think tooling production had since part that’s you work monitoring to we’ve the of for all, part don’t have So customers And makes been – seen of not at our as big we approaches as traditional We’ve We containers in-production on containers advisable time But run do in numbers see we’ve was it’s many definitely before can scale – old point already we a our of share tell it. at And several you been we volumes containers product the now. number monitoring do see. the of for I times numbers any in years that, instance now. OEM.

Chris Merwin

you Okay, incremental with but invest you enterprise? terms R&D, products already, to obviously, of then talk I great. with projects the looking main strong your comprehensive I of is as some focused of some terms a can it maybe R&D bit in And further market to continue from very you look in on have mean, broader there? existing in suite here? are you and of the product just maybe just the a with investment, Or the in help go to even functionality in deeper more traction maybe about

Olivier Pomel

I So bit for fast. our Well, right? there. lot earlier, we it product a easier of there’s it’s to life a is of make can very And infrastructure still have, customers cover still both, we growing as ground, mentioned

in our investing are are we’re hyper we heavily management product, on log very in innovating and partnership there. products growth APM So rapidly and

market. at announced to we’ve products more bring few a have to fully that We’ll have Dash heavily. we investing we’re So

show and haven’t most As something then started charging the the But products mid are plan. for And long there were categories think say about of quarters. that’s enter beta them term in you’ll we we in earlier, can these I that IPO in I that’s would And we larger few talked see future. in we few to that yet. road next mentioned the

Chris Merwin

Okay. Thank you.

Operator

Thank you.

line Brad Suisse. comes Zelnick Next from question from Credit the of

line Your open. now is

Brad Zelnick

project open I tracing. as very convergence the official about company. to you’ve standardizing metrics extent telemetry but for What impact is towards model, ask open Olivia, is for public your expect to as head traces. on looking sort and forward a question of And supported the a business any to My up question first it now, obviously, on wanted until the open strong if in Congrats the you of Great. start successful we project instrumentation would census Olivia. and at a all? have

Olivier Pomel

always It’s for us.

backend we’ve I differentiator. the And source that the we’ve our collection open leaves on not actually customer that’s everything opened our to that always technology the all was data is thought Supporting going of think APIs why long term be side, agents, our side the in source. libraries, customer our a easy telemetry the make open deploy the the invest as possible, not what heavily possible. is day, product of that direction. And matters the where to end is in At out in easy to as information step get and our on as of that’s as products. we to

Brad Zelnick

you and capacity continue how ramp we gross overseas? margins as perfect internationally strength need to compute to makes That update see should on sense. And David, scale us expect can you to

David Obstler

term said we investment in think a mode. long our over gave time. improvement that, we’re We model, in I slight

investment balancing versus we’re So right the now, optimization.

try of XX% to we range You get balance little will to XX%, see we’ve been more. in We the start as to we a – XX%. said

approach that. investment still expand that’s to in and mode But So our geographically. we’re we’ll still

Brad Zelnick

taking questions. Great. Thanks my again for

Operator

you. Thank

question Barclays. from line of Next comes Raimo the from Lenschow

Your is line open. now

Raimo Lenschow

hear Where Hey, you question. work thanks. anymore. the is when because come people then thinking even Congrats to old that’s they don’t want big tools just very It And are more over, picture the from me your that feels understand be cloud, in my to beating Olivier very, to cloud question over as coming monitoring, workloads I first and like migration? like, workloads more there the tools, there. move correctly, and more well. this there on-premise I you come if we on should huge in. infrastructure early opportunity but initial big Well, picture of

Olivier Pomel

Yes.

IT who it’s to nobody – we you basically So a in percent around the hard depending single-digit the on folks, that, it’s knows workloads have look, it’s or device device arms private the of a wrap low whole public from your cloud. a tried thing. it’s at APM But Like are. exactly that legacy where have to to teens either people, moved can ask and

So, yet, market product, tremendous mind, is that ahead XX% the of been have runway us. amount hasn’t with of was which XX% basically first end that there’s in attributed our which why that we is even or infrastructure, a of think for – so we

This impact is fact footprint is to and application transform companies businesses, become digital going by also combated that, and software overall grow. their as the of the and

of think transition size. We center quantify. just So, larger. state, end whatever going hard Again, that before lot into the it’s the data a from is we’re the had state not something to equal end cloudy, at be more but looking to that’s

can lead and like of very a but with a beginning kind that it. we the that, is opportunity large we confident very, were are of very things and You of this lot very, report

Raimo Lenschow

you versus a team. what’s perfect, your selling as follow-up marketing individual And the product, thank around thinking the Okay, was just or this platform then you. as like, launch new a like product.

Olivier Pomel

infrastructure always So, doorway the with that we we immediate infrastructure customers pain way get the we to our that first that But Raimo, we to the be the approach feel the foot so platform. the in and needs do miss around it is But we message the platform. is speak. with customer remediated this

a Yes. bit of it’s So, both.

Raimo Lenschow

Perfect, team. Thank congrats. you. Okay.

Olivier Pomel

Thanks.

Operator

Thank you.

of line from question RBC Capital comes the Next from Henry Matt Markets.

now line is open. Your

Matt Henry

out as five only curious, think talked there being sort are could offer in I’ll why industry, is is follow-up guys, that you we years When the lot a X% monitored. guess Olivier, from I of of of apps I’m to do APM a maybe, an think and where now, industry? at be that? well. my And Raimo’s. people as question on folks to Hey my congrats it’s we

Olivier Pomel

Yes.

product mostly a APM. used with legacy that’s in and – So conjunction

apps. APM slow the for APMs the was traditional center the and rate that the that are reason they’re used So, these data very, And in very, instrumentation heavy expensive. is very very weight

limited it So, some extremely ROI convinced be deploy of up of for can them make it’s to an them applications, set being value you out value high it. and very a investment out actually hard to get get and of to ends small which and

easier of many, to world lot the affordable becoming providing each more many, that software apps. unit to compute our companies we’re and it’s of into the many have of they to solutions companies, deploy think And many, When for going a a actually them deploy have are you to we’re the the solutions. lot – what more are the world going of increasingly cloud, they’re

and So, see end with a market to returns. be significantly get larger needed to we’re up to to that is a going there’s lot less going investment

will the big companies instrumenting future, this with the the of to most the that’s X% and they end monitored APM will the mostly up So, the try of apps wall being where the between applications. of world of difference digitally –

Matt Henry

a more congrats That’s Thanks. synthetics? And talk as on the that then for landscape you super bit maybe wins, but of synthetics, greenfield early the follow-up, helpful. little imagine a successes could I competitive lot a of about

Olivier Pomel

Yes.

to one aspect different of their few the top product. is it. have a of there’s So, first vendors capability APM on And the APM a a number Synthetics

a offer number that’s, So pure companies I say, of Synthetics competitors. player there are then a the And that would of testing. set first

would I in XQ that replacement of there’s landscape. some Some low-end, products And very another you a part the is adopt. That’s say cheap software industry high-end more in can that then easily of testing. so overall them the fairly

our of initial with any understand to try It we not of really compete world to customers maintain performance was the fill saw was those gap and the applications. in a the focus could specifically. and

of think platform covers terms it an didn’t going it integrated drive simulating an to head-to-head to compete intent from is drove those that traffic. we future user We with everything the in look from what including companies. So, we like

Matt Henry

you. Thank

Operator

Thank you.

line with Next question comes Brent Thill from Jefferies. of the

line Your open. now is

Brent Thill

Yes.

Synthetics. follow-up Just quick a in

just strong pricing or revenue you enterprise up dive of Thank you. that more this seeing what engage it to you Are the early? obviously and that some was You into customers you is force what a of expand and second you’re more perhaps easier curious suite which you make you go roll you robust, license too as to to way you uptake, agreement for from is go for easier still that an desire with it can features? and customers will market comment sales think that in portfolio, mentioned seeing part the type terms could an or and is deeper to incremental have very is – uplifts you product And a there if continue seeing. little I you’re the

Olivier Pomel

Yes.

right the the yes, by Synthetics. On of we with first what very out impressed part, gate we’re feel so look,

overall from more a can which demand. a includes few I of set, I pent-up comes that of think it’s the percent was Synthetics, we will months had expected. it’s that couple growth rate than we this say though

product also we As product. right after – charging for the away beta, the – we didn’t you customers do start onboard the

basically. we already buildup So, usage some when QX, charging started had we

less started again, see We, some if quarter expect and products, of way when this multiple do any don’t the without it. over in time, But that pent-up pricing products way Datadog on to of we’ll to we let same having products. they We already rate demands way, it amount we customers combine bullish. that certain as than we we we for quarter a them to to grow. the the had level on sell specific we in to the charging a use the with by of for we’re product, commit impacts card next fit know any any because had spending of and commit see

a rate teams everything And them about are great we to because And everything love, use. customers in just force not not or same our the going for use and problem and what worry to that’s to of our it for their for lets time because to buyers that something ahead today products, part have that today. sell the been a sales are customers, hasn’t the negotiate sell

Brent Thill

you. Thank Great.

Operator

Thank you.

from Stifel. of the Next line Rebeck question from Brad comes

is open. line now Your

Brad Rebeck

on in first have If existing the last difference any very we this seen down year, customer compare Great. Thanks draw time year contracts? to you rates on much. to

Olivier Pomel

Well, we additional both down effect, the so the the are as which periods infrastructure than drawing in product. customers pro rata, both is of uses well products continue the see to quickly as from they’re consuming same more

that come this and of quickly They’re capacity to sort there. which using more continue fixed that’s that the continuing more and instances, year is last happened are some year. muscle, finding customers we So have same back for reserved more

Brad Rebeck

Thanks much. Great. very

Operator

you. Thank

Next Raymond of question is Turits James. the Michael from coming with line

Your line now open. is

Michael Turits

on IPO a the on gate. the quarter David. out great and Hi, of guys. first Congrats Hello,

companies competitive cycles marketing in so of a the guys much sales approach, or responses terms change looking the and and there of response monitoring at from broadening any have following in from that lead? people in of log in decision pioneered your a multi-siloed see space to have couple APM You space. the been some this cycles Do you

David Obstler

did that And expect silos see as expect lost having the end-to-end for the it. do changes. are competitors we don’t mean, customers of our high obviously we We our what approach I our not regard. any it’s we that is and We solving again, No, who do combining on successful. problem

that that the today our validation any haven’t see we in dynamics. of – that’s seen changes but we So, as approach, competitor

we can a And I account. think in customer we in you had said, QX, logo, very strong as see that new the

of even So things all usage and about rates we with those maintained the quarter. talked the as had increased as platform, that have also adoption months so then well as, are in earlier over summer continuing retention we of the increased an

Michael Turits

model less a there Is small And spending very had I it push feed OpEx looks next it then the on quickly, than that’s year? follow-up is for the implied David, EBIT into or modeling. for we either any originally EBIT next next nice quarter. If of in like quarter out guide and great into

David Obstler

team to that’s But roadshow. dropped think team that our the we’re gross and during had saw bottom to has line. we we’re the revenues investment same R&D continuing invest. all, continuing grow sales and you and with Similarly the met margins at outperformed I the Not with we the when pace

Michael Turits

Again, Great. Thanks, David Olivier. congrats a Olivier. great quarter on and

David Obstler

Thank you.

Operator

Thank you.

the with Next Securities. JMP question coming Walravens Pat from line of

now open. is line Your

Pat Walravens

Great. Thank you. And let me add my congratulations.

hear DevOps maybe I’d in differ on where by or geography of how to maturity each company? Olivier, it customers for So journey towards or industry their by and see are love thoughts you of size your one you, by

Olivier Pomel

– if APAC to think of it’s years the are what interesting Yes, and mold cloud, seen behind EMEA U.S. you in or so because DevOps to was the three so two we in markets related about the see and transition

It’s to years to three particular in seen is world ago. in of just U.S. private we’ve the cloud enterprises large public when two going that scale happen today. at the parts starting something So other in to and start

add seen and we’ll otherwise, move So small first is to where to to think to tech no well. to I as a there will the mobilize be larger the just the we’ve companies, companies you traditional companies. still modernize need and that the market, the main DevOps comment cloud have After do companies mid enterprise trying are that to companies I are more going last that oriented

turn various on one So market all see other those each basically. we the of after parts

Pat Walravens

where government And those Yes. we… is behind the even all like federal –

Olivier Pomel

Federal government bit say I would a is – it’s having of beast. a different to

Pat Walravens

Yes.

then And congratulations David, on ninth Okay. the quarter. consecutive

of if from and you set as future? little what our a expect it about Just the expectations would expansion I dollar it love the net rate bit terms base should could we in think we

David Obstler

Yes.

We’ve relative set we what the to think on public to we would usage when drivers increase the to continuing we’re do the relative of saw that And with that. relative XXX. that, cross-sell. we seen time as to environment I comment went that and no IPO had we change in

Olivier Pomel

number going is And XXX% best-in-class – moving we Yes. to use and in that’s our already we’re perspective forward. the

Pat Walravens

you All Great. both. Thank right.

Olivier Pomel

welcome. You’re

Operator

next question The Needham. the Jack of Andrews you. line Thank with comes from

is now line Your open.

Jack Andrews

perhaps Are customer would Any Thanks. predominantly be helpful? Well could experiencing and afternoon you or you’ve wins logos, on bit landing. you new you with ASPs? of that a congratulations good results. down you’re drill higher different seeing new I to in multi-product on still little Are deals? landing just perhaps color the more terms wanted on – see more if been infrastructure form trends the the specifically

Olivier Pomel

Yes.

during same what the remains IPO. the trends the So we’ve detailed as

you the the extrapolate road If can idea you a you some that data happening what that some bit and in get that SX of good still true have the and show in remains the today. of of little of or all is

the new – and logos ASPs on the the again, the that’s same. the on trends remain On

David Obstler

continue think we’ve with so – more what show one I think about continuing. logo and with customers to couple similar landing very continues said than XXX, customers have We the we contribution. one IPO they’re we more than with much and a on road pillar thousand – for XXX had it’s of the said for and enterprise mid-market talked meaningful and to a I hundred grow

Jack Andrews

for my Great. taking Thanks question.

Olivier Pomel

Yes.

Operator

at any questions remarks. showing Thank time. to would CEO Olivier no closing the I hand like this to for Pomel, you. now I am it over further call

Olivier Pomel

proud you. substantial a in Thank we I’d incredibly that repeat we’re of like re-platforming opportunity. use Well closing of believe in the are we Datadog. stage the built We to early what

we for in the We on And the for all course all and their larger thank our hard employees focused have trusts I of and we and to and strategy believe their potential customers dedication. would long-term. Datadog work company today growth essentially very to like Datadog are profitable on executing be

far We believe have I a and complete great best is to thing so come. the yet

thank So you.

David Obstler

everybody. you Thank

Operator

concludes you Ladies today’s and a wonderful conference. Thank for participation have this day. your gentlemen, and

disconnect. You may all

Datadog (DDOG) 12 Nov 192019 Q3 Earnings call transcript