DDOG - Earnings call transcript Q4 2021

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Operator

Welcome to the Q4 2021 Datadog Earnings Conference Call. My name is John and I’ll be your operator for today’s call. [Operator Instructions] And I will now turn a call over to Yuka Broderick, Head of Investor Relations.

Yuka Broderick

Thank you, John. Good morning. morning. joining XXXX review announced financial press issued for and fourth in you release year fiscal results, this thank us Datadog’s to quarter our And which we

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

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

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

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

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

Olivier Pomel

joining thank you morning. all Yuka. this us And Thanks, for

QX, our growth We performance showed efficiencies. well as where are high very as strong business pleased we with scale, at in

customers not well innovating XXXX, manage continue to at our we executed to And a only we extremely kept rapid at a the COVID also very our era. demand team help strong do environment, complexity back in pace. see Looking

And products. coming customers trends newer from usage recent XXX% million. quarter, with this quarters, exceeded or of with up and range. Revenue the Let's our free continued dollar-based be expectation of with end net scenario ARR the is increase high in of at than cash growth high these segments. positive increase through our from our added. to XX% as and had logo continued generated remains QX. at large year-over-year to a model end more, another And together XXX churn of ended at including with from X,XXX had the customers million, XX% up with an QX, customers about We quarter from the about the more, ARR guidance our last At over customers existing of in XX,XXX business our year. of of $XXX,XXX platform and $XXX Business leverage rates about growth our or adopted start double and factors last These X,XXX in across QX. record of led all end above The we we level, the ARR XXX All record $X with ARR. retention of rates. in wins. XX,XXX business the our our efficiency strong quick last had a saw ARR year. line was year. end some We and enterprise million more historical We customers quarter We had was all $XXX new which customers new of about of in products business of low

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

from using were which QX, more up ago, from XX% products, of QX. products, QX saw XX% ago a customers or Year-over-year a that of As infrastructure XX% were up from of year monitoring the using as ARR growth of of accelerated XX% adoption a two sign is of were year. further year of or more strong to end using in customers of or we and more platform, has customers six our XX% our X% compared QX. up in across platform saw last growth products, four our We

XXXX. addition added be to the pleased newer These logo mode. about XXXX, products we management launched newer ARR that, to APM in to our $XXX log which In we're hyper-growth management. excludes APM million continue suite and products infrastructure, that very products and report in in And in core core are

R&D, for quarter teams, data to many of it and log across customers XXXX. of is or moves to Sensitive been discover, method Data gives the protect modern delivered industries December. care product in We financial will general announced not into slowing have it is today Now information. in health important With Sensitive when available down an extend move Scanner and are making let's Scanner Data important storing cost-effective innovation. to and applications, enterprises This regulated areas for in and where our easy we platform working know Scanner the Sensitive be teams and sensitive strong classify difficult particularly on other services sensitive like Data data. another management, services. to of availability

Engineering customers each cases such joint alliance with the We and that shared other's conferencing which this on a real are with number if us many-to-many, as will presentation lets a acquisition believe team and environment. help unlike goal participants this allows use silos between funding work We work focus breaking of general were in is in incident as team of they a a of collaborate video applications. one-to-many platform morning CoScreen, participants to our a into local to CoScreen response and sport. tools, screen-sharing And time. conversation, is bring teams. purpose our space down windows interact share CoScreen and individual also allowing in multiple announced

easier platforms, from accomplishments thirteen clouds, XX our to and it nine significantly extended have XXXX. to the We and to We XXXX. monitoring, We we in appliances, integrations even [indiscernible] new our at center visibility web more. platforms, at Azure for platforms cloud our infrastructure over with monitor. container In XXXX. instrument scale. year end covering as including XXX the of We up continue AWS, a launched review devices deeper continue and network new customers massive We over available device go and take and CDNs, capabilities we in launched integrations automation Now GCP. network now products, ended moment let's made generally adopting into physical monitoring created views

the also which the ecosystem into develop, our data, a but without have On that functions customers of we security and the include level front, serverless only And expanded visibility service routing health them. needing universal of services modify monitoring, captures code. performance coverage launched and to any service beta we to not application surround

leader Quadrant for doubled suite in numerous we replay, XXXX, in monitoring of in was support on a launched We Android database and mobile of new the and APM devices. and tracking release and PHP, they named Profiler, many Gartner APM. Monitoring are in with innovation meaningfully, We devices CC++ expanded new close down problems deployment. Synthetic services. front-end expanded monitoring iOS particularly day-to-day session Continuous We In now detecting provide Magic Our we’re faulty experience we Ruby, no such to synthetic support .NET, with and get as languages in locations. before to we they production, added tracking CI with developers’ happen invested testing and covering and NodeJS. back-end automated And pipelines, browsers

to more invest, And In our of capabilities data line source customers storage aggressively Lab Management, we developers to code. with providing to flexibility type continue integration analytical and sophisticated governance giving production code enabling retention. and the right more and

many Our improvements sophisticated for use and example, analysis. in unlock business cases, cybersecurity

data extremely data announced also volumes. We store Archives, new Online a large for long-term

including workflows, Posture our developers obtainability Cloud Security. Cloud and ship extending development Visibility and we further we faster CI safely. Security help observability, And Team, to Cloud Security Cloud Workload launched going launched Management Now more beyond to Platform,

In cloud addition is thousands our very we're with our product in our application to security customers those, pleased momentum using And we security in as products of early now have today. currently beta. security

Datadog's Watchdog with Datadog apps. up We and also their context the I and our our busy engineering teams throughout correlate invest want thank we'll Datadog customers. release platform. and detect hard we've in anamolies, work Watchdog, for platform and extending provide our finally, information engine. automatically been their continue product a of with to as AI kept to to and innovate opening And on Watchdog focus

in a and who in well-deserved for Earlier Now promotion sales to to is deep shown Sean, a this moving build are his Revenue leader marketing. performance few XX and productivity. him increasing has of with Walters Sean years high sales, Sean on past month, see delivering Datadog has successes Chief promotion for field an on experience to building well. years This at all We've and teams CRO. quarters Officer. four and now over excellence software in enterprise strong we impressed of the responsibilities been his has with over as sales announced as the we the been excited

are this, a pleased authorization. received have to we addition moderate to In FedRAMP

sell U.S. of as and Government customers the an FedRAMP who Federal well As a indicator use to security. result, we can as as compliance other now sector agencies public

our build intend efforts to aggressively. go-to-market to we the working on been have sector, expand for and We those teams public

invest the AWS We the already a to a have growth to marketplace. of areas of further our we commitment integrated our tightly into global opportunities. AWS. AWS success Among and is with This recognition with partnership strategic also further and more joint accelerate announced our Datadog partnership,

AWS but extend security level. our a We to to continue and build to at high only are execute not teams integrations very cases, observability, joint go-to-market working use also also for also activities. for Meanwhile, we planning are sales our with deeper

So, for some let's wins QX. discuss

customer IT six a significantly plan in land an more a over with teams applications expand facto all to as start and expectation monitoring and to major we products airline. the Datadog projects Datadog First, This deal with with solution chosen for platform had new six-year U.S. de the applications. time. with has They

Next, disparate break to the we monitoring Datadog, tools, down they which in this had frequency With and seven-figure a reduce leaving and silos between with teams focus of a five Datadog, European has major able company. Prior outages. while coverage. gaps car customer alerts to were created using duration up-sell

customer a estimate the This customer products. as has support And Security in X.X% And Management. growth. consolidated had [indiscernible] to savings infrastructure XX to and by with Datadog company. such financial this stability This Datadog. ensure monitoring ARR and Security multiple we of Cloud them [ph] up-sell helping Datadog, new uses customer Workload also Next, Team, major now up-sell includes Cloud tools migrating an Posture Cloud products

sees data And have Datadog Correlation, hinged Datadog finally, centers to with operational on land an also standards customer its some and minutes. decided massive what embark existing beverage conglomerate. customer-facing makes adoption data to observability. amounts wanted proper of a of And optimized seven-figure project, end-to-end of enough it up-sell time highly digital quickly largest-ever, people content monitoring our ten we traffic to Next, enterprise overhaul This discussing one to their over takes eliminating in most major support and the customers' such This critical significant zones. increasing a used innovate expansion multimillion global entertainment we with favor as media this transformation cloud. growth a complexity. spend conglomerate deal solutions three the person requires Thanks international observability across to live This This company. failed dollar But hour observability. sports to with multinational, gathering, upon six now content. this with than less time take media

Datadog In five strain engineering open-source replace cloud on to different tooling with single solution, resources. tools the starting was commercial Datadog provided integrity of reliance eight platform, in and a planned our a products. customer addition, a with open-source and

teams this So, work can their our get both existing quarter. for want are see, and And as I at congratulate value to Datadog. helping new you them go-to-market customers successfully incredible

anywhere customers technologies Now applications, looking and transformation continue creating our infrastructure crucial. and manage. and beyond, making that to and understand this prospective and XXXX in and other for see as we and Meanwhile, to need security set vulnerability of complexity occur to are customers. attacks can dynamic absolutely broad digital next-gen existing migration threats and critical cloud cloud identifying ahead The

[indiscernible]. So, there's lot there demand a of security for for out observability and

continue forward in progress XXXX, And market we feel we very further still early make looking our with will are to Datadog our platform. result, the and a As that products to expanding opportunity. to we respect

we many happy of Datadog, front have final excited lot We and do, XXXX us. over a global of our in to to Datadog we're year, others. a to will at guidance. recognize, of call our what's the and it's we're financial note, was for more to and turn million end feel over that, communities With our that giving and together nonprofit why is a I which successful a we performance time the On XXXX. This about with report back review been forward a $X for in to year employees, the dedicated very look tough we to David? for organizations that CFO

David Obstler

XXXX. products Olivier. very QX. XX% summary, a robustly on million, are In ARR growth year and logo existing Usage $XXX fiscal Revenue up finding and Thanks, new up we year-over-year platform. And from value strong had our XX% expectations. QX exceeded in our customers adopting more Customers was with our quarter-over-quarter. grew

more Let's of go some into details. the

consecutive quarter. And retention our of growth dollar-based remained growth XXX% net very XXth for was above was First, in strong. the Usage existing rate strong customers QX.

our accelerated products of rapidly. Infrastructure And and APM log mode. hyper-growth levels. in remain largest meaningfully. QX products the very usage are newer all the ARR expanded customers from year-over-year products And our management growth growing monitoring suite Our

strong also region. geographical to saw growth all APAC a in QX. We North ARR basis EMEA compared each year-over-year accelerated on America, and

teams new logo generally ARR. ever, earlier. and usage-based customers logos as logo land record was go-to-market delivered new And record largest logo not in our Remember ARR wins sequentially, a for us. into that immediately ARR strong X,XXX new added a meaningful our also new included do given discussed translate Olivier new revenue. and revenue model, Our quarter a We

customers XX% continues four two customers end on products of of Datadog or using products six with strategy using our using products, more with Our as more XX% platform or or more and of to resonate the XX% QX.

Finally, remained churn low. has

improved in has high-XXs, similar and dollar-based gross to is Our years mid- products. the it's now major retention rate gradually customer over segments the across and and

the were was were year billings million, Current we've QX over Remaining duration year-over-year. the million, seen growth year-over-year. billings, contract similar range $XXX to ago duration year-over-year. was XX% to $XXX quarter performance quarter. up obligations, up ago the similar was in XX% XX% to within Turning RPO, year historically. Billings and And RPO or

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

review let's Now income the statement.

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

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

discussed costs cost margin million margin was year we on the cloud quarter's last sold operating to the call, continue XX% goods remain gross income efficiencies range. income Operating As million In the a with compared high-XXs $XX an saw margin we to in our expect long-term, to a in to XX% of of in medium- $XX reflected in we or quarter. in operating ago the quarter.

continued, long-term opportunities, is in investments go-to-market. and strong aggressive R&D significant on This in are revenue particularly despite occurring experiencing business growth. We efficiencies our

presence DASH hosted virtually AWS a and User in QX, strong had Reinvent. at Conference we Finally, our

sheet Turning margin in in generated $X.XX generated operating margin margin XX% cash equivalents, balance with with a XX% we XX%. million $XX $XXX want of free into to a flow a the to ended at at to was was strong $XXX quarter. billion XX% After – income in and from cash operating Revenue XXXX software, employees flow with million million and free results. XX% securities. flow cash, XXXX. thank to $X.X quarter briefly operating throughout year-over-year. margin summarize in free cash the And strong all billion taking million consideration Datadog compared a an execution We And and statements, XXXX to flow the cash million I billion, I work margin operations taking $XX marketable into in flow a fiscal capitalized was restricted for $XXX $XXX in we our XXXX. CapEx hard XXXX. cash cash in account XX% for positive compared and up want cash their

to we Now are XXXX, beginning early the in-cloud our first the we customer observability. and opportunity customers at security penetration And for in we quarter of very days very continue our in industries outlook believe we broadly of are customers, believe year fiscal for XX,XXX potential we and opportunities our early sizes. At worldwide, and and are our we see observability. potential developer-focused across in still of

higher business past upon life we companies and drive to of work the As need cloud XXXX, over we for competitive disruptions to have strategic imperative look and advantage. on migration our embark around the And to potential the digital is to projects believe we manage companies couple than years. transformation remote believe and learned ever that

are continued high growth. fiscal usual XXXX initiating outlook applied, follows. With we guidance, our So, our as is our which conservatism includes

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

in be be at diluted $X.XX now million we range operating share approximately the And per full revenues XXXX, is $X.XX income the share at And year-over-year outstanding. to range the million $X.XX XXX Non-GAAP on For shares expected in growth of of weighted $XXX billion to income is average the the billion, guidance. to expected million. which the year $XXX midpoint. notes to non-GAAP to per fiscal XX% represents net some expect $X.XX range to in of be

our conservative seen more use results. assumptions when in we usual, guidance, than we As historical providing have

to growth. aggressively remains in for optimize strategic R&D our invest to long-term and go-to-market Our focus

but depending developments, events flexible travel priority remain our of related assumes further protecting employees. in-person is forward, and Next, on highest going health to we our and our expenses model greater COVID the

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

We continue broaden be to our launched innovate to with products in rapidly more many capabilities XXXX. and platform planned

will public including deepening our against And Authorization to company, grown with FedRAMP hard relationships our our partners. cloud working and first our A. opportunities, we sector across begin XXXX the are beyond. the question Operator, have open Barclays. our Instructions] And in [Operator the call questions. with from and Moderate we that, go-to-market We in execute with opportunities let's Lenschow our is And for Q& the Raimo from

Raimo Lenschow

Thank you. Lenschow, Congratulations. my name. Raimo

I think higher clients it a Is that? there? are the standardizing? Olivier, Is of driving that's because What's kind usage was number? getting factors an you that kind in of strong you. very very, in just a quarter. amazing traffic just better, quarter. mentioned as this Thank the people it What

Olivier Pomel

specific that's one I it. driving factor don't there's think

of the having it's with the think with I transformation, company. us a surface history more of more happening everyone's grow happening. through product still the, combination cloud more they the they historical I those adopt we've and And migration customers That rate can into. seen can digital covering say, plus would that

very, right, the end it what quarter was pronounced and the We thought be of as more world. quarter And a did them see definitely It strong did bit stronger a see But last like we to overall, very last also the is a seen We've QX, see was we more bit in pronounced – quarter. like so that's was than year. a year. post-COVID so this at year. every compression same the the we through

Raimo Lenschow

one one. And follow-up Okay. on then that

and Do kind cetera? big you. some in-house some they of the et also it and talked competitors consolidation more is very in that upper open-source space, like areas, kind of the are the Or more of you APM You tools? build established see of consolidating tooling the on about in wins consolidating about how load

Olivier Pomel

we're we're It's customers happen, it maybe bit say, this up of movement. call earnings out consolidating but We have whatever what this movement, with at mentioning a But the end is the often couple of are the follows more in expect in would still large they a there. that every consolidation away. we Really, I notable. more see mix I than used not And of fairly in tooling see distribution it both. on to necessarily this a mean right early future, us. ones Like to. point we

Raimo Lenschow

Well Okay. Perfect. Congratulations. done.

Olivier Pomel

Thank you.

Operator

Rangan next Sachs. Kash from is question from Goldman Our

Kash Rangan

you I'm the so what you superb out, Are much, a Thank broadens things. much. in and APM attacking, a to Olivier. your you product going market to app for curious market you thoughts on quarter, get suite And have say, distribution question. core a of how distribution? are couple DevOps monitoring? thinking the as specialized Thank more about I your so is markets have One the follow-up in

Olivier Pomel

to work. whatever proof mentioned force we points still of still think one very The that we land-and-expand We largely changes answer that mean actually one way. our some see land we suites. still expand any good And our I with that have the fact finance And security standard way is, customers we're call large we in with was motion. that our can done adopted the the that get the I distribute. to on sells We haven't some open sales there. We and we made from everything. infrastructure wins very

in So, there some we product, fully we that the get That least product, to we security mature go might have market, at yet. cases. to working newer especially some have said, we're to see being not as but

Kash Rangan

thank for one, much Got so you final it. second And and that.

at impressive can look obviously, trends consumption ones as outcomes those are you As the you as when that model, revenue the improving, be have.

of other the pass side? they improvements, technology some these are become keep congrats. same at a my you alleviate minimize strategic to larger mean contemplating elaborate little time, on a a like great customers volatility much. to god, pushback concessions that its ahead can company, potential of me, and positive to bit have things I'm That's and as snowflake you spending gives it these savings but would a the more anticipate and for so of predictability the any how back thank of think you Oh little can you've that so become results they some value, It a vendor? bit much the is making more And As get things underway? can on you as those you

Olivier Pomel

Yes.

again, way the of backdrop volumes. the and with is deal there – explosion the data So, we that is

So, And if want our so data those at that time developing customers can't the data of we is, The options at volume the a types that are ways faster charge of differentiated ways technologically what more linearly that deal volume. keep the periods for new grow we and customers of than options. you different what choose with more grow with data, out point, some and that. lot data way storing can for you at they least different line, to top let different we give use in them of

this what the also that's year. in which with which we in going That's Online we're example, invested investing doing we So – last Archives, great year is ability why and which announced for pipeline. we're is –

So, number always, of aligns customers put the we there's make with charge that control a always and deliver we things aligns get. always with the doing value what to sure in – help what customers we're

Kash Rangan

you so Thank much.

Operator

is Singh Sanjit Stanley. from question Our Morgan from next

Sanjit Singh

at of And your sort have seen, I and of one some of the the software little Olivier, it's they congrats talk customers, or on getting to That's Salesforce to at on hundreds large that taking the VMware I do sort customer opportunity you I look we've the exceptional companies, guys' of about sitting whether thousands early you bit Thank the days for account terms XX,XXX. sort north the companies sort or part about of of Datadog two-dimensions. you're big your my envision a questions levels? wanted question. in If of comment other of of was wondering right? of of vision, XXXX.

been of large largest to now of versus approach sort it the On that to sort feel platform with guys media sort the bid at start land is this last of kind up-market mobility doing cloud and or Any company. of you views market of seems at, win the moving couple longer-term? and hand, like the towards more traction Datadog better comes they've can of stuff hybrid this and on and better of you this are Do enterprise they that sort despite more what customer sort for get in years? in enterprise that other

Olivier Pomel

Yes.

that definitely very like So, the – gamut way developers companies company and same large customers. whole think especially we a way market, very question, the product as a They have of enterprises. on in the developers serves whole behave, we build in behave at the largely. they same the first same much potential small We work toolbox. cloud, the that They the

is in Datadog. expect also land-and-expand the the market, good demand, lot of the so, we higher And We feel your a built larger large product enterprises we and that a a on very about we But part market. lot standardize the mid-market successfully like see see that it successfully the and do coming end. of service from of growth we end And it everyone. with us. customers of have of now, We counts the to to right second question, also see,

growing part in Well, else an the say faster for think faster. market we're size equivalent I of I we're than would and anybody the that growing specific market.

I it. what think of we're feel a big So, part That's we good doing. about

Sanjit Singh

versus in selling to the move I how versus ton the of relates if my two-pieces. more of go-to-market going you a more One, makes that's of talk an about security. motion? wondered sort to traction of follow-up securities days that selling confident your which solutions you're this of solutions sort to maybe it like area. set think And big question to sooner we early I motion guess If security on I one that investment, of can require sort users do that selling operations into in in users, could operations? you a how part traction see core – understand of That to might you Datadog sense. through still are specialized team, of

Olivier Pomel

the call, on the here. customers we on products. So, the right? security traction, mentioned see we have is traction thousands of We So,

the across our adoption It's there. And so, It's products. happening happening. is

started of those We Cloud example. strong for charging start. as a a QX, number have And for to such Protection, are off we actually in products Workload

pretty numbers the are we impressed we So, with see there.

again, early So pass it's too judgment. to

see We perform have a couple quarters. for to them of

of observability. number embarking standardization bit for are do on in when right security of say. other to not the come see customers us the would multiple product. We positive and adoption what's the go-to-market motion in still of see quarters way into the for of terms I very a motion a those in we're It's terms with the do sense now what’s is specialize But very same we terms of have size fit happening possible for say the we pleased the see as according what terms today the with products, makes teams later story to start of as things. to would fit But of customers. working product. and the our adoption the make plan, in we customers This to today, get changes of adoption, they in are those it I and the our working, have might –

very happy. we're So,

Sanjit Singh

Very you, encouraging. Thank Olivier.

Operator

Auty Sterling from question JPMorgan. next Our from is

Sterling Auty

side. Hi, over Thanks. margin Maybe to switch guys. we'll the

did the just sales usage in that David, and last your of in dollars was go increased by incremental based Can the of particular, through, higher. added all existing So, that because the spend this much quarter? impressed it I is but customer in than contribution year kind less quarter-over-quarter marketing you you year, was revenue

David Obstler

our and and because adoption. the efficiency That's it cross-sell in usage of the the frictionless Yes. of

the platform. So, of ability market adopt the more an robotics end it's to and as well clients the both the as of indication for

Sterling Auty

it it on was levels? these Got gross is a one contributing thing follow-up. be terms quick Or should maybe it. margins, sequential What's we very durable to And what it? at And that bump. contemplating Same big in trend? then of

David Obstler

cloud will were due And that to Yes. costs. focusing fluctuation since up. middle able And in that this there said efficiencies will in harvest in we then went towards margins margin, the gross like lower investment, of part of the of to time public this the or XX%. are other on the as our in of to gross and touching we've go periods periods time, range that And be they we that to hit And tend XX%. in we of mid-XX% case, period we

As remain we confident parts XX% remarks, my we're the that. the that range. may dip in in we investing, we will mid-to-upper said below prepared of feel as But

Olivier Pomel

a a study for year, case product we're next As shipping reminder, cloud we that. be hope cost first to management the and

Sterling Auty

thank Understood, you.

Operator

Our Boolani from next Citi. question from is Fatima

Fatima Boolani

for morning, I'll taking Olivier, you start my with Good maybe thank you. question.

of observability audience. the respect of around realm with of and some conservative the the to core very traction outside your you're been You've catering in wheelhouse to of developer real CICD seeing your commentary

if or maybe to put XX family similar a some So being are place a take buyer more you just persona? groups step And certain then sort in of available to and organization? the efforts more a in these I on that are with what to follow-up are package David, generally are that attract similar different I address of for the a modules back products, able that journey of have where be may. to And within enterprise

Olivier Pomel

Yes.

with actually we're very products. So, those happy

So, market they're nicely. getting to

that's we're to point, also compared the At $X similarly the positive we numbers year-over-year. for also comment growing focused and we'll rest started recently, XXX% that charging on the business. business for But the to due we about say the with billion what CICD to ARR would on product see fairly in of happy it or over of I said the numbers that. small fact very there, still security. well north some adoption and the of close are the small of is the So, XXX% to rest

that. products. to take potential a for to lot do in of to we going meaningful time But it's all those more compared see it be So,

happy the are very adoption. We with

on we what always In unbundling gives they us terms those doesn't packaging, signal what of ourselves package and the align works of way signs the for value to it ask the does products. big customers get, what pay With product very with precisely because the right it at – level. and very price strong the work and

time, are start we bundling differently always together that need want that's start to bundle, that motion So, there we then might that's or default us. to things. when unbundled. And be But for something buy we customers start with we always over with a that's might find that packaged

Fatima Boolani

prepared and eight Olivier. contemplating But saw customers to start about you're volume of moving Any detail, the the more of context guidance David, are that that for way how larger you figure context how seven, vis-à-vis those incidence, are repeatability deal appreciate a deal you step deals help your to the your and …. think I as the seeing attributing mark? philosophy. I taking back million frequency patterns you, some in remarks categorical were and or thinking in year, do pretty maybe the this as $X double volume in you you

David Obstler

land-and-expand. motion our the We're experiencing, part, to the lower lower still Yes. and $XXX,XXX, largely $X It's customers started for our the million million. $XXX,XXX-plus than which been Thank the $X what still out than customers most you. were we've similar means, started

is land discussing. and expand in said prepared $XXX, about sizes continuing. for cloud and some So, deal significant been open part, get to client $X which the has goes see our most system and the amount to we that, cases, than or a where land remarks, to motion source, a presence we earlier, in addition it think we would prepared our But we've in that a talked and outsources And that in consolidates I comments. some we've million lower evolve rather as seeing, of or and we're a still to XXX from large as

Fatima Boolani

Thank you.

Operator

Thill Brent from is question from Jefferies. next Our

Brent Thill

some doesn't on slowdown what the you we've financial But new Historically, Sean's quick software consumption with thoughts role. seems It it a really digestion. of haven't change. there's as you you, what could just like concern movement question well? comment about your expecting? even or major And other companies, given on What services appear seems now. there there's year? the be happens that, in that two new been if like this that seeing curious XXXX other right Olivier, the some years we seen. pockets could that In you're share that's we've some subsectors and little sales a cloud air of seen proceed can pocket. go-to-market migrations, last that this bit seen versus tweaking it's more we've just team. on And on I Thanks. expect are of if follow-up David, a seen you to Can that a changes of and you the smoothly, an in It in

Olivier Pomel

Yes. Sure.

So, be tells continuity. it we we've XXXX, Like this like them in is sort this it to it in XXXX, And be see like the at you in transformation history terms early move what what the lot – XXXX. XXXX, we still what including workloads look which cloud the the and – the that within convert with seen, we're enterprises forecasting, or is rate cloud. you certain – a to to the And lot throughout if looks from that less And no seems migration. and happening more we're we of seen see happening there's what tell, a is of we we've trends take a can like it company. us, to of itself looks

of we or – stand, like it that. that pull-forward don't see would be we XXXX acceleration where XXXX anything from in any particular So, is a

what That's So, see. we see continuity. we

next happen. very Really, be that is still times, that in a still It's know possible we're things we we're of going which if year. that we very But and a transformation, that's happen reason early the demand strong case, So, to broad still very, it's about. confident troubled the difficult see can't managers where the possible very to setbacks we what's forecast in temporary environment. and will we're

So that's question. on your first

environment place very confident and on in our we're the it. very in So, confident

we from the We who our actually I really. CRO any part for We the acted don't Sean, the best expect spot. think team. job for continuity, make a is we large person of with promoted didn't terms changes very within In of team, to sales the sales promoted big synergies as and And we that.

keep We expect building. to

to We keep expect scaling.

be to new here areas expect go-to-market We some little to But we to fold. have we're in today. the with a bit the scale products what mostly, of

Brent Thill

you. Thank

Operator

is Our Rebeck from next Brad from question Stifel.

Brad Rebeck

that's talked very Thanks be XXXX some could I'm just recent as by last easily trending? releases wondering then driver that beyond? and more forward, or XXXX to quarter think you consumed about product how Thanks. we And as a Great. we Olivier, about should much. look non-IT employees; so, that

Olivier Pomel

Yes.

There more are some area, Cloud are and Session that in have those we that like of Replay, a the few areas reach like So, support we into mentioned business of the still Management. Analysis, some GA. products products, of things that, not Cost

very late We still them last The ship early. year. others are

be about So, that's there's but to big probably it's too a on a to data area would them. I definitely the have too share say still any to going for us future. the growth numbers, in XXXX, impact small early for major definitely

and And what So, we other make meaningful future. seen to our invest we've way, products the we they now in those a then contribution by that's the products today. with happen

very meaningful. call that think collectively which "those more we we last in is mentioned the added released the $XXX than year, XXXX smaller on products" since ARR that million I

we so, year. released the And the we expect same to happen last with products

Brad Rebeck

much. very Thanks great. That's

Operator

next with Turits question is Michael from Our Keybanc.

Michael Turits

particularly have the two that quarter. given the impressive to public everybody, I and want on ask less important had you results. Olivier congrats that Hey question, competitive comps

up-market market? maybe enterprise winning in how winning where So also are be you price ingest? competitively where seeing up And downmarket competition are very may more you you specifically, and on

Olivier Pomel

don't see competition So much. first that all actually the of we all,

We're I or going the we a few replacements mentioned lot a on going integrated every others our see and we cloud whether more what's adoption are We've customers platforms win an We So, few the When a asking teams And against we are being the winning. starting every on. the that quarter. in idea big the cloud have are ground and call. and building mostly wake mentioned case, don't from native on why we do it how don't. situations those themselves morning is the in we are – I usage mean compete We offer up typically importantly, up The around the others on that's market. we product. ones ones myself; or winning where to aren't. tool the we're reason most without

applies saying that repeat every market, that market, us applies up everyone by makes used are what the I really we end customers, and down what deploy that with it in call, is everywhere. win applies the that that's that So

David Obstler

and add course, let of We have of didn't the And didn't years breadth logs. five APM have the platform that, ago. me just we the

products where a talked source open you're and landed talking enhancement, consolidating that whether the platform, So, of replacement on be company's with be the or whether they it as customers there, it had number whether we movement products, it from as we are buying of our about infrastructure be they're about.

Michael Turits

overlay And personas, a and breadth the what to create from scope moves or packaging David, now given forces of either go-to-market different about specialized and you're on offering? of perspective? sales what sales the Any products or different

Olivier Pomel

it – keeping we're made trying changes to our can like with now. successful is now, haven't be experimenting Right see also makes in areas, But any a way prime the if being yet. some we Not we're the points see we And sales sense with few obviously the things, security. candidate we we it sell. to some big the way way the right interesting proof that keeping team can

are that. key we on So,

next of no it focus year, so some good. area to be but changes the and at far, so point an looking expect We far, during

Michael Turits

Thanks. Great.

Operator

Our is Hedberg Capital Markets. from next RBC from Matt question

Matt Hedberg

success guys. Great. that Oli, about drive XXXX? could Could Hey, the you've on federal there to the you achieving additional see success in thus us side? great far was better thanks at you it Hey, And had status. moderate remind

Olivier Pomel

to able is market to to go goal really on to side. sell The be federal fully the

we things FedRAMP other we we FedRAMP take basically that are in of like local certain products, use do agency same and can we and agencies, are before, could as use we single sell agencies civilian use cases. can much or that also Government pretty the medium With past as agencies every compliance. cases. of number a Federal is APM, a number sell for We the number in of government With our to monitoring only security limited the same as but can all send limited guidelines what couldn't logs, low were the in we well target and could had that. target, we We of

the some market. of We've We the So, already opens to up federal $X seen FedRAMP side on really date. [indiscernible] our as million-plus have, last quarter, our – it customer offer. already on on some success

go-to-market So, but same lot building a go-to-market there, we that used we're like we do exactly to. optimistic, not to the of the on necessarily it's have still

Matt Hedberg

then that And sounds Datadog a governance excited as of logs. the data product becoming scope on it. to data curious feels is perspective? maybe It a It quick working was provide just Got one of what like It on today I'm a like side. Sensitive in Data Could whole see governance a it's really go what with world. launch. post-COVID application just really product of the important Scanner more from further? sort a sort governance just –

Olivier Pomel

Yes.

of front it data it to all extend data We network started through because they love monitoring. to the derive which can So which at the that go end application Scanner end hard Sensitive We we actually an the all customers the go data, network product a of tells something We of Data extend log manipulating is APM. for sell. to immediately through should various is our that the a extend at all them or services problem and it. various example But straightforward look at very we great use back cases on with data in monitoring. to the them the platform to from of can data power in the the it to ends whether through of application can that of not, reuse can the sensitive up the look are it look all is the of they through

So, make have pretty product the good customers could help who case use it's our attaching interesting for and of observability they we to between data hard the great to or much can is It's one a we because example couldn't solve And otherwise. other. problems a security. a solve already it's collection also halfway that that you

we're future observability building. So, the unified it like really and platform that security shows

Matt Hedberg

on guys. Congrats results, helpful. the Super

Olivier Pomel

Thank you.

Operator

from is Our James. from Raymond next Adam Tindle question

Adam Tindle

question. start wanted morning. to I with Okay. just Thanks, good Olivier, a big picture

thinking to billion ARR to a You in be updates threshold either billion take beyond strong a this software level. internal crossed year. can start team or infrastructure companies where that very year, tends That milestone about them to $X $X the

maybe about to place you put multibillion-dollar So in you're about conceptually a could Datadog what to company? to thinking just talk scale how

Olivier Pomel

what going do our scaling to every the We Well, ask we that's need we sales, keep how to missing, we're what are week. what company, add.

I hard keep redtape it levels. any make careful that outside scaling I will want we hiring to We're we delivering very, lot. work a I've that before. while sure larger productive. number keep get sure in bringing of have extremely done to companies We large done getting at enough our enough also much sure general, mean We're to We're innovating. can at are teams be that and I we seen that so in don't we controls, putting make how to nothing would roads And minimized we're keep a prevent them experience can things in we have happen. building it. very organization. addition the So, say, very make we company. worked for – very, But hiring and where all

single that's what job Datadog, us pretty So every concern at for and is. week my the that's much

Adam Tindle

for David XXXX. year-over-year for follow-up on to guidance. last near-term more guiding a This XXs Maybe were growth year, time Understand. you high

we're a year-over-year here high-XXs that, guiding in number. sitting You obviously on overachieved to XXXX base but bigger now

talked versus the process about you time now how seems to year usual XXXX. out bold, conservatism. putting but last about Just target thought It in wondering you this a

us So maybe take that? Thank you. through

David Obstler

Yes, yes.

– yes, thanks. think I

and seen the last more took we've conservative I overall, it. usage a year. approach. to the uncertainty less I we call, we which last in COVID, the and – of will more said We this think in say take had sort we being bit same on discount what is ideology, a it's had and of numbers year

think mean year when conservatism same our applied we approach So, guidance. more I I we gave original a adopted little but last the

Adam Tindle

That's helpful. Thanks, and congrats again.

David Obstler

you. Thank

Operator

from from is Gregg question Moskowitz next Mizuho. Our

Gregg Moskowitz

you the My now mentioned, have months Datadog product. product. congratulations. you But of off seemed have as SIEM you. about you it thank thousands that start customers security slower your XX a Okay, than and Olivier, deployed Cloud to new get released typical ago, to

cloud primary protection, is become and adept channel to? driver it wondering function you the a Or force more it it what So, what's point has Is of data such sensitive scanner, I'm in et something as because security? at is selling cetera? of else Is your sales breadth more having would this? workload security,

Olivier Pomel

off So first strong a it's to of actually, all, very start.

thousands mentioned an using that product product. So, That's it. of of we a typically. That's lot is expansion customers especially not a for we that customers, with something lead

we're product very investment a growing it do So, that. on There's be quite use so need it we're so that remains. so happy with can of there's it. that cases, end-to-end more the bit our support for with everything we a work to bit can on customers product more still cloud quite of Like happening

still we're the product So, in cycle there. early development

very, much monitoring rest the products those product. point, We smaller than also But mentioned very buckets And those are bigger from added and from experience to newer And or million revenues maybe we're expect base with $XXX this the a year growing there. in two ARR quickly, the obviously at of revenue security. the added are numbers but some growth by user some share products, products. we very on from the there the happy

So, see of we that a potential growth and growing, being that for driver us. future we see

Gregg Moskowitz

the how engage go-to-market? regarding new are also much you AWS or then And tighter expanded global companies how product planning with very may in actively partnership, helpful. the integration collaborative become? can then Okay. partnership And to elaborate two That's on the

Olivier Pomel

Well, [indiscernible]. so with it's very much a continuation of what we're doing

of that written going us don't down things to things were few also more do cases. we've we've written What's in concern reach that – exciting just perspective. integration observability, before we're are into think that but what terms I is a down use from an that to implicit security

to integrations decided say, working other in customers. I we're on fully still more really to a to little I two what the on So, bit There's provider's of number on go closer say also go doing on But there between a can partners And market with those to products. see with we're some not would line of to cloud broader with much get this is, market. going the we've We're things. that.

Gregg Moskowitz

Very helpful. you. Thank

Operator

Our from Capital next question Markets. is Loop from Yun Kim

Yun Kim

Hey, guys.

congrats a super quarter. First, on strong

rate just what sales the and to you accelerating you than deals And much it scale already Obviously, gains? just just growth larger natural in productivity larger keep higher is is a regards to Can for can seeing growth. you're sales focus Your you our to current you support keep at improvement? at about talk that's competition. are on hiring driving to productivity

Olivier Pomel

productivity So first all, because sales a model. have frictionless largely is our of completely not growth on predicated we

So, which – wide our part growth but not, the why of growth margin. and growth sales outpace the is by growth the see or revenue is, part you a is expenses marketing

Our team focus very, for the productivity very than the year more on is on productivity increasing is high. because scaling

best, the If close to sale, cost you in market. like the of look not best at the probably the we're if

of keep already scaling So, of team and customers. that product getting more getting we economies keep so our can the with the the see our is set, scope goal to we keep same

Yun Kim

over revenue for trended actual the that quick the lag past about of David. year? question You mentioned a just Great. high the And you Can just, then level level, talk a of deals. has and visibility could signing that have how you at recognition

ramp As the deployment size Or bit gets larger deals new and expansion seeing larger? a sign revenue the visibility? deals, you deals longer take increasing as to some of are you

David Obstler

cohorts consistent the product applies to deals performance and ramp. We they that the types smaller. the adopt across way as our customers, well very different have as larger on And of

in time good have that been visibility, look that ability monitor good our pretty the So, adoption There the at all increasing hasn't time change series. revenue. we a pattern predict of we as to pretty and we

to I And idea help clients are our pretty edges, sort account also, in around of good a think that are we in but functionality our of adopting. looking some how faster. adopt clients cases a have the developing is management We at

Yun Kim

Thank so much. Great. Okay. you

Operator

is Needham from question next Our & Cikos Company. Mike from

Mike Cikos

question Thanks taking the guys. for Hi here.

fiscal some The and of in-person profitability travel events you imagine for that how first, that's have that these help, little you in. guidance I guys back that the these I discussed, far we guess, QX some expected Can to had bit to that coming that for into have as now; know expected kind fine-tooth what that a there's cost incremental of back to what's for announced. acquisitions us I guess, and see expectation would for you we XXXX I just feather David, the the come as and year? have with

David Obstler

normal guidance due and the in said we lower-than-average marketing had assumed and savings X% a our cost sort to estimate T&E have resumption Yes. previously events. range. to marketing We T&E In that events. X% we've of of We

in that that see resumes. incorporated guidance. we've the how have We'll quickly to So,

percentage relative we As employees. we hiring in in. aggressive is we've and incorporated T&E a our think the savings as said, we that. we priority first we've plans But sort of have revenues. But and marketing incorporated number that of average around is events We've safety also, as three to said said on of very previously, plus as of terms COVID

Mike Cikos

housekeeping. question just, Thank for I guess, here, a but two-part more then Great. And that. you

I call typically missed how the it with you I The two-plus quarters, coming first, in to discussed know and this time. maybe have are products XX% lands guys in XX% but previous here, new on of logo

question So, It talking still that the mid- high-XXs be, now would mid-XXs. the first then been about second improving is that know And had to case? the you're gross I question, to retention range.

low-XXs. before was think to mid- that, it I

time? think what well. what guys as drive it over of rates investments you those are gross congratulations on help or So, is up that doing us the effort you retention can to And just are

David Obstler

Thank you.

previously, motion. remains No first of On that change XXs. to we similar more the in what yes, said in product question, than one percentage the land the

have, standardization, And gross retention, more some focusing do. and which we've management, on term the done always continue Oli? we a of stickiness. In platform management, long clients the terms and technical both as account with see expanding account with we working over we're one, the our to

Olivier Pomel

expected and has delivers we customer And value close great that deliver for know customers them. must across base, on I extremely high And adoption Yes. mean, have this to that's not our usage for understand is of be that, a a great our by have customers we lets anything for that of quickly delivers platform We're it it. and that out unbundling value. because great really approach surprised part pay our will that we us product what basically

stay So go and retention that's up over up what makes time. the gross

Mike Cikos

much Terrific. guys. Thank you very

Operator

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

Olivier Pomel

Thank I. XXXX. you And want their you. excited and thank we this In I'll with very also for that in the performance pleased are around am hard closing, I repeat quarter. Datadogs very, Thank right. our all. world all All XXXX they're so know in I work for to just

all. you thank So,

Operator

[indiscernible] That ladies for participating may you disconnect. and Thank you, now gentlemen. concludes thank and you

Datadog (DDOG) 10 Feb 222021 Q4 Earnings call transcript