Below are my personal notes from reading Datadog S-1. All numbers and charts below are from the filing
What is Datadog?
I found these two graphs very descriptive of Datadog’s history and MO
Growth
Stickiness
These quotes from the filing showed that customers seem to enjoy what Datadog has to offer. Their list of customers includes some famous names as follows:
- Coinbase
- Comcast
- Expedia
- HSBC
- News Corp UK & Ireland
- Peloton
- Starbucks
- Twilio
- Wabtec
- Zendesk
We have seen increased traction with enterprise customers, a testament to our success and ability to grow. As of June 30, 2019, the average ARR of our enterprise customers, defined as having 5,000 or more employees, was approximately $200,000, which has increased from approximately $120,000 as of December 31, 2017. The average ARR of our mid-market customers, defined as having between 1,000 and 5,000 employees, was approximately $140,000, which has increased from approximately $70,000 as of December 31, 2017. No customer, including any group of customers under common control or customers that are affiliates of each other, represented more than 10% of our revenue in 2017 or 2018
Each cohort represents customers that made their initial purchase from us in a given year. For example, the 2014 cohort includes all customers as of the end of 2014. This cohort increased their ARR from $4.8 million as of December 31, 2014 to $19.2 million as of December 31, 2018, representing a multiple of 4.0x. Additionally, the ARR from our top 25 customers as of December 31, 2018 increased by a median multiple of 33.9x
As of June 30, 2019, approximately 40% of our customers were using more than one product, up from approximately 10% a year earlier. Additionally, in the six-month period ended June 30, 2019, approximately 60% of our new customers landed with more than one product, up from approximately 15% a year earlier.
Competition
Datadog admits to have quite a fearsome group of competitors across different product offerings
With respect to on-premise infrastructure monitoring, we compete with diversified technology companies and systems management vendors including IBM, Microsoft Corporation, Micro Focus International plc, BMC Software, Inc. and Computer Associates International, Inc.
With respect to APM, we compete with Cisco Systems, Inc., New Relic, Inc. and Dynatrace Software Inc.
With respect to Log management, we compete with Splunk Inc. and Elastic N.V.
With respect to Cloud monitoring, we compete with native solutions from cloud providers such as Amazon.com, Inc. (AWS), Alphabet Inc. (GCP) and Microsoft Corporation (Azure).
Operating Losses
Similar to many other SaaS technology companies, Datadog consistently registered operating losses in every quarter in the last three years, except for two quarters
Capital efficiency and Total Addressable Market
According to Gartner, enterprises will quadruple their use of APM due to increasingly digitalized business processes from 2018 through 2021 to reach 20% of all business applications. According to Gartner, only 5% of applications were monitored as of 2018.According to Gartner, enterprises will quadruple their use of APM due to increasingly digitalized business processes from 2018 through 2021 to reach 20% of all business applications.
Datadog S-1
Datadog raised a total of $92 million in capital and as of June 30, 2019, still had around $64 million in cash.
Minh Quang Duong 