Specialist
Former director at Datadog Inc
Agenda
- Datadog’s (NASDAQ: DDOG) core offerings – infrastructure monitoring, APM (application performance monitoring), log management and security monitoring – and shifting related dynamics
- Datadog’s approach to innovation and new solutions, with potential in security
- Growth momentum and drivers, noting cloud-first platform and land and expand sales approach
- Competitive dynamics, highlighting AppDynamics (NASDAQ: CSCO), Dynatrace (NYSE: DT), New Relic (NYSE: NEWR) and Splunk (NASDAQ: SPLK), including reports of Cisco’s (NASDAQ: CSCO) interest in acquiring Splunk
- 1-3-year outlook, noting opportunities and risks
Questions
1.
What are your thoughts on Datadog as a business and its evolution?
2.
Why is Datadog’s cloud platform, which is at the heart of its offering, so important? The company seems to lead with this platform. You discussed its offering of infrastructure monitoring, APM [application performance monitoring], log management and security monitoring.
3.
How does Datadog compare to other solutions around reducing the mean time to alert and repair? You referenced the fact that one platform, all unified, is much faster. How much faster?
4.
How much faster is the process with Datadog’s platform and integrated solutions vs something slower, more disparate or both?
5.
What might be the revenue contributions from Datadog’s four main product areas – infrastructure, APM, logs and security? I think infrastructure has been around for about 10 years so is by far the oldest business.
6.
Would you say infrastructure still is half of Datadog’s revenues and APM and logs are 30% and 20%, with security being the most minimal? It’s interesting you said infrastructure is still king, but APM and logs don’t seem far behind.
7.
You said that over the last year or so, Datadog has gained more traction with some of its newer products in logs and security, in part, because it sounded as if the decision makers have shifted from being completely security-focused to being more IT-oriented. That’s given Datadog an opportunity, because historically it hasn’t had those security and logs relationships as much. Why do you think that is? Is that just related to company decision-making or making it easier for more consistency?
8.
There’s been a tremendous amount of innovation at Datadog around product introduction, so the company has had this infrastructure offering for the last decade, but in the last five years or so it has built out a variety of products and solutions. How has Datadog been able to do that, because the one-platform element definitely seems to play into that, but there has to be more than just being a cloud platform? It has to be a focus on related investment and execution. To what extent do you think the company’s movement into newer areas is mostly done?
9.
Do you think Datadog is largely done with the major product area focus or might it try to do more? It’s interesting you mentioned the continuing involvement of the founders, especially as they talk with customers. We discussed the major product areas of infrastructure, APM, logs and security. Is there anything else, or are those the broad categories and the company will continue to fill those out?
10.
What are Datadog’s security aspirations? You indicated the company’s security piece accounts for around 0-5% of revenue but it sounds as if Datadog could gain more share as it builds out that capability. Who are its competitors in security?
11.
Could security account for one-quarter of Datadog’s revenue in three years’ time? Security offers a big opportunity but the company would have to benchmark against the growth in the other areas. You seem particularly keen on the security opportunity and how Datadog will execute there. How large could that business get vs the others over the next 3-5 years?
12.
Could you talk about Datadog needing more elements in security alongside network monitoring, which you mentioned? You seem to think about logs and security almost hand in hand. Those are the newer areas of focus and there has been a lot of innovation and product introductions there over the past couple of years, partly related to M&A. Is there anything else that Datadog needs to do to build out and strengthen its security offering, or does it just need to build organically?
13.
It sounds as if Datadog’s primary competitor in logs and security is Splunk. When Datadog wins, it largely seems to be because it’s building from an infrastructure relationship and adding to it, which relates to what you said about response times of one hour vs one day. You mentioned Splunk’s security is more out-of-the-box comprehensive. Why else might customers choose Splunk over Datadog?
14.
You mentioned the primary APM competitors are AppDynamics – owned by Cisco – New Relic and Dynatrace. Is it just standardising on Datadog and is that primarily why it wins? It sounds as if there’s largely parity in Datadog’s APM solution vs others, so why would someone choose one of these other solutions?
15.
How much faster can you go from signing a contract to deployment with Datadog vs a standard competitor? Do you have a sense of cost savings, especially for services? How would you talk with prospects or even customers about that?
16.
You indicated Datadog’s APM deployment takes place after one month vs a minimum of six months for AppD. What is the disparity in services obligations that an enterprise customer might have to pay?
17.
What might be 2-3 primary growth drivers for Datadog’s revenue over the next three years? You’ve talked pretty articulately about how and why Datadog can deliver the kind of growth that we’ve observed. It sounds as if a major element of that growth could be the company’s ability to attach APM, logs and security to that infrastructure piece as it moves upmarket to larger enterprises.
18.
How well-positioned do you think Datadog is to make a push in moving upmarket? Does the company need to round out that security offering, hire more experienced salespeople or need more vertical experts? What is its readiness and capability to sell to the Fortune 1000 or the Fortune 100?
19.
How important are Datadog’s relationships with major public cloud businesses, particularly from a sales perspective? You mentioned the importance of multi-cloud and it’s not lost on me that Datadog seems to have spent a lot of time over the last few years establishing and fortifying these partnerships.
20.
Do you think Datadog’s relationships with major public cloud businesses helps it regarding further enterprise penetration? I read that the company is slightly over 50% penetrated across the Fortune 500. To what extent do you think those relationships, and their strength, could help Datadog as it calls on large enterprises?
21.
What percentage of revenues do you think is driven by public cloud business relationships?
22.
What are your thoughts on the Wall Street Journal’s report indicating that Cisco/AppDynamics had approached Splunk about an acquisition of the company? How could that impact Datadog from a competitive perspective?
23.
Do you have any thoughts on Datadog’s founder and CEO Olivier Pomel? You said the company’s founders are engineers that are still very involved and talk to customers all the time. What management changes over the last year do you think are particularly important?
24.
What is your 1-3-year outlook for Datadog? What might be the biggest risks for the company? There seem to be many positives.
