68% GROWTH RATE
This company was GROWING by 122% in Q4 ’19
Despite the pandemic It grew by 68%
AND raise its GROSS MARGINS to 79%
It is providing Log Management Application Performance Management Security monitoring
Here is an EASY thread
This company was GROWING by 122% in Q4 ’19
Despite the pandemic It grew by 68%
AND raise its GROSS MARGINS to 79%
It is providing Log Management Application Performance Management Security monitoring
Here is an EASY thread
$DDOG was founded in 2010 by Olivier Pomel and Alexis Le-Quoc They met while working at Wireless Generation
The pair set out to build a software that reduces friction between developers and system-admins
The pair set out to build a software that reduces friction between developers and system-admins
In very simple terms, $DDOG enables developers and operations teams to get a centralised view of their infrastructure
Meaning that they can monitor their cloud servers apps, services… in one place
Meaning that they can monitor their cloud servers apps, services… in one place
This is done through real-time interactive dashboards, full-text search and collaboration tools (discussion, data sharing)
In more details, $DDOG offers 3 main tools
Log Management
Application Performance Management (APM)
Security monitoring and alerts
In more details, $DDOG offers 3 main tools
Log Management
Application Performance Management (APM)
Security monitoring and alerts
Log Management
When IT systems are running, it outputs information about its state
The process successfully ran? Output a success message
Is there an error? Output an error message
Is there a cause for concern (e.g. memory space running low)? Output a warning
When IT systems are running, it outputs information about its state
The process successfully ran? Output a success message
Is there an error? Output an error message
Is there a cause for concern (e.g. memory space running low)? Output a warning
What is $DDOG doing here
Well, if you just run 1 system, you can easily digest the logs on your own
But what if you run a business and relies on multiple applications, servers, services, databases?
Well, if you just run 1 system, you can easily digest the logs on your own
But what if you run a business and relies on multiple applications, servers, services, databases?
You can use $DDOG to centralise ALL YOUR LOGS
These logs are then also analysed for anomaly and trends detection
Users can then search inside these logs create dynamic dashboards and build sophisticated alerts
These logs are then also analysed for anomaly and trends detection
Users can then search inside these logs create dynamic dashboards and build sophisticated alerts
Application Performance Management (APM)
APM ensures that an application remains available and works efficiently (costs, speed, required infrastructure)
It basically monitors whether an application is working as it should
APM ensures that an application remains available and works efficiently (costs, speed, required infrastructure)
It basically monitors whether an application is working as it should
It can be done through Real User Monitoring, Network Monitoring and Distributed Tracing
$DDOG does all of these and is able to provide a full end-to-end tracing of users
This by integrating with Log Management and providing a easy-to-use and understand dashboard
$DDOG does all of these and is able to provide a full end-to-end tracing of users
This by integrating with Log Management and providing a easy-to-use and understand dashboard
Meaning that they can monitor ALL OF A USER’S STEPS when interacting with a business’ IT systems of all kinds
From the screen to the database and going through the servers
From the screen to the database and going through the servers
Monitoring these steps and their consequences on a organisation’s IT infrastructure enables it to find weak spots it should improve on
Here is $PTON Customer Story https://www.datadoghq.com/customers/?video=peloton
Here is $PTON Customer Story https://www.datadoghq.com/customers/?video=peloton
Security monitoring
What could $DDOG capabilities be used for as well? You’ve guessed it!
These monitoring capabilities enables it to detect suspicious behaviours
In real time
Across applications and cloud environments
What could $DDOG capabilities be used for as well? You’ve guessed it!
These monitoring capabilities enables it to detect suspicious behaviours
In real time
Across applications and cloud environments
As always with $DDOG these alerts can be mapped on a clean dashboard and shared with colleagues across your organisation
So by now, it should be clear what $DDOG is doing
Is there a market for that?
How is competition doing?
Can $DDOG win?
Is there a market for that?
How is competition doing?
Can $DDOG win?
Is there a market for that?
According to Markets And Markets
The Log management market is set to reach $ 3.7B by 2025 up from $ 1.9B in 2020 A CAGR of 14%
The APM market is set to reach $ 11.9B by 2027 up from $ 5.7B in 2020 A CAGR of 12%
According to Markets And Markets
The Log management market is set to reach $ 3.7B by 2025 up from $ 1.9B in 2020 A CAGR of 14%
The APM market is set to reach $ 11.9B by 2027 up from $ 5.7B in 2020 A CAGR of 12%
IT Operations Market is set to reach $ 45B by 2025 - up from $ 9B in 2020 (CAGR of 37%)
Driven by wider adoption of cloud services and the need for companies to get a holistic / 360 degrees view of their IT operations
Driven by wider adoption of cloud services and the need for companies to get a holistic / 360 degrees view of their IT operations
This encompasses the log management network and security management and anomaly detection
According to Mordor Intelligence
“For many businesses, applications and services are the only potentials for revenue right now, with the shut down of stores and events...
According to Mordor Intelligence
“For many businesses, applications and services are the only potentials for revenue right now, with the shut down of stores and events...
...Thus, application performance management solutions play a pivotal role in this pandemic hours.”
How is competition doing?
The APM market is shared by $DDOG $CSCO $DT $NEWR $SPLK $SWI $RPD and others
Let’s review who is gaining market share
The APM market is shared by $DDOG $CSCO $DT $NEWR $SPLK $SWI $RPD and others
Let’s review who is gaining market share
Dynatrace
$DT is growing at 27% YoY on top of sales of $ 155m and GMs of 81%
$DT has a market cap of $ 12B and EV / Sales of 21
NewRelic
$NEWR is growing at 15% YoY on top of sales of $ 162m and GMs of 79%
$NEWR has a market cap of $ 3.7B and EV / Sales of 5.4
$DT is growing at 27% YoY on top of sales of $ 155m and GMs of 81%
$DT has a market cap of $ 12B and EV / Sales of 21
NewRelic
$NEWR is growing at 15% YoY on top of sales of $ 162m and GMs of 79%
$NEWR has a market cap of $ 3.7B and EV / Sales of 5.4
SolarWinds
$SWI is growing at 8% YoY on top of sales of $ 246m and GMs of 73%
$SWI has a market cap of $ 6.7B and EV / Sales of 8.5
Rapid7
$RPD is growing at 25% YoY on top of sales of $ 98m and GMs of 70%
$RPD has a market cap of $ 3.2B and EV / Sales of 8.9
$SWI is growing at 8% YoY on top of sales of $ 246m and GMs of 73%
$SWI has a market cap of $ 6.7B and EV / Sales of 8.5
Rapid7
$RPD is growing at 25% YoY on top of sales of $ 98m and GMs of 70%
$RPD has a market cap of $ 3.2B and EV / Sales of 8.9
And here is Datadog
$DDOG is growing at 68% YoY on top of sales of $ 140m and GMs of 79%
$DDOG has a market cap of $ 30B and EV / Sales of 62
$DDOG is growing at 68% YoY on top of sales of $ 140m and GMs of 79%
$DDOG has a market cap of $ 30B and EV / Sales of 62
Clearly $DDOG is growing faster than its competitors
It is also growing way faster than the market CAGR
Gaining market share from competitors, but that brings us to our next question
It is also growing way faster than the market CAGR
Gaining market share from competitors, but that brings us to our next question
Can $DDOG win?
Well, we’ve just seen it, $DDOG is growing faster than its competitors and eating their lunch
This is not surprising as customers often report the
Easiness to use $DDOG
Extensive dashboard capabilities
Breadth of integrations and plug-ins
Well, we’ve just seen it, $DDOG is growing faster than its competitors and eating their lunch
This is not surprising as customers often report the
Easiness to use $DDOG
Extensive dashboard capabilities
Breadth of integrations and plug-ins
Is that all? It got a great product and is growing fast ? Let’s remember what $DDOG does
Provides a software for applications performance management
Able to gather logs over all of companies’ infrastructure
Provides SIEM (Security info. & event mgmt) tools
Provides a software for applications performance management
Able to gather logs over all of companies’ infrastructure
Provides SIEM (Security info. & event mgmt) tools
Why is that important Well ALL OF THIS is VERY relevant for the CLOUD
And you know what is happening Companies are shifting massively to the cloud
And you know what is happening Companies are shifting massively to the cloud
Cloud computing market is reported to grow to from $ 272B in 2018 to $ 623B in 2023
83% of all enterprise workloads will be in the cloud by end 2020
Only 24% of $DDOG sales are from outside North America Leaving plenty of room for growth
83% of all enterprise workloads will be in the cloud by end 2020
Only 24% of $DDOG sales are from outside North America Leaving plenty of room for growth
It thus seems that $DDOG has all it takes to further expand and eat its competitor’s lunch
However, one main concern subsist $DDOG rich valuation of 63 EV / Sales
However, one main concern subsist $DDOG rich valuation of 63 EV / Sales
Financials check
Sales grew by 68% YoY to $ 140m per quarter
Gross margins stand at 79% Up from 75% in prev. Qs.
Income from operations stood at $0.6m down from a $ 3.8m a Q. earlier
Current assets of $ 1.6B vs current liabilities of $ 240m
Sales grew by 68% YoY to $ 140m per quarter
Gross margins stand at 79% Up from 75% in prev. Qs.
Income from operations stood at $0.6m down from a $ 3.8m a Q. earlier
Current assets of $ 1.6B vs current liabilities of $ 240m
THE BOTTOM LINE
$DDOG is not standing still and innovating quickly in order to expand its TAM
$DDOG has an outstanding Net Retention Rate above 130% and only 24% of its sales come from abroad (outside North America)
$DDOG is not standing still and innovating quickly in order to expand its TAM
$DDOG has an outstanding Net Retention Rate above 130% and only 24% of its sales come from abroad (outside North America)
Given the huge runaway for cloud adoption, $DDOG is well placed to provide the AMP and SIEM tools required as cloud-adoption increases
Despite the though environment, it managed to get 68% growth YoY and EV/ Sales climbed to above 60
Despite the though environment, it managed to get 68% growth YoY and EV/ Sales climbed to above 60
We will review post-earnings and stay on the sidelines for now
$ARRY $GOCO $UPLD $ATHM $FEAC $DAO are on our watchlist To Be Reviewed SOON
Please note that this is not a recommendation to buy - You are responsible for conducting your own research
Please note that this is not a recommendation to buy - You are responsible for conducting your own research
Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.
Sources
✑ Investor presentation
✑ Company website
✑ Markets And Markets
✑ HostingTribunal
✑ StackShare
✑ Mordor Intelligence
Sources
✑ Investor presentation
✑ Company website
✑ Markets And Markets
✑ HostingTribunal
✑ StackShare
✑ Mordor Intelligence
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