DataDog

Datadog is the monitor and analytics platform for developers, IT ops and business users.

Product

Cloud monitoring SaaS platform

  • Infrastructure agent: $23/host/month
  • Log management
    • $0.10 per GB scanned / month
    • 15 day retention: $1.70 / 1 mm log events / month
  • APM
    • $31/host/month
  • DB monitoring
    • $70/db host /month
  • API/browser test
    • $5/10k runs/month
  • Incident managmenet
    • $20/user/month
  • Real time user monitoring
    • Browser $0.45 / 1000 sessions/month
    • Session replay: $1.8/ 1000 sessions /month
    • Mobile: $0.045 / 1000 sessions / month
  • CI visiblity
    • CI pipeline: $20/user/month
    • Testing pipeline visiblity: $20/user/month
  • Serverless
    • $5/1million invocations
  • Network monitoring
    • $5/host/month
  • Security monitoring (logs)
    • $0.02 / gb / month
  • cloud security posture
    • $7.50/host/month
  • cloud workload seucirty (hosts/containers)
    • $15/h/month

Business model

  • Subscription based (monthly or annual), prepay expected usage and pay more for incremental usage
  • Pay per usage
    • # of hosts or volume of data indexed
    • Logs product: pay per log event indexed and events ingested
  • land-and-expand business model
  • low implementation costs, self service model
  • Short time to value

 

  • Revenue
    •  sale of subscription to customer on cloud products
    • paid per usage and revenue recognized when used
  • Cost of revenue
    • 3rd party cloud infra
    • Personnel for ops and global support

Core Metrics

  • Revenue F21: $940M expected (+55% YoY)
    • Q3 Total Revenue: $270M (+66% YoY)
    • Q2 Cost of Revenue: $63M (+103% YoY)
    • Gross profit: $176M (+58% YoY)
    • Gross margin: 75% (80% last year)
  •  Customers:
    • Customer >$100k: 1,800 (+59% YoY)
      • 82% of ARR
      • ACV: $467k
    • Customer > $1M: not reported
  • Net dollar retention: 130%
  • 75% of customers using more than 1 product (68% last year)

Analysis

I haven’t used the product yet but can see how it can be useful to have out of the box managed system to introspect logs for all containers/hosts. There are currently lots of out of the box free open source solutions but they are tricky to setup and manage.

Datadog is currently expensive at 60x revenue, estimate ~2.7B revenue in 3 years at $50-80B valuation (1.5-2x upside)

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