I’m sure everyone has a different perspective here, so I’ll provide mine.
For me, it’s a matter both competition, and a lack of understanding of where things will stabilize.
On competition:
- Honeycomb recently raised $50M and shared strong metrics (160% NRR, >100% revenue growth
- Grafana was recently added to AWS market place (and rumors are they are growing very rapidly given their open source nature)
It’s true that Datadog is an order of magnitude larger, but I’ve been seeing more and more evidence of players encroaching on its dominance as budgets tighten.
On stabilization:
I may be guilty of ‘price driving narrative’ but I just have no idea what the right “value” is for Datadog as it transitions its hypergrowth from its top-line to its bottom-line.
Personally, I prefer investing where I am confident that there is an underlying trend that the market may be underappreciating. For example, the enterprise customer growth for Cloudflare; or international growth for Crowdstrike. That gives me a clear trend that I can follow while I monitor its other operational and financial metrics.
But I really struggle with the likes of Datadog and Snowflake at the moment where the premise is “stabilization” of top-line while its bottom-line expands. Will revenue growth really stabilize in the 30%'s? What if things get worse before they get better?
These are questions that can happen to ANY of our companies - and granted - the worse may be behind us. The point is that it feels like its an exercise of price-discovery, and I have 0 confidence in my ability to do that.
-RMTZP