I ran a pretty quick analysis on DDOG by skimming through the S-1. As a disclaimer some of these numbers might not be dead-on because I was “speed” reading but I hope it helps some of you. By no means do I consider this a deep dive. This summary is mostly focused on DDOG by the numbers but I included a few notes on their customers and competition which I found pretty interesting.
Of course, the valuation is off the charts but it’s EV/S number of 33 is right in line with recent IPO’s ZM and CRWD. The EV/S/Oomph of 11.8 is less than OKTA, TEAM, and VEEV. Unfortunately, these valuations appear to be the new norm for high growth companies going public so we should be getting used to it. If you think it’s too rich for your blood then don’t invest in it and move on.
I do not own the stock but after reading Bert’s excellent write up and digging a little into the S-1 they certainly have my attention. I’m going to watch the price action on this one for a while and see what happens. No rush. Enough of my rambling lets get to the good stuff.
$333M Revenue Run Rate
74% Gross Margins
590 customers with $100K—6.7%
40 customers with $1M—.45%
Added 1,169 customers between Dec 2018 & June 2019. Increase of 15% from 7,676 to 8,845 customers
35% of customers are Fortune 100 companies
75% of customers are based in North America
DDOG has 5 core product offerings. 40% of their customer base is using 2 or more products.
Dollar Based Net Retention Rate
SG&A spend per quarter is about 77% of revenue. That’s lower than recent IPO’s like ZM, PD, and CRWD. For some context ESTC & OKTA are 118%
Sales & Marketing spend per quarter is about 40% of revenue. CRWD, AYX, and ESTC are around 60%
Notable customers include Expedia, GrubHub, Mercado Libre, Starbucks, Morgan Stanley, Comcast, Hulu, DropBox, PagerDuty, Pivotal Software, Salesforce, Twilio, Zendesk, Maersk Group, United Health Group, Wabtec Corp
Competition per business segment:
On-premise infrastructure monitoring: IBM, Microsoft, BMC Software
Application Performance Management (APM): Cisco & New Relic
Log Management: Splunk & Elastic
Cloud Monitoring: AWS, Alphabet (GCP), Azure
Something random that caught my attention: MongoDB CEO Dev Ittycheria has served on the Board of Directors since 2014