DDOG Q2 2022

[mekong22]

Datadog earnings are out

https://investors.datadoghq.com/news-releases/news-release-d…

It’s a nice beat for the quarter, especially in this environment, revenue of $406 million was up 72%, compared to guidance of $380 million which would have only been +63%

Here is a running list of the last few quarters of YOY growth

Q1’21 +51%
Q2’21 +67%
Q3’21 +75%
Q4’21 +84%
Q1’22 +83%
Q2’22 +74%
Q3’22 +53% (implied based on new guidance, if they beat by similar as Q2’22 (7%), it will +63%

The stock is down about -8% right now and I think that has more to do with the full year guidance than anything.

Las quarter they guided for full year 2022 $1.62 billion at the top end. Today they are only guiding for a tiny increase to $1.63 billion. But that actually implies a pretty big decrease in the second half of the year because they beat by almost $0.3m in Q2, so the second half of '22 is essentially being guided down by $0.2b

Assuming they hit the (sandbagged?) Q3 guide of $414 million, the new FY guide implies only $445 million for Q4, which would only be +36%.

I’m sure they’ll be asked about this on the analyst call that is about to begin. Will be interesting to see whether their tone is that they are being very conservative or if something else is going on to make them more concerned about the end of the year.

Dadadog also announced an acquisition of an API Observability company called Seekret

https://investors.datadoghq.com/news-releases/news-release-d…

https://www.seekret.io/

I’m connecting to the conference call now

-mekong

[mekong22]

so the second half of '22 is essentially being guided down by $0.2b

my decimal is in the wrong place. I should have said second half is essentially guided down by $0.02 billion

-mekong

[sjo]

My Notes From Analyst Question/Answer During DDOG Earnings Call.

DDOG Earnings Call
Analyst Q/A
8/4/2020, 7AM Central

Q Trends re: Guidance. As the qtr started to progress, when did you start to see this slowing impact? Context re: how you’re framing the guidance for Q3 & Q4?
A Started to see this in late April, May and June. In July, they did see an improvement in these trends, and still see this improving. They use lower organic growth than they’ve actually seen historically to project their guidance as a means of staying conservative.

Q RE: lower growth, with APM I’m a little confused by this vs. APM side.
A W/ APM, there’s part of it that looks like ?. IT’s still growing, but slower as customers attempt to manage their costs.

Q Infrastructure is not as impacted at the log and APM side. What are the differences there?
A It’s to optimize. Each customer goes through cycles where they optimize, and seeing this periodically during certain customer’s usage. Infrastructure and APM didn’t experience as much variability, but the injestion of data is where they saw variability.

Q How do we look at growth re: hyperscalers and how they were able to put up so much growth?
A In Q2, DDOG did a lot better than the hyperscalers. In terms of the go forward, the hyperscalers don’t need to guide the same way as DDOG. With DDOG’s land and expand, as they start to use DDOG, there is variability as the owner uses the product. ARR is still the best indicator of revenue growth due to timing of billings. DDOG manage their (DDOG’s) business based on usage and not on billings.

Q Wins in open source and if it aint broke don’t fix it. How do you compete against open source?
A Free ends up being the most expensive.

Q Roughly ¾ of the business is associated with committed by customers. How does this impact usage in the next 6-12 month usage?
A Some customers may have stayed in their previous commit plus demand. These customers may want to have more optionality, which will increase prices due to their need to have flexibility. DDOG does not offer large discounts for large commitments to use their services.

Q In guidance philosophy, did you use other metrics in consumer discretionary guidance?
A In this quarter, by passing through less of the beat, by taking several things down, it remains at the core of how they provide their guidance to be conservative. There were not large geographical changes in guidance, rather it was more in sectors.

Q Have your thoughts changed re: Making a more transformative acquisition than the one you announced today?
A Everything is possible, and they expect to be more active with the macro markets where they are currently.

Q Hiring
A Aggressively recruiting and in an interesting situation because they are very disciplined. Goal is to be efficient. Discipline is in the DNA of the company, and adjust levers as needed. Try to maintain a steady balance between R&D, Go to Market and maintain a steady profile to invest and keep on focus re: the long term opportunity.

Q Seeing an inversion w/ S&B and large businesses. Are you embedding a reduction in the 2nd half of the business.
A In certain SEGMENTS, they had a more conservative growth. In the larger areas where there had been substantial expansion, there’s more optimizing/cost management taking place. They are guiding based on the level of spend and the industry vertical.

Q Are DDOG raising more questions re: pricing?
A Everybody always wants a better deal, but DDOG remains very bullish.

Q Changes re: customer consolidation?
A Customers may want to do more of this in the future.

Q SMB vs. Enterprise. Is it fair to categorize and is it less of a big deal at the SMB level or is it because SMB has different exposure?
A What’s your time to sales is the big question.

Q Multi-product adoption, 1st time we’ve seen some reduction.
A There’s nothing changing in trends, even though there are slight reductions.

Q IS it part of DDOG or just customers managing their overall expenses for all of their software and technology?
A It’s overall technology cost reduction, and not just attempting to reduce costs for DDOG. IF you look at the gross retention and see how important DDOG is to them, you see that it’s not just DDOG, rather it’s other software and technologies that customers that they are attempting to reduce costs. When the bill goes out is not as related to ARR. When it’s plus (or minus), they always warn people not to be worried about it, as it’s more ARR that’s the better indicator.

Hope this is helpful to everyone. Hang in there with the recent rough waters in the market.

sjo

[cwg75]

From the above notes on the conference call,

Q Trends re: Guidance. As the qtr started to progress, when did you start to see this slowing impact? Context re: how you’re framing the guidance for Q3 & Q4?
A Started to see this in late April, May and June. In July, they did see an improvement in these trends, and still see this improving. They use lower organic growth than they’ve actually seen historically to project their guidance as a means of staying conservative.

Was the CFO in the Jefferies conference interview being dishonest? That was in June and I’m pretty sure he said they haven’t seen any impact yet when asked about any macro headwinds to the business. I haven’t listened to the conference call yet but sounds like he’s singing a different tune now. Started to see some effects from the economy in late April? Am I getting this wrong?

Chris

[kwealth]

Well, here’s the quote:

"Great question and something we think about a lot. We said on our earnings call that in our first quarter, we didn’t see any impact from the economy or from Russia, Ukraine that we - our first quarter was very similar to our previous first quarters in terms of net retention and adoption and the growth of the business.

Of course, we’re looking - we’re not naive. Back in the second quarter of - at the beginning of 2020, at the beginning of COVID, we did see some flattening of the business. The business continued to grow very substantially, but clients began to look at their spend and do some rationalization.

And that could happen again, that clients, in periods of time where there is some economic pushback, will look at their cost structure. We take some comfort in the fact that we are only low single digits cost of their cloud expense.

And there are tremendous trends towards digital migration. In fact, there may be things in a tighter labor economy and with cost management where you want to go to more of a managed solution than do-it-yourself. So there are a number of things that we look at, but we haven’t really seen any effect yet. In addition, we have a very long-term trend here in cloud migration and DevOps."

Seems he said they saw no effect in the FIRST quarter. Then talked about Q2 2020 for some reason…which they again brought up on the conference call today but I don’t see the relevance. Then alludes that they could see a slowdown again. But sort of concludes by saying “we haven’t really seen any effect yet” which implies they were not seeing slowdown as of June 2022.

So, yeah I’d say his interview doesn’t jive with seeing a slowdown in April/May 2022.

[shbeavers]

“Then talked about Q2 2020 for some reason” - We are in or about to enter a potentially significant downturn. Revisiting the ‘covid crash’ of 2020 makes sense if you’re trying to share perspective on how history might rhyme.

[MajorFool20]

Here is the full quote from this morning’s conference call regarding the guidance. It was the first question asked, go figure. Bolding is mine.

Sanjit Singh – Morgan Stanley – Analyst

“I wanted to talk a little bit about some of the trends you’re seeing in the business and particularly with respect to the guide. I guess the first question is, as the quarter progressed, when did you start to see some of these slower usage trends in some of these verticals? If you could give a comment on that? And then, David, in terms of the guidance in terms of how you were framing it, can you give us a sense of what you’re sort of assuming in the back half with respect to Q3 into Q4? Is it some of the trends that you’re seeing in July? Did that improve or stabilize or worsen? Just give us some sort of context on how you are framing the guidance for the back half, that would be super helpful.”

Olivier Pomel – Co-Founder and Chief Executive Officer

"So I’ll start maybe with the linearity. We did see the viability in usage growth that we mentioned. We saw that start really in late April, May and June.

So as we got deeper into the quarter. I should say that… if you’re thinking of what happened in terms of COVID, this is not a sharp pullback as we have seen at that time. But we saw it’s just for some customers still growth, but slower growth for certain types of customers and others than what we would have seen historically. I should say that while we did see that for some of our products, especially the ones that have more of a volume component, net logs and some APM, we did see continued healthy growth in host or I should say, cloud expenses and containers, which really are indicative of the fact that the cloud migration is proceeding as it was before.

In July, we did see an improvement on those trends, but we still remain conservative in our outlook for the short term because of the noisiness of the data we’re seeing there. There’s a few more valuations, a bit more noise. And all of that is underpinned by some macro uncertainty. So we want to derisk that a little bit and give it more careful."

David Obstler – Chief Financial Officer

"On guidance, as you know, we have always been conservative in our guidance by using lower organic growth and other metrics than seen historically and continue to maintain that philosophy. I would note that if you look at the raise here and the percentage of the beat that was passed through into the raise from Q2, it is lower, more conservative than we have done in previous quarters. And the reason for that is the macro uncertainty where we can’t be as confident about what happens given the macro uncertainty.

So I would say… there were some incremental conservatism put into this. But I’d remind everybody that we’ve always been quite conservative in using assumptions that are lower than the past when we give guidance."

Me here- I think the message is pretty clear. Because of the macroeconomic environment, they thought it prudent to put some ‘incremental conservatism’ into this guide. Yes, growth is going to slow somewhat due to the macro challenges, but we should not expect growth to drop to less than 7% QoQ as it did in Q2 2020, the peak COVID quarter. Datadog usually beats its guidance by 7-8% but with this extra conservative guide, I would not be surprised to see a 9-10% beat next quarter assuming trends continue to improve as they did in July. All in all, not the most impressive quarter but certainly not thesis busting, in my opinion. I am happy to have this company remain as my largest holding.

Rex

[CMF_muji]

Was the CFO in the Jefferies conference interview being dishonest? That was in June and I’m pretty sure he said they haven’t seen any impact yet when asked about any macro headwinds to the business.

No idea why you are implying dishonesty.

Earnings call said they saw impact late April, mostly May, June … months in their Q2 just reported.

CFO at that conf in June said in Q1 (Jan-Mar) they didn’t see effect. He never mentioned Q2 so this whole implication is being invented. He is not going to comment on their ONGOING Q at that event - it would be illegal. That Q ends in June, they have a quiet period (month or so) then report to the public via SEC filings (yesterday). NOW they can comment on Q2 freely going forward.

As for the other poster asking why he pivoted his answer… besides the fact he can’t discuss Q2… He instead brought up Q2 2020 as it is HIGHLY RELEVANT to what they see now… focus on cost optimization which means customers pulling back on cloud spending. Fortunately this Q2 was nothing like that Q2.

-muji

[kwealth]

First, DDOG is my biggest growth tech position and I haven’t sold a share. I was happy with the quarter. So in case anyone wants to call me out on being some sort of short selling bear, sorry, I’m not. But anyway…

In response to a question about macro, he said “Of course, we’re looking - we’re not naive. Back in the second quarter of - at the beginning of 2020, at the beginning of COVID, we did see some flattening of the business.” and then a few lines later “So there are a number of things that we look at, but we haven’t really seen any effect yet.”

What you are saying is that the CFO can only legally comment on general business conditions that are over 60 days old as of the June 1st conference? So hypothetically, even if the first 60 days of Q2 have been an utter disaster - “we aren’t seeing any slowdown yet” would be the correct (legal) response to the question because that’s the latest official data he has from Q1? As I understand it, the quiet period is about 30 days after the company finalizes its financials for the previous quarter.

Regarding Q2 2020, perhaps it is “relevant” to the current quarter in terms of a renewed focus on cost optimization, but is there a single investor on earth assuming the economic climate is as bad in Q2 2022 as it was in Q2 2020? It seems like he chose the lowest absolute bar possible to make the comparison. Personally, I’d prefer companies not use “well at least it’s not as bad as Q2 2020” in their conference calls.

[PHSammy]

One of the metrics that hasnt seen much visibility in this discussion is Deferred Revenue. Deferred Revenue not only stopped growing but actually reduced Q/Q.

Year Q1 Q2 Q3 Q4
2020 204825
2021 223647 264650 300950 371985
2022 454812 444247

From their annual report “The increase in deferred revenue results primarily from increased billings for
subscriptions.” If I am interpreting correctly, this is a bit of a leading indicator that they are seeing a decent slowdown in the future and/or lengthening cycles. A frame of comparison for me is always CRWD which I consider a best in class at scale. I will be very interested if they see some similar slowdowns or plateauing in this metric

Year Q1 Q2 Q3 Q4
2020 701988
2021 786793 882969 974571 1136502
2022 1249198

I am long CRWD ~16% and DDOG ~7.5%

[BeachMan2115]

Billings and deferred revenues are snapshot-in-time numbers that are not good leading indicators. They are a reflection of DDOG’s accounting systems and billing terms signed into contracts with their customers.

RPO is the true leading indicator. It is the total signed contractual value that can be earned as revenue in future months. Sure, customers cancel contracts but this is rare.

DDOG’s RPO came in at $881M which was 51%YoY and 3%QoQ. Given the macro pressures AND tougher post-COVID 2021 comps, this was pretty decent. Remember, DDOG saw a post-COVID bump that took 12 months to show up starting Q2 2021.

DDOG is a large allocation for many growth investor portfolios. Everyone was waiting for this “bastion” of hyper growth to report Q2. Now that the report is out, the over-zealous over-analysis continues.

I am long DDOG.

Beachman (Beachman.substack.com)

[PHSammy]

Thanks Beachman!

I generally I agree with your statements. DDog is an awesome company and it had a good quarter, but Im not so quick to dismiss Deferred Revenue as that is actually money in hand and a significant portion of the RPO equation. Even using RPO it is clear that future growth rates are declining. Here are the last 5 Q/Q rates for RPO.
Q21-2 = 26%
Q21-3 = 23%
Q21-4 = 13%
Q22-1 = 5%
Q22-2 = 3%

I dont think any of the Quarters stats for either Revenue, RPO or Deferred revenue can be looked at in a vacuum… but barring significant re-acceleration this trend should be reviewed and will make it hard for DDOG to grow at >50% FY23.

long DDOG ~7.5%

[PaulWBryant]

using RPO it is clear that future growth rates are declining

RPO isn’t a great leading indicator either. In boom times like 2021, Datadog’s customers were signing increasingly longer contracts, so RPO was growing even faster than revenue. This year customers are exceedingly cautious, so RPO is barely budging. The faster RPO growth (then) didn’t portend a faster revenue growth in the future (now). In fact, revenue grew slower this quarter than the last few. “Current RPO” or “cRPO” is the RPO that will be recognized in the next 12 months. But even with that, a slow down could hypothetically just mean that customers want to pay month to month, so they’re not signing contracts even for 1 year. (I don’t know if Datadog even allows this which is why I said hypothetically.)

But the point is, revenue isn’t so easy to predict. Rex pointed to a plausible rosy scenario: Datadog usually beats its guidance by 7-8% but with this extra conservative guide, I would not be surprised to see a 9-10% beat next quarter assuming trends continue to improve as they did in July. I might be a little surprised, but it’s possible. And even with an optimistic 10% beat, YoY growth will dip to the high 60’s. But if the beat is lower than it was this quarter, we could be looking at low 60’s growth. We’ve got more math problems in Q4…but actually, I think it’s fine. Deceleration is normal and fine at their scale, and I think it would be a little silly for us to expect them to grow more than 60-something percent again. In fact they might very well grow 50-something percent for a while or for the foreseeable future. No real problem with that, as long as the business matures nicely.

However, I couldn’t help but notice (since I called Zscaler out for this) that Datadog’s revenue growth rate, 74%, was slower than the GAAP OpEx increase, 76%. Might be a blip that snaps back into line next quarter, but I was surprised to see spending up.

Lastly, I agree with those who are bothered by the CFO’s comments in June. Perhaps he couldn’t give an update on what he was seeing since they reported Q1, but he could have left out the phrase, “we really haven’t seen any effect yet,” when in fact, they had. Not saying he was intentionally being dishonest, but as a shareholder I was misled, whether that’s my fault or his.

So a few yellow flags have popped up! Because of that, I’ve updated my conviction level on Datadog. I no longer believe that Datadog is head and shoulders ahead of the rest. I guess I feel like the Dog has come back to the pack a bit. I’m adjusting accordingly – I’ll say more in my August portfolio summary, but honestly, you can probably guess what I’m doing. I wish I had a new great company in the $5b to $20b market cap range to plow money into, but I don’t. Let’s all find one!

Bear

PS – I agree with Rex and others. Thesis isn’t busted. This just wasn’t the best quarter, and where there were no flags previously, now there are.

[5761796E65]

He is not going to comment on their ONGOING Q at that event - it would be illegal.

Didn’t they just comment on their ongoing quarter? Is that illegal?

“In July, we did see an improvement on those trends…”

[1poorguy]

I don’t believe so. The company can make any info public at any time. What would be illegal is if they informed only certain people without making it public. My company revised or reaffirmed estimates for the current quarter from time to time.

[StockFanatic]

Hi all,

as I am still digging in the DDOG Q2 numbers, I just wanted to highlight the following:
According to my calculations DDOG had the biggest QoQ customer growth (%) since Q4 2020.

From the conference call:
“we added a record 1,400 new customers in the quarter, including the impact of turning off about 200 customers in Russia and Belarus in Q2”

If I read this correctly, they acutally acquired 1,600 new customers which is a 8.1% QoQ growth.
The previous quarters only had 5/6/7-ish % QoQ growth. So a nice acceleration there.
With their land&expand strategy this is a great sign for potential future growth.
The drop in customers using 2+ products from 81% to 79% indicates, however, that the majority of these customers are only starting with a single product.

Hope I interpreted this figures correctly.
I remain very bullish on DDOG with it being my largest position.
Even with the slight decelaration I cannot find any company with a similarly strong market position, durable growth and profitability as DDOG.

[FourthStooge]

Datadog

Datadog

RPO isn’t a great leading indicator either. In boom times like 2021, Datadog’s customers were signing increasingly longer contracts, so RPO was growing even faster than revenue. This year customers are exceedingly cautious, so RPO is barely budging. The faster RPO growth (then) didn’t portend a faster revenue growth in the future (now). In fact, revenue grew slower this quarter than the last few. “Current RPO” or “cRPO” is the RPO that will be recognized in the next 12 months. But even with that, a slow down could hypothetically just mean that customers want to pay month to month, so they’re not signing contracts even for 1 year. (I don’t know if Datadog even allows this which is why I said hypothetically.)

Thanks for providing a nice reminder about looking for the proper context when analyzing the numbers. Perhaps they’ll start using an ARR type metric in the future that could give us a bit more insight. It’s also often difficult to glean elements out of the prior conference call and use what they say in the current conference call and conclude that there was some nefarious behavior.

So unless there is something egregious, we need to go with the numbers.

Here are some:

Market Cap & TTM Market Cap to TTM Sales Ratio Ranges

Qtr	MCHi	MCLo	MCClose	P/MCHi	P/MCLo	P/MCCl						
Sep-19	$4,305	$3,165	$3,901	13.9	10.2	12.6
Dec-19	$14,432	$9,018	$14,013	39.8	24.9	38.6
Mar-20	$16,429	$9,467	$16,393	38.8	22.3	38.7
Jun-20	$30,769	$10,931	$29,674	64.0	22.7	61.7
Sep-20	$32,673	$21,965	$30,909	60.6	40.7	57.3
Dec-20	$35,918	$24,252	$35,535	59.5	40.2	58.9
Mar-21	$40,885	$25,514	$40,343	61.0	38.0	60.1
Jun-21	$36,764	$23,869	$36,695	48.1	31.2	48.0
Sep-21	$51,899	$34,921	$51,217	59.0	39.7	58.2
Dec-21	$69,063	$46,565	$67,986	67.1	45.3	66.1
Mar-22	$63,845	$39,368	$60,354	53.5	33.0	50.6
Jun-22	$54,832	$27,975	$53,990	40.1	20.5	39.5

At $115/share, the current multiple is just a tick under 30. The ratio almost went down to 20 in the June quarter, which is the lowest low since their first quarter as a public company. I think we’ve seen the bottom in the June quarter, and the multiple will gradually improve from here as inflation eases and investors shift from freaking out to getting greedy again.

Revenues, Customers & Revenues per Customer

Month	Rev	RevTTM	Cust	SeqGrth	Rev/Cust >100k	SeqGrth
Mar-18	39.7		5,872				
Jun-18	45.7		6,440	9.7%			
Sep-18	51.1		7,008	8.8%		377	
Dec-18	61.6	198	7,676	9.5%	25,805	453	20.2%
Mar-19	70.1	228	8,391	9.3%	27,221	508	12.1%
Jun-19	83.2	266	9,106	8.5%	29,207	594	16.9%
Sep-19	95.9	311	9,821	7.9%	31,641	727	22.4%
Dec-19	113.6	363	10,536	7.3%	34,432	858	18.0%
Mar-20	131.2	424	11,391	8.1%	37,220	960	11.9%
Jun-20	140.0	481	12,246	7.5%	39,259	1,015	5.7%
Sep-20	154.7	540	13,100	7.0%	41,189	1,082	6.6%
Dec-20	177.5	603	14,200	8.4%	42,498	1,228	13.5%
Mar-21	198.5	671	15,200	7.0%	44,129	1,406	14.5%
Jun-21	233.5	764	16,400	7.9%	46,604	1,570	11.7%
Sep-21	270.5	880	17,500	6.7%	50,292	1,800	14.6%
Dec-21	326.2	1,029	18,800	7.4%	54,723	2,010	11.7%
Mar-22	363.0	1,193	19,800	5.3%	60,266	2,250	11.9%
Jun-22	406.1	1,366	21,200	7.1%	64,427	2,420	7.6%

While the number of customers is increasing pretty consistently, the growth in the number of larger customers (>$100k ARR) has slowed down a bit. On the conference call they mentioned some caution in customer spending, which most likely explains this. Nevertheless, they don’t see anything like the 2020 COVID slowdown.

Guidance

QGuide	Mar	Jun	Sep	Dec
2019				102
2020	118	135	144	163
2021	186	212	247	291
2022	337	378	412	

REV	Mar	Jun	Sep	Dec
2017	18.4	21.9	26.7	33.7
2018	39.7	45.7	51.1	61.6
2019	70.1	83.2	95.9	113.6
2020	131.2	140.0	154.7	177.5
2021	198.5	233.5	270.5	326.2
2022	363.0	406.1		

% Beat	Mar	Jun	Sep	Dec
2019				11%
2020	11%	4%	7%	9%
2021	7%	10%	10%	12%
2022	8%	7%		

*This is the growth of the guide from prior quarter actual*
GuideGrth	Mar	Jun	Sep	Dec
2019				6.4%
2020	3.8%	2.5%	2.8%	5.4%
2021	4.8%	6.8%	5.8%	7.6%
2022	3.2%	4.1%	**1.4%**

Clearly, the sequential growth guide is lower than it has ever been, even lower than the COVID quarters. If, as the company says, purchasing conservatism is not as pronounced as the COVID quarters, why is the guide relatively low? Could it be that we’re starting to hit the law of large numbers? Could it be that customers have more control over their usage now than they did then? Or could it be management’s attempt to be even more conservative with guidance? I don’t know. But given the relatively low valuation and the very long runway for growth, I think it doesn’t matter too much.

If they do a double digit beat (>=10% as I think they will do), this will help us better understand what is going on.

DJ

[WillO2028]

I sold a little 10% of my Datadog shares after earnings to add to some of my other positions.
That’s not to say I have no confidence in Datadog. I still have a ~17% position in Datadog.
After DDOG Q2/22 Earnings Report:
I agree with Peter Offringa at Softwarestackinvesting.com when he wrote:
“Datadog retains several advantages. I think these position Datadog for durable growth and even re-acceleration once the macro headwinds subside.”
I also agree with Bert Hochfeld at Tickertarget.com when he wrote:
“free cash flow margin this quarter was 15%-that is a significant decline basically driven by the fall in deferred revenue balances (Me here: Management explained that some customers have gone to pay-as-you-go). The fall in deferred revenue balances had more to do with timing of invoices and contract duration than anything existential”

(Me here:From the CC reguarding low guidance and perhaps Deffered revenue resulting in drop in FCF.)
David Obstler
… we did say that in the level of conservatism that was introduced to some clients that they may have stayed more into their previous commit plus on demand. Because of that, that doesn’t for that situation affect the (future)revenues because they’re still consuming the same, but they may want to retain more optionality.
This is really sort of in looking at financial management with level of uncertainty. You generally would pay a higher price if you stayed that way, but you’d be trading off the higher unit price, the marginally higher unit price for the more optionality.
And we did see some of that. We don’t know what’s going to happen next, but we would think that if we continue to have macro uncertainty, there will be some customers that will opt for that type of pattern relative to the commitments.

Me again:
As YoY revenue lapped the Marked brief COVID slowdown there was perhaps some acceleration in QoQ %Rev growth rates leading to now, a year after that. So over the next couple quarters, there may be some difficult YoY compares (IMO, there’s going to be another ‘perceived’ drop in company performance, as measured by YoY Rev growth rates). That should only last at most a few or more quarters, so just a small trim in Datadog.

Best

Jason