One question raised in my head - the DT is able to successfully get its on-prem customers to its cloud based subscription (btw-is that understanding correct?); is DT better positioned for hybrid cloud vs DDOG a better solution for pure cloud?
With permission from the author (Beth Kindig) on her recent Dynatrace write-up; I am paraphrasing and not copying verbatim on this topic for the “sound bites” listed below:
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Dynatrace has invested heavily since 2016 in a product roadmap that expands into multi-cloud and hybrid cloud; using AI to perform root cause analysis faster; pushing forward on AI powered analytics, self-learning AI, real time discovery, automated problem remediation and use of AI chatbots
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76% of companies surveyed indicate that they are committed to hybrid cloud due to the fact that it is more cost efficient, transparent and safe. Hybrid helps move the needle and move companies from on-premise into the cloud.
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this Dynatrace initiative combined with the transitioning from a licensed based to subscription based model is in the sixth quarter of a 10-12 quarter transition period for the company according to the CEO; (HMC: Hence, this may explain some of the increased S&M spend that was referenced in this thread above. Getting out there and pounding the pavement to sell the subscription based model.)
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transitioning to a hybrid cloud and subscription based service has resulted in dollar-based net expansion rate of 140%; better than Smartsheet at 130% and Alteryx at 131%. The net dollar expansion rate has increased along with the pivot to the cloud platform
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transitioning to subscription model and cloud platform has resulted in increased operating margins and revenues (HMC: Although not at the levels required of investors on this board.)
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Non-GAAP Operating margins are most recently 22% Q1 2020 up from 13% Q2 2019. The company is profitable on a non-GAAP basis.
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Revenue growth was negative from 2017 to 2018 as the company absorbed costs of and focused energies on the transition to a hybrid cloud based subscription model. Revenue increased 8% from 2018 to 2019 and full year fiscal 2020 is expected to be up 24% compared to 2019 full year. (HMC: Is it fair to say that their revenue growth rate is expected to triple from 2019 to 2020? In other words, maybe they have invested in the transition and are now seeing the fruits of their labor and are now in the early stages of turning the corner and growing more aggressively?)
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Since the recent IPO; they reduced debt on the balance sheet from $1 billion down to $540 million and they are cash flow positive to the tune of $27.7 million in the most recent quarter.
Just some input I can provide…I do not have a dog in the Dynatrace hunt; although I do have a Datadog in the APM hunt.
Long DDOG