New Relic which used to be followed on the board (and which I was in for a while but exited quite a while ago), was down 28.6% yesterday, apparently because management admitted that they hadn’t been able to execute nearly as well as hoped. I don’t follow them any more and just stumbled on this, so I can’t add more.
Best,
Saul
10 Likes
There’s another interesting tidbit in the conference call. They are seeing competition from an open source system for realtime system tracing (what they do) call Prometheus - which was open source a few years back by Netflix. Customers are willing to roll their own vs. paying for this one. Part of the reason is you can’t really use NEWR without development work.
Some might immediately jump and try to relate this to ESTC… but ESTC doesn’t face the same type of issue. Tracing system like what NEWR builds need to be deeply embedded within the software and enterprise systems in a company, and has heavy performance and integration complexity… ESTC on the other hand, you just want a well managed, always up service.
More similar is OKTA, but with security and authentication, the risk of getting it wrong is high enough that you tend to want that as a well engineered offering that someone else has worked out the hard parts.
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Don’t own this one, but it does seem to be an area a lot of companies are getting into.
I looked at the CC transcript, and saw this exchange:
"Michael Turits
Lew, that all makes sense to me. I guess, I was trying to get to where to drill down a little bit more on the competition, which competitors are you seeing? What do they look like…?
Lew Cirne
Sure. I mean – yes, we see competitors for a few angles. There are open source solutions that customers are deciding to install on site and invest the time involved in managing that on sort – on-premise stuff. We see infrastructure centric solutions that have a historical strength in dashboarding and in collecting data from lots of sources, lots of – and infrastructure.
We’ve, for many years had this sort of same list of competitors in the APM space. I’d say what’s evolved has been some of these open source and infrastructure-centric vendors coming in as the markets clearly, much larger, more interesting, it’s attracted more types of competitors, all kind of responding to the customer demand to kind of see inside everything they need to see in real-time to deliver great performance and availability results."
Not saying their shortfall is due only to Elastic, but they certainly fit the bill of an open source solution provider in the APM space.
I went to last ESTC CC transcript and searched for “APM” and it comes up 18 times. Some examples:
“An example is Key Banc, who renewed and expanded business with us in the quarter. They use Elastic for log metric and APM data collection. They monitor all kinds of things with Elastic, their Kubernetes and OpenShift infrastructure, performance across their 1,600 branches by running Metricbeat on 10,000 workstations and uptime for their systems and services using Heartbeat.”
“Looking ahead, we are doubling down on our investments in R&D. We are well positioned to capture reach opportunity across many market, such as APM and security and we are investing against that.”
“I’m excited about the fact that our company has been there from the start to realize the fact that collapsing these three use cases APM, metrics and logging actually makes a lot of sense and leading the way when it comes to the observability use case. So we’ve been there from the starting, if not one of the first ones. One of the things that I’m really proud about what the team has done is the ability to actually use exactly the same product line for all three use cases. So the ability to go and weave questions between APM, logs and metrics is something that is very natural when you’re using the same UI in Kibana and the same data storage in Elasticsearch.”
Muji could likely do a much better job explaining that last paragraph, but essentially the way I read it is that under their Enterprise product users are able to combine multiple workstreams of APM, metrics, and logging - basically you can now walk, chew gum, and listen to an audiobook at the same time. This is versus companies that specialize in only 1 main solution - can only chew gum.
Dreamer
22 Likes