All,
I went back and pulled all of the available data from the DDOG earnings releases. I have summarized the data and made some comfortable projections in order to gain some insight into where things are going. I was happy with the press release overall but especially with the earnings conference call. This seems like a company where the patient investor will reap the rewards in due time. They reiterated over and over how they are early innings and how they are prioritizing future growth over short-term profitability.
Below is a table with all of the relevant information from their press releases. To estimate Q1 2021 revenue I assumed they beat their average guidance by the average of their previous beats (average beat is 8.6%). This represents QoQ revenue growth of 13.5%. This is then carried into the Q2 2021 estimate to get $229.1, which reflects the exact same QoQ growth rate which they “saw” in Q1 2021. The realignment comes when you look at the YoY growth rate of 63.7%, which represents an “acceleration.” We all know this isn’t an acceleration but rather a washing of the woes from Q2 2020, but I suspect the market at large won’t know that.
Quarters Q2-2021 Q1-2021 Q4-2020 Q3-2020 Q2-2020 Q1-2020 Q4-2019
Guidance (M) $186.0 $163.0 $144.0 $135.0 $118.0 $102.0
Revenue (M) $229.1 $202.0 $178.0 $154.7 $140.0 $131.2 $113.6
$100K+ ARR 1,253 1,107 1,015 960 858
% Guidance Diff 8.6% 9.2% 7.4% 3.7% 11.2% 11.4%
Revenue QoQ 13.5% 13.5% 15.1% 10.5% 6.7% 15.5% 18.5%
Revenue YoY 63.7% 53.9% 56.7% 61.3% 68.0% 87.0% 85.0%
$100K+ ARR QoQ 13.2% 9.1% 5.7% 11.9% 18.0%
$100K+ ARR YoY 46.0% 52.3% 70.9% 89.0% 89.4%
Below I put another table with the same information except the Q1 2021 revenue estimate is based on the average beats excluding the Q2 2020 low beat of 3.7%. This brings the Q1 2021 revenue estimate to $204.2 (using average beat of 9.8%), a QoQ growth rate of 14.7%, and then a Q2 2021 estimated YoY revenue growth of 67.4% based on revenue of $234.3. Although this is all hypothetical, I don’t believe it is anywhere outside the realm of possibilities. Especially given that in their conference call they said many times that they are overly cautious with their estimates.
Quarters Q2-2021 Q1-2021 Q4-2020 Q3-2020 Q2-2020 Q1-2020 Q4-2019
Guidance (M) $186.0 $163.0 $144.0 $135.0 $118.0 $102.0
Revenue (M) $234.3 $204.2 $178.0 $154.7 $140.0 $131.2 $113.6
$100K+ ARR 1,253 1,107 1,015 960 858
% Guidance Diff 9.8% 9.2% 7.4% 3.7% 11.2% 11.4%
Revenue QoQ 14.7% 14.7% 15.1% 10.5% 6.7% 15.5% 18.5%
Revenue YoY 67.4% 55.7% 56.7% 61.3% 68.0% 87.0% 85.0%
$100K+ ARR QoQ 13.2% 9.1% 5.7% 11.9% 18.0%
$100K+ ARR YoY 46.0% 52.3% 70.9% 89.0% 89.4%
Another important point from the conference call was that they expect to be live with the Azure integration in the first half of the year. This will conveniently coincide with the time in which we have lapped the bad comparable from Q2 2020.
I hope this has been useful for some. It was good for me to see that this is really a strong ~65% YoY growth company (at least) that is just experiencing tough compares at the moment. We all know this to be true, the management has expressed it over and over again, but the numbers really show the true story. Any commentary would be appreciated by all as this company is making a real strong attempt at moving from my second tier to my first tier.
- Junomean2
Long DDOG