Datadog’s customer purchase commitments soared to $1.45Bn last quarter, up 54% YoY. This underscores a broader trend of customers committing to multi-year spend 🏆 not only with top 3 hyperscalers, but also with critical layers of their cloud operations like Datadog.
Even with Datadog's robust performance that reached $548M in revenue last quarter (a 25% increase YoY), their customer commitments expanded at an even more rapid pace. The company's Remaining Performance Obligations (RPO) reached an impressive $1.45Bn, representing nearly 9 months of revenue secured in advance.
Olivier Pomel, Co-Founder & CEO of Datadog, comments on this trend: “Over the past couple of quarters, we have seen an increasing preference from our customers to 📍 sign multiyear deals and our weighted average booking duration was up sequentially and year over year. We see continued interest in multiyear duration deals in our pipeline as customers seek longer-term strategic partnerships with us….”
As a leading observability and security SaaS platform for cloud applications, Datadog has unique insights into how companies are embracing cloud.
📈 With Cloud still at ~12% of IT spend only, Datadog witnesses a resurgence in cloud migration (see the image)
CEO expresses cautious optimism:
"It looks like we've hit an inflection point. It looks like there is a -- there's a lot less overhang now in terms of what needs to be optimized or could be optimized by customers. It looks like, also, optimization is more -- is less intense and less widespread across the customer base. So, all that is positive.
Now, you know, there's still quite a bit of uncertainty in the macro environment, you know, so I don't think we should get ahead of ourselves either and declare that it's the end of it for the foreseeable future. So, we feel positive about things, but it's still hard to know exactly what's going to happen in a couple of quarters from now.
From a buying behavior perspective, we've 📍 never seen customers really slow down in their intent to move to the cloud and the rate of adoption of new observability platforms and new products from us”.
🎯 The trend of vendor consolidation continues
Datadog’s CEO notes: “Customers are getting more sophisticated, more mature in their needs, they're getting further into the cloud. And as part of that, they will want to act less as integrators....
If they can use one platform instead of 12 different products, that's something that they all react very positively to, and we see that again and again as we expand into our customers.”
The rising trend of long-term cloud commits reflects a growing customer confidence, strategic move to staying competitive and embracing AI adoption for scalable growth.
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