https://www.cnbc.com/2019/09/22/datadog-is-fourth-
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Posted On: 09/22/2019 11:45:36 AM
https://www.cnbc.com/2019/09/22/datadog-is-fo...t-cap.html
More $10 billion software companies are being minted than ever before — here’s why
Datadog became the fourth cloud software company to debut this year and reach a $10 billion valuation.
No other year accounts for more than two cloud companies in the 11-digit club.
Datadog, Zoom, Slack and Crowdstrike, this year’s entrants, all have very high retention rates.
...
The new crop brings to 16 the total number of cloud software companies in the 11-digit club. While 14 of those companies have gone public since the beginning of 2012, this is the first year with more than two that reached $10 billion in value.
It’s just the latest sign that public market investors are hungry and willing to pay up for high-growth technology companies as long as the financials make sense, even as they shun cash-burning consumer businesses like Uber, Lyft and WeWork.
Jason Lemkin, an investor at SaaStr, sees the cloud market continuously opening up to more categories, expanding the overall pie. According to Gartner, the global market for public cloud services will climb 17.5% this year to $214.3 billion. That money is being spread across many areas, including productivity apps, developer tools, security and backend infrastructure.
“There are 100 cloud categories that can do $1b in annual revenues,” Lemkin wrote in a message. “All the IPOs are on track to get that. All good ones at least.”
The 2019 class is particularly attractive to investors because the biggest of them show extremely high customer retention rates, meaning that they’re very efficient with their sales and marketing dollars. Not only are customers sticking around, but they’re increasing the size of their contracts.
Datadog recorded retention in its latest quarter of 151% — a customer that spent $100 a year earlier is now shelling out $151. Crowdstrike reported a retention rate of 147% as of January, Slack’s was 143% and Zoom was at 140%.
According to Tomasz Tunguz of Redpoint Ventures, any company that’s at 140% or higher is in the top decile of subscription businesses, based on a survey the firm conducted with 600 respondents.
More at the link
...
More $10 billion software companies are being minted than ever before — here’s why
Datadog became the fourth cloud software company to debut this year and reach a $10 billion valuation.
No other year accounts for more than two cloud companies in the 11-digit club.
Datadog, Zoom, Slack and Crowdstrike, this year’s entrants, all have very high retention rates.
...
The new crop brings to 16 the total number of cloud software companies in the 11-digit club. While 14 of those companies have gone public since the beginning of 2012, this is the first year with more than two that reached $10 billion in value.
It’s just the latest sign that public market investors are hungry and willing to pay up for high-growth technology companies as long as the financials make sense, even as they shun cash-burning consumer businesses like Uber, Lyft and WeWork.
Jason Lemkin, an investor at SaaStr, sees the cloud market continuously opening up to more categories, expanding the overall pie. According to Gartner, the global market for public cloud services will climb 17.5% this year to $214.3 billion. That money is being spread across many areas, including productivity apps, developer tools, security and backend infrastructure.
“There are 100 cloud categories that can do $1b in annual revenues,” Lemkin wrote in a message. “All the IPOs are on track to get that. All good ones at least.”
The 2019 class is particularly attractive to investors because the biggest of them show extremely high customer retention rates, meaning that they’re very efficient with their sales and marketing dollars. Not only are customers sticking around, but they’re increasing the size of their contracts.
Datadog recorded retention in its latest quarter of 151% — a customer that spent $100 a year earlier is now shelling out $151. Crowdstrike reported a retention rate of 147% as of January, Slack’s was 143% and Zoom was at 140%.
According to Tomasz Tunguz of Redpoint Ventures, any company that’s at 140% or higher is in the top decile of subscription businesses, based on a survey the firm conducted with 600 respondents.
More at the link
...
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