Reach out to service@etr.ai to learn more about the vendor reports and Regression Model or begin your Free Trial right now
Back in April, ETR collected updated CY22 IT budgets from over 1,100 IT decision makers globally. Now entering the back half of the year, ETR is tightening the screws by asking its community of end users for their anticipated 2H’22 IT spending plans vs. actual 1H’22 spend. While the survey is still in the field, so far, over 900 respondents have already submitted their 2H plans via ETR’s July ’22 Technology Spending Intentions Survey.
Polling will continue until 7/7 and ETR will host its Findings Webinar on 7/22. But before we look forward, we want to reflect on our April 2022 survey with another self-graded ‘Report Card’ for a handful of vendors from ETR’s Viewpoint List (published 1/21/22). These viewpoints were based on updated CY22 IT spend data collected from ~1,200 IT End Users between 3/8/22 - 4/8/22.
ETR’s April ‘22 Report Card:
Elastic (Positive Outlook) Grade: A | View APR22 Report
ETR Updated 2022 Outlook: Despite a pullback in Net Score, minimal negativity, strong Pervasion growth, and positive positioning in Information Security keeps the positive outlook intact for Elastic’s 2022 data set.
Earnings Recap: Elastic reported F4Q (Apr) revenue of $239.4M (+34.8% y/y vs +42.5% last q) vs cons $232.4M, guided F1Q (Jul) revenue to $244M-$246M ($245M at midpoint, or +26.9% y/y) vs cons $243M, and guided FY23 (Apr 23’) revenue to $1.08B-$1.086B ($1.083B at midpoint, or +25.6% y/y) cons $1.08B. The revenue beat was driven by subscription revenue ($221.7M vs cons $218.4M) and professional revenue ($17.6M vs cons $14.6M). The company also reported stronger billings ($312.9M vs cons $306.9M) and weaker deferred revenue ($465.3M vs cons $470.2M).
Our Take: We maintained our Positive rating in April following consecutive surveys with strong CY22 spend data and the company reported a 4Q revenue beat and 1Q guide up, highlighting particular strength in its enterprise customer segment, resulting in a +18.9% stock price reaction.
Datadog (Positive Outlook) Grade: A | View APR22 Report
ETR Updated 2022 Outlook: Despite shifts across the Observability space, Datadog stands out as the one vendor to show great resilience and strength; Datadog continues to screen a high customer Adoption rate and robust spending intent from Fortune 500 / Global 2000 organizations - we remain Positive.
Earnings Recap: Datadog reported F1Q (Mar) revenue of $363M (+82.9% y/y vs +83.7% last q) vs cons $339M, guided F2Q (Jun) revenue to $376M-$380M ($378M at midpoint, or +61.9% y/y) vs cons $363.4M, and guided FY22 (Dec 22’) revenue to $1.6B-$1.62B ($1.61B at midpoint, or +56.3% y/y) vs cons $1.54B. The company also reported stronger billings ($444.8M vs cons $364.9M) and deferred revenue ($467.6M vs cons $413M).
Our Take: A strong dataset and continued leader in our survey translated to a strong earnings report (revenue beat & guide up) despite a -6% stock price reaction.
CrowdStrike (Positive Outlook) Grade: A | View APR22 Report
ETR 2022 Outlook: Continued penetration in Global 2000 accounts and minimal churn leaves CrowdStrike as a top performer in the Information Security sector.
Earnings Recap: CrowdStrike reported F1Q (Apr) revenue of $487.8M (+57.2% y/y vs +62.7% last q) vs cons $464M, guided F2Q (Jul) revenue to $512.7M-$516.8M ($514.8M at midpoint, or +52.4% y/y) vs cons $509.8M, and guided FY23 (Jan 23’) revenue to $2.1905B-$2.205B ($2.198B at midpoint, or +51.6% y/y) vs cons $2.15B. The revenue beat was driven by subscription revenue ($459.8M vs cons $437.5M) and professional services revenue ($28M vs cons $26.7M). The company also reported stronger billings ($651.1M vs cons $582M) and deferred revenue ($1.69B vs cons $1.65B).
Our Take: Impressive customer citation growth in our survey led to strongest revenue beat in 5 quarters for CrowdStrike, with management also raising guidance for 2Q and citing no slowdown in demand.
Cloudflare (Neutral Outlook from Positive) Grade: A- | View APR22 Report
ETR 2022 Outlook: A few cautionary tales have emerged leading to a less positive dataset than prior surveys and a move to Neutral for Cloudflare.
Earnings Recap: Cloudflare reported F1Q (Mar) revenue of $212.2M (+53.7% y/y vs +53.7% last q) vs cons $205.7M, guided F2Q (Jun) revenue to $226.5-227.5M ($227M at midpoint, or +49% y/y) vs cons $217.9M, and guided FY22 (Dec 22’) revenue to $955-959M ($957M at midpoint, or +45.8% y/y) vs cons $931.1M. The company also reported stronger billings ($228.2M vs cons $222.5M) and paying customers (154.1k vs cons 148k) while deferred revenue missed expectations ($137.3M vs cons $138.1M).
Our Take: We stepped down due to a few pockets of weakness in Cloudflare’s dataset before the company reported 1Q followed by a -15% stock price reaction. In addition, our regression forecast model predicted 2Q revenue of $225M (vs cons $218M), and 2Q revenue was guided up to $227M.
RingCentral (Neutral Outlook from Negative) Grade: B | View APR22 Report
ETR 2022 Outlook: Rebounding Net Score driven by high Adoptions, along with Pervasion growth lifts RingCentral’s long-standing Negative outlook.
Earnings Recap: RingCentral reported F1Q (Mar) revenue of $468M (+32.8% y/y vs +34.1% last q) vs cons $458.4M, guided F2Q (Jun) revenue to $475.5M-$479.5M ($477.5M at midpoint, or +25.9% y/y) vs cons $477.1M and reaffirms guided FY22 (Dec 22’) revenue to $1.990B-$2.015B ($2.003B at midpoint, or +26% y/y) vs cons $2.01B. The revenue beat was driven by subscription revenue ($439.9M vs cons $428.5M), while other revenue slightly missed expectations ($27.7M vs cons $29.3M).
Our Take: Our regression forecast model correctly predicted a beat for 1Q, but forecasted 2Q revenue of $507M much higher than management’s updated guidance of $477.5M.
Palo Alto Networks (Neutral Outlook) Grade: D | View APR22 Report
ETR 2022 Outlook: Enterprise Pervasion remains strong, but decreasing spending intent and lower than expected growth forecasts nudge us to a Neutral viewpoint.
Earnings Recap: Palo Alto Networks reported F3Q (Apr) revenue of $1.39B (+29.9% y/y vs +29.5% last q) vs cons $1.36B, guided F4Q (Jul) revenue to $1.53B-$1.55B ($1.54B at midpoint, or +26.2% y/y) vs cons $1.53B, and guided FY22 (Jul 22’) revenue to $5.481B-$5.501B ($5.491B at midpoint, or +28.9% y/y) vs cons $5.46B. The revenue beat was driven b product revenue ($351.5M vs cons $331.2M) and services revenue ($1.04B vs cons $1.03B). The company also reported stronger deferred revenue ($5.86B vs cons $5.69B) and billings ($1.80B vs cons $1.60B).
Our Take: Despite some pockets of deceleration in ETR’s dataset and revenue forecasts slightly below consensus estimates, Palo Alto delivered an impressive quarter, beating revenue & raising guidance.
Now that we reviewed a few highlights from our ViewPoint List, let’s turn our grading pencil towards ETR's proprietary Regression Forecast Model from April where ETR backtested our historical data against reported revenue for a number of vendors in our universe in an attempt to predict future revenue for 1 and 2 quarters out…
As the chart above depicts, 15 vendor regressions were graded in the A or B category versus only 4 in the C and D categories, supporting the directional accuracy of ETR's proprietary regression forecast models. While only ETR clients can access this information, you can start that client journey by taking the first step with a FREE TRIAL today.
Enterprise Technology Research (ETR) is a technology market research firm that leverages proprietary data from our targeted IT decision maker (ITDM) community to bring you actionable insights about spending intentions and industry trends. Since 2010, we have worked diligently at achieving one goal: eliminating the need for opinions in enterprise research, which are typically formed from incomplete, biased, and statistically insignificant data. Our community of ITDM’s represents $1+ trillion in annual IT spend and is uniquely positioned to provide best-in-class customer/evaluator perspectives. ETR’s comprehensive proprietary data and insights from this community empower institutional investors, technology companies, and ITDMs to navigate the complex enterprise technology landscape amid an expanding marketplace. Discover what ETR can do for you at www.etr.ai