With earnings season in full swing, ETR highlights data reviews on select vendors. The data cited in this article is from ETR's January 2024 Technology Spending Intentions Survey (TSIS). With more than 20+ covered tech vendors reporting next week, we focus on ZoomInfo, Monday, Datadog, and Shopify. However, please see the ETR Research Platform for full spending intentions data sets for other reporting companies such as Teradata, Twilio, Cisco, Fastly, Hubspot, Pegasystems, Appian, Dropbox, and many more. The ETR platform tracks forward looking spending data, as well as market growth, and competitive positioning data for more than 450 public companies! If you don't have access, you can start a free trial right now.
Let's kick things off with a deep dive into Datadog...
Datadog. Based on ETR's JAN24 TSIS and Macro Trends survey, overall IT spend has continued to improve. The overall Survey Net Score is up 2.3%-pts Y/Y, with the Analytics/BI/Big Data sector seeing a similar increase of 1.8%-pts over that same timeframe. Datadog, however, is seeing a 16%-pt decline in Analytics from year-ago levels. This, along with a more modest decline in Information Security, has left Datadog's consolidated metrics falling 10%-pts Y/Y. The company is one of only six publicly traded vendors with more than 100 citations exhibiting a >10%-pt decline. Among its closest Observability peers in Analytics, Datadog is the only vendor seeing declines of this magnitude.
Spending intent is deteriorating even further among Fortune 500 and Global 2000 respondents (N = 85 shown below), where Net Score is falling more than 50% Y/Y. Its 13.4% Net Score within Global 2000 organizations now sits at all-time lows and is well below its peers and the sector. Expansion rates within the index have also reached lows, and Negative spend indications now sit at 20% of respondents. In the JAN24 survey period, Global 2000 customers represented 30% of Datadog's total citations.
Alongside the higher negative spend indications for Datadog, using our Shared Accounts dashboard we also note a large Y/Y improvement for most Observability peers within accounts that indicate Decrease or Replace for Datadog across both sectors tracked. This analysis could be an indication that Elastic, Grafana, and Splunk, in particular, are capitalizing on the weaker spending intent on Datadog for 2024.
For the reasons stated and illustrated above, our research team recently wrote, "Continuing a longstanding downward trajectory, Datadog’s latest data set is rife with Pervasion drops, plummeting Net Scores across F500 and G2000 organizations, and weakening competitive positioning, especially within the higher citation Big Data / Analytics sector. Despite more stability within Information Security, the overall rate of contraction warrants a Negative outlook on the vendor’s data set heading into 2024."
The company is slated to report earnings on Tuesday, February 13th, where the forward-looking declines in our spending intention data could begin to show up in guidance over the next quarter or two.
ZoomInfo. A significant contraction in Adoptions and Increasing spending indications have driven ZoomInfo’s Net Score to a new low, warranting our continued Negative outlook on the vendor’s data set for the second consecutive survey period. ZoomInfo’s Net Score continues to deteriorate from levels seen in 2023 and is now far below historical levels at 7.4%. On a year-over-year basis, Net Score has fallen by 59%, continuing a longstanding trajectory of decline as Pervasion growth levels out.
However, one bright spot for the vendor in this survey period came from Global 2000 customers, which account for ~20% of ZoomInfo’s sample. Within the index, Net Score has improved greatly from a stint in the negatives in 2022-23. Even with a strong year-over-year recovery, Net Score is only 20% for the index. This is a much stronger Net Score than ZoomInfo’s aggregate sample, but lukewarm in absolute terms. Still, it is a trend we will monitor going forward. Zoominfo is expected to report earnings on Monday, February 12th.
Below, you can see ETR's JAN24 Vendor Quick Take list, which shows those vendors that warranted an outlook on their respective data sets for the January 2024 TSIS period. If you would like the full report or to speak to a research member about any of these vendor's data, please reach out to us at firstname.lastname@example.org
Monday. com: Monday is also expected to report earnings on Monday, February 12th, and, like ZoomInfo above, also had a data set that warranted a negative outlook in this TSIS period. While aggregate spending intentions for Monday have improved relative to all-time lows captured in 2H23, Net Score remains ~10 percentage points lower than APR23 levels and now sits at 22%, an erosion of 30% on a year-over-year basis. Negative spending intent remains elevated in this survey period, as well. However, both Midsize (18% of total respondents) and Small-organization respondents (21% of the sample) indicate a sizeable decline in spending intentions on Monday. A former subsample of relative strength for Monday.com, Net Score among Small organizations has fallen from 38.9% in APR23 and now sits at 14.3%. The decline among Midsize organizations fared worse (see illustration below), now sitting at just 4% after being in the high 30s last year.
Overall, increasing customer expansion rates and strong improvements among Large and Global 2000 respondents are clear bright spots for Monday.com’s latest data set. However, deterioration among Mid & Small accounts is extremely concerning, and overall negative spend intent remains high. With that and the fact that aggregate spending levels are down 30% on a year-over-year basis, we retain our Negative outlook on the vendor.
Shopify. Back in July 2023, ETR debuted a new Fintech sector within the Technology Spending Intentions Survey (TSIS). In its second consecutive TSIS survey period, Shopify was a standout data set, with the vendor’s Net Score coming in at 45.9%, significantly higher than the 23% level captured in its debut survey three months prior and among one of the highest across the entire survey universe. Fast forward to the JAN24 TSIS survey, however, and that promising data set has reversed. In this survey period, Net Score for the Fintech sector dropped considerably from 23% to 14%, but the fall for Shopify was even more pronounced, with the vendor’s Net Score among all respondents diving from 46% to 16%. The decline was across all enterprise sizes, industry verticals, and geographic subsamples. However, Midsize and Small organizations did fare better on a relative basis.
In the prior OCT 23 survey iteration, we wrote, “Fully acknowledging the obvious caveats (and risks) of small citation size and lack of historical comparisons, ETR is going out on a limb with a Positive view of Shopify’s data set due to the vendor’s impossible-to-ignore spending trajectory and sequential growth, especially among the company’s core customer demographic of Midsize and Small organizations.” That outlook was followed by a strong quarterly report for the company, but in the JAN24 TSIS, we saw that aforementioned feared volatility show up as citations dropped from 85 to 72 and brought with it drastically lower forward-looking spending intentions across all demographics. In fact, among all vendors tracked in the JAN24 TSIS, Shopify had the largest survey-over-survey decrease in Net Score (see below). As such, we can not carry the Positive outlook on the vendor’s data set into the beginning of 2024. The company is expected to report earnings on Tuesday, February 13th.
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Enterprise Technology Research (ETR) is a technology market research firm that leverages proprietary data from our targeted IT decision maker (ITDM) community to provide 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 often formed from incomplete, biased, and statistically insignificant data. Our community of ITDMs represents $1+ trillion in annual IT spend and is positioned to provide best-in-class customer/evaluator perspectives. ETR’s 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