Back in July, ETR collected 2H’23 IT budgets from over 1,700 IT decision makers globally. Now entering the back half of the year, ETR is following up by asking its community of end users for an update on their original 2H’23 IT spending plans (vs. actual 1H’22 spend). While the survey is still in the field, so far, over 1,200 respondents have already submitted their updated 2H plans via ETR’s October ’23 Technology Spending Intentions Survey (TSIS).
Polling will continue until 10/5, and ETR will host its Findings Webinar on 10/20. But before we look forward, we want to reflect back on our July 2023 survey with another self-graded ‘Report Card’ for a handful of vendors from ETR’s Viewpoint List (published 7/14/23). These viewpoints were based on 2H’23 IT spend data collected from ~1,780 IT End Users between 6/6/23 and 7/6/23.
Okta: Positive Outlook (Previously: Positive) Grade: A | View JUL23 Report
ETR's 2H23 July Outlook: "Spending levels for the Okta and Auth0 combination continue to grow and are dominantly positioned relative to the broader sector and peer group, leaving the positive outlook on the company’s data set firmly entrenched as we head into 2H23."
Earnings Recap: Okta reported F2Q (Jul) revenue of $556M (+23.1% y/y vs. +24.8% last q) vs. cons $534.7M, guided F3Q (Oct) revenue to $558M-$560M ($559M at midpoint, or +16.2% y/y) vs cons $552.9M, and guided FY24 (Jan 24’) revenue to $2.207B-$2.215B ($2.211B at midpoint, or +18.9% y/y) cons $2.18B. The revenue beat was driven by subscription revenue ($542M vs. cons $518.2M), while professional services revenue missed expectations ($14M vs. cons $16.2M). The company also reported stronger billings ($611M vs. cons $548.6M) and deferred revenue ($1.24B vs. cons $1.20B).
Our Take: We maintained our Positive rating in July following consecutive surveys with positive spending intention data and a particular rebound among Global 2000 customers in our sample. The company reported a strong 2Q revenue beat and guide higher, highlighting large customer momentum, resulting in a +13.5% stock price reaction.
Fortinet: No Outlook (Previously: Positive) Grade: A | View JUL23 Report
ETR's 2H23 July Outlook: "Another sequential drop for Fortinet brings its Net Score down 15% year-over-year. A long-time information security leader in our work, Fortinet’s data set remains relatively healthy overall but continued sequential declines in spending intentions and pressures from Microsoft and Palo Alto Networks warrant the removal of our positive outlook on its data set."
Earnings Recap: Fortinet reported F2Q (Jun) revenue of $1.29B (+25.5% y/y vs. +32.2% last q) vs. cons $1.30B, and guided FY23 (Dec 23’) revenue to $5.35B-$5.45B ($5.40B at midpoint, or +22.3% y/y) vs. cons of $5.47B.
Our Take: After ETR removed its positive outlook on Fortinet following consecutive surveys of declining spend intent data, the company missed consensus revenue estimates for just the second time in the past 14 quarters and guided down FY23 revenue. This resulted in a -25.1% stock price reaction.
Alteryx: Negative Outlook (Previously: Negative) Grade: A | View JUL23 Report
ETR's 2H23 July Outlook: "Despite bright spots among the world’s largest organizations, continued Net Score declines, all-time high Replacement rate and relatively weak positioning in Adoptions and Net Score Change Y/Y compared to sector peers warrant a continued Negative outlook for Alteryx’s data set in this survey period."
Earnings Recap: Alteryx reported F2Q (Jun) revenue of $188M (+4.1% y/y vs. +26.1% last q) vs. cons $182M, guided F3Q (Sep) revenue to $208M-$212M ($210M at the midpoint, or -2.6% y/y) vs. cons $233M, and guided FY23 (Dec 23’) revenue to $930M-$940M ($935M at midpoint, or +9.3% y/y) vs. cons of $983.7M. The company also reported weaker billings ($176.5M vs. cons $178.7M) and deferred revenue ($201M vs. cons $209.2M).
Our Take: As ETR’s spending intention data for Alteryx continued to sour in July ’23, the company guided down 3Q revenue significantly and cited an unexpected change in customer behavior as reasoning for ARR missing estimates, resulting in a -17.9% stock price reaction.
Datadog: No Outlook (Previously: Positive) Grade: A | View JUL23 Report
ETR's 2H23 July Outlook: "Despite some relatively positive aspects, especially within Information Security, overall spending intention levels are approaching all-time lows and no longer warrant a Positive outlook for Datadog’s data set."
Earnings Recap: Datadog reported F2Q (Jun) revenue of $509.5M (+25.4% y/y vs. +32.7% last q) vs. cons of $501.6M, guided F3Q (Sep) revenue to $521M-$525M ($523M at midpoint, or +19.8% y/y) vs. cons of $536M, and guided FY23 (Dec 23’) revenue to $2.05B-$2.06B ($2.055B at midpoint, or +22.3% y/y) vs. cons of $2.10B. The company also reported stronger billings ($519.6M vs. cons of $510.4M) and deferred revenue ($595M vs. cons of $593M).
Our Take: Following a decline in spending intentions within the Analytics sector (i.e., Observability) and ETR removing its Positive outlook on Datadog, the company guided down revenue estimates for 3Q and FY23, resulting in a -17.2% stock price reaction.
MongoDB: Positive Outlook (Previously: No Outlook) Grade: B | View JUL23 Report
ETR's 2H23 July Outlook: "Accelerating spending intentions from Global 2000 customers and strong positioning relative to database peers leads us to step up to a Positive outlook on MongoDB’s data set entering 2H23."
Earnings Recap: MongoDB reported F2Q (Jul) revenue of $423.8M (+39.6% y/y vs. +29% last q) vs. cons $393.7M, guided F3Q (Oct) revenue to $400M-$404M ($402M at midpoint, or +20.5% y/y) vs. cons $389.9M, and guided FY24 (Jan 24’) revenue to $1.596B-$1.608B ($1.602B at midpoint, or +25.1% y/y) vs. cons $1.56B. The revenue beat was driven by subscription revenue ($409.3M vs. cons $379.1M). The company missed expectations for billings ($369.6M vs. cons $399.9M) and deferred revenue ($368.6M vs. cons $420.1M).
Our Take: After strong Global 2000 customer spend data in ETR’s July ’23 survey, the company reported a revenue beat for 2Q and strong guide up for 3Q and FY24 revenue estimates. This resulted in a +3% stock price reaction. We give ourselves a B here because this outlook was less ‘contrarian’ than the vendors listed beforehand.
HashiCorp: Positive Outlook (Previously: Positive) Grade: C | View JUL23 Report
ETR's 2H23 July Outlook: "Despite a declining trend that warrants monitoring, HashiCorp’s Net Scores remain among the highest across the entire survey universe. In addition, stellar debuts within the Information Security and Networking sectors now mean that the vendor holds the 1st or 2nd position in three of the four sectors tracked, leaving the positive outlook on the data set firmly intact."
Earnings Recap: HashiCorp reported F2Q (Jul) revenue of $143.2M (+25.8% y/y vs. +36.8% last q) vs. cons $138.2M, guided F3Q (Oct) revenue to $142M-$144M ($143M at midpoint, or +14.1% y/y) vs. cons $141.7M, and guided FY24 (Jan 24’) revenue to $571M-$575M ($573M at midpoint, or +25.1% y/y) vs. cons $567.6M. The company also reported stronger billings ($160.3M vs. cons $143.8M) and deferred revenue ($293.4M vs. cons $281.3M).
Our Take: Although HashiCorp beat consensus estimates for revenue, it was the weakest magnitude beat since the company IPO’d in late 2021 and resulted in a negative 5.2% stock price reaction. Despite the fact that the company raised its guidance, we still give ourselves a C here due to the fact we’ve captured positive end-user data for multiple quarters where the revenue trajectory has been underwhelming.
Freshworks: Negative Outlook (Previously: Negative) Grade: D | View Report
ETR's 2H23 July Outlook: "Echoing trends seen in APR23, spending intentions on Freshworks continue to deteriorate, driven by a broad weakening of positive spending intent and persistent negativity in Large and Midsized subsamples, yielding another negative outlook on the vendor’s data set for the back half of 2023."
Earnings Recap: Freshworks reported F2Q (Jun) revenue of $145.1M (+19.5% y/y vs. +20.1% last q) vs. cons $141.4M, guided F3Q (Sep) revenue to $149.0M-$151.5M ($150.7M at midpoint, or +17% y/y) vs. cons $150.1M, and guided FY23 (Dec 23’) revenue to $587M-$595M ($591M at midpoint, or +18.7% y/y) vs. cons $586.5M.
Our Take: While our 2H’23 data screened persistent negativity for Freshworks, the company reported 2Q revenue above expectations and guided up for 3Q and FY23 revenue. This resulted in a +18.5% stock price reaction. While ETR has maintained a negative outlook in the past two surveys on Freshworks' data sets, the company has consistently beat revenue estimates by +2-3% for the past five quarters. A potential explanation may be the result of ETR’s sample focusing on large enterprise customers while Freshworks has a long tail of SMB customers, creating a possible ‘blind spot’ that our survey does not capture.
Updated spending intentions data for hundreds of public technology vendors is currently on the ETR research platform; check it out yourself by logging in or starting a free trial.
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