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It’s been a volatile start to 2022 for enterprise technology stocks (to say the least), but some clarity into 2022 IT spending intentions is now available in the ETR platform via the JAN22 Technology Spending Intention Survey which was finalized this week with 1200+ participants. Access the DATA.
Next week, we will release the full findings from the January 2022 version of our survey but before we look forward, we decided to reflect back on our October 2021 survey with a self-graded 'Report Card' for a handful of vendors from ETR's Viewpoint List (published 10/21/21). These viewpoints were based on updated 2H21 IT spend data collected from ~1,200 IT End Users between 9/9/21 - 10/7/21 and will be updated in mid-January based on the results of ETR’s JAN22 survey.
ETR’s October ‘21 Report Card:
Elastic (Neutral Outlook from Positive) Grade: A - View OCT21 Report
ETR Updated 2H21 Outlook: While acknowledging the relative health of Elastic’s positioning within Analytics, Information security concerns, stalled market share, and competitive pressures warrant a begrudging step down to Neutral after a year-plus of Positive outlooks.
Earnings Recap: Elastic reported F2Q (Oct) revenue of $206M (+42.2% y/y vs +49.8% last q) vs cons $194.6M, guided F3Q (Jan) revenue to $207M-$209M ($208M at midpoint, or +32.4% y/y) vs cons $202.3M, and guided FY22 (Apr 22’) revenue to $826M-$832M ($829M at midpoint, or +36.2% y/y) vs cons $813.6M. The revenue beat was driven by subscription revenue ($190.3M vs cons $182.8M) and professional revenue ($15.7M vs cons $11.8M). The company also reported stronger billings ($231.9M vs cons $223.3M) and weaker deferred revenue ($390.3M vs cons $393.1M).
Our Take: Despite a revenue beat & raise in guidance, there was a negative stock reaction (-15%) to Elastic’s reported F2Q which didn’t seem ‘good enough’ (lowest rev beat % in the past six quarters).
Prelim JAN22 Outlook: Spending intentions are re-accelerating to the elevated levels captured one year ago, largely driven by a reversal of the softening InfoSec data highlighted in the OCT21 report.
Snowflake (Positive) Grade: A - View OCT21 Report
ETR Updated 2H21 Outlook: Snowflake again defends its position as holder of the top Net score within the TSIS and continues to see strength from Fortune 500 organizations expanding their spend at wildly impressive rates.
Earnings Recap: Snowflake reported F3Q (Oct) revenue of $334.4M (+109.5% y/y vs +104.4% last q) vs cons $305.6M. The revenue beat was driven by product revenue ($312.5M vs cons $283.4M) and professional services ($22M vs cons $20.6M). The company also reported stronger billings ($392.4M vs cons $375.6M) and weaker deferred revenue ($766.9M vs cons $778.8M).
Our Take: This was one of the easier assignments as Snowflake seemingly has a permanent residence at the pinnacle of ETR's survey results. The survey standout reported an impressive F3Q and strong F4Q guidance.
Prelim JAN22 Outlook: Elevated Net Scores persist and customer citations continue to grow.
Zoom (Negative) Grade: A- View OCT21 Report
ETR Updated 2H21 Outlook: Under Microsoft's shadow, Zoom’s data set has gone from bleak to grim with plummeting Net score, shrinking Adoptions, and stalling market share yielding another Negative outlook.
Earnings Recap: Zoom reported F3Q (Oct) revenue of $1.05B (+35% y/y vs +54% last q) vs cons $1.02B, guided F4Q (Jan) revenue to $1.051B-$1.053B ($1.052B at midpoint, or +19.2% y/y) vs cons $1.02B, and guided FY22 (Jan 22’) revenue to $4.079B-$4.081B ($4.080B at midpoint, or +54.0% y/y) vs cons $4.01B. The company also reported stronger billings ($1.06B vs cons $1.04B) and weaker deferred revenue ($1.19B vs cons $1.20B).
Our Take: Slowing customer growth was an area of concern for many investors following Zoom’s F3Q earnings call, a trend that has been visible in ETR surveys since our October ’20 study.
Prelim JAN22 Outlook: Zoom’s Net Score across all customers has reached all-time lows yet again. However, the vendor shows some reprieve among G2000 / F500 customers with a rebounding Net Score from October levels.
Datadog (Positive) Grade: B+ View OCT21 Report
ETR Updated 2H21 Outlook: Datadog remains a standout vendor in our survey, leading its observability peers both within the Analytics and newly added Information Security sector. We remain Positive.
Earnings Recap: Datadog reported F3Q (Sep) revenue of $270.5M (+74.9% y/y vs +66.8% last q) vs cons $247.8M, guided F4Q (Dec) revenue to $290M-$292M ($291M at midpoint, or +63.9% y/y) vs cons $263.4M, and guided FY21 (Dec 21’) revenue to $993M-$995M ($994M at midpoint, or +64.7% y/y) vs cons $943.7M. The company also reported stronger billings ($308.8M vs cons $250.5M) and deferred revenue ($301.0M vs cons $268.6M).
Our Take: ETR originally assigned a Positive viewpoint on Datadog in July ’21 after the cloud-native vendor surfaced as the leader across the APM in our survey; the elevated data continued in OCT21. Datadog reported strong F3Q revenue and a large raise in guidance for FY21.
Prelim JAN22 Outlook: Customer citations continue to grow while expansion rates are elevated among F500 / G2000 customers (47-50% of these customers plan to increase spend in CY22 vs CY21).
DocuSign (Positive) Grade: C View OCT21 Report
ETR Updated 2H21 Outlook: DocuSign’s market share continues to strengthen within key index cuts (F500, G2000) while customer churn remains minimal, keeping us Positive through the remainder of 2021.
Earnings Recap: DocuSign reported F3Q (Oct) revenue of $545.5M (+42.5% y/y vs +49.6% last q) vs cons $532.6M, guided F4Q (Jan) revenue to $557M-$563M ($560M at midpoint, or +30.0% y/y) vs cons $575.3M, and guided FY22 (Jan 22’) revenue to $2.083B-$2.089B ($2.086B at midpoint, or +43.9% y/y) vs cons $2.09B. The revenue beat was driven by subscription revenue ($528.6M vs cons $512M), while professional services & other revenue ($16.9M vs cons $20.2M) slightly missed expectations.
Our Take: Revenue & billings guidance missed estimates, and management commentary included customers returning to more normalized buying patterns following six quarters of accelerated growth. In hindsight, ETR may have underestimated the severity of growing ‘Flat’ indications but instead gave the vendor a pass due to a growing customer count (i.e., pervasion gains in our survey).
Prelim JAN22 Outlook: Customer citations continue to grow, but the ‘Flat’ bucket of customers is inching higher as well.
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 October 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 1-2 quarters out…
