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Datadog vs Splunk – SaaS Cloud Software Stock Analysis – Growth Investing – Which Stock to Buy Now?

Apr 18, 2021 admin 51 Comments 180 Views

Today I discuss Datadog and Splunk SaaS cloud software stocks. What do these companies do? What are the pros and cons of each? Which company should you invest in? Which stock should you buy now? I cover the key differentiators in these Intelligent Application And
Service Monitoring businesses, and I also provide my thoughts and opinions on each stock. Wait until you see the Rule of 40 chart towards the end!

Datadog (DDOG) is the leading service for cloud-scale monitoring. It is used by IT, operations, and development teams who build and operate applications that run on dynamic or hybrid cloud infrastructure. Start monitoring in minutes with Datadog!

Splunk (SPLK) is a leading platform for Operational Intelligence. Customers use it to search, monitor, analyze and visualize machine data.

* Splunk provides a flexible solution for customizing algorithms and adding data.
* Core capabilities have provided a foundation for the company to expand into a wide set of corporate functions, such as security, compliance, business analytics, and monitoring.
* Splunk has a large and active ecosystem of technology professionals, including professional services consultants and customers that share a wealth of knowledge and custom-built technology add-ons on its knowledge base portal to augment its own intellectual property (IP).
* Splunk’s strength lies in its ability to normalize data for complex correlations across multiple data types.
* Longer and more expensive to implement.
* Enterprises looking to use custom complex algorithms to mine information contained in disparate log sources will likely gravitate toward Splunk.

* Datadog straddles traditional IT operations and newer DevOps perspectives.
* Offers a Software-as-a-Service (SaaS)-based solution built on the premise that operations and development professionals all have skin in the game and should be able to measure application performance from any angle.
* A unified dashboard keeps the practitioner in-context when troubleshooting performance issues, and integrations for collaboration and notification tools (e.g., Pagerduty, Slack, or Victorops) are supplied natively through APIs.
* Datadog has a large volume of out-of-the-box dashboards and integrations. Customers noted that the solution gives them far greater visibility than previously deployed tools, allowing staff members, armed with precise troubleshooting data, to react faster.
* One area for increased R&D spend would be to expand deployment capabilities to provide options for cloud providers and enterprise on- premises requirements.
* Because it’s a purely SaaS alternative, Datadog will resonate with IT decision makers who want to free their staff from tool management and support.

* Datadog (DDOG) is firing on all cylinders…growing in an expanding market, improving its margins and cash flow, while also making acquisitions to expand capabilities.
* Revenue increased by 87% (y/y) when it reported last quarter. Dollar-Based Net Retention Rate (DBNRR) was above 130%…which is impressive because, unlike the dollar-based net expansion rate, DBNRR includes the effect of churn. Billings grew 55% y/y, but actually was slightly down with COVID-19. RPO (remaining performance obligation) grew by 82%, which is a strong signal that Datadog is offering competitive products.

Splunk – Rule of 40:
* Revenue Growth + FCF margin = 52% – 16% = 36%
* The score is slightly lower than the necessary 40% needed to fulfill the rule of 40….I believe it's due to a temporary drop in free cash flow, and it should recover once the accelerated shift to recurring revenue subsides.
* For SPLK, leadership and analysts are pushing ARR (Annual Recurring Revenue), which is 52%.

Sources:

™__Intelligent_Application_And_Service_Monitoring%2C_Q2_2019.pdf

Disclaimer:
I have been investing in the stock market for over 20 years, but I am not a financial advisor or a legal professional, and I am not providing financial or legal advice. The information provided is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. FIRED Up Wealth and Eric Cuka do not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. Past performance is no guarantee of future results.

#stocks #highgrowth #cloudstocks #stockmarket #investing #stockanalysis #DDOG #SPLK #datadog #splunk

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51 comments

    2. Mr. FIRED Up Wealth

      Good stuff. Those are all solid picks. I have some AYX too. So many companies! And I agree that DDOG is expensive, although it has a premium for a reason. Anything in the $60s is probably a buy for long term. Get some rest! And thanks for being an awesome member of the team. 🔥😎🍻

      reply to comment →
    3. Sebastian Schlegel

      @Mr. FIRED Up Wealth i own a bit of Splunk ( 8 shares). datadog for me personally is too expensive right now. In december i bought a lot of CRM, NOW and ayx, and recently added FSLY (33$). Thats enough cloud stuff for me. I try not to overexpand tech in my portfolio, but your videos make that more and more harder 😉

      Greetings from Germany
      23:00 PM 🙂
      El Schlee

      And yeah… Thank you Eric… Still figuring out the GRIT score of PD 😉

      The graph at the end, i love it! 😳

      reply to comment →
    2. Layor Wouzon

      @Mr. FIRED Up Wealth Not yet, but I did get WCLD after watching your other video and doing more research. Still looking this up, I am “stock” between SPLK or CRM for the long term. I already have MSFT but still trying to add more but really can’t decide which ones. Any tips?

      reply to comment →
    1. Mario Bello

      Mr. FIRED Up Wealth i own wcld arkk and arkw, it is easier to own them through those etf since there are a lot of cloud companies i like, i am a soft dev and i like investing, appreciate your content, it is top notch.

      reply to comment →
  19. Viktoria LN.

    hi Eric, thank you once again for your informative video. I’ve never heard of these stocks. Here, in Europe t’s almost impossible to find info about new stocks like these. Almost every blogger makes video about classic stocks like Coca-Cola & so on. So you are a godsend 🙂

    reply to comment →
  20. Per Sondrup

    great video. New to your channel, lots of great stuff.
    The chart you have with undervalued/overvalued is that your own and/or something publicly available (guess not as it seems very useful )

    reply to comment →

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