Cloud-based app performance monitoring startup DataDog files for IPO, says it had revenue of $198M in 2018, up from $101M in 2017, and a loss of $13M in 1H 2019
Context & Ripple Effects
Datadog is following the path AppDynamics blazed with its December 2016 IPO filing, becoming the second major application-performance-monitoring vendor to take its books public. The numbers it is showing are the strongest part of the story: revenue nearly doubled from $101M in 2017 to $198M in 2018, while the $13M loss in the first half of 2019 is small relative to that scale.
The filing matters because it tests whether public markets will value a fast-growing cloud monitoring pure-play independently — the same question hovering over the category since AppDynamics filed, and one sharpened by the fact that Datadog would later reject Cisco's acquisition offer on its way to a $648M US IPO at a $7.83B valuation.
First-order effects
- Datadog gains a public currency for acquisitions and retention, and its roughly 96% 2018 revenue growth against a modest loss gives underwriters a clean growth-at-scale story to price.
Second-order effects
- Rival APM vendors face a new public benchmark for growth-versus-loss tradeoffs, pressuring any peer still weighing a strategic sale — the Cisco acquisition interest around Datadog shows acquirers are active in exactly this category.
Third-order effects
- If the pattern holds, cloud-native monitoring consolidates into a handful of independent public platforms rather than rolling up into hardware-and-networking acquirers, with AppDynamics' filing and Datadog's trajectory marking the shift from exit-by-acquisition to exit-by-listing.
The trend: Application performance monitoring is moving from private companies courting strategic buyers to independent public platforms priced on hypergrowth.