Investment Memo

DATADOG is Valued at $19.13 Billion, with a 31.02 P/S ratio. The reason for the post-May 11th earning
announcement price uptick are two-fold:

First of all during the first quarter of 2020 its revenue growth accelerated to 87.4%/annum jumping way
above management guidance. $117-119mm guidance, and $131.2 million actual revenue. This is a 15.5%
revenue increase over the last quarter of 2019. Similar rate of growth in seen in high value customers of
100,000$ ARR and more.

Second of all, the non-GAAP operating profit margin increased to 12.3%, with a positive net income of
0.02$/share. This excited investors, and coronavirus-scared money flooded DATADOG.

What’s interesting is that over the last 10 days, insiders in the DATADOG company, including the CEO,
and CFO have sold almost $40 million worth of shares. This is a big deal. Now although DATADOG
generally sees insider sales month-to-month, with insider stock sales of $10 million - $20 million per
month in 2020, I still believe that this is a very strong negative indicator.

Overall DATADOG competitors are all seeing strong and consistent insider selling as well, starting prior
to the coronavirus crisis. This, combined with the fact that DATADOG has a much higher EV/Revenue
and Price/Sales, all signals an overheated momentum play. Price appreciation may continue on the back
of the strong momentum given the general lack of investment opportunities, but overall this is a very
over-bought position.

Datadog Newr Splunk Crowdstrike Zscaler Dynatrace

EV/Revenue 42.5 5.42 10 31.7 26.05 17.5
Momentum up down up sideways sideways sideways
Insiders selling selling selling selling selling selling
mixed-
Institutions mixed selling mixed mixed buying mixed

Sergei Mochtchenkov, CFA