The budgets are >still< there,
but they're harder to access, so sales needs to understand what your buyer's true goals are for next year and align with it. pic.twitter.com/a6BKk61LQR
— Jason ✨Be Kind✨ Lemkin (@jasonlk) October 27, 2022
So with the latest batch of earnings out, we can get a sense of where the leaders are in SaaS. I think we can learn the most from the #1 leaders in each category.
Let’s start with Datadog: Crazy Growth Still — 61% at $1.8B ARR — But Not Quite as Crazy as Before.
Datadog had an epic quarter growing a stunning 61% at $1.8 Billion in ARR, and increased its $100k+ customers by 41%. Epic.
But … they cited some economic headwinds in their quarterly announcement, and importantly, new bookings were actually down a bit. They added $121m in new ARR this quarter, versus $172m in Q2 and $146m in Q1. So still an incredible quarter, but not quite as big as the 2 preceding. That’s both great growth in absolute terms … but some slowdown in percentage from headwinds.
With Datadog the clear leader in DevOps, it’s a great barometer of where the entire category is. Doing well — but not quite as well as earlier in the year.
Datadog blows out the quarter:
– 61% growth at $1.8B ARR
– 2,600 $100k customers
– raises next quarter
Slowdown? Nope pic.twitter.com/2y2ACon3RO
— Jason ✨Be Kind✨ Lemkin (@jasonlk) November 3, 2022
ZoomInfo: Growing a Stunning 46% at $1.15 Billion in ARR With Stunning Profits — But Slightly Slower Growth That Past Quarters
A similar story with arguably the #1 public leader in next-generation sales tools. So a great one to look at if you sell into sales.
ZoomInfo had an epic quarter too, and a highly profitable one. But they also cited economic headwinds biting into growth for the first time this week, with strong but slower growth than the prior quarter, when they were growing 54%.
So again, a category leader like ZoomInfo is still growing at a jaw-dropping rate past $1.15B ARR. But some headwinds are blunting that growth a bit compared to earlier this year and even just last quarter.
Atlassian: 31% Growth at $3.2 Billion ARR, but a Smidge Down From 36% The Prior Quarter.
With Atlassian being the leader in collaboration and project management, again another important one to track the pulse of what’s happening. Atlassian also cited macro impacts for the first time — last quarter, they’d said they hadn’t seen impacts. But growth was still very strong, north of $3B in ARR, if not just as strong as before. Atlassian noted a decline in Free to Paid conversion, but importantly, no decline in demand for their products:
Amazon: We’re Seeing Strong But Slowing Growth at AWS to 28%, Albeit at a Stunning $82B Run Rate
Amazon also cited some headwinds in AWS, with growth slowing a bit to 28% and potentially as low as 20% at the very end of this past quarter. More on that here. Again, epic growth but a material slowing from what AWS cited as “economic headwinds”. Still — Google Cloud didn’t see a slowing of growth, and Azure’s growth rate barely budged.
So real impact from headwinds at the Cloud leaders, but they are still growing at jaw-dropping rates, if not as fast as before.
Cloud Giants Update:
AWS (Amazon): $82B run rate growing 28% YoY (last Q grew 33%)
Azure (Microsoft): In the $50's billion run rate (estimate) growing 42% YoY (last Q grew 46%)
Google Cloud (includes GSuite): $27B run rate growing 38% YoY (last Q grew 36%, neither are cc)
— Jamin Ball (@jaminball) October 27, 2022
So That’s The Real Story: Overall, SaaS and Cloud Are Still Growing at Jaw-Dropping Rates. But — Often Not Quite as Quickly as Earlier in the Year.
How you view that depends on your view of Half Empty vs. Half Full. If you see incredible growth at $1B, $2B, even $82B in ARR as a positive sign — as I do — then these are still amazing times in SaaS and Cloud. But if you see some slowdown in the growth rates at leaders like Datadog, ZoomInfo, and AWS as a flag, then these are times to be a bit more fearful. And it does explain a lot of the conservatism out there.
But certainly, there is no excuse not to grow at strong rates these days. Even if the top leaders like Datadog, ZoomInfo, and AWS have taken a bit of a hit from macro issues, they are still growing at jaw-dropping rates. Just with a little bit of weight attached to their ankles.
As Datadog notes, long-time growth drivers are still in the early stages, relatively speaking: