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July 10, 2019
Olivier Pomel
Chief Executive Officer
Datadog, Inc.
620 8th Avenue, 45th Floor
New York, NY 10018
Re: Datadog, Inc.
Draft Registration Statement on Form S-1
Submitted June 13, 2019
CIK No. 0001561550
Dear Mr. Pomel:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1
Management Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 55
1. Please clarify whether users of your free trials or free tiers of your
platform are included
in your customer count. If so, revise to also disclose the number of
paid customers. In
addition, please disclose the actual number of customers and the number
of customers
with annual recurring revenue greater than $100,000 for each period
presented, including
December 31, 2018, rather than referring to a count in excess of a
certain amount.
Olivier Pomel
FirstName LastNameOlivier Pomel
Datadog, Inc.
Comapany NameDatadog, Inc.
July 10, 2019
July 10, 2019 Page 2
Page 2
FirstName LastName
Factors Affecting Our Performance, page 57
2. You state that annualized revenue run-rate is calculated by taking the
monthly recurring
revenue (MRR), which includes committed amounts as well any additional
usage, and
multiplying it by 12. Please tell us how you determined that
additional usage in a given
month is recurring. Also, clarify whether monthly subscription
customers are included in
MRR and if so, explain your basis for annualizing revenue derived from
such customers.
In your response, please tell us the amount of revenue recognized
from monthly
subscriptions for each period presented.
3. You use "ARR" to describe both "Annual Recurring Revenue" and
"Annualized Revenue
Run-rate." Please revise to clarify whether these both represent the
same metric. If
not, use another acronym for one of these metrics and explain how you
calculate annual
recurring revenue.
4. Please revise to provide comparative disclosure of your actual
dollar-based net retention
rate for each reported period and discuss any significant fluctuations
in such rates.
Liquidity and Capital Resources, page 65
5. Please provide a brief description of the operating lease and purchase
commitments listed
in your Contractual Obligations and Commitments table. Please also
advise us whether
any office space leases, such as for your New York City headquarters,
are material
agreements upon which you are substantially dependent pursuant to Item
601(b)(10) of
Regulation S-K.
6. Please provide a description of the hosting agreement that you entered
into in April 2019
in which you committed to spend at least $225 million over the next
three years. Your
description should include material terms and the identity of the data
center services
provider.
Business
Our Platform, page 82
7. You disclose that you "fully support and maintain all of our
integrations." You further
indicate that alternatives to your platform require significant
professional services. Please
clarify how your clients integrate your platform into their systems
and specifically address
whether they use their own internal IT staff, resellers or other
third-parties, or your
support and maintenance staff.
Sales and Marketing, page 86
8. You briefly describe sales channels including resellers, distributors,
managed service
providers and cloud provider marketplaces. Please clarify whether you
derive a material
amount of revenue from these non-direct sales channels.
Olivier Pomel
Datadog, Inc.
July 10, 2019
Page 3
9. Clarify whether any organization accounted for 10% or more of your
revenue for the
fiscal years ended March 31, 2017 and 2018. In this regard, you state
that in some cases,
a single organization may comprise multiple customer accounts when
there are separate
divisions, departments or subsidiaries that operate and make
purchasing decisions
independently from the parent organization. We note that a group of
customers under
common control or customers that are affiliates of each other shall be
regarded as a single
customer for the purpose of disclosure regarding customer
concentration. Refer to Item
101(c)(1)(vii) of Regulation S-K.
Management
Composition of Our Board of Directors, page 92
10. Please identify the parties to the voting agreement as well as the
board members who were
designated through the voting agreements with your Series A and B
preferred
stockholders.
Executive Compensation
Employment Arrangements, page 98
11. Your exhibit index indicates that you will file employment agreements
for Messrs.
Pomel, Obstler, and Kopits that will be dated sometime in 2019. Please
advise us whether
these agreements will be finalized and filed on a pre-effective basis.
If so, please provide
a description of material terms of such compensation agreements when
available.
Certain Relationships and Related Party Transactions, page 108
12. Please identify the "certain investors" that you entered into an
agreement to waive certain
transfer restrictions in connection with the tender offer. In
particular, clarify
whether parties to this agreement included the investors that
purchased shares in the
tender offer. For the tender offer investors, also please clarify
whether they would be
subject to the 180-day lock up agreement and receive any other rights
and privileges
beyond those afforded to all Class B stockholders, such as
registration rights.
Principal Stockholders, page 110
FirstName LastNameOlivier Pomel
13. Please disclose the natural person(s) holding investment and/or voting
power over the
Comapany NameDatadog, Inc. held by principal stockholders that are entities,
such as the funds
shares of common stock
July 10, 2019 Page 3 Open Venture Partners, ICONIQ Strategic Partners, and RTP
Ventures.
affiliated with
FirstName LastName
Olivier Pomel
FirstName LastNameOlivier Pomel
Datadog, Inc.
Comapany NameDatadog, Inc.
July 10, 2019
July 10, 2019 Page 4
Page 4
FirstName LastName
Description of Capital Stock, page 113
14. Please advise us whether your certificate of corporation will continue
to include the
Excluded Opportunity provision, which would apply to your non-employee
directors. If
so, provide a description of the Excluded Opportunity provision and
provide a risk factor
given the inherent conflicts of interests with your Class B
stockholders and directors that
are affiliated with venture capital firms.
15. Please revise to provide a more detailed description of the material
voting rights of the
Class A common stockholders. For example, disclose the circumstances
under which the
Class A common stockholders are entitled to a separate class vote
under Delaware law.
Notes to Consolidated Financial Statements
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Deferred Contract Costs, page F-14
16. Please tell us if additional sales commissions are paid upon contract
renewal and, if so,
whether such amounts are commensurate with the initial commissions. To
the extent
applicable, explain how commissions paid for renewals are considered
in your initial
commission amortization period. Also tell us the period of time over
which you amortize
commission costs related to contract renewals and revise your
disclosures, as necessary.
Refer to ASC 340-40-35-1 and 340-40-50.
Note 10. Equity
Stock-Based Compensation, page F-27
17. Please provide us with a breakdown of all stock options granted to
date in fiscal 2019 and
include the fair value of the underlying common stock used to value
such awards as
determined by your board of directors. To the extent there were any
significant
fluctuations in the fair values from period-to-period, please describe
for us the factors that
contributed to these fluctuations, including any intervening events
within the company or
changes in your valuation assumptions or methodology. Also, tell us
how the
$47.75 tender offer price impacted your valuations.
Note 12. Net (Loss) Income Per Share, page F-35
18. Please revise to clarify whether the convertible preferred
stockholders have a contractual
obligation to share in the company's losses. We refer you to ASC
260-10-45-68.
General
19. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you or anyone authorized to do
so on your behalf
present in reliance on Section 5(d) of the Securities Act, whether or
not they retain the
communications.
Olivier Pomel
Datadog, Inc.
July 10, 2019
Page 5
20. If you intend to use graphics in your prospectus, other than those
already provided, please
submit such materials to the staff on a supplemental basis and provide
any support for any
claims contained therein. Please refer to Question 101.02 of our
Compliance and
Disclosure Interpretations relating to Securities Act Forms available on
our website.
You may contact Eiko Yaoita Pyles, Staff Accountant, at (202) 551-3587
or Kathleen
Collins, Accounting Branch Chief, at (202) 551-3499 if you have questions
regarding comments
on the financial statements and related matters. Please contact Edwin Kim,
Staff Attorney,
at (202) 551-3297 or Jan Woo, Legal Branch Chief, at (202) 551-3453 with any
other questions.
Sincerely,
FirstName LastNameOlivier Pomel Division of
Corporation Finance
Office of
Information Technologies
Comapany NameDatadog, Inc.
and Services
July 10, 2019 Page 5
cc: Nicole Brookshire, Esq.
FirstName LastName