Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Consumption Thoughts We’re really learning a lot about consumption models, and how they fare in a down market. Coming into this cycle I had two hypotheses on how consumption models would fare relative to their seat based counterparts (speaking in very generalized terms):
Very interesting POV on consumption versus seat revenue growth.
1. I think we need to take out the COVID pandemic year data because it is a black swan outlier event that is skewing the analysis. I much prefer to use normal, historical market cycles (economic expansions, recessions etc.).
2. These young companies (DDOG, SNOW, CRWD etc.) have not undergone enough of economic history to allow us to make an informed guess. Even their mgmt teams dont know for sure what is ahead in terms of top line growth and customer demand.
So bottomline, we are all guessing. But that is what makes this fun :-)
I like the datadog chart, thanks. I think it bottoms between 20 and 30% for, probably, 3 quarters, before accelerating to >30% near 40% again.
Cool visuals on the Consumption vs. Seat models. A picture is worth 1000 words!
Always enjoy your weekly take. Thanks!
Very interesting POV on consumption versus seat revenue growth.
1. I think we need to take out the COVID pandemic year data because it is a black swan outlier event that is skewing the analysis. I much prefer to use normal, historical market cycles (economic expansions, recessions etc.).
2. These young companies (DDOG, SNOW, CRWD etc.) have not undergone enough of economic history to allow us to make an informed guess. Even their mgmt teams dont know for sure what is ahead in terms of top line growth and customer demand.
So bottomline, we are all guessing. But that is what makes this fun :-)
I'm surprise that Salesforce has done well
i think it's because of increased profitability