Thank you for standing by and welcome to the Quarter 2, 2020 Datadog Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. AJ Ljubich, the Director of Investor Relation. Please go ahead, sir.

Thank you, Frendi. Good afternoon and thank you for joining us today to review Datadog's second quarter 2020 financial results, which we announced in our press release issued after the close of market today. Joining me on the call today are Olivier Pomel, Datadog's Co-Founder and CEO, and David Obstler, Datadog's CFO. During this call, we will make statements related to our business that are forward-looking under federal securities laws and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our future financial performance, including our outlook for the third quarter and for the full-year of 2020, our strategy, the central benefits for products, R&D and go-to-market investments, expected capital expenditures, anticipated hiring, the size of and our ability to capitalize on our market opportunity, as well as the impact of the COVID-19 pandemic on our customers, their usage of our products, our market, industry trends and our business and operating results. The words anticipate, believe, continue, estimate, expect, intend, will and other similar expressions are intended to identify forward-looking statements or similar indications of future expectations. These statements reflect our views only as of today and not as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our quarterly report on Form 10-Q for the quarterly period ended March 31, 2020 filed with the SEC on May 12, 2020. Additional information will be made available in our quarterly report on Form 10-Q for the quarterly period ended June 30, 2020 and other filings and reports that we may file from time to time with the SEC. Our filings with the SEC are available on the Investor Relations section of our website. A replay of the call will be available there for a limited time. Additional information may also be made available in our other filings and reports that we may file from time to time with the SEC. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release, which you can find on the Investor Relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financial measure. With that I'd like to turn the call over to Olivier.

Thank you, AJ and thank you all for joining us today. Before discussing the results of the quarter, I want to proudly report that together with our employees, we raised over $1 million for charities supporting COVID release, as well as organizations working to dismantle the systemic discrimination experienced by black communities. We are living in unprecedented times for many reasons, and we want to do our part to help. And as always, Datadog is committed to supporting diversity and inclusion within our company and communities. Now turning to Q2 results, we are happy to report another quarter of strong growth and demonstrated financial efficiencies. Execution was strong during challenging times, including robust new logo generation and continued platform adoption. While we are pleased with our execution in the quarter, we did experience some impact to the rate of usage growth of our customers related to the micro environment. While this macro uncertainty remains in the near-term, we continue to believe that this environment accentuate the need to be digital first and agile and confirms the cloud as the best path to achieve these outcomes over the long-term. And we see evidence of this in growing overall demand in the form of new customers and new use cases for existing customers. To summarize, Q2 at a high level, revenue was $140 million, an increase of 68% year-over-year and above the high end of our guidance range. We ended the quarter with 1,015 customer with ARR of $100,000 or more, which is an increase of 71% from last year. These customers generate about 75% of our ARR. We have about 12,100 customers, which represent growth of 37% from about 8,800 last year. We also continued to be capital efficient with free cash flow of $19 million. And as in past quarters,…

Thanks, Olivier. As mentioned, we delivered strong second quarter top and bottom line results amid a difficult macro backdrop. Revenue was $140 million, up 68% year-over-year, against the challenging compare. Execution was strong with robust new logo generation and continued platform traction. While the macro environments did pressure usage of existing customers. To provide some more context. First, in Q2 we strong -- we saw strong new logo additions with robust contributions from both enterprise and commercial sales channels and sequential growth of new logo ARR. Execution against our platform has been very strong with 68% of customers now using two or more products versus just 40% a year ago driven by both lands and cross-selling. In the second quarter, our dollar based net retention was once again above 130% for the 12th consecutive quarter. We saw continued growth of our existing customers, driven by both increased usage of existing solutions and robust cross-selling to newer solutions. Our net retention rate, which remains best-in-class above 130% did however decline from Q1. As Olivier discussed, macro factors pressured usage increases. To add some detail. First, while existing customers did grow, the rate of growth was below pre-pandemic levels. This was primarily seen from our larger customers with a greater scale in the cloud, who experienced business pressures and softer save in the near-term by slowing down their consumption. Additionally, one dynamic, which we discussed as a possibility on our Q1 call is that we did see the normalization of some spike usage from Q1. In March, we had a number of customers such as streaming media vendors, scale rapidly in the face of COVID. Over the following months, some of these customers were able to optimize usage and save on cloud spending amid budget pressures and normalization of business activities. Next,…

Thank you. [Operator Instructions] Your first question comes from the line of Sanjit Singh of Morgan Stanley. Your line is open.

Hi and thank you for taking the question. And I really appreciate all of the detail that you guys provided in a rough environment and usage, that's very helpful context. So I guess, maybe to start with, Oli, you sort of singled out the sort of primary factor and correct me if I'm wrong, but the primary factor being large customers that have large scale cloud deployments. And would sort of just makes sense, right? It's sort of a large, large numbers impact there as well. What gives you kind of confidence Oli that you think this is a temporary pause with those customers versus something more sustained? Is there any sort of customer conversations you're having -- or was it just kind of like the secular tailwinds of digital transformation. I just want to get a sense of what gives you guys the confidence that in these large customer cohorts that it's more of a digestion period after a period of strong growth versus more -- a more sustained downturn?

Yes. So the first thing I'd say is, it's something we've seen before, it happens from time to time like companies ramp up their cloud consumption at some point, their bills going up and they ask themselves can we optimize. And look we've done that too as a company. If you've seen our gross margins. For example, go up from last year that was fairly similar in that respect. What happened there is that everybody has the same idea at the same time like everybody ask themselves, how can we save some cash. The word came pretty much every single company effected down by COVID, because of the uncertainties, cash have to be conserved. One of the good things about cloud is that a lot of it is opex and a lot of it is -- still had to be paid -- has to be paid in the next bill, it's not some costs, so there are still savings to be made. If you take action, so that's what we saw happen. In terms of it, continuing on that, again it's hard to tell what's going to happen in the near-term, but in the broader scheme of thing, companies are still moving to the cloud, but new companies are moving to the cloud that were not before and we've mentioned that on the call. That we've had a number of asset -- key companies that started using us right now, when you think of hotel chains and amusement parks and things like that. We see though -- in the July data and even some of the June data that companies that have optimized their cloud infrastructure. And by the way, in general what we mean by that is not that call Datadog to cut their bill to cut data bill, is that they're trying to figure out what they could shutdown or optimize on the Amazon side, or on the Google side on the Azure side. And so while we see some decrease of their data volume or infrastructure side view over -- period of a few weeks, but then what we see after that is that they start going again, because then their team keeps building and they keep deploying, keeps having customer etc, etc. So it's not an exercise that is new or unexpected. I think what's different now is that, it's a -- it makes sense for all of these companies to be at the same time and it just happened.

Understood. That makes total sense. And then David, if I think about the guidance, right? 68% growth this quarter, and I look at Q3, the high-end is roughly around 50% and the Q4 is roughly around 40%, at least by my math. I think what would be helpful to understand the underlying assumptions behind that guidance? And particularly around those usage trends, right? So, I know there was a -- prior to COVID, there was a significant amount of customers that were sort of overspending relative to their committed usage. If you could sort of give us like the pre-level of usage, anyway to sort of quantify that -- although it looks like post-COVID, to understand the underlying assumptions behind your guidance. Because I think what your guidance assumes is that some of the weaker usage trends persist for the second half? And so anyway to frame that out I think would be very helpful in terms of understanding that, the guidance.

Yes, I think that's right. We have our guidance throughout our history as a public company been fairly prudent and our forward-looking usage and implicit net retention and we're particularly cognizant of that given COVID, most of our guidance has conservative assumptions in that and we continue to do that. I think as we said, we had strong cross sell. And so we see a continued adoption of the platform, which is a good sign and as far as the usage. The more variable usage we saw as Oli just mentioned some constraints. So we tried to use conservative assumptions going forward in our guidance.

Understood. I'll leave the floor. Thank you very much.

Thank you.

Your next question comes from the line of Chris Merwin of Goldman Sachs. Your line is open.

Okay, thanks very much for taking my questions. For Olivier, I wanted to ask about your thoughts on pricing, particularly in light of -- or the convergence that we're seeing going on within the observability space. I remember with your log product when you launched it, you had a pretty disruptive pricing strategy where you were charging at very low price for ingestion and you're letting the customers pay just for the logs that they actually want to index. And now we're seeing other players in the space give away entire aspects of their platform for free and creating free tier. So I guess the question is how do you see your pricing model evolving if at all in time and as you keep up the industry leading pace of innovation. Do you see the ability to even raise price as you deliver more value to your customers? Thanks.

Yes. So I think we are -- so we are very careful about pricing, in that the way we do it is, first of all, we encourage having the maximum deployments with our customers, meaning that's why we don't charge by the user, we want absolutely everybody to use it. And then we want to make sure that customers have the levers to align pricing to able to pay to Datadog with value they get. And in our case, that means, having differentiated pricing for very different parts of our platform, because not every single gigabytes of data that is being sent to us has the same value to the customer and represents the same amount of processing and other things online. So we try to align that. Right now, we're happy with our pricing model. It works well in the market. It gives customers the flexibility, but look we've had our pricing model evolve over time, it will probably still evolve in the future. We believe in our ability to winning the market -- at least winning the market and give a more and more value you have pricing power in the long-term and that's where we are today, we want to be in the future. I think when you -- when your only tool is to play on pricing, like it's usually bad news. It means you can't actually win based on the quality of your products alone.

Understood. Thank you. And maybe just follow-up for David, would you be able to share some more detail about some of the trends that you saw by customer segment during the quarter, as it relates to net expansion or good churn or any metrics you could share, I guess across SMB and mid-market and our enterprise customers. Thank you.

Yes, that was one of the surprises we had very stable gross churn, dollar based gross churn and it's very similar to what we have discussed in the last call that all over the metrics and growths are in the 90s with enterprise tending to be towards the upper part of that range and SMB towards the lower, but all of them strong and in the 90s. We really didn't see very much disruption from that. And similarly, we saw net retention rates come down, we said a little more at the larger end because of this concentration on costs. But all within the same type of bands, we've had since we've become a public company.

Great, thanks very much.

Yes.

Your next question comes from the line of Sterling Auty of JP Morgan. Your line is open.

Yes, thanks. Hi guys. So in terms of the macro impacts and the slowing of usage of existing customers. Is there any evidence that you've seen of some of those customers slowing the usage of your tools, but supplementing it with maybe the cloud platform tools or something else or they're just slowing the usage and that's it?

No, I think what we've seen mostly is they're slowing the usage of the cloud infrastructure that's directly related to how we recognize new revenue. So that's what we thought. To put in another terms, they use less Amazon instances or containers or less Azure instances and containers. And that's -- that would end up move the needle for us. And I should say, this is something that we used to see it in the other way, we used to see, like the way we sell it, we send to customers and they're still early in their cloud transition and we grow with them as they grow. What happened this quarter is that their growth slowed overall during the quarter, they still grew and they are still going to grow and what we said in the call is -- in July, so towards the June, we saw some acceleration of the growth again, but we want to remain prudent considering all the uncertainties there is right now in terms of, how long the COVID crisis is going to last and what's going to be the impact in various parts of the economy. We remain prudent in what we think is going to happen in the near-term.

Understood. And then one follow-up, how would you characterize the ramping of the new sales resources that you've hired over the last couple of quarters of ramping at the same pace that you've traditionally seen, are they ramping faster, slower?

We haven't seen any changes there. And everything that that is within control of the sales team actually worked pretty well. We mentioned during the call but -- so we had a record level of new logos, both in terms of numbers and in terms of revenue. We had a record level of new product attach. And this is where our sales team spend their time on. The growth of customers once they are set up every single month, it did only partially related to the world of [indiscernible] like we don't have full control over that, which is also why when we set expectations around our net retention initially, we said we're going to sell at 130%, because we don't fully control that number. A great part of this is driven by the rate of migration to the cloud and the rate at which customers are scaling to the cloud. Again, we're very early in that transition and customers are going to keep transitioning for much longer time, they keep scaling and we see that they only wanted to do that more now they see the impact of COVID on their business and the need to transform. But from a quarter-to-quarter basis. In the near-term, we don't exactly know where that's going.

Understood. Thank you.

Your next question comes from the line of Brad Zelnick of Credit Suisse. Your line is open. Mr. Brad Zelnick of Credit Suisse. Your line is now open.

Hi. Sorry about that. This is Ray McDonough on for Brad Zelnick. Thanks for taking the questions. I just wanted to ask -- can you help us understand a little bit more the relative size or recent attach rates of your APM and log management solution, both of which I think you mentioned last quarter were growing faster than the overall business. So that remain the case in this recent quarter?

Yes. So they are both in hyper growth. So the picture hasn't changed a lot since the last time we talked. The infrastructure iPhone would still be a great public company, logs and APM are still in hyper growth not growing much faster than Datadog grows at this scale and the other products that are smaller and earlier are also growing extremely fast right now. So we -- overall we're fairly happy with those.

And the attach rates and their contribution to net retention, has been very similar to the trends that we've talked about last time. So we continue to have increasing number of customers using the platform and there -- what they're spending on the additional components of the platform continues to grow in hyper growth.

Yes, which is important to understand. The signs of active demand are really strong, whether it's new logo, new products that we -- that rate is actually up from what they've been before and we keep -- this keeps growing over time. So all that is great. The one thing that's been a detractor this quarter has been I would say the passive consumption. I don't like the word passive, because it sounds like we're not doing anything, and customer is not doing anything, but it's something that not directly related to an actual customer they are taking with us today.

Thanks, that's helpful color. And then if I could building on Chris's question from earlier and appreciating that the majority of your lands are Greenfield. How do you think your -- one of your competitor's recent pricing changes and packaging changes will impact your ability to cross sell APM into your customer base? And overall, what do you think that the medium or long-term implications are for your business as you know this one competitor in particular seems to be focused on competing more aggressively on price and total cost of ownership at this point?Yes, so for this kind of changes like we -- we always have to keep an open mind, while we see, what can work and not work. At the same time, look we don't see that having a major impact on us, because we don't actually, our business as you said is mostly Greenfield and you saw today on the strength of our individual product that get tied together in a platform, and there is no problem with our customers adopting our products, little by little. Like they can adapt as little as they want as APM, as little as they want as log and that of their infrastructure, or as little as they want Synthetics, that's not an issue, that's already something we have. We actually give them differentiated pricing that tells that is more tailored to the value they agreed to get for each of those product. So I don't see anything very disruptive there or anything very different. So again from our end, there is no, it won't be a change there.

Yes, so for this kind of changes like we -- we always have to keep an open mind, while we see, what can work and not work. At the same time, look we don't see that having a major impact on us, because we don't actually, our business as you said is mostly Greenfield and you saw today on the strength of our individual product that get tied together in a platform, and there is no problem with our customers adopting our products, little by little. Like they can adapt as little as they want as APM, as little as they want as log and that of their infrastructure, or as little as they want Synthetics, that's not an issue, that's already something we have. We actually give them differentiated pricing that tells that is more tailored to the value they agreed to get for each of those product. So I don't see anything very disruptive there or anything very different. So again from our end, there is no, it won't be a change there.

All right. Thank you for the color.

Your next question comes from the line of Raimo Lenschow from Barclays. Your line is now open.

Hey, thank you. Quick question from me. So you mentioned about like this slowing usage in the public cloud. I mean, like the one benefit we have is that we see Azure and Amazon and AWS then report numbers before you. And so in the way, you were always seen as a little bit of a derivative of those and if I look at AWS growth slow down, Azure slow down. I am just wondering, like they almost -- you almost seem more directly in terms of their growth numbers. But in terms of directionally related. Is that something that you're paying attention to as well, because it seems like there seems to be a correlation here?

Well there is definitely a correlation, and we don't call it exactly with them, right, because they have different product portfolios and some of these tied to what we do today, the kind of the products that we already have for our customers to consume. But the -- what I will say is we understand the dynamics of what happened to these top providers. We saw it happened to these -- to their customers basically, which is they try to save for the next deal, because every million dollar counts in big companies right now. And before they know where their prices is going, they want to make sure they do everything they can. So we have -- we have quality today. And the one thing I will say is, we are growing a lot faster than the cloud providers, because we keep adding more products and we're still underpenetrated in the market. So we are growing a lot faster than they are. And we are still growing faster even in more recent quarters.

Yes, exactly, no. No. Exactly yes, and that's, true. The -- and then the other question I had is on that subject. But in theory the one offsets you have is like one is consumption usage and there's not that much you can do about it. On the other hand, you mentioned some stats around product uptake etc. Have you taken any action, you kind of change or the incentivized sales force or a push more towards more up selling and cross-selling of other products. Or is this something look we are writing it up, because like COVID is there for everyone, you saw some better trends in July or you taking extra action here?

No, we didn't change anything. The sales incentives are the same. The way we sell, we have the teams to do is the same. So we haven't changed anything to the -- the way we proceed. The -- we're doing right now is working, right. What we said earlier is, we did bring the right numbers of new logos, the right numbers of product cross-sell that was our focus before, that's still our focus today. The rest, the growth in usage will come because the transition into digital businesses move to the cloud is not going to stop.

Yes, it makes sense. Perfect, thank you.

Welcome.

Your next question comes from the line of Matt Hedberg from RBC Capital Markets. Your line is now open.

It's Dan Bergstrom for Hedberg. Thanks for taking our question. Wondering about linearity in the quarter, given call-outs around the macro and then large enterprise, you provided some color in July. That was helpful, but anything else from a linearity perspective in the quarter to note or maybe different than what you expected?

Yes. So this quarter was actually. I mean, David, I hope you don't -- let's say, if I take a numbers question. But...

No. Go ahead.

The way the scope that this quarter was a little bit different in that what we saw from early July was fairly consistent with what we had before in Q1. So we saw good growth and great behavior on the logos, which is what we discussed in last call. Sorry, I mentioned, not July -- April. The first few weeks of April were very good growth and new logos. Our new logos remain for the rest of the quarter. But what we saw is towards the end of April and then the full month of May, we had much lower growth. And then things recovered -- had started recovering in June, so growth was going up in June, and is recovering further in July. So these are the trends we've seen. Now, so this is what we saw past quarter, it was a lot noisier than what we used to. Like we're used to having very consistent numbers month over month. We can't really tell whether in the near-term, we will see some return to the previous normal or if we'll still see some oscillation as the state of the economy and other things provoke the same emotions in our customers.

Great thanks helpful. And then Security Monitoring that's been generally available here for a little over three months. Just curious of initial reception from customers and security engineers. I know, it's a strong demand in beta. And then maybe where should we think about you heading with security? Certainly, a long runway left there?

Yes. So we -- now if look, it's still super early right, it's a very, very early product, it has some very focused use cases to start with for some very focused types of customers. We're very happy with the uptake that we did get a good start in terms of customers planning to use it and pay for it. But again, super, super early. So I think maybe we'll talk about it some more in the future when it becomes more material and we have -- when we have more products to talk about there, but we are -- we say we're excited, but still early, still a lot of work to do.

Thank you.

Your next question comes from the line of Brad Rebeck from Stifel. Your line is now open.

David, I know you don't guide to billings. But I believe looking through my notes next quarter, you had some difficult comps with pretty significant contracts that paid up last 3Q, any color on that would be super helpful. Thank you.

We didn't have that and what we -- we didn't present the pro forma, because it wasn't as impactful. We did say in RPOs we had the multi-year contracts, and a quarter ago, which were more concentrated than we had in creating RPO, but it didn't affect the billings numbers that much. And so there was nothing to point out.

Okay, and no issue for 3Q, as we look forward?

Sorry, I can't hear you. No issues with?

Sorry, any issues for 3Q with difficult comps from the year before?

Yes, we haven't -- nothing that we are pointing out on this call. So we -- nothing that we wanted to point out.

Okay, thanks very much.

Yes.

Your next question comes from the line of Jack Andrews from Needham. Your line is now open.

Well good afternoon, thanks for taking my question. I want to follow-up on the go-to-market strategy, you talked about -- you haven't really changed anything, but I'm just wondering, as you continue to innovate rapidly and roll out these new products. Are you running into new buyers or new personas within organizations. And how do we think about the implications of that whether you might need to either make more investments or maybe change your strategy over time?

Yes. You're thoroughly right. I think on the -- for the bulk of our product portfolio. We still talk to buyers that are going to be the same or working the same way, for everything that relates to observability I will say. When it comes to security, in some cases, now we are starting to see some different buyers. So today, we are still selling the same way. I mean, the security product is focused enough in terms of the customers we're going after that it works that way, but it's something that we're monitoring, it's possible that we'll make changes in the future to that motion. Nothing yet, we'll get more data, we'll get more and we'll see more how the product behave and how the customers behave as we keep expanding the target audience for that product. But that's something that we're aware of, and we're monitoring.

Okay, great. Just as a follow-up, could you elaborate on how you're thinking about the opportunity for the private locations for Synthetic Monitoring product. I mean is this essentially a new way to leverage your technology for employee use? Or how do you think about the opportunity around that?

Yes, I think it's more for all of the internal services that are being exposed. In fact, companies that don't have a web safety UI. One of the -- in fact as many great advantage is but for me it's more difficult to go and reaching to test some endpoints that are not exposed to the Internet. So that solves that. So it allows customers to put probably inside their own networks to automatically test and verify their APIs and their web application, but it also allows them to install probs in a networks they might manage or their -- or that their employees might be using for example, they might deploy that at either a cable providers or basically cloud providers things that we -- we're not hosted in as Datadog, but they want to monitor it directly. So it opens a whole range of possibilities for them.

Great. Well, thank you.

Your next question comes from the line of Bhavan Suri of William Blair. Your line is now open.

Hi. This is [indiscernible] on for Bhavan Suri. You announced the launch of your formal Partner Network in January, which expands support for partners via things like go to market collateral, self-training for implementation, opportunity registration, partner locator listing. Can you talk about early interest across partner categories in your near and medium term channel strategy. And how important of a growth lever, do you see this channel being over time? And at least qualitatively, can you talk about how it's been impacted by the macro environment. Thank you.

Thanks. So, yes, so we've -- since it's a fairly recent program for us. We've had great uptake like we signed up for large number of partners, actually larger than we thought we would. I don't think we've communicated that number publicly. So I will not do it today. But it's been off to a strong start. I think we're working on making sure we have the right process in place, so we can enable those partners and develop them, so not enough to just be a partner, but there are different levels of partnerships, that are also going to have different expectations in terms of what they provide to us, we will provide to them. And so we're working on promoting for partners to -- for different levels right now. So far we've seen some interesting outputs on that. So we've closed deals, large deals, much earlier than we thought through partners. And we've done that in multiple regions. We haven't seen a specific impact on COVID just because that partner network is still new, that it's growing very fast, no matter what. And we can focus on the partners that want to grow now and that have opportunities now as opposed to maintaining the large base of existing partners. So far with the early plus signs, but a lot more to do.

That's very helpful. Thank you. And can you talk a little bit more on your international performance this quarter. Are there any specific regions where you're seeing particular strength. And additionally, could you talk about your plans for international investment this year and where you maybe see the most opportunity? Thanks.

David, do you want to take this one?

Yes. We are continuing as we've talked about before, to build out regions either when we get to critical mass and have a successful sales team or when we're landing in new territories, so we're continuing the same plan we had which is to build out Asia complete, the build out of EMEA, as well as to expand in some areas like Latin America. We saw good performance as we've talked about before in the second quarter in EMEA on the back of the build outs we had done, and as we said all along, we're earlier in Asia, building out teams and filling out teams for the first time. So we'll continue that as part of our plan in the remainder of the year.

One thing that's interesting is that the pandemic is hitting different parts of the world at different times. So we have these -- very possible to get turned out and turned off at different times and we've seen that through Q2 basically. Again, it's hard to tell what's going to happen in Q3 with respect to that.

Okay, that's great, thanks for the call.

Your next question comes from the line of Brent Thill from Jefferies. Your line is open.

Thanks. This is Parthiv on for Brent. Hey, Oliver, I wanted to ask about the Undefined acquisition, can you help us frame the opportunity for observability in the application testing spaces. I guess, how should we think about the usage patterns in development environments relative to production environments?

Yes, so what's very interesting with Undefined is that they focus completely on what happens when developers check their own codes first on their own machine and then to share Naxi ITD process until it ends up being deployed in production. So it's not an area where we've been present before it, we haven't been typically used with developers on coding their machine before they commit anything towards shared. So that's new for us. All of us to be closer to the developer, closer to the clients in many ways and also allows us to really get extremely high flexibility information for what happens from the time the code is committed to all the way through the release of production. So very good change level with there. So we are super excited about it, because it's a company that built a great product in a short amount of time and we are very excited about the -- about building a common product together. Right now, we are busy, that we're planning to sunset the [indiscernible] and to rebuild in the data platform to have it being maximally integrated and the team is hard at towards that right now.

Okay, got it Thank you.

Your next question comes from the line of Pat Walravens from JMP Sec. Your line is now open.

Thank you for getting me in. So Oli, I'd like to ask you pretty much the same question, I asked you last quarter, which was -- you've been doing this for 20-years, you've seen a number of sort of slowdowns in the economy. How does this point feel in comparison? And then just to remind you, last time you said that the one thing you've learned was that you don't really know where it's going, until it's over. So do you still feel the same way or what have you learned?

Yes, I think, we knew, like this thing we knew last time was that we wouldn't exactly know what would happen. We had some ideas and some of the things we thought would happen -- did happen, some others happened a little bit differently. So when we thought about Q2 back in Q1, we thought we might see elevated churn. We thought we might see certain parts of our customer base being much more affected than others. And it's not exactly what happened. We actually, didn't see the churn we're expecting to see, but we saw a broader slowdown among a certain category of our largest current customer. I mean in retrospect, you can explain easily, you understand the behavior, you see what's happening. And it makes sense. I think predicting it before that would be a difficult part. So going back to where we are today, we're super confident about where we are, what the products doing in the market, core customers are adopting it, developing the various parts of it and are growing with it. The one thing we are a little bit more careful about is, our understanding of what's going to happen over the next few month -- the next few quarters as we will maybe get it's way through the end of the pandemic hopefully.

Great. Thank you very much.

Your next question comes from the line of Gregg Moskowitz from Mizuho. Your line is now open.

Hey, thanks very much. Hi guys, and thanks for taking the questions. For Olivier, the increased level of cloud optimization among larger customers that you saw this quarter. Do you think that this will have any impact on the pace of multi-cloud adoption going forward?

I don't think so, because when customers are adopting multi-cloud, like they typically have one cloud of scale. You know, the smaller one in addition to that. So I think it is going to adopt the -- to impact mostly their cloud of scale first. That's my guess. And maybe what we've seen in some cases, but we'll see what happens. Again, it's a little bit harder to tell, so that's my guess.

Okay, thanks. And then just for David, your growth in RPO on a year-over-year basis did decelerate quite a bit this quarter. I think you said that your annual contract billing has remained strong and that you were coming up against some longer duration contracts from a year ago. And I know, you don't break out current RPO. Just wondering, if you have any commentary on duration adjusted RPO growth or just how we should be thinking about that?

Yes, you're exactly right. The RPO -- the current RPO is similar growth to the billings much closer to the revenues in the 60s. The difference there is the timing of multi -- of some multi-year contracts in the second quarter of last year. So the billing duration didn't -- the billing period you see didn't change. The contract duration came down slightly, just because those contracts are being consumed, and that's the reason why we had a current RPO, it would be much more aligned with the billings and the revenue.

Okay, very clear. Very helpful, thank you.

Yes.

And right now, I would like to turn it over to Mr. Olivier Pomel. Please continue.

Thank you. All right. So to close this call, I would like to repeat that we are very pleased with our execution in Q2, against what has been a challenging backdrop. And while the macro environment has presented near-term uncertainties, the situation has made it more imperative than ever for businesses to be digital first and in the cloud. We believe Datadog is ideally positioned to be a primary beneficiary of these long-terms and we continue to invest to capture that opportunity. So, I want to thank you all for attending the call.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participations. You may now disconnect.