Grafana at $270M/year growing 69%

Featuring

Grafana Labs is a leading open-source software company known for its flagship product, Grafana, which enables organizations to create beautiful and interactive data visualization dashboards for data-driven decision-making.

Listed In

#b2b

#modern-data-stack

Published Jun 23rd, 2024

TL;DR: Sacra estimates that Grafana hit $270M annual recurring revenue (ARR) in June 2024, up 69% year-over-year, monetizing just 1% of its 20M users. As the leading open-source alternative to Datadog (NASDAQ: DDOG), Grafana is going after an observability TAM that is now $50B+ and growing.

Torkel Ödegaard launched Grafana in 2013 as a delightfully-designed, simple dashboard for time-series data, designed to make it easier for devops teams to visualize the performance of their web applications.

The original v1 of Grafana took the form of a pull request to add support for the Graphite time-series database to the popular visualization tool Kibana. When that PR was rejected, Ödegaard decided to build it as his own open-source product, Grafana.

Today, Grafana is one of the fastest-growing devops companies by revenue, one of the biggest open source projects in the world by contributions and users—and yet it only monetizes 1% of its total user base.

Key points from our update:

Sacra estimates that Grafana is at $270M of annual recurring revenue (ARR), up 69% year-over-year, currently raising at a $5.5B valuation for a 20x forward revenue multiple. Compare to Datadog (NASDAQ: DDOG) at $2.45B fo annual recurring revenue, up 27% year-over-year, currently valued at $39B for a 16x forward revenue multiple, and to Elastic (NYSE: ESTC) at $1.3B ARR, up 16%, for a 8x multiple on their $11B market cap.
Early on, Ödegaard focused on making Grafana the default visualization for Prometheus databases, recognizing that their growth would be tightly coupled—at the first Prometheus conference 5 months after their first release, 30% of the audience was using Grafana. Over time, Grafana differentiated through its "big tent" approach of prioritizing interoperability with a wide ecosystem of over 100 different databases, unlike competitors like Kibana which were tied to specific tools like Elasticsearch.
Grafana's open source model and "big tent" interoperability have enabled it to efficiently acquire customers and expand their $50B+ observability TAM as data volumes and sources proliferate. Grafana acquires users for free via the open source community at near-zero marginal cost—Grafana currently has 20M users, 61K Github stars, and the third-most contributors of any OSS project, just behind Next.js—and monetizes them over time through enterprise support and managed services, resulting in 80-90% gross margins.