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Datadog(DDOG - Free Report) reported third-quarter 2022 non-GAAP earnings of 23 cents per share, which increased 77% from the year-ago quarter. The Zacks Consensus Estimate for loss was pegged at 14 cents per share.
The company’s net revenues of $436.5 million surpassed the consensus mark by 5.92%. The figure increased 61.4% year over year.
Quarter Details
In the third quarter of 2022, Datadog had about 2,600 customers with an annual run rate of $100K or more, up from 1,800 in the year-ago quarter.
As of the end of the third quarter, 80% of customers used two or more products, up from 77% in the year-ago quarter. Additionally, 40% of customers utilized four or more products, up from 31% in the year-ago quarter.
Datadog’s dollar-based retention rate was above 130% for the 21st consecutive quarter, driven by increased usage and adoption of existing and new products.
In the third quarter, Datadog’s adjusted gross margin increased 200 basis points (bps) on a year-over-year basis to 78.6%.
Research & development expenses increased 82.3% on a year-over-year basis to $205.4 million, driven by increased investments in Datadog’s platform. Research & development, as a percentage of revenues, increased 540 bps to 47%.
Sales and marketing expenses increased 70.8% year over year to $129.5 million. Sales and marketing expenses, as a percentage of revenues, grew 160 bps to 29.7%.
General & administrative expenses increased 67.3% year over year, reaching $39.4 million in the reported quarter. General & administrative expenses, as a percentage of revenues, increased 30 bps to 9%.
Datadog reported a non-GAAP operating income of $81 million compared with $44.3 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2022, Datadog had cash, cash equivalents and marketable securities of $1.8 billion compared with $1.7 billion as of Jun 30, 2022.
Operating cash flow was $83.6 million in the reported quarter, up from $73 million reported in the previous quarter.
Free cash flow during the quarter was $67.1 million compared with $60.2 million in the prior quarter.
Guidance
For the fourth quarter of 2022, Datadog anticipates revenues between $445 million and $449 million. The Zacks Consensus Estimate for the same is pegged at $440.84 million.
Non-GAAP earnings are expected to be 18-20 cents per share. The consensus mark for earnings is pegged at 14 cents per share.
Non-GAAP operating income is expected in the range of $56-$60 million.
For 2022, Datadog anticipates revenues between $1.650 billion and $1.654 billion. The Zacks Consensus Estimate for the same is pegged at $1.62 billion.
Non-GAAP earnings are expected to be between 90 cents and 92 cents. The Zacks Consensus Estimate for earnings stands at 78 cents per share.
Non-GAAP operating income is expected in the range of $300-$304 million.
3Q22 Highlights
Datadog announced the general availability of Datadog Continuous Testing, a new product that helps developers and quality engineers quickly create, manage and run end-to-end tests for their web applications.
It launched Cloud Cost Management, which shows an organization's cloud spending in the context of its observability data. This allows engineering and FinOps teams to automatically attribute spending to applications, services and teams, track any changes in spending, understand why those changes occurred and include costs as a key performance indicator of application health.
Datadog announced the general availability of Cloud Security Management. This product brings together capabilities from Cloud Security Posture Management, Cloud Workload Security, alerting, incident management and reporting in a single platform to enable DevOps and Security teams to identify misconfigurations, detect threats and secure cloud-native applications.
Datadog Certification Program was also launched in the third quarter of 2022. The program builds on the Datadog Learning Center to help developers further uplevel their observability skills.
The company achieved Amazon Web Services (“AWS”) Security, Networking and Retail competencies. In total, Datadog has now received nine competencies, the most of any integrated observability company supporting AWS to date. It also extended Monitoring for Microsoft SQL and Microsoft Azure Database Platforms. With this expanded support, engineers and database administrators can quickly pinpoint and address database performance issues, such as costly and slow queries, incorrect indexes in SQL server or Azure databases and bottlenecks in their applications.
Zacks Rank & Other Stocks to Consider
Currently, Datadog carries a Zacks Rank #2 (Buy).
Datadog’s shares have declined 57.9% compared with the Zacks Computer and Technology sector’s fall of 37.7% in the year-to-date period.
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Datadog (DDOG) Q3 Earnings Rise Y/Y, Revenues Beat Estimates
Datadog(DDOG - Free Report) reported third-quarter 2022 non-GAAP earnings of 23 cents per share, which increased 77% from the year-ago quarter. The Zacks Consensus Estimate for loss was pegged at 14 cents per share.
The company’s net revenues of $436.5 million surpassed the consensus mark by 5.92%. The figure increased 61.4% year over year.
Quarter Details
In the third quarter of 2022, Datadog had about 2,600 customers with an annual run rate of $100K or more, up from 1,800 in the year-ago quarter.
As of the end of the third quarter, 80% of customers used two or more products, up from 77% in the year-ago quarter. Additionally, 40% of customers utilized four or more products, up from 31% in the year-ago quarter.
Datadog’s dollar-based retention rate was above 130% for the 21st consecutive quarter, driven by increased usage and adoption of existing and new products.
Operating Details
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
In the third quarter, Datadog’s adjusted gross margin increased 200 basis points (bps) on a year-over-year basis to 78.6%.
Research & development expenses increased 82.3% on a year-over-year basis to $205.4 million, driven by increased investments in Datadog’s platform. Research & development, as a percentage of revenues, increased 540 bps to 47%.
Sales and marketing expenses increased 70.8% year over year to $129.5 million. Sales and marketing expenses, as a percentage of revenues, grew 160 bps to 29.7%.
General & administrative expenses increased 67.3% year over year, reaching $39.4 million in the reported quarter. General & administrative expenses, as a percentage of revenues, increased 30 bps to 9%.
Datadog reported a non-GAAP operating income of $81 million compared with $44.3 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2022, Datadog had cash, cash equivalents and marketable securities of $1.8 billion compared with $1.7 billion as of Jun 30, 2022.
Operating cash flow was $83.6 million in the reported quarter, up from $73 million reported in the previous quarter.
Free cash flow during the quarter was $67.1 million compared with $60.2 million in the prior quarter.
Guidance
For the fourth quarter of 2022, Datadog anticipates revenues between $445 million and $449 million. The Zacks Consensus Estimate for the same is pegged at $440.84 million.
Non-GAAP earnings are expected to be 18-20 cents per share. The consensus mark for earnings is pegged at 14 cents per share.
Non-GAAP operating income is expected in the range of $56-$60 million.
For 2022, Datadog anticipates revenues between $1.650 billion and $1.654 billion. The Zacks Consensus Estimate for the same is pegged at $1.62 billion.
Non-GAAP earnings are expected to be between 90 cents and 92 cents. The Zacks Consensus Estimate for earnings stands at 78 cents per share.
Non-GAAP operating income is expected in the range of $300-$304 million.
3Q22 Highlights
Datadog announced the general availability of Datadog Continuous Testing, a new product that helps developers and quality engineers quickly create, manage and run end-to-end tests for their web applications.
It launched Cloud Cost Management, which shows an organization's cloud spending in the context of its observability data. This allows engineering and FinOps teams to automatically attribute spending to applications, services and teams, track any changes in spending, understand why those changes occurred and include costs as a key performance indicator of application health.
Datadog announced the general availability of Cloud Security Management. This product brings together capabilities from Cloud Security Posture Management, Cloud Workload Security, alerting, incident management and reporting in a single platform to enable DevOps and Security teams to identify misconfigurations, detect threats and secure cloud-native applications.
Datadog Certification Program was also launched in the third quarter of 2022. The program builds on the Datadog Learning Center to help developers further uplevel their observability skills.
The company achieved Amazon Web Services (“AWS”) Security, Networking and Retail competencies. In total, Datadog has now received nine competencies, the most of any integrated observability company supporting AWS to date. It also extended Monitoring for Microsoft SQL and Microsoft Azure Database Platforms. With this expanded support, engineers and database administrators can quickly pinpoint and address database performance issues, such as costly and slow queries, incorrect indexes in SQL server or Azure databases and bottlenecks in their applications.
Zacks Rank & Other Stocks to Consider
Currently, Datadog carries a Zacks Rank #2 (Buy).
Datadog’s shares have declined 57.9% compared with the Zacks Computer and Technology sector’s fall of 37.7% in the year-to-date period.
Investors interested in the broader Zacks Computer & Technology sector can also consider some other top-ranked stocks like eGain (EGAN - Free Report) , Flux Power (FLUX - Free Report) and Monday.com (MNDY - Free Report) , each carrying a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of eGain have lost 25% in the year-to-date period. The company is expected to release its first-quarter fiscal 2023 earnings on Nov 7.
Shares of Flux Power have lost 19.3% in the year-to-date period. The company is expected to release its first-quarter fiscal 2023 earnings on Nov 10.
Shares of Monday.com have declined 69.8% in the year-to-date period. The company is expected to release its third-quarter 2022 earnings on Nov 14.