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Datadog (DDOG) to Report Q4 Earnings: What's in the Cards?

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Datadog (DDOG - Free Report) is set to release fourth-quarter 2020 results on Feb 11.

For the quarter, the company expects to report earnings between 1-2 cents per share. The Zacks Consensus Estimate for the same is currently pegged at 2 cents per share, having moved north by a penny over the past 30 days. The company had reported earnings of 3 cents per share in the year-ago quarter.

Moreover, the company projects revenues between $162 million and $164 million, indicating a year-over-year jump of 43% at the mid-point.

The consensus mark for the top line is currently pegged at $163.3 million, suggesting 43.7% growth from the figure reported in the previous quarter.

Markedly, Datadog’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, the average being 437.5%.

Let’s see how things have shaped up prior to this announcement.

Datadog, Inc. Price and EPS Surprise

Datadog, Inc. Price and EPS Surprise

Datadog, Inc. price-eps-surprise | Datadog, Inc. Quote

Factors to Consider

Datadog’s quarterly performance is likely to have benefited from increased adoption of its cloud-based monitoring and analytics platform owing to the accelerated digital transformation and cloud migration across organizations.

Moreover, robust adoption of Synthetics and NPM products is expected to have aided customer wins in the soon-to-be-reported quarter.

Notably, the company ended third-quarter 2020 with 1,107 customers with ARR of more than $100K, up 52.3% year over year. Also, the firm’s dollar-based net retention rate remained more than 130% for the 13th consecutive quarter.

Apart from this, contributions from a solid cloud partner base, which includes the likes of Google Cloud, Microsoft Azure and Amazon Web Services (AWS), is anticipated to have been a key growth driver.

Datadog extended its partnership with Google Cloud to provide enterprises with infrastructure monitoring, application performance monitoring and log-management capabilities across cloud infrastructure. The partnership is likely to have boosted Datadog’s presence by extending its footprint to newer markets.

In addition, at the third-quarter end, Datadog entered into a strategic partnership with Microsoft Azure, which makes Datadog available in the Azure console as a first-class service, allowing Azure customers to implement Datadog as a monitoring solution for their cloud workloads. The integration is likely to have aided customer acquisition during the quarter under review.

Additionally, Datadog’s expanding portfolio of integrated solutions has been a key catalyst in expanding its clientele. The company launched an integration for Datadog Compliance Monitoring with the AWS Well-Architected Tool to enable customers monitor their workloads with respect to AWS best practices.

Further, Datadog’s recently-released new monitoring capabilities to troubleshoot DNS issues and Deployment Tracking, a new feature for Datadog APM, are likely to have been a major positive and contributed to top-line growth in the soon-to-be-reported quarter.

What Our Model Indicates

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

DDOG has an Earnings ESP of +33.33% and carries a Zacks Rank #4 currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.

CDW Corporation (CDW - Free Report) has an Earnings ESP of +3.40% and carries a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marvell Technology (MRVL - Free Report) has an Earnings ESP of +2.90% and carries a Zacks Rank of 2 at present.

Workday (WDAY - Free Report) has an Earnings ESP of +0.90% and currently holds a Zacks Rank #2.

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