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Datadog (DDOG) to Report Q1 Earnings: What's in the Cards?

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Datadog (DDOG - Free Report) is set to release first-quarter 2021 results on May 6.

For the quarter, the company expects to report non-GAAP earnings between 2-3 cents per share. The Zacks Consensus Estimate for earnings has remained at 3 cents per share over the past 30 days, indicating a decline of 50% from the year-ago period.

Moreover, the company projects revenues between $185 million and $187 million. The consensus mark for the top line is currently pegged at $186.2 million, suggesting 41.8% growth from the figure reported in the previous quarter.

Markedly, Datadog’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 425%.

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 fourth-quarter 2020 with 1,253 customers with ARR of more than $100K, up 46% year over year. Also, the firm’s dollar-based net retention rate remained more than 130% for the 14th consecutive quarter.

During the to-be-reported quarter, Mendix, a Siemens business and global leader in low-code application development for the enterprise, selected Datadog as the company’s exclusive cloud observability platform for monitoring its multi-cloud microservices environment.

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.

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 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.

Key Developments in Q1

On Feb 11, Datadog acquired Timber Technologies, the developer of Vector, a vendor-agnostic, high-performance observability data pipeline, which helps customers to collect, enrich, and transform logs, and other observability data both on-premises and in cloud environments.

What Our Model Indicates

According to 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.

Datadog has an Earnings ESP of -31.03% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

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

Fox Corporation (FOXA - Free Report) has an Earnings ESP of +13.40% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Playtika Holding Corp. (PLTK - Free Report) has an Earnings ESP of +18.87% and is Zacks #2 Ranked.

CDW Corporation (CDW - Free Report) has an Earnings ESP of +0.51% and a Zacks Rank #2.

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