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Datadog (DDOG - Free Report) reported fourth-quarter 2022 non-GAAP earnings of 26 cents per share, which increased 30% from the year-ago quarter and beat the Zacks Consensus Estimate for earnings by 36.8%.
The company’s net revenues of $469 million surpassed the consensus mark by 5.01%. The figure increased 43.9% year over year.
In the fourth quarter of 2022, Datadog had about 2,780 customers with an annual run rate of $100K or more, up from 2010 in the year-ago quarter.
As of the end of the fourth quarter, 81% of customers used two or more products, up from 78% in the year-ago quarter. Additionally, 42% of customers utilized four or more products, up from 33% in the year-ago quarter.
Datadog’s dollar-based retention rate was above 130% for the 22nd consecutive quarter, driven by the mission-oriented nature of the platform.
Operating Details
In the fourth quarter, Datadog’s adjusted gross margin expanded 30 basis points (bps) on a year-over-year basis to 80.6%.
Research & development expenses increased 52.6% on a year-over-year basis to $142.4 million, driven by increased investments in Datadog’s platform. Research & development, as a percentage of revenues, increased 170 bps to 30.3%.
Sales and marketing expenses increased 65.1% year over year to $125.3 million. Sales and marketing expenses, as a percentage of revenues, grew 340 bps to 26.7%.
General & administrative expenses increased 24.4% year over year, reaching $27.5 million in the reported quarter. General & administrative expenses, as a percentage of revenues, contracted 90 bps to 5.9%.
Datadog reported a non-GAAP operating income of $83.1 million compared with $70.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2022, Datadog had cash, cash equivalents, restricted cash and marketable securities of $1.9 billion compared with $1.8 billion as of Sep 30, 2022.
Operating cash flow was $114.4 million in the reported quarter, up from 83.6 million reported in the previous quarter.
Free cash flow during the quarter was $96.4 million compared with $67.1 million in the prior quarter.
Guidance
For the first quarter of 2023, Datadog anticipates revenues between $466 million and $470 million. The Zacks Consensus Estimate for the same is pegged at $478.08 million.
Non-GAAP earnings are expected to be in the range of 22-24 cents per share. The consensus mark for earnings is pegged at 24 cents per share.
Non-GAAP operating income is expected in the range of $68-$72 million.
For 2023, Datadog anticipates revenues between $2.07 billion and $2.09 billion. The Zacks Consensus Estimate for the same is pegged at $2.32 billion.
Non-GAAP earnings are expected to be between $1.02 and $1.09 per share. The Zacks Consensus Estimate for earnings stands at $1.08 per share.
Non-GAAP operating income is expected in the range of $300-$320 million.
Due to rise in interest rates, net interest and other income is expected to be $75 million approximately.
Q4 Highlights
Datadog had its strongest quarter for new logo ARR bookings. The sales for new logo and cross selling have been rising year over year.
As of January 2023, only 37% of Fortune 500 are customers of Datadog. This indicates a huge potential in terms of revenues from the larger customers. There was high growth seen among the smaller ticket customers.
Datadog now has more than 600 integrations which include latest products like AWS, GCP and Azure. The company launched services like Observability Pipelines for customers to collect and change data from any source to any destination, Audit trail for compliance and governance goals, Beta of native protection to block threats directly within and many more such helpful platforms.
Some of the notable deals done in fourth-quarter 2022 are a seven-figure deal with a Fortune 500 financial services company, a seven-figure deal with a major federal government agency, another seven-figure deal with a Japanese system integrator and a multimillion-dollar expansion deal with one of the world’s largest insurance companies.
Zacks Rank & Stocks to Consider
Currently, Datadog carries a Zacks Rank #3 (Hold).
Image: Bigstock
Datadog (DDOG) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Datadog (DDOG - Free Report) reported fourth-quarter 2022 non-GAAP earnings of 26 cents per share, which increased 30% from the year-ago quarter and beat the Zacks Consensus Estimate for earnings by 36.8%.
The company’s net revenues of $469 million surpassed the consensus mark by 5.01%. The figure increased 43.9% year over year.
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
Quarter Details
In the fourth quarter of 2022, Datadog had about 2,780 customers with an annual run rate of $100K or more, up from 2010 in the year-ago quarter.
As of the end of the fourth quarter, 81% of customers used two or more products, up from 78% in the year-ago quarter. Additionally, 42% of customers utilized four or more products, up from 33% in the year-ago quarter.
Datadog’s dollar-based retention rate was above 130% for the 22nd consecutive quarter, driven by the mission-oriented nature of the platform.
Operating Details
In the fourth quarter, Datadog’s adjusted gross margin expanded 30 basis points (bps) on a year-over-year basis to 80.6%.
Research & development expenses increased 52.6% on a year-over-year basis to $142.4 million, driven by increased investments in Datadog’s platform. Research & development, as a percentage of revenues, increased 170 bps to 30.3%.
Sales and marketing expenses increased 65.1% year over year to $125.3 million. Sales and marketing expenses, as a percentage of revenues, grew 340 bps to 26.7%.
General & administrative expenses increased 24.4% year over year, reaching $27.5 million in the reported quarter. General & administrative expenses, as a percentage of revenues, contracted 90 bps to 5.9%.
Datadog reported a non-GAAP operating income of $83.1 million compared with $70.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2022, Datadog had cash, cash equivalents, restricted cash and marketable securities of $1.9 billion compared with $1.8 billion as of Sep 30, 2022.
Operating cash flow was $114.4 million in the reported quarter, up from 83.6 million reported in the previous quarter.
Free cash flow during the quarter was $96.4 million compared with $67.1 million in the prior quarter.
Guidance
For the first quarter of 2023, Datadog anticipates revenues between $466 million and $470 million. The Zacks Consensus Estimate for the same is pegged at $478.08 million.
Non-GAAP earnings are expected to be in the range of 22-24 cents per share. The consensus mark for earnings is pegged at 24 cents per share.
Non-GAAP operating income is expected in the range of $68-$72 million.
For 2023, Datadog anticipates revenues between $2.07 billion and $2.09 billion. The Zacks Consensus Estimate for the same is pegged at $2.32 billion.
Non-GAAP earnings are expected to be between $1.02 and $1.09 per share. The Zacks Consensus Estimate for earnings stands at $1.08 per share.
Non-GAAP operating income is expected in the range of $300-$320 million.
Due to rise in interest rates, net interest and other income is expected to be $75 million approximately.
Q4 Highlights
Datadog had its strongest quarter for new logo ARR bookings. The sales for new logo and cross selling have been rising year over year.
As of January 2023, only 37% of Fortune 500 are customers of Datadog. This indicates a huge potential in terms of revenues from the larger customers. There was high growth seen among the smaller ticket customers.
Datadog now has more than 600 integrations which include latest products like AWS, GCP and Azure. The company launched services like Observability Pipelines for customers to collect and change data from any source to any destination, Audit trail for compliance and governance goals, Beta of native protection to block threats directly within and many more such helpful platforms.
Some of the notable deals done in fourth-quarter 2022 are a seven-figure deal with a Fortune 500 financial services company, a seven-figure deal with a major federal government agency, another seven-figure deal with a Japanese system integrator and a multimillion-dollar expansion deal with one of the world’s largest insurance companies.
Zacks Rank & Stocks to Consider
Currently, Datadog carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can also consider some top-ranked stocks like ACM Research (ACMR - Free Report) , ASM International (ASMIY - Free Report) and Baidu (BIDU - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
ACM Research, ASM International and Baidu are scheduled to report their quarterly results on Feb 24, Feb 28 and Feb 22, respectively.
The Zacks Consensus Estimate for ACMR’s fourth-quarter 2022 earnings is pegged at 10 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for ASMIY’s fourth-quarter 2022 earnings is pegged at $3.81 per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for BIDU’s fourth-quarter 2022 earnings is pegged at $2.14 per share, down 18.6% over the past 30 days.