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Datadog (DDOG - Free Report) reported third-quarter 2023 non-GAAP earnings per share of 45 cents, which beat the Zacks Consensus Estimate of 34 cents and increased 95.7% from the year-ago quarter.
The company’s net revenues of $547.5 million increased 25.4% year over year. The Zacks Consensus Estimate for revenues was pegged at $523 million.
In the third quarter of 2023, Datadog had about 3,130 customers with an annual run rate (ARR) of $100K or more, up from 2,600 in the year-ago quarter.
As of the end of the third quarter, 82% of customers used two or more products, up from 80% in the year-ago quarter. Additionally, 46% of customers utilized four or more products, up from 40% in the year-ago quarter.
Datadog’s dollar-based retention rate was slightly below 120% as customers increased their usage and adopted more products.
Operating Details
In the third quarter, Datadog’s adjusted gross margin increased 260 basis points (bps) on a year-over-year basis to 82.3%.
Research & development expenses gained 12.7% on a year-over-year basis to $155.8 million, driven by increased investments in Datadog’s platform. Research & development, as a percentage of revenues, decreased 320 bps to 28.5%.
Sales and marketing expenses increased 18.6% year over year to $127.5 million. Sales and marketing expenses, as a percentage of revenues, decreased 130 bps to 23.3%.
General & administrative expenses increased 34.2% year over year, reaching $36.8 million in the reported quarter. General & administrative expenses, as a percentage of revenues, expanded 40 bps to 6.7%.
Datadog reported a non-GAAP operating income of $130.8 million compared with $74.8 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2023, Datadog had cash, cash equivalents, restricted cash and marketable securities of $2.3 billion compared with $2.2 billion as of Jun 30, 2023.
Operating cash flow was $152.8 million in the reported quarter, down from $153.2 million reported in the previous quarter.
Free cash flow during the quarter was $138.2 million compared with $141.7 million in the prior quarter.
Guidance
For the fourth quarter of 2023, Datadog anticipates revenues between $564 million and $568 million. The Zacks Consensus Estimate for the same is pegged at $541.39 million.
Non-GAAP earnings are expected in the range of 42-44 cents per share. The consensus mark for earnings is pegged at 34 cents per share.
Non-GAAP operating income is expected in the range of $129-$133 million.
For 2023, Datadog anticipates revenues between $2.103 billion and $2.107 billion. The Zacks Consensus Estimate for the same is pegged at $2.06 billion.
Non-GAAP earnings per share are expected between $1.52 and $1.54. The Zacks Consensus Estimate for earnings is pegged at $1.32 per share.
Non-GAAP operating income is expected in the range of $453-$457 million.
Q3 Highlights
Datadog had a strong quarter for infrastructure monitoring ARR, which exceeded $1 billion due to continuous innovation and demand for serverless functions.
Datadog launched new logos, workloads and products in the third quarter. This attracted a number of exciting new customers in the third quarter.
For the second quarter in a row, the company closed a record number of new deals with more than $100,000 in annual commitments.
Some of the notable deals done in third-quarter 2023 are a seven-figure deal with a South American FinTech company, the U.S. federal agency and a Fortune 500 industrial company. Datadog’s other important agreement includes an eight-figure deal with a major American chain of convenience stores.
Zacks Rank & Other Stocks to Consider
Currently, Datadog sports a Zacks Rank #1 (Strong Buy).
Image: Bigstock
Datadog (DDOG) Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Datadog (DDOG - Free Report) reported third-quarter 2023 non-GAAP earnings per share of 45 cents, which beat the Zacks Consensus Estimate of 34 cents and increased 95.7% from the year-ago quarter.
The company’s net revenues of $547.5 million increased 25.4% year over year. The Zacks Consensus Estimate for revenues was pegged at $523 million.
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
Quarter Details
In the third quarter of 2023, Datadog had about 3,130 customers with an annual run rate (ARR) of $100K or more, up from 2,600 in the year-ago quarter.
As of the end of the third quarter, 82% of customers used two or more products, up from 80% in the year-ago quarter. Additionally, 46% of customers utilized four or more products, up from 40% in the year-ago quarter.
Datadog’s dollar-based retention rate was slightly below 120% as customers increased their usage and adopted more products.
Operating Details
In the third quarter, Datadog’s adjusted gross margin increased 260 basis points (bps) on a year-over-year basis to 82.3%.
Research & development expenses gained 12.7% on a year-over-year basis to $155.8 million, driven by increased investments in Datadog’s platform. Research & development, as a percentage of revenues, decreased 320 bps to 28.5%.
Sales and marketing expenses increased 18.6% year over year to $127.5 million. Sales and marketing expenses, as a percentage of revenues, decreased 130 bps to 23.3%.
General & administrative expenses increased 34.2% year over year, reaching $36.8 million in the reported quarter. General & administrative expenses, as a percentage of revenues, expanded 40 bps to 6.7%.
Datadog reported a non-GAAP operating income of $130.8 million compared with $74.8 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2023, Datadog had cash, cash equivalents, restricted cash and marketable securities of $2.3 billion compared with $2.2 billion as of Jun 30, 2023.
Operating cash flow was $152.8 million in the reported quarter, down from $153.2 million reported in the previous quarter.
Free cash flow during the quarter was $138.2 million compared with $141.7 million in the prior quarter.
Guidance
For the fourth quarter of 2023, Datadog anticipates revenues between $564 million and $568 million. The Zacks Consensus Estimate for the same is pegged at $541.39 million.
Non-GAAP earnings are expected in the range of 42-44 cents per share. The consensus mark for earnings is pegged at 34 cents per share.
Non-GAAP operating income is expected in the range of $129-$133 million.
For 2023, Datadog anticipates revenues between $2.103 billion and $2.107 billion. The Zacks Consensus Estimate for the same is pegged at $2.06 billion.
Non-GAAP earnings per share are expected between $1.52 and $1.54. The Zacks Consensus Estimate for earnings is pegged at $1.32 per share.
Non-GAAP operating income is expected in the range of $453-$457 million.
Q3 Highlights
Datadog had a strong quarter for infrastructure monitoring ARR, which exceeded $1 billion due to continuous innovation and demand for serverless functions.
Datadog launched new logos, workloads and products in the third quarter. This attracted a number of exciting new customers in the third quarter.
For the second quarter in a row, the company closed a record number of new deals with more than $100,000 in annual commitments.
Some of the notable deals done in third-quarter 2023 are a seven-figure deal with a South American FinTech company, the U.S. federal agency and a Fortune 500 industrial company. Datadog’s other important agreement includes an eight-figure deal with a major American
chain of convenience stores.
Zacks Rank & Other Stocks to Consider
Currently, Datadog sports a Zacks Rank #1 (Strong Buy).
NetEase (NTES - Free Report) , AST SpaceMobile (ASTS - Free Report) and Genius Sports Limited (GENI - Free Report) are some other top-ranked stocks that investors can consider in the broader sector. While NTES sports a Zacks Rank #1, ASTS and GENI carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of NetEase have gained 54% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
Shares of AST SpaceMobile have declined 17.6% year to date. ASTS is slated to report its third-quarter 2023 results on Nov 13.
Shares of Genius Sports Limited have gained 51.3% year to date. GENI is set to report its third-quarter 2023 results on Nov 13.