Datadog DDOG reported fourth-quarter 2019 non-GAAP earnings of 3 cents per share against a loss 6 cents per share reported in the year-ago quarter. The Zacks Consensus Estimate was pegged at loss of 2 cents per share. Net revenues of $113.6 million beat the consensus mark by 11.2% and increased 84.5% from the year-ago quarter. Quarter Details Datadog’s revenue growth was driven by robust customer additions during the fourth quarter as well as continued growth of existing customers. Notably, the company had 10,500 customers as of the end of the fourth quarter, up from 7000 in the year-ago quarter. Moreover, Datadog added 1000 new customers in the quarter, which is twice the number added in the year-ago-reported quarter.
Of these customers, 858 have an annual run rate (ARR) of $100k or more, up 89% year over year. Additionally, 50 customers had an ARR of $1 million or more.
During the quarter, Datadog’s dollar-based retention rate was above 130% for the 10th consecutive quarter, driven by increased usage of existing products as well as cross selling of newer products. Further, the company witnessed solid growth across its enterprise, mid-market, and SMB segments. Notably, average ARR of enterprise customers was $230K, up 43.8% year over year, while the average ARR of mid-market customers was $170K, up 54.5% from the year-ago quarter. Operating Details In the fourth quarter, Datadog’s adjusted gross margin expanded 300 basis points (bps) on a year-over-year basis to 77.7%. Research & development and sales, as a percentage of revenues, expanded 280 bps to 31.6%, driven by increased investments in Datadog’s platform. General & administrative expenses, as a percentage of revenues, expanded 200 bps to 11.2% due to public company related expenses. Sales and marketing expenses as a percentage of revenues were 36.6%, down from 47.2% in the year-ago quarter. This was partly due to solid top-line growth for the company. Datadog reported non-GAAP operating income of $6.97 million. The company had incurred a non-GAAP operating loss of $4.3 million in the year-ago reported quarter. Balance Sheet & Cash Flow As of Dec 31, 2019, Datadog had cash, cash equivalents, restricted cash, and marketable securities of $777.9 million compared with $771 million as of Sep 30, 2019. Operating cash flow was $17.4 million in the reported quarter compared with $3.8 million in the previous quarter. Free cash flow during the quarter was $10.9 million. Guidance For the first quarter of 2020, Datadog anticipates revenues between $117 million and $119 million. The Zacks Consensus Estimate is currently pegged at $109.4 million. Non-GAAP loss is expected between 1-2 cents per share. The consensus mark for loss is currently pegged at 3 cents. Non-GAAP operating loss is expected to be in the range of $5 million to $7 million. For full-year 2020, Datadog anticipates revenues between $535 million and $545 million. The Zacks Consensus Estimate is currently pegged at $503 million, indicating growth of 43.2% from the year-ago quarter. Non-GAAP loss is expected between 3-7 cents per share. The consensus mark for loss is currently pegged at 11 cents. Non-GAAP operating loss is expected to be in the range of $20 million to $30 million. Zacks Rank & Stocks to Consider Currently, Datadog carries a Zacks Rank #3 (Hold). CEVA, Inc. CEVA, Alteryx, Inc. AYX and Cirrus Logic, Inc. ( CRUS Quick Quote CRUS - Free Report) are some better-ranked stocks in the same industry. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here Long-term earnings growth rate for CEVA, Alteryx and Cirrus is currently pegged at 20%, 39.9% and 15.3%, respectively. Looking for Stocks with Skyrocketing Upside? Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>