Datadog Adds to Its Google Cloud Observability Capabilities with Expanded BigQuery Monitoring April 09, 2025 9:00 AM EDT | Source: Datadog, Inc. Joint customers like Forbes and Delta Dental of New Jersey and Connecticut can now drive more efficiency for their Google Cloud environments with expanded BigQuery monitoring and six more recently announced features Datadog was also named a Google Cloud Partner of the Year for the third year in a row Las Vegas, Nevada--(Newsfile Corp. - April 9, 2025) - Datadog, In ...

Core Insights - Datadog has announced plans to establish a new data center in Australia, which will enhance local data storage and processing capabilities for its customers and partners, addressing local privacy and security requirements [1][2][5] Group 1: Data Center Announcement - The new data center will be built on AWS and will be Datadog's first in Australia, complementing existing locations in North America, Asia, Europe, and AWS GovCloud [1][5] - This facility aims to create sovereign data storage capacity, allowing Datadog's customers to meet local privacy and security preferences [2][5] Group 2: Customer Impact - Datadog's end-to-end observability solutions are expected to help organizations like Flight Centre and SEEK improve service quality and proactively resolve issues before they become critical [3][4] - The data center will support Australian companies in their cloud investments, digital transformations, and AI projects, particularly in regulated industries such as healthcare and financial services [5] Group 3: Company Growth and Strategy - Datadog is expanding its presence in Australia and New Zealand, with recent office openings in Melbourne, Sydney, and Auckland, indicating a commitment to the region [5] - The new data center is anticipated to open in the middle of 2025, further solidifying Datadog's role in supporting local businesses [5]

Group 1 - Louis Stevens is a former U.S. Army engineer officer with an MBA and a BA in political science, recognized as a leading analyst in the investing community, ranking in the top 0.1% according to TipRanks [1] - Louis created L.A. Stevens Research, which includes the LAS Index, a basket of stocks selected through a proprietary investment method that has consistently outperformed market indices since its inception [2] - The research and investment services provided by Louis cater to a diverse audience, including beginners, busy professionals, and seasoned fund managers [2]

Core Viewpoint - Datadog's stock has underperformed compared to the broader market and its industry, raising concerns for investors about its future performance and valuation [1][20]. Market Competition and Pricing Pressure - Datadog faces significant pricing pressure from competitors such as IBM, Microsoft, and Broadcom in on-premise infrastructure monitoring, as well as from cloud providers like Amazon, Google, and Microsoft in cloud monitoring [4] - Customers are increasingly cost-conscious, leading to contract renewals with discounts, which negatively impacts revenue growth. Some large enterprises are also considering in-house observability solutions, posing a threat to Datadog's long-term revenue [5]. Cost Escalations Might Hurt the Bottom Line - Datadog has experienced substantial cost escalations in R&D, sales and marketing, and general and administrative expenses, which increased by 29.4%, 31.3%, and 29.6% year-over-year, respectively, in Q4 2024. This trend is expected to continue into 2025, potentially hurting profitability [6]. Valuation Concerns - Datadog's stock is considered overvalued, trading at a forward 12-month P/S ratio of approximately 11.35, indicating high growth expectations from investors. The Value Score of F suggests a stretched valuation [7]. Product Innovation Drives Market Position - Despite challenges, Datadog is enhancing its market position through product innovation, having introduced over 400 new features in the past year, including LLM Observability and BizAI for incident management [12][16]. - A partnership with Chainguard aims to improve container security and observability, further strengthening its security offerings [13]. AI and Cloud Growth Potential - Datadog is well-positioned to benefit from the rapid adoption of AI and cloud technologies, with AI-native customers contributing 6% of ARR in Q4 2024, doubling from the previous year [14]. - The launch of new products tailored for AI integration enhances Datadog's appeal in the growing market for AI-driven solutions [16]. Financial Performance and Market Outlook - Datadog's guidance for Q1 2025 projects revenues between $737 million and $741 million, indicating a year-over-year growth of 20-21%. The full-year 2025 outlook suggests revenues between $3.175 billion and $3.195 billion, with non-GAAP EPS expected in the range of $1.65-$1.70 [17]. - The Zacks Consensus Estimate for 2025 revenues is $3.19 billion, reflecting an 18.85% year-over-year improvement, while earnings per share are expected to decrease by 7.14% [18]. Conclusion - Current valuations suggest that investors may benefit from waiting for a better entry point, as Datadog's strong product portfolio and market position are countered by challenges from competition and cost escalations [20]. - Datadog is viewed as a compelling long-term investment candidate, but factors such as cost-conscious spending and the risk of enterprises shifting to in-house solutions could limit growth [21].

Core Viewpoint - Datadog's stock performance has shown a slight increase recently, but it has underperformed compared to the broader market over the past month, with upcoming earnings expected to reflect a decline in EPS but an increase in revenue [1][2]. Company Performance - Datadog closed at $110.58, with a daily increase of 0.37%, outperforming the S&P 500's gain of 0.16% [1]. - Over the past month, Datadog's shares have decreased by 6.25%, compared to a 5.94% loss in the Computer and Technology sector and a 3.59% loss in the S&P 500 [1]. - The upcoming earnings report is anticipated to show an EPS of $0.42, a decline of 4.55% year-over-year, while revenue is expected to reach $739.51 million, reflecting a 20.98% increase [2]. Earnings Estimates - For the full year, earnings are projected at $1.69 per share, representing a decrease of 7.14% from the previous year, while revenue is expected to be $3.19 billion, indicating an increase of 18.85% [3]. - Recent changes in analyst estimates suggest a positive outlook for Datadog's business operations and profitability [4]. Valuation Metrics - Datadog's current Forward P/E ratio is 65.32, significantly higher than the industry average of 28.29 [7]. - The company has a PEG ratio of 7.79, compared to the Internet - Software industry's average PEG ratio of 2.07, indicating a premium valuation relative to expected earnings growth [7]. Industry Context - The Internet - Software industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 128, placing it in the top 50% of over 250 industries [8]. - Historically, industries in the top 50% outperform those in the bottom half by a factor of 2 to 1 [8].

Core Insights - Chainguard and Datadog have announced a partnership to enhance software supply chain security by integrating container observability with proactive risk mitigation strategies [1][4] - The collaboration aims to provide real-time insights into container risks, enabling engineering and security teams to eliminate vulnerabilities and improve software development velocity [1][5] Group 1: Partnership Overview - The integration combines Chainguard's secure container solutions with Datadog's monitoring capabilities, allowing customers to identify and remediate common vulnerabilities and exploits (CVEs) [1][4] - A new Chainguard dashboard within Datadog will provide a holistic view of container infrastructure and associated CVE risks, facilitating better decision-making for security and engineering teams [3][4] Group 2: Industry Challenges - The World Economic Forum's report indicates that 54% of large organizations view supply chain challenges as the primary barrier to achieving cyber resilience [2] - There is a lack of visibility and accountability between engineering and security teams, leading to increased exposure to supply chain attacks and slower innovation [2] Group 3: Customer Benefits - Joint customers of Chainguard and Datadog will experience reduced risk across their application surface area, transitioning from reactive alerts to proactive risk reduction [5] - The integration allows security teams to prioritize CVE remediation in high-risk containers, enabling engineering teams to focus on shipping secure software more efficiently [5][6]

Group 1 - Datadog Inc. (DDOG) is a significant player in the IT infrastructure management space, valued at approximately $30 billion [1] - The company offers a comprehensive observability and monitoring platform that helps firms manage, optimize, and secure their IT infrastructure [1]

Core Viewpoint - Datadog has experienced a significant decline in stock performance, with a return of -27.4% over the past month, compared to the S&P 500's -9.6% and the Zacks Internet - Software industry's -18.8% [2] Earnings Estimate Revisions - The current quarter's earnings estimate for Datadog is $0.42 per share, reflecting a decrease of -4.6% year-over-year, with a notable change of -23.4% in the consensus estimate over the last 30 days [5] - For the current fiscal year, the consensus earnings estimate is $1.69, indicating a decline of -7.1% from the previous year, with a significant change of -44.8% in the estimate over the last month [5] - The next fiscal year's consensus earnings estimate is $2.08, showing an increase of +23.4% year-over-year, although it has decreased by -12.8% recently [6] Revenue Growth - Datadog's consensus sales estimate for the current quarter is $739.51 million, representing a year-over-year growth of +21% [9] - The sales estimates for the current and next fiscal years are $3.19 billion and $3.79 billion, indicating growth rates of +18.9% and +18.8%, respectively [9] Last Reported Results and Surprise History - In the last reported quarter, Datadog achieved revenues of $737.73 million, a year-over-year increase of +25.1%, with an EPS of $0.49 compared to $0.44 a year ago [10] - The reported revenues exceeded the Zacks Consensus Estimate of $711.65 million by +3.67%, and the EPS surprise was +13.95% [11] - Datadog has consistently beaten consensus EPS and revenue estimates in the last four quarters [11] Valuation - Datadog is currently graded F in the Zacks Value Style Score, indicating it is trading at a premium compared to its peers [15] - Valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) are essential for assessing whether the stock is overvalued, fairly valued, or undervalued [13][14] Bottom Line - The current Zacks Rank of 3 suggests that Datadog may perform in line with the broader market in the near term, despite the recent market buzz [16]

Group 1 - Datadog (NASDAQ: DDOG) has experienced a significant decline since its recent highs in December, indicating potential volatility in the software sector [1] - The management of Datadog provided conservative guidance, reflecting cautious expectations for future performance [1] - The investment strategy discussed emphasizes finding undervalued companies with strong balance sheets and management teams in sectors with long growth potential [1] Group 2 - The leader of the investing group Best Of Breed Growth Stocks focuses on stocks with a high probability of delivering substantial alpha compared to the S&P 500 [1] - The investment approach combines growth-oriented principles with strict valuation criteria to enhance the margin of safety [1] - Features of the investment group include access to high-conviction stock picks, comprehensive research reports, real-time trade alerts, and macro market analysis [1]

Group 1: Market Overview - Analysts on Wall Street unanimously believe certain stocks are undervalued, indicating potential investment opportunities [1][2] - The article highlights three AI stocks that are trading below the lowest price targets set by analysts [3] Group 2: Microsoft - Microsoft is a leader in AI due to its early investment in OpenAI and the ChatGPT application, which has driven growth in its Azure cloud computing platform [4] - Azure's revenue increased by 31% year over year, with AI services growing by 157% in the last quarter, suggesting continued strong growth [5] - The enterprise software segment, boosted by AI features, saw a 15% increase in sales for Microsoft 365 commercial products and Microsoft Dynamics [6] - Microsoft stock trades at approximately 29 times forward earnings, reflecting its strong cash flow and buyback strategy [7] Group 3: Dell Technologies - Dell's revenue is split between PC sales and enterprise solutions, with the latter benefiting significantly from AI, leading to a 54% increase in server sales last year [8][9] - Despite a recent shortfall in AI server sales, Dell's AI server backlog reached $9 billion, doubling from the previous year, indicating strong future growth potential [12] - Dell's forward P/E ratio is just 10, making it an attractive investment despite stagnant client PC business [13] Group 4: DataDog - DataDog provides solutions for unifying data across various platforms, which is increasingly important as businesses adopt AI [14] - The introduction of the LLM Observability product has expanded DataDog's customer base and increased product uptake, contributing to high net dollar-based retention rates [16] - DataDog's stock has a forward P/E ratio of 66, reflecting its potential for over 20% annual revenue growth and margin improvement [18]