Datadog (DDOG) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.The power ...

Kubernetes Active Remediation empowers users to detect issues, gain contextualized insights and make changes to repair Kubernetes environments—all within one integrated workflowNEW YORK, Nov. 12, 2024 /PRNewswire/ -- Datadog, Inc. (NASDAQ: DDOG), the monitoring and security platform for cloud applications, today announced the launch of Kubernetes Active Remediation, which builds on Datadog's automated troubleshooting capabilities to provide curated remediation guidance, best practices and end-to-end issue m ...

Investors need to dig in beyond the hype words.Datadog (DDOG -4.11%) and Snowflake (SNOW -2.15%) both help companies optimize their businesses with AI-powered applications. Datadog collects diagnostic data from a wide range of software applications, aggregates that information onto its unified dashboards, then feeds it all to its Bits AI generative AI platform. That process makes it much easier for IT professionals to diagnose software problems.Snowflake's cloud-based data warehouse is used to collect infor ...

Wall Street analysts are overwhelmingly bullish on Microsoft and Datadog.Generative artificial intelligence (AI) leans on large language models and other machine learning models to create media content like images, text, and videos. The technology had its big bang moment when OpenAI introduced ChatGPT in November 2022, and demand for such products is forecast to surge.Bloomberg Intelligence estimates generative AI software spending will increase 2,790% to approach $320 billion by 2032, compounding at 52% an ...

Datadog (DDOG) reported third-quarter 2024 non-GAAP earnings of 46 cents, which increased 27.8% from the year-ago quarter and beat the Zacks Consensus Estimate by 17.95%.Revenues of $690 million rose 26% year over year and beat the consensus estimate by 4.15%.Following the results, DDOG shares rose 1.12% in the pre-market trading. Datadog’s stock has gained 6.9% against the Zacks Computer and Technology sector’s rise of 28.5% in the year-to-date period.DDOG’s Quarterly Details Datadog ended the third quarte ...

Revenue Growth - Revenue for Q3 2024 was $690.0 million, a 26% YoY increase from $547.5 million in Q3 2023[107] - Revenue for the nine months ended September 30, 2024 was $1,946.5 million, a 27% YoY increase from $1,538.7 million in the same period of 2023[107] - Revenue increased by $142.5 million, or 26%, for the three months ended September 30, 2024 compared to the same period in 2023, with 75% from existing customers and 25% from new customers[139] - Revenue increased by $407.8 million, or 27%, in the nine months ended September 30, 2024 compared to the same period in 2023, with 75% from existing customers and 25% from new customers[146] Net Income and Profitability - Net income for Q3 2024 was $51.7 million, compared to $22.6 million in Q3 2023[107] - Net income for the nine months ended September 30, 2024 was $138.2 million, compared to a net loss of $5.4 million in the same period of 2023[107] - Operating income improved to $20.3 million in Q3 2024 from a loss of $4.2 million in Q3 2023[133] - Net income for Q3 2024 was $51.7 million, compared to $22.6 million in Q3 2023[133] Cash Flow and Liquidity - Operating cash flow for the nine months ended September 30, 2024 was $605.4 million, up from $439.7 million in the same period of 2023[107] - Free cash flow for the nine months ended September 30, 2024 was $534.1 million, up from $396.3 million in the same period of 2023[107] - Net cash provided by operating activities increased by $165.6 million in the nine months ended September 30, 2024 compared to the same period in 2023, driven by higher non-cash charges and accrued expenses[160] - Free cash flow increased to $534.1 million in the nine months ended September 30, 2024 compared to $396.3 million in the same period in 2023, driven by higher operating cash flow[164] - Company had $332.5 million in cash equivalents and $2.9 billion in marketable securities as of September 30, 2024[169] Customer Metrics - The company had 29,200 customers as of September 30, 2024, up from 26,800 as of September 30, 2023[110] - 3,490 customers had ARR of $100,000 or more as of September 30, 2024, representing 88% of ARR, up from 3,130 customers representing 86% of ARR as of September 30, 2023[112] - Trailing 12-month dollar-based net retention rate was in the mid-110%'s as of September 30, 2024, down from the high-110%'s as of September 30, 2023[113] - 83% of customers were using more than one product as of September 30, 2024, up from 82% a year earlier[116] Cost and Expense Analysis - Cost of revenue increased by $34.4 million, or 33%, primarily due to $28.6 million in third-party cloud infrastructure hosting and software costs and $4.8 million in personnel costs[140] - Gross margin decreased by 1% due to increased spend with third-party cloud infrastructure providers[141] - Research and development expense increased by $51.6 million, or 21%, driven by $38.4 million in personnel costs and $12.8 million in cloud infrastructure-related investments[142] - Sales and marketing expense increased by $30.9 million, or 20%, primarily due to $30.3 million in personnel costs and increased variable compensation[143] - General and administrative expenses increased to $52.4 million in Q3 2024 from $51.4 million in Q3 2023[133] - General and administrative expense increased by $1.1 million, or 2%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to increased personnel costs[144] - Cost of revenue increased by $66.3 million, or 22%, in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to higher cloud infrastructure and personnel costs[148] - Gross margin increased by 1% to 81% in the nine months ended September 30, 2024 compared to the same period in 2023, driven by revenue growth exceeding cloud infrastructure costs[149] - Research and development expense increased by $127.2 million, or 18%, in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to higher personnel and cloud infrastructure costs[150] - Sales and marketing expense increased by $99.4 million, or 22%, in the nine months ended September 30, 2024 compared to the same period in 2023, driven by higher personnel and advertising costs[152] Other Income and Expenses - Interest income and other income, net increased to $37.4 million in Q3 2024 from $29.8 million in Q3 2023[133] - Other income, net increased by $7.3 million, or 26%, for the three months ended September 30, 2024 compared to the same period in 2023, driven by higher interest income from marketable securities[145] - Other income, net increased by $41.0 million, or 64%, in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to higher interest income from marketable securities[154] - Stock-based compensation expense totaled $142.2 million in Q3 2024, up from $123.1 million in Q3 2023[134] Financial Instruments and Risk Management - Company issued $747.5 million aggregate principal amount of the 2025 Notes on June 2, 2020[170] - Fair value of the 2025 Notes is influenced by interest rate risk, market risk, and Class A common stock price fluctuations[170] - All company sales are denominated in U.S. dollars, minimizing foreign currency risk[171] - Operating expenses are denominated in local currencies, primarily in the U.S., France, Ireland, and the U.K.[171] - A hypothetical 10% change in the U.S. dollar's relative value would not materially affect operating results[171] - A hypothetical 10% change in interest rates would not materially impact the company's financial statements[169]

Financial Data and Key Metrics - Revenue for Q3 2024 was $690 million, up 26% YoY and 7% QoQ, exceeding the high end of guidance [7][22] - Free cash flow was $204 million with a free cash flow margin of 30% [7] - Gross profit was $560 million, representing a gross margin of 81.1%, slightly down from 82.1% last quarter and 82.3% YoY [27] - Operating income was $173 million, with a 25% operating margin, up from 24% last quarter and 24% YoY [27] - Cash flow from operations was $229 million, and the company ended the quarter with $3.2 billion in cash, cash equivalents, and marketable securities [28] Business Line Data and Key Metrics - 83% of customers were using two or more products, up from 82% YoY, while 49% were using four or more products, up from 46% YoY [8] - Infrastructure monitoring, APM suite, and log management together represent more than $2.5 billion in ARR [8] - 15 out of 23 products now exceed $10 million in ARR, including CI visibility and cloud cost management [8] - AI native customers contributed 6% of Q3 ARR, up from 4% in Q2 and 2.5% YoY [23] Market Data and Key Metrics - The company added 29,200 customers, up from 26,800 YoY, with 3,490 customers having ARR of $100,000 or more, up from 3,130 YoY [7] - Net revenue retention (NRR) was in the mid-110s, with trailing 12-month gross revenue retention stable in the mid-to-high 90s [25] - Billings were $689 million, up 14% YoY, with remaining performance obligations (RPO) at $1.82 billion, up 26% YoY [26] Company Strategy and Industry Competition - The company continues to focus on expanding its platform in observability and next-gen AI, with strong customer adoption of AI integrations [6][10] - Datadog was named a leader in the 2024 Gartner Magic Quadrant for observability platforms and digital experience monitoring [13][14] - The company launched Datadog On Call, a new product in the cloud service management space, which has seen strong initial reception [12][13] Management Commentary on Operating Environment and Future Outlook - The business environment remained stable in Q3, with customers continuing to grow cloud usage while being cost-conscious [9][22] - The company expects revenue for Q4 2024 to be in the range of $709 million to $713 million, representing 20% to 21% YoY growth [29] - For fiscal year 2024, revenue is expected to be between $2.656 billion and $2.660 billion, representing 25% YoY growth [30] Other Important Information - The company highlighted several large customer deals, including a seven-figure deal with a leading Indian e-commerce company and a six-figure deal with a major U.S. federal agency [15][16] - Datadog On Call, though still in limited availability, is seeing strong customer interest and is being included in deals [12][13] Q&A Session Summary Question: AI Contributions and Future Traction - AI native customers contributed 6% of ARR in Q3, with initial signs of traction in LLM observability products [10][23] - The company expects AI adoption to drive long-term growth, though there may be short-term volatility due to rapid customer ramp-ups [23][64] Question: Billings and RPO Trends - Billings growth was affected by timing differences, but the company emphasized that revenue is a better indicator of business trends [26][36] - RPO growth was 26% YoY, with current RPO growth in the high 20% range, though duration slightly decreased [26] Question: Security and Service Management Trends - The company sees strong opportunities in cloud security and is investing in product development to unify its security platform [39][40] - Datadog On Call is receiving strong customer interest, with potential to expand beyond the Datadog ecosystem [79] Question: Customer Spending Intentions - While consolidation remains a theme, the company is also seeing increased interest in innovation, particularly around AI and cloud technologies [42][44] Question: Federal Government Opportunities - The company sees significant opportunities in the federal government sector, with early successes and plans to expand capacity and certifications [70][71] Question: Gross Margin and Usage Growth - Gross margins remain stable, with the company balancing new product development and optimization efforts [74][75] - Usage growth from existing customers continues to trend higher, with potential for acceleration as AI applications move into production [76] Question: Datadog On Call Opportunity - Datadog On Call is initially focused on the Datadog ecosystem but may expand to integrate with other incident resolution tools based on customer demand [79] Question: Product Growth and 2025 Outlook - The company is excited about several products, including database monitoring, which is growing rapidly and expected to exceed $50 million in ARR [82] - For 2025, the company is investing in engineering and sales capacity, with a focus on digital transformation and cloud migration trends [84][85]

Datadog (DDOG) came out with quarterly earnings of $0.46 per share, beating the Zacks Consensus Estimate of $0.39 per share. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 17.95%. A quarter ago, it was expected that this data analytics and cloud monitoring company would post earnings of $0.35 per share when it actually produced earnings of $0.43, delivering a surprise of 22.86%.Over the last ...

[Financial & Business Highlights](index=1&type=section&id=Financial%20%26%20Business%20Highlights) Datadog reported strong Q3 2024 financial performance with significant revenue growth and robust cash flow, alongside continued customer expansion and key product advancements [Third Quarter 2024 Financial Highlights](index=1&type=section&id=Third%20Quarter%202024%20Financial%20Highlights) Datadog reported strong financial results for the third quarter of 2024, with revenue reaching $690 million, a 26% year-over-year increase Q3 2024 Financial Performance Summary | Metric | Value | Growth (YoY) | | :--- | :--- | :--- | | Revenue | $690 million | 26% | | GAAP Operating Income | $20 million | - | | GAAP Operating Margin | 3% | - | | Non-GAAP Operating Income | $173 million | - | | Non-GAAP Operating Margin | 25% | - | | GAAP Net Income per Diluted Share | $0.14 | - | | Non-GAAP Net Income per Diluted Share | $0.46 | - | | Operating Cash Flow | $229 million | - | | Free Cash Flow | $204 million | - | - As of September 30, 2024, the company's cash, cash equivalents, and marketable securities totaled **$3.2 billion**[3](index=3&type=chunk) [Third Quarter & Recent Business Highlights](index=1&type=section&id=Third%20Quarter%20%26%20Recent%20Business%20Highlights) Datadog demonstrated continued customer growth, particularly among high-value clients, with a 12% year-over-year increase in customers generating $100,000 or more in Annualized Recurring Revenue (ARR) - The number of customers with an ARR of $100,000 or more grew by **12% year-over-year**, from approximately 3,130 to 3,490[1](index=1&type=chunk)[3](index=3&type=chunk) - Datadog was named a Leader in the 2024 Gartner Magic Quadrant for both Observability Platforms and Digital Experience Monitoring[2](index=2&type=chunk)[4](index=4&type=chunk)[6](index=6&type=chunk) - The company announced the General Availability of Datadog Monitoring for Oracle Cloud Infrastructure, expanding its multi-cloud support[1](index=1&type=chunk)[5](index=5&type=chunk) - The State of Cloud Security 2024 report was released, highlighting the ongoing risk of long-lived credentials in cloud environments[5](index=5&type=chunk) [Financial Outlook](index=2&type=section&id=Fourth%20Quarter%20and%20Full%20Year%202024%20Outlook) Datadog projects strong financial performance for Q4 and full year 2024, with revenue expected to reach up to $713 million and $2.66 billion respectively [Fourth Quarter and Full Year 2024 Outlook](index=2&type=section&id=Fourth%20Quarter%20and%20Full%20Year%202024%20Outlook) Datadog projects Q4 revenue between $709 million and $713 million, with full-year revenue anticipated to be between $2.656 billion and $2.660 billion, alongside non-GAAP net income per share guidance Q4 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Revenue | $709 million - $713 million | | Non-GAAP Operating Income | $163 million - $167 million | | Non-GAAP Net Income per Share | $0.42 - $0.44 | Full Year 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Revenue | $2.656 billion - $2.660 billion | | Non-GAAP Operating Income | $658 million - $662 million | | Non-GAAP Net Income per Share | $1.75 - $1.77 | - The company has not reconciled its non-GAAP outlook to the most comparable GAAP measures due to uncertainty regarding items like stock-based compensation[9](index=9&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents Datadog's consolidated statements of operations, balance sheets, and cash flows, along with reconciliations of GAAP to non-GAAP financial measures [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the third quarter of 2024, Datadog's revenue grew 26% YoY to $690.0 million, shifting from a GAAP operating loss to a GAAP operating income of $20.3 million Q3 Statement of Operations Highlights (in thousands) | Metric | Q3 2024 | Q3 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $690,016 | $547,536 | +26.0% | | Gross Profit | $552,260 | $444,217 | +24.3% | | Operating Income (Loss) | $20,278 | $(4,230) | N/A | | Net Income | $51,697 | $22,630 | +128.5% | | Diluted EPS | $0.14 | $0.06 | +133.3% | Nine Months Ended Sep 30 Statement of Operations (in thousands) | Metric | 2024 | 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $1,946,548 | $1,538,710 | +26.5% | | Operating Income (Loss) | $44,892 | $(61,206) | N/A | | Net Income (Loss) | $138,152 | $(5,425) | N/A | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, Datadog's balance sheet reflects a strong financial position, with total assets growing to $4.63 billion and cash, cash equivalents, and marketable securities increasing to $3.20 billion Balance Sheet Summary (in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $337,418 | $330,339 | | Marketable securities | $2,861,536 | $2,252,559 | | Total Assets | $4,631,471 | $3,936,072 | | Total Liabilities | $2,002,326 | $1,910,718 | | Total Stockholders' Equity | $2,629,145 | $2,025,354 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q3 2024, Datadog generated $228.7 million in cash from operating activities, a significant increase from Q3 2023, resulting in a free cash flow of $203.6 million Cash Flow Summary - Three Months Ended Sep 30 (in thousands) | Metric | 2024 | 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $228,681 | $152,783 | +49.7% | | Free cash flow | $203,604 | $138,189 | +47.3% | Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Metric | 2024 | 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $605,375 | $439,728 | +37.7% | | Free cash flow | $534,131 | $396,258 | +34.8% | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details the adjustments from GAAP to non-GAAP metrics, showing non-GAAP operating income of $173.0 million and non-GAAP net income of $165.7 million for Q3 2024 Q3 2024 Reconciliation of GAAP to Non-GAAP Operating Income (in thousands) | Description | Amount | | :--- | :--- | | GAAP operating income | $20,278 | | Plus: Stock-based compensation expense | $142,190 | | Plus: Amortization of acquired intangibles | $1,438 | | Plus: Employer payroll taxes on employee stock transactions | $9,115 | | **Non-GAAP operating income** | **$173,021** | Q3 2024 Reconciliation of GAAP to Non-GAAP Net Income (in thousands) | Description | Amount | | :--- | :--- | | GAAP net income | $51,697 | | Plus: Non-GAAP adjustments (Stock comp, amortization, etc.) | $153,655 | | Less: Income tax effects and adjustments | $(39,617) | | **Non-GAAP net income** | **$165,735** | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides definitions for Datadog's non-GAAP financial measures and key operating metrics, clarifying their calculation and purpose [About Non-GAAP Financial Measures](index=4&type=section&id=About%20Non-GAAP%20Financial%20Measures) Datadog uses non-GAAP financial measures to supplement its GAAP results, excluding certain non-cash or non-recurring expenses for evaluating operational performance - Datadog discloses non-GAAP measures to provide a supplement to GAAP results for evaluating operational performance[15](index=15&type=chunk) - Key adjustments from GAAP to non-GAAP include stock-based compensation, amortization of acquired intangibles, employer payroll taxes on employee stock transactions, and amortization of issuance costs[17](index=17&type=chunk) - Free cash flow is defined as net cash provided by operating activities, minus capital expenditures and capitalized software development costs[18](index=18&type=chunk)[23](index=23&type=chunk) [Operating Metrics](index=6&type=section&id=Operating%20Metrics) The company defines key operating metrics to provide clarity on business performance, including customer count and Annualized Recurring Revenue (ARR) - A customer is defined as an account with a unique identifier and an active subscription; free trial users are not included[25](index=25&type=chunk) - ARR is defined as the annualized revenue run-rate of subscription agreements, calculated by multiplying MRR by 12[26](index=26&type=chunk)

Datadog (DDOG) is scheduled to release third-quarter 2024 results on Nov. 7.For the third quarter of 2024, Datadog anticipates revenues between $660 million and $664 million. The Zacks Consensus Estimate for the same is currently pegged at $662.55 million, suggesting 21% growth from the year-ago period.Non-GAAP earnings per share are expected in the range of 38-40 cents. The Zacks Consensus Estimate for earnings has remained unchanged at 39 cents per share over the past 30 days, indicating a decline of 13.3 ...