Investment Rating - The report assigns a "BUY" rating for Datadog (DDOG US), indicating a potential return of over 15% over the next 12 months [1][16]. Core Insights - Datadog's total revenue for 4Q24 was US$737.7 million, reflecting a 25% year-over-year growth, which is 3% above Bloomberg consensus forecasts [1]. - The company is entering an investment phase aimed at driving long-term growth, with management planning to increase spending on sales and marketing (S&M) and research and development (R&D) in 2025 [1][5]. - The target price for Datadog is set at US$156.4, up from a previous target of US$154.3, based on a valuation of 16.6x 2025E EV/sales [1][2]. Financial Performance Summary - For FY24, total revenue reached US$2.68 billion, with a year-over-year growth of 26%, and non-GAAP net income increased by 41% to US$653.8 million [1][6]. - Key operating metrics include billings of US$908 million (up 26% YoY), and a net dollar-based retention rate in the high-110s percentage [5][6]. - The company had over 30,000 customers by the end of 2024, with significant growth in large customers contributing to the annual recurring revenue (ARR) [5]. Future Guidance - Management expects 1Q25 revenue to be between US$737-741 million, representing approximately 21% growth YoY, and non-GAAP net income per share to be between US$0.41-0.43 [5]. - For FY25, revenue is projected to be between US$3.175 billion and US$3.195 billion, indicating an 18-19% growth YoY [5][6]. - Operating expenses are expected to grow in the high-20s percentage YoY, which may impact near-term margins but is aimed at supporting long-term growth [1][5]. Shareholder Structure - Major shareholders include Vanguard Group Inc (9.2%) and Blackrock Inc. (6.8%) [3]. Market Performance - The current market capitalization of Datadog is approximately US$48.735 billion, with a 52-week high of US$168.65 and a low of US$104.97 [2][3]. - The stock has shown a 1-month performance of -2.3% and a 6-month performance of 19.0% [3].

Core Insights - Datadog Inc's shares experienced a significant decline of 8.4% following the release of its earnings report, despite the overall market showing gains [1] - The company's strong revenue growth in 2024 was overshadowed by disappointing guidance for fiscal year 2025, leading to investor concerns [1][3] Financial Performance - For Q4 2024, Datadog reported earnings per share (EPS) of $0.49, exceeding analyst expectations of $0.43, with sales reaching $737.7 million, surpassing Wall Street's targets [2] - The company's top-line revenue grew by 25% year over year, and for the full year, it reported operating income of $674 million and EPS of $1.82 on sales of $2.68 billion, reflecting a 26% year-over-year increase [2] Guidance and Market Outlook - For fiscal year 2025, Datadog's sales guidance is projected between $3.175 billion and $3.195 billion, falling short of the $3.24 billion anticipated by Wall Street [3] - The expected operating income range of $655 million to $675 million indicates a potential decline in this key metric over the next year [3] Competitive Landscape - The company is focusing on delivering new key features and innovations to remain competitive, particularly in the context of increasing artificial intelligence solutions [4] - Datadog's current price-to-earnings ratio of nearly 270 suggests a high valuation, which, combined with intensifying competition, may lead investors to consider alternative investment opportunities [4]

Core Insights - Datadog's shares fell approximately 9% due to weaker-than-expected projections for the first quarter and the full year of 2025, despite a strong fourth quarter performance that exceeded estimates [1][4]. Financial Performance - The company reported adjusted earnings per share (EPS) of $0.49 on revenue of $738 million, both figures surpassing analyst expectations [1]. - Datadog's fourth quarter sales and earnings exceeded estimates, but the stock still declined due to future projections [4]. Customer Metrics - At the end of the quarter, Datadog had 462 customers with an annualized revenue run rate exceeding $1 million, which is about 25 fewer than analysts had anticipated [2]. Future Projections - For the first quarter, Datadog expects revenue between $737 million to $741 million and adjusted EPS between $0.41 and $0.43, falling short of the analyst consensus of $740.58 million and $0.46 per share [3]. - The full-year revenue projections are between $3.175 billion to $3.195 billion, with EPS expected to be between $1.65 to $1.70, both below analyst estimates of $2.04 per share [3].

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $738 million, representing a 25% year-over-year increase and exceeding the high end of guidance [7][40] - Free cash flow was $241 million, with a free cash flow margin of 33% [55] - Gross profit was $603 million, resulting in a gross margin of 81.7%, compared to 81.1% in the previous quarter and 83.4% in the year-ago quarter [50] - Operating income for Q4 was $179 million, reflecting a 24% operating margin, down from 25% in the previous quarter and 28% in the year-ago quarter [52] Business Line Data and Key Metrics Changes - Total ARR exceeded $3 billion, with infrastructure monitoring contributing over $1.25 billion, log management over $750 million, and APM products also exceeding $750 million [11][12] - 83% of customers used 2 or more products, with 50% using 4 or more products, and 26% using 6 or more products, indicating strong product adoption [9] - The number of customers with ARR of $100,000 or more increased to 3,610, up from 3,190 a year ago [8] Market Data and Key Metrics Changes - 45% of Fortune 500 companies are now Datadog customers, up from 42% in 2023, indicating strong market penetration [10] - AI-native customers represented about 6% of Q4 ARR, up from 3% a year ago, contributing significantly to revenue growth [42][43] Company Strategy and Development Direction - The company continues to focus on digital transformation and cloud migration as long-term growth drivers, particularly in the context of AI adoption [38] - Investments in sales and marketing, as well as R&D, are expected to continue, with a focus on expanding capabilities and entering underserved geographies [61][60] - The company aims to enhance its product offerings, particularly in logs and cloud SIEM, to capture emerging market opportunities [79][86] Management's Comments on Operating Environment and Future Outlook - Management noted a stable business environment with continued cloud usage growth, although some customers remain cost-conscious [15][41] - The company anticipates that AI adoption will continue to benefit its long-term growth, despite some optimization and volume discounts during contract renewals [44][43] - Guidance for Q1 2025 expects revenues between $737 million and $741 million, representing 21% year-over-year growth [57] Other Important Information - The company ended 2024 with approximately 30,000 customers, adding 800 net customers in Q4 [47] - Billings for Q4 were $908 million, up 26% year-over-year, with remaining performance obligations (RPO) at $2.27 billion, up 24% year-over-year [48] - The company issued a 5-year $1 billion convertible note, which contributed to a net cash increase of $736 million [53][54] Q&A Session Summary Question: Thoughts on AI native customers and their commitments - Management observed renewals with higher commitments and better terms, indicating stability in the AI cohort despite some optimization [68][69] Question: Impact of holiday timing on December performance - Management noted it is difficult to determine the exact impact of AI capacity constraints but indicated that overall growth is outpacing cloud providers [73][75] Question: Sales and marketing strategy for 2025 - The company plans to grow sales capacity and focus on underserved geographies and channel partnerships to drive growth [78][81] Question: Renewed interest in logs and cloud SIEM - Management highlighted new technologies and cost efficiencies driving demand for logs and cloud SIEM, alongside a modernization of the tech stack [85][86] Question: Observability for inference workloads - Currently, most customers use third-party models for inference, with growing interest in measuring model performance [90][91] Question: Confidence in increased investments in sales and marketing - Management's confidence is based on evidence of demand cycles and successful account management strategies [95][96] Question: Disparity between strong indicators and conservative guidance - Guidance is based on recent usage trends, with a conservative approach to account for potential fluctuations in customer usage [102][104] Question: Net revenue retention and AI contribution in guidance - The guidance incorporates a conservative view of net retention and does not assume non-pro rata acceleration from AI contributions [116][117] Question: Growth potential for infrastructure monitoring - Management sees opportunities in emerging use cases, particularly around GPU management and network monitoring [121][125] Question: FX impacts on revenue and guidance - FX is not a significant factor for the company, which primarily operates in USD, and local billing is not a major consideration [127]

Core Viewpoint - Datadog reported quarterly earnings of $0.49 per share, exceeding the Zacks Consensus Estimate of $0.43 per share, and showing an increase from $0.44 per share a year ago, indicating a strong performance in the data analytics and cloud monitoring sector [1][2]. Financial Performance - The company achieved revenues of $737.73 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.67% and reflecting a year-over-year increase from $589.65 million [2]. - Datadog has consistently outperformed consensus EPS estimates over the last four quarters, with an earnings surprise of 13.95% in the latest report [1][2]. Stock Performance - Datadog shares have increased approximately 3.6% since the beginning of the year, outperforming the S&P 500's gain of 2.9% [3]. - The current Zacks Rank for Datadog is 3 (Hold), indicating that the stock is expected to perform in line with the market in the near future [6]. Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.44, with expected revenues of $734.32 million, and for the current fiscal year, the estimate is $1.95 on $3.19 billion in revenues [7]. - The trend of earnings estimate revisions is mixed, which could change following the recent earnings report [6]. Industry Context - The Internet - Software industry, to which Datadog belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [8].

Core Insights - Datadog reported a fiscal fourth-quarter revenue growth of 25% year-on-year, reaching $737.73 million, surpassing analyst expectations of $714.54 million [1] - The adjusted EPS of 49 cents exceeded the consensus estimate of 44 cents [1] Financial Performance - As of December 31, Datadog had 3,610 customers with an ARR of $100,000 or more, marking a 13% year-over-year increase [2] - The adjusted gross margin decreased by 100 basis points to 82%, while the adjusted operating margin fell by 400 basis points to 24% [2] - Datadog held cash and equivalents of $4.2 billion and generated $241 million in free cash flow [2] Strategic Initiatives - The CEO highlighted that in 2024, Datadog introduced new features to assist customers in cloud migration and adopting next-gen AI technologies [3] - The company aims to address complex challenges in Observability, Cloud Security, Software Delivery, Cloud Service Management, and Product Analytics through 2025 [3] Future Outlook - For the first quarter, Datadog expects revenue between $737 million and $741 million, slightly below the consensus of $740.29 million, with an adjusted EPS projected at $0.41–$0.43, below the consensus of $0.46 [4] - For fiscal 2025, the revenue forecast is $3.175 billion to $3.195 billion, compared to the consensus of $3.24 billion, with an adjusted EPS of $1.65–$1.70, also below the consensus of $2.05 [4] Market Reaction - Datadog's stock experienced a decline of over 10.2% to $133.08 in premarket trading following the earnings report [6] - Analyst sentiment has shifted, with a downgrade from Buy to Hold due to anticipated challenges in revenue growth and margins throughout fiscal 2025 [5]

Here's our initial take on Datadog's (DDOG 1.84%) fourth-quarter financial report.Key MetricsMetricQ4 2023Q4 2024Changevs. ExpectationsTotal revenue$590 million$738 million+25%BeatAdjusted earnings per share$0.44$0.49+11%BeatCustomers > $100K ARR3,1903,610+13%n/aFree cash flow$201 million$241 million+20%n/aTrouble Ahead for Datadog?Things looked good for Datadog in the fourth quarter. Strong quarterly revenue gains helped the data-focused technology company finish 2024 with a 26% rise in annual sales, and a ...

Datadog exceeded earnings expectations with notable revenue growth and strong customer expansion in its Q4 2024 results.Datadog (DDOG 1.84%), a leading provider of observability and security platforms, announced its financial results for the fourth quarter of 2024 on February 13, 2025. The company outperformed expectations, with non-GAAP earnings per share (EPS) of $0.49 against estimates of $0.43, marking a 14% beat. Revenue climbed to $738 million, exceeding projections by $24 million and marking a 25.1% ...

Revenue Growth - Fourth quarter revenue grew 25% year-over-year to $738 million[5] - Fiscal year 2024 revenue was $2.68 billion, an increase of 26% year-over-year[5] - Revenue for Q4 2024 reached $737.7 million, a 25% increase from $589.6 million in Q4 2023[30] - For Q1 2025, revenue is expected to be between $737 million and $741 million[7] Customer Metrics - Datadog had 462 customers with $1 million+ ARR, up 17% from 396 a year ago[7] Profitability - GAAP net income per diluted share for Q4 2024 was $0.13, while non-GAAP net income per diluted share was $0.49[5] - Net income for Q4 2024 was $45.6 million, a decrease of 15.5% from $54.0 million in Q4 2023[30] - GAAP operating income for the year ended December 31, 2024, was $54.284 million, a significant recovery from a loss of $33.464 million in 2023[36] - Non-GAAP operating income for fiscal year 2025 is projected to be between $655 million and $675 million[11] Cash Flow - Operating cash flow for fiscal year 2024 was $871 million, with free cash flow of $775 million[2] - The company reported a net cash provided by operating activities of $265.2 million for Q4 2024, compared to $220.2 million in Q4 2023[34] - Free cash flow for the year ended December 31, 2024, was $775.103 million, an increase from $597.548 million in 2023, marking a 29.8% rise[39] - Free cash flow margin for Q4 2024 was 33%, slightly down from 34% in Q4 2023[39] Expenses - Research and development expenses for Q4 2024 were $316.3 million, a 25% increase from $253.3 million in Q4 2023[30] - Research and development expenses (GAAP) for Q4 2024 were $316.314 million, up from $253.250 million in Q4 2023, indicating a 25% increase[36] Assets and Liabilities - Cash and cash equivalents increased to $1.25 billion as of December 31, 2024, from $330.3 million in 2023[32] - Total current assets rose to $4.91 billion in 2024, compared to $3.18 billion in 2023, reflecting a 54.3% increase[32] - Total liabilities increased to $3.07 billion in 2024, up from $1.91 billion in 2023[32] Product Development and Innovation - The company plans to deliver more innovation in areas like Cloud Security and Product Analytics in 2025[2] - Datadog expanded its Database Monitoring product to include MongoDB databases[7] - The company plans to continue investing in new product development and market expansion strategies in the upcoming year[30] Gross Profit - Gross profit for Q4 2024 was $593.5 million, up 22.5% from $484.8 million in Q4 2023[30] - GAAP gross profit for Q4 2024 was $593.549 million, up from $484.820 million in Q4 2023, representing a 22.5% increase[36] - Non-GAAP gross profit for the year ended December 31, 2024, was $2.201053 billion, compared to $1.744434 billion in 2023, showing a 26.2% increase[36] Other Financial Metrics - Non-GAAP net income for Q4 2024 was $177.506 million, compared to $155.651 million in Q4 2023, reflecting a 14% growth[38] - The diluted net income per share after non-GAAP tax adjustments for the year ended December 31, 2024, was $1.82, up from $1.32 in 2023, reflecting a 38% increase[38]

Datadog (DDOG) is scheduled to release fourth-quarter 2024 results on Feb. 13.For the fourth quarter of 2024, Datadog anticipates revenues between $709 million and $713 million. The Zacks Consensus Estimate for the same is currently pegged at $711.65 million, suggesting 20.69% growth from the year-ago period.Non-GAAP earnings per share are expected in the range of 42-44 cents. The Zacks Consensus Estimate for earnings has remained unchanged at 43 cents per share over the past 30 days, indicating a decline o ...