Group 1: Datadog - Datadog provides observability software with a platform that includes around two dozen products for monitoring application and IT infrastructure performance, enhancing collaboration between development and operations teams [2] - Gartner recognized Datadog as a technology leader in observability and digital experience monitoring software, with demand for observability products projected to grow at 11% annually through 2028 due to increasing IT complexity from cloud migration and AI [3] - Datadog's fourth-quarter results exceeded expectations, with revenue rising 25% to $738 million and a 10% increase in customer count to 30,000, while average spending per existing customer also grew by 10% [4] - Despite strong performance, management provided disappointing guidance for 2025, expecting revenue growth of about 19% to $3.2 billion and a 6% drop in adjusted earnings to $1.70 per diluted share, leading to a stock price drop of over 10% [5] - The importance of observability software is expected to increase as enterprises deploy AI applications, with Morgan Stanley analyst suggesting that future spending will shift towards running inference on AI models, which could serve as a catalyst for Datadog [6] - Wall Street estimates adjusted earnings growth at 22% annually through 2027, although the current valuation of 71 times adjusted earnings appears expensive; however, Datadog has historically beaten consensus estimates by an average of 21% over the last six quarters, suggesting potential undervaluation for long-term investors [7] Group 2: The Trade Desk - The Trade Desk operates a leading independent adtech platform that assists media buyers in planning, measuring, and optimizing digital campaigns, leveraging advanced machine learning and measurement capabilities [8] - The company has a strong presence in retail media and connected TV (CTV), benefiting from its independent business model that avoids conflicts of interest by not owning ad inventory [9] - Among analysts, the median target price for The Trade Desk is $142 per share, indicating a potential upside of 75% from its current price of $81 [10] - The Trade Desk reported a 22% revenue increase to $741 million in the fourth quarter, which fell short of its guidance, but non-GAAP net income rose 44% to $0.59 per diluted share; the CEO attributed the shortfall to minor execution missteps [12] - Despite the disappointing results, Morgan Stanley analyst views the situation as a buying opportunity, emphasizing that the challenges faced were transitory and unrelated to competition or market size [13] - Wall Street anticipates earnings growth of 21% annually through 2026, with the current valuation of 49 times earnings being more reasonable compared to the previous 80 times earnings before the fourth-quarter report, suggesting that patient investors should consider buying [14]

Core Insights - Datadog reported fourth-quarter 2024 non-GAAP EPS of 49 cents, an 11.4% increase year-over-year, exceeding the Zacks Consensus Estimate by 13.95% [1] - The company's net revenues reached $737.73 million, reflecting a 25.1% year-over-year growth and surpassing the consensus estimate by 3.67% [1] Quarter Details - Datadog ended the fourth quarter with 30,000 customers, up from 27,300 in the prior-year period [2] - The company had 3,610 customers with an annual run rate (ARR) of $100,000 or more, a 13.2% increase year-over-year, contributing approximately 88% of total ARR [2] - 83% of customers used two or more products, while 50% utilized four or more products, up from 47% in the previous year [3] - Net revenue retention was in the high 110s, indicating increased usage and product adoption by customers [3] Operating Details - Adjusted gross margin contracted by 170 basis points year-over-year to 81.7% [4] - Research & development expenses rose 29.4% year-over-year to $211.6 million, with R&D as a percentage of revenues increasing by 1,000 basis points to 28.7% [4] - Sales and marketing expenses increased by 31.3% year-over-year to $173.3 million, representing 23.5% of revenues, an increase of 110 basis points [5] - General & administrative expenses grew 29.6% year-over-year to $38.7 million, accounting for 5.2% of revenues, an increase of 20 basis points [5] - Non-GAAP operating income was reported at $179.2 million, compared to $166.7 million in the year-ago quarter [5] Balance Sheet & Cash Flow - As of December 31, 2024, Datadog had cash, cash equivalents, restricted cash, and marketable securities totaling $4.2 billion, up from $3.2 billion as of September 30, 2024 [6] - Operating cash flow for the quarter was $265 million, an increase from $229 million in the previous quarter [6] - Free cash flow during the quarter was $241 million, compared to $204 million in the prior quarter [6] Guidance - For the first quarter of 2025, Datadog expects revenues between $737 million and $741 million, with non-GAAP EPS projected in the range of 41-43 cents [7] - For the full year 2025, revenues are anticipated to be between $3.175 billion and $3.195 billion, with non-GAAP EPS projected between $1.65 and $1.70 [8]

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% ...