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Datadog Q4 Earnings: Margins Shrink, Outlook Lags Expectations
DDOGDatadog(DDOG) Benzinga·2025-02-13 14:25

Core Insights - Datadog reported a fiscal fourth-quarter revenue growth of 25% year-on-year, reaching 737.73million,surpassinganalystexpectationsof737.73 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 100,000ormore,markinga13100,000 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 241millioninfreecashflow[2]StrategicInitiatives−TheCEOhighlightedthatin2024,Datadogintroducednewfeaturestoassistcustomersincloudmigrationandadoptingnext−genAItechnologies[3]−ThecompanyaimstoaddresscomplexchallengesinObservability,CloudSecurity,SoftwareDelivery,CloudServiceManagement,andProductAnalyticsthrough2025[3]FutureOutlook−Forthefirstquarter,Datadogexpectsrevenuebetween241 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 741million,slightlybelowtheconsensusof741 million, slightly below the consensus of 740.29 million, with an adjusted EPS projected at 0.41–0.41–0.43, below the consensus of 0.46[4]−Forfiscal2025,therevenueforecastis0.46 [4] - For fiscal 2025, the revenue forecast is 3.175 billion to 3.195billion,comparedtotheconsensusof3.195 billion, compared to the consensus of 3.24 billion, with an adjusted EPS of 1.65–1.65–1.70, also below the consensus of 2.05[4]MarketReaction−Datadog′sstockexperiencedadeclineofover10.22.05 [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]