Group 1 - The Coca-Cola Company (NYSE:KO) is highlighted in Jim Cramer's game plan, particularly noting the retirement of CEO James Quincey, marking his last quarter in charge [1] - Cramer mentioned that Coca-Cola does not have a snack business like PepsiCo, which has seen growth due to price cuts, indicating a different market strategy for Coca-Cola [1] - Coca-Cola's major brands include Coca-Cola, Fanta, Sprite, Dasani, and others, positioning the company as a significant player in the beverage industry [3] Group 2 - Cramer identified Coca-Cola as one of his top three picks for dividend stocks, alongside Kimberly and Procter & Gamble, despite a general lack of strong dividend stocks in the current market [3] - The company is recognized for its diverse beverage portfolio, which includes soft drinks, water, juices, coffee, tea, sports drinks, and plant-based beverages [3]

Market Overview - The U.S. stock market opened higher on February 10, with the Dow Jones up by 0.67%, S&P 500 up by 0.19%, and Nasdaq up by 0.05% [1] - The Nasdaq China Golden Dragon Index increased by 0.56% [1] Key Stock Movements - Major tech stocks mostly rose, with Microsoft up nearly 2%, Tesla over 1%, and slight increases for Apple, Amazon, and Broadcom. However, Google A fell over 2%, and Nvidia and Meta saw minor declines [2] - AI application software stocks surged, with Spotify and Datadog both rising approximately 16%, Shopify over 6%, and Unity nearly 5% [2] Economic Data Insights - U.S. retail sales for December 2025 unexpectedly stagnated, indicating cautious consumer spending, with 8 out of 13 retail categories showing declines [6] - The retail sales data was below expectations, with a forecast of a 0.4% increase, while the actual figure was flat [5] - The ADP report indicated an average weekly increase of 6,500 jobs in the private sector as of January 24 [7] Future Economic Indicators - Upcoming reports on non-farm payrolls and CPI are expected to be released on Wednesday and Friday [8] - Economists predict a 70,000 increase in non-farm employment for January, with the unemployment rate expected to remain at 4.4% [9] Federal Reserve Outlook - The White House's economic advisor noted that job growth may slow due to labor force growth deceleration and productivity increases [10] - The probability of a 25 basis point rate cut by the Federal Reserve in March is estimated at 17.7%, with an 82.3% chance of maintaining current rates [10]

Core Insights - Datadog (DDOG.O) shares increased by 11.7% following the announcement of fourth-quarter revenue that exceeded expectations [1] Group 1 - The company reported fourth-quarter revenue that surpassed market forecasts [1]

Core Insights - Datadog reported quarterly earnings of $0.59 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, and showing an increase from $0.49 per share a year ago, resulting in an earnings surprise of +7.27% [1] - The company achieved revenues of $953.19 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 4.22% and increasing from $737.73 million year-over-year [2] Earnings Performance - Datadog has consistently surpassed consensus EPS estimates over the last four quarters, with the latest earnings surprise being +22.22% compared to the previous quarter's expectation of $0.45 per share [1][2] - The current consensus EPS estimate for the upcoming quarter is $0.51, with projected revenues of $929.6 million, while the estimate for the current fiscal year is $2.27 on $4.06 billion in revenues [7] Market Position and Outlook - Despite the positive earnings report, Datadog shares have underperformed the market, losing about 16.2% since the beginning of the year, while the S&P 500 has gained 1.7% [3] - The company's Zacks Rank is currently 4 (Sell), indicating expectations of underperformance in the near future, influenced by unfavorable estimate revisions prior to the earnings release [6] Industry Context - The Internet - Software industry, to which Datadog belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable industry outlook that could impact stock performance [8] - Another company in the same industry, Pinterest, is expected to report earnings soon, with a consensus EPS estimate of $0.66, reflecting a year-over-year increase of +17.9% [9]

Financial Data and Key Metrics Changes - Q4 revenue was $953 million, an increase of 29% year-over-year and above the high end of guidance [7][27] - Free cash flow was $291 million, with a free cash flow margin of 31% [8][30] - Gross profit for Q4 was $776 million, with a gross margin percentage of 81.4% [29] - Billings were $1.21 billion, up 34% year-over-year [29] - Remaining performance obligations (RPO) was $3.46 billion, up 52% year-over-year [29] Business Line Data and Key Metrics Changes - Infrastructure Monitoring contributes over $1.6 billion in ARR [10] - Log Management is now over $1 billion in ARR [10] - APM and DEM products also crossed $1 billion in ARR, with core APM product growth in the mid-30s% year-over-year [10] - 84% of customers used two or more products, up from 83% a year ago [8] Market Data and Key Metrics Changes - Datadog ended Q4 with approximately 32,700 customers, up from about 30,000 a year ago [7] - 48% of Fortune 500 companies are Datadog customers, indicating strong market penetration [9] - The median ARR for Fortune 500 customers is still less than $500,000, suggesting significant growth potential [9] Company Strategy and Development Direction - The company continues to focus on digital transformation and cloud migration as long-term growth drivers [25] - Datadog is integrating AI into its platform to enhance customer value and outcomes [25] - The company aims to solve end-to-end problems across software development, production, data stack, user experience, and security needs [25] Management's Comments on Operating Environment and Future Outlook - Management noted broad-based positive trends in demand driven by cloud migration [5] - There is an expectation of increased AI usage among customers, with significant growth anticipated in 2026 [26] - The company is optimistic about its ability to capitalize on market opportunities and deliver value to customers [25] Other Important Information - The company released over 400 new features and capabilities in 2025 [11] - Datadog launched several new products, including Data Observability and enhanced security features [16][17] - The company is seeing strong growth dynamics with its core observability pillars as customers adopt modern technologies [10] Q&A Session Summary Question: Observability's future in the context of advancements in AI - Management believes that increased productivity from AI will lead to more complexity, which observability can help manage [38][39] Question: Evolution of observability with human and agentic SREs - The company is preparing for more automation and is building products to satisfy both human and agentic interactions [41][42] Question: Insights on the eight-figure deal with an AI model company - The deal reflects the value Datadog provides over homegrown solutions, as companies recognize the cost of internal development [46][47] Question: LLMs as anomaly detection tools and Datadog's competitive moat - Management sees LLMs improving but believes Datadog's ability to provide context and proactive solutions is a significant advantage [51][55] Question: Guidance assumptions for 2026 - The company has taken a conservative approach in its guidance, expecting at least 20% growth excluding its largest customer [62] Question: Impact of LLM rise on competition - Management does not see significant changes in competition and believes Datadog is well-positioned to capture market share [68][69]

Financial Data and Key Metrics Changes - Q4 revenue was $953 million, an increase of 29% year-over-year and above the high end of guidance [7][27] - Free cash flow was $291 million, with a free cash flow margin of 31% [8][30] - Gross profit for Q4 was $776 million, with a gross margin percentage of 81.4% [29] - Billings were $1.21 billion, up 34% year-over-year [29] - Remaining performance obligations (RPO) was $3.46 billion, up 52% year-over-year [29] Business Line Data and Key Metrics Changes - Infrastructure Monitoring contributes over $1.6 billion in ARR [10] - Log Management is now over $1 billion in ARR [10] - APM and DEM products also crossed $1 billion in ARR, with core APM product growth in the mid-30s% year-over-year [10] - 84% of customers used two or more products, up from 83% a year ago [8] - 55% of customers used four or more products, up from 50% a year ago [8] Market Data and Key Metrics Changes - 48% of the Fortune 500 are Datadog customers, indicating strong market penetration [9] - The median ARR for Fortune 500 customers is still less than $500,000, suggesting significant growth potential [9] - Approximately 650 AI-native customers are using Datadog, with 19 customers spending $1 million or more annually [28] Company Strategy and Development Direction - The company continues to focus on digital transformation and cloud migration as long-term growth drivers [25] - Plans to integrate AI into the Datadog platform to enhance customer value and outcomes [25] - The company aims to expand its platform to address end-to-end customer needs across software development, production, data stack, user experience, and security [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing momentum of cloud migration and the acceleration of revenue growth [5] - The company anticipates continued strong adoption among AI-native customers, with growth significantly outpacing the rest of the business [27] - Management expects revenues for Q1 2026 to be in the range of $951 million to $961 million, representing 25%-26% year-over-year growth [31] Other Important Information - The company released over 400 new features and capabilities in 2025 [11] - Significant growth in AI-related products, with over 5,500 customers using Datadog AI integrations [15] - The company launched Data Observability for end-to-end visibility across the data lifecycle [16] Q&A Session Summary Question: Observability's Future in the Context of AI - Management believes that the rise of AI will increase the complexity of systems, necessitating enhanced observability tools [39][40] Question: Evolution of UI and Workflows with AI - Management acknowledged that there will be an evolution in UI and workflows to accommodate both human and agentic SREs [41][42] Question: AI Customer Concentration and Growth - Management noted that the AI cohort is diversified, with significant growth among various customers [62][81] Question: Competition and Market Dynamics - Management stated that competition remains stable, with no significant changes in market dynamics due to the rise of LLMs [68][69] Question: CapEx Trends and Future Revenue - Management indicated that while CapEx trends are significant, it is challenging to directly correlate them to LLM observability revenue [75] Question: Diversifying AI Customer Base - Management emphasized that the company is not reliant on a few customers and is seeing growth across a broad range of AI customers [78][81]

Financial Data and Key Metrics Changes - Q4 revenue was $953 million, an increase of 29% year-over-year and above the high end of guidance [5][26] - Free cash flow was $291 million, with a free cash flow margin of 31% [6][30] - Gross profit for Q4 was $776 million, with a gross margin percentage of 81.4% [28] - Billings were $1.21 billion, up 34% year-over-year [28] Business Line Data and Key Metrics Changes - Infrastructure Monitoring contributes over $1.6 billion in ARR, Log Management is now over $1 billion in ARR, and APM products also crossed $1 billion in ARR [9] - 84% of customers used two or more products, up from 83% a year ago, and 55% used four or more products, up from 50% [6] - The number of customers with an ARR of $100,000 or more increased to about 4,310, up from about 3,610 a year ago [6] Market Data and Key Metrics Changes - 48% of the Fortune 500 are Datadog customers, indicating strong penetration in large enterprises [7] - The median ARR for Fortune 500 customers is still less than $500,000, suggesting significant growth opportunities [8] Company Strategy and Development Direction - The company continues to focus on digital transformation and cloud migration as long-term growth drivers [24] - There is a strong emphasis on integrating AI into the Datadog platform to enhance customer value and outcomes [24] - The company aims to expand its platform to address end-to-end customer needs across software development, production, data stack, user experience, and security [24] Management's Comments on Operating Environment and Future Outlook - Management noted broad-based positive trends in demand driven by cloud migration and high growth within AI-native customer groups [4][5] - The company expects continued strong growth dynamics and is optimistic about the adoption of AI innovations by customers [25] - The outlook for Q1 2026 revenue is projected to be in the range of $951 million to $961 million, representing 25%-26% year-over-year growth [31] Other Important Information - The company released over 400 new features and capabilities in 2025, focusing on AI and observability [10][12] - The MCP server is seeing explosive growth, indicating strong customer interest in AI-driven solutions [11] Q&A Session Summary Question: Observability in the context of advancements in AI - Management believes that the increase in applications and complexity will drive demand for observability tools, as developers will need to ensure systems work correctly in production [36][38] Question: AI-native customer growth and spending - The company has seen strong growth among AI-native customers, with 19 customers spending over $1 million annually [27][46] Question: Competition and market dynamics - Management noted that competition remains stable, with no significant changes in market dynamics despite the rise of LLMs [68][70] Question: Future CapEx trends and LLM observability - Management indicated that while it is difficult to directly map CapEx to LLM observability, the overall increase in complexity will benefit the business [74][76] Question: Diversification of AI customer concentration - The company is not focused on a few large customers and expects to see more diversification within the AI cohort [78][80]

Market Overview - Global stock markets have returned to historical highs, with Japan's market continuing its upward trend and software stocks stabilizing, boosting overall risk appetite [2][30] - As of the report, Dow futures rose by 0.06%, S&P 500 futures increased by 0.11%, and Nasdaq futures gained 0.06% [3][30] - European markets saw the Stoxx 600 index slightly retreat from a record high, while Kering Group surged by 11% due to signs of recovery in its Gucci business [4][30] Japanese Market - The Nikkei 225 index closed up by 2.3%, with other Asian markets showing moderate gains: Hang Seng Tech Index up by 0.5%, Shanghai Composite Index up by 0.1% [5][31] - The market anticipated that the victory of the ruling party would benefit the Japanese stock market due to planned fiscal stimulus, with unexpected rebounds in Japanese government bonds and the yen [5][31] Economic Data Focus - Traders are awaiting a series of U.S. economic data, with retail sales being the first major report expected to show resilience in consumer spending despite high living costs and a weak job market [6][32] - Upcoming data includes non-farm payrolls and inflation metrics, which will influence expectations regarding the Federal Reserve's interest rate path [6][32] Technology Sector Insights - PineBridge Investments' Mike Kelly expressed confidence in the current tech stock rebound, emphasizing the importance of identifying winners in the evolving landscape of disruptive technologies [7][33] - Ecofi Investissements' Karen Georges anticipates an economic rebound in the second half of the year, although short-term consumer data may appear less optimistic [7][33] Currency and Commodity Movements - The Chinese yuan strengthened to its highest level against the dollar since May 2023, following reports of regulatory recommendations to reduce U.S. Treasury exposure [7][33][34] - Gold prices maintained above $5,000, with traders awaiting new catalysts, while Bitcoin fell by 2.3% to $68,708 [6][36] Company-Specific Developments - Datadog's stock surged over 10% in pre-market trading, while Spotify's shares rose by 11% due to expected profits exceeding forecasts [15][42] - Conversely, Coca-Cola's stock fell over 2% as its fourth-quarter net revenue missed market expectations [17][43] - Ferrari's stock jumped nearly 10% due to strong demand, with orders extending to the end of 2027 [20][46]

Core Insights - Datadog exceeded Wall Street expectations for its fourth-quarter results, driven by increased adoption of artificial intelligence which boosted demand for its cloud security products [1] Group 1 - The company's shares rose by 10% following the announcement of its strong quarterly performance [1]

Group 1 - Spotify and Datadog saw pre-market gains exceeding 10% [1] - Shopify increased by nearly 5% [1] - Unity experienced a rise of over 4% [1] - Applovin and Snowflake both rose by nearly 4% [1] - Palantir gained over 2% [1]