Latest news with #DDOG
Yahoo
18 hours ago
- Business
- Yahoo
1 Super Stock Down 32% to Buy Hand Over Fist in August, According to Wall Street
Key Points Datadog offers a growing portfolio of tools to help businesses track the cost and performance of their artificial intelligence (AI) models. The proportion of Datadog's revenue attributable to AI customers nearly tripled year over year during the second quarter of 2025. Datadog stock remains 32% below its 2021 high, but Wall Street is very bullish on its potential. 10 stocks we like better than Datadog › Datadog (NASDAQ: DDOG) is a leader in cloud observability. Its platform monitors digital infrastructure around the clock, and immediately alerts businesses to technical glitches so they can be fixed before impacting customers. Whether a business operates in retail, entertainment, or even financial services, this is a critical tool in the digital age because the competition is always one click away. Last year, Datadog applied its expertise in cloud observability to launch a series of new tools for businesses using artificial intelligence (AI) applications. Based on the company's operating results for the second quarter of 2025, these new products are generating rapid growth. Datadog stock peaked in 2021, when a frenzy in the tech sector drove it to an unsustainable valuation. It's trading 32% below its record high as I write this, but the overwhelming majority of analysts tracked by The Wall Street Journal are extremely bullish on its prospects from here. Thirty-one of 46 rate it a buy. Datadog's new AI products are experiencing rapid adoption Datadog had around 31,400 customers at the end of the second quarter of 2025, which was a modest 8% increase from the year-ago period. However, 4,500 of those customers were using at least one of its AI products, a count that soared by a whopping 80%. One of those products is called LLM Observability, and it helps developers track costs, identify technical issues, and even evaluate the quality of the outputs from their large language models (LLMs). These models are at the foundation of consumer-facing AI software applications, and as they grow more complex, observability tools are becoming a necessity rather than an option. Datadog also offers a monitoring product for businesses using third-party LLMs from OpenAI, which is one of the industry's leading AI developers. It helps them track usage, costs, and error rates across their organization, giving them full visibility when deploying the GPT family of LLMs. Building a model from scratch requires significant financial resources and technical expertise, so more businesses are turning to third-party developers like OpenAI, which will create significant demand for this product over time. Datadog's revenue growth accelerated in the second quarter Datadog generated $827 million in total revenue during the second quarter of 2025, obliterating the high-end of management's guidance by $36 million. It represented a 28% increase year over year, which was an acceleration from the 25% growth the company delivered in the first quarter. AI-native customers accounted for 11% of Datadog's Q2 revenue, almost tripling from 4% in the year-ago period, which was a key reason for the solid performance. The Q2 result prompted management to increase its 2025 revenue forecast by $92 million, to $3.317 billion at the midpoint of its guidance range. Datadog also had another good quarter on the bottom line, with its adjusted (non-GAAP) net income growing by 7% year over year to $163.8 million. The company's operating costs surged by 36% during Q2, led by a sharp increase in research and development spending, which is why its adjusted profit grew at a much slower pace compared to its revenue. Datadog will have to spend aggressively if it wants to continue releasing new AI products, which could impact its bottom line for the foreseeable future. This won't be a problem if it leads to accelerating revenue growth over the long term, because it would create an opportunity to generate even higher profits. Wall Street is bullish on Datadog stock The Wall Street Journal tracks 46 analysts who cover Datadog stock, and 31 have given it a buy rating. Eight others are in the overweight (bullish) camp, while six recommend holding as I write this. Only one analyst recommends selling. The analysts have an average price target of $163.66, which implies a potential upside of 25% over the next 12 to 18 months. The Street-high target of $230 points to an even greater potential return of 75%, and while that seems ambitious in the short term, it's certainly on the table in the long run. Datadog stock is down 32% from its 2021 high, when a frenzy in the tech market -- fueled by pandemic-related stimulus -- drove its price-to-sales (P/S) ratio to an unsustainable level over 60. But the decline in the stock since then, combined with the company's rapid revenue growth, has pushed its P/S ratio down to 15.6. That's a 10% discount to its three-year average of 17.4 (which excludes the exuberant levels from 2021). Datadog looks like an attractive investment right now in August on that basis, and if the momentum in the company's AI revenue persists, the stock might even surpass $230 over the next few years. Do the experts think Datadog is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Datadog make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,060% vs. just 182% for the S&P — that is beating the market by 877.59%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 11, 2025 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Datadog. The Motley Fool has a disclosure policy. 1 Super Stock Down 32% to Buy Hand Over Fist in August, According to Wall Street was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Datadog (DDOG) Releases Q2 2025 Results
Datadog, Inc. (NASDAQ:DDOG) is one of the Best Cloud Computing Stocks to Invest in Now. On August 7, the company released its Q2 2025 results, with 28% YoY revenue growth, $200 million in operating cash flow, and $165 million in FCF. As of June 30, 2025, the company had ~3,850 customers with ARR of $100,000 or more, reflecting a rise of 14% from about 3,390 as of June 30, 2024. Datadog, Inc. (NASDAQ:DDOG) sees an overall strong demand environment with an ongoing healthy pace of cloud migration and digital transformation, while churn remained low with gross revenue retention stable in the mid- to high 90s. A close-up of a laptop with a software engineer coding on the monitor. Datadog, Inc. (NASDAQ:DDOG) opines that AI is a tailwind as higher cloud consumption fuels increased usage of its platform. Furthermore, next-gen AI brings in new complexity and observability challenges. Datadog, Inc. (NASDAQ:DDOG)'s AI observability products help customers gain visibility and deploy with confidence throughout the entire AI stack, which includes GPU monitoring, LLM observability, AI agent observability, and data observability. For Q3 2025, the company expects revenue in the range of $847 million – $851 million, and non-GAAP operating income of $176 million – $180 million. Baron Funds, an investment management company, released its Q2 2025 investor letter. Here is what the fund said: 'Within IT, performance was strongest in systems software, driven by Cloudflare, Snowflake, Zscaler, and Datadog, Inc. (NASDAQ:DDOG), and semiconductors led by NVIDIA, Taiwan Semiconductor (TSMC), and indie Semiconductor. Datadog's shares had a correction of 43% during the first half. At the same time, we judged their reported financial results to be strong and improving. The company demonstrated success expanding into the lucrative enterprise segment with new logo annual contract value up 70% year-on-year and gross retention of existing logos exceeding 99%. Datadog is seeing success with AI native companies, serving 8 of the top 10 AI companies including OpenAI, Anthropic, Cursor, Scale AI, and Replit. Four of these customers tripled spending with Datadog in 2024. Datadog's innovation velocity helps strengthen its platform, and underpins a long duration of growth, supported by continual annual share gains.' While we acknowledge the potential of DDOG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
5 days ago
- Business
- Yahoo
Datadog Q2 Earnings Surpass Estimates, Revenues Increase Y/Y
Datadog DDOG reported second-quarter 2025 non-GAAP earnings per share (EPS) of 46 cents, which increased 7% from the year-ago quarter and beat the Zacks Consensus Estimate by 12.20%.The company's net revenues of $826.8 million rose 28.1% year over year and beat the consensus estimate by 4.55%. Q2 Details of DDOG The company ended the second quarter with 31,400 customers, up from about 28,700 in the prior-year the second quarter of 2025, Datadog had 3,850 customers with an annualized run rate (ARR) of $100,000 or more, up from about 3,390 in the year-ago quarter. These customers generated about 89% of the total ARR. Datadog, Inc. Price, Consensus and EPS Surprise Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote As of the end of the second quarter, 83% of customers used two or more products, unchanged from the year-ago period. Additionally, 52% of customers utilized four or more products, up from 49% in the year-ago reported a trailing 12-month net revenue retention rate of approximately 120% in the second quarter, up from the mid-110% in the prior year's quarter. Operating Details of DDOG In the second quarter, Datadog's adjusted gross margin contracted 110 basis points (bps) on a year-over-year basis to 80.9%.Research & development expenses grew 45.5% on a year-over-year basis to $263.2 million. Research & development, as a percentage of revenues, expanded 380 bps to 31.8%.Sales and marketing expenses rose 27.4% year over year to $200 million. Sales and marketing expenses, as a percentage of revenues, contracted 10 bps to 24.2%.General & administrative expenses increased 22.9% year over year, reaching $41.9 million in the reported quarter. General & administrative expenses, as a percentage of revenues, decreased 20 bps to 5.1%.Datadog reported a non-GAAP operating income of $164.1 million, up 4.2% year over year. However, its non-GAAP operating margin of 19.8% shrank by 460 basis points from the prior year. Datadog's Balance Sheet & Cash Flow As of June 30, 2025, Datadog had cash, cash equivalents, and marketable securities of $3.9 billion compared with $4.4 billion as of March 31, cash flow was $200 million in the reported quarter, down from $272 million reported in the previous cash flow during the quarter was $165 million compared with $244 million in the prior quarter. Datadog's Guidance for Q3 & 2025 For the third quarter of 2025, Datadog anticipates revenues between $847 million and $851 million. Non-GAAP EPS is expected in the range of 44-46 cents. Non-GAAP operating income is expected in the band of $176-$180 2025, Datadog anticipates revenues between $3.312 billion and $3.322 billion. Non-GAAP EPS is projected to be between $1.80 and $1.83. Non-GAAP operating income is expected in the range of $684-$694 million. Datadog's Zacks Rank & Other Stocks to Consider Currently, Datadog carries a Zacks Rank #2 (Buy).Vipshop VIPS, Lumentum LITE and NetEase, Inc. NTES are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. While Vipshop sports a Zacks Rank #1 (Strong Buy) at present, Lumentum and NetEase carry a Zacks Rank #2 each. You can see the complete list of today's Zacks #1 Rank stocks and NTES are scheduled to report their respective second-quarter 2025 results on Aug. 14. LITE is slated to report its fourth-quarter fiscal 2025 results on Aug. 12. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NetEase, Inc. (NTES) : Free Stock Analysis Report Vipshop Holdings Limited (VIPS) : Free Stock Analysis Report Lumentum Holdings Inc. (LITE) : Free Stock Analysis Report Datadog, Inc. (DDOG) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-08-2025
- Business
- Yahoo
Datadog Q2 Preview: Can AI Upside Offset Slower Cloud Growth?
Datadog (NASDAQ:DDOG) will report Q2 2025 results before the open on August 7. Wall Street expects EPS at $0.41 and revenue of $791 million, reflecting a 23% YoY growth. The stock is down 8% year-to-date, and a muted reaction to Datadog's recent addition to the S&P 500 underscores the importance of this quarter's report in restoring momentum in a maturing cloud market. Investors will assess Datadog's ability to expand its platform footprint and upsell across its customer base. In Q1, the company reported continued growth in larger accounts and deeper product adoption. A continuation of this trend would reinforce the platform's stickiness and enterprise value proposition. Another crucial area is the company's AI strategy. At its recent DASH 2025 conference, Datadog announced a suite of new AI-powered tools for observability, security, and developer workflows. Management's commentary on the early traction of these features will be monitored closely. Investors want to see evidence that these innovations are converting into new customers and increased spending from existing ones, particularly in the competitive LLM observability and cloud security segments. Finally, forward guidance for Q3 and FY 2025 will likely be the stock's main catalyst. Given recent rumors of a potential acquisition of the security firm Upwind for approximately $1 billion, any commentary on this or other strategic moves will also be closely monitored. A strong outlook would reassure investors that Datadog can navigate a more measured cloud spending environment while continuing its rapid pace of innovation and growth. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
28-07-2025
- Business
- Yahoo
Datadog (DDOG): 3 Reasons We Love This Stock
Datadog has been treading water for the past six months, recording a small loss of 1.2% while holding steady at $150. The stock also fell short of the S&P 500's 5.4% gain during that period. Is now the time to buy DDOG? Or does the price properly account for its business quality and fundamentals? Find out in our full research report, it's free. Why Is DDOG a Good Business? Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) is a software-as-a-service platform that makes it easier to monitor cloud infrastructure and applications. 1. ARR Surges as Recurring Revenue Flows In While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable. Datadog's ARR punched in at $3.20 billion in Q1, and over the last four quarters, its year-on-year growth averaged 27.2%. This performance was fantastic and shows that customers are willing to take multi-year bets on the company's technology. Its growth also makes Datadog a more predictable business, a tailwind for its valuation as investors typically prefer businesses with recurring revenue. 2. Customer Acquisition Costs Are Recovered in Record Time The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it's the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability. Datadog is extremely efficient at acquiring new customers, and its CAC payback period checked in at 20.4 months this quarter. The company's rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Datadog more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments. 3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Datadog has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company's free cash flow margin was among the best in the software sector, averaging 29.4% over the last year. Final Judgment These are just a few reasons why we're bullish on Datadog. With its shares lagging the market recently, the stock trades at 16.1× forward price-to-sales (or $150 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it's free. Stocks We Like Even More Than Datadog Donald Trump's April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities. The smart money is already positioning for the next leg up. Don't miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here. Sign in to access your portfolio
