Latest news with #FlexLogs
Yahoo
08-05-2025
- Business
- Yahoo
DDOG Q1 Earnings Call: Growth in Large Deals, AI Adoption, and Platform Expansion Drive Outlook
Cloud monitoring software company Datadog (NASDAQ:DDOG) reported Q1 CY2025 results topping the market's revenue expectations , with sales up 24.6% year on year to $761.6 million. The company expects next quarter's revenue to be around $789 million, close to analysts' estimates. Its non-GAAP profit of $0.46 per share was 9% above analysts' consensus estimates. Is now the time to buy DDOG? Find out in our full research report (it's free). Revenue: $761.6 million vs analyst estimates of $741 million (24.6% year-on-year growth, 2.8% beat) Adjusted EPS: $0.46 vs analyst estimates of $0.42 (9% beat) Adjusted Operating Income: $166.5 million vs analyst estimates of $165.1 million (21.9% margin, 0.8% beat) The company lifted its revenue guidance for the full year to $3.23 billion at the midpoint from $3.19 billion, a 1.3% increase Management raised its full-year Adjusted EPS guidance to $1.69 at the midpoint, a 2.4% increase Operating Margin: -1.6%, down from 2% in the same quarter last year Free Cash Flow Margin: 32.1%, similar to the previous quarter Customers: 3,770 customers paying more than $100,000 annually Net Revenue Retention Rate: 118%, in line with the previous quarter Annual Recurring Revenue: $3.2 billion at quarter end, up 24.6% year on year Billings: $747.7 million at quarter end, up 21% year on year Market Capitalization: $36.61 billion Datadog's first quarter results were shaped by robust customer adoption of new observability and security products, alongside notable expansion in enterprise and AI-native segments. CEO Olivier Pomel highlighted increased usage of products like Flex Logs and Database Monitoring, as well as strong traction with large customers, stating, 'Dollar bookings for new logos were up over 70% year-over-year and much stronger than our typical seasonal softness in Q1.' Looking ahead, management raised full-year revenue and adjusted earnings guidance, citing continued investment in sales capacity and R&D to support product innovation and market expansion. CFO David Obstler emphasized that while 'cloud hosting costs rose more quickly than we expected in Q1,' Datadog remains focused on optimizing expenses and expects efficiency projects to yield savings throughout the year. Datadog's leadership attributed Q1 performance to increasing product adoption, strong execution in large enterprise deals, and momentum in AI-driven workloads. The company also emphasized investments in new product areas and international expansion to sustain growth. Platform adoption broadening: Management reported rising customer engagement across multiple products, with a growing proportion of users adopting four or more Datadog offerings. Notably, 83% of customers now use at least two products, reflecting increasing reliance on the platform. AI cohort accelerating: The AI-native customer segment continued to grow, with these clients now representing approximately 8.5% of annual recurring revenue. Management noted that AI-related deals contributed significantly to overall revenue growth and bookings. Large enterprise deals rising: The quarter saw a sharp increase in large transactions, with 11 deals exceeding $10 million in total contract value—up from just one in the same period last year. These wins were attributed to Datadog's ability to replace multiple existing tools and consolidate observability functions for complex organizations. Security and data observability investment: The company highlighted expansion in its security and data observability products, supported by the recent acquisitions of Eppo and Metaplane. Over 7,500 customers now use Datadog's security offerings, and the Database Monitoring product is approaching $50 million in annual recurring revenue. International and sales capacity growth: Datadog increased its international sales headcount by mid-30% year-over-year and continues to target new markets, including the launch of an Australian data center to address regional requirements for data residency and privacy. Management's outlook for the coming quarters is shaped by continued investment in product innovation, expansion of sales capacity, and growing demand for observability and security solutions—especially among large enterprises and AI-focused organizations. Continued AI adoption: Management expects further growth from AI-native customers, with increased observability needs as organizations deploy more AI-driven workloads in production environments. Platform expansion and integration: The integration of new capabilities from recent acquisitions and the expansion of data observability solutions are positioned to drive cross-sell opportunities and deepen customer engagement. Margin focus and efficiency projects: While gross margins faced short-term pressure from higher cloud hosting costs, Datadog is prioritizing efficiency initiatives to optimize spending and maintain margins within its historical range, even as operating investments continue. Mark Murphy (J.P. Morgan): Asked about the opportunity in monitoring AI-generated code, to which CEO Olivier Pomel responded that the shift to AI-written software increases the need for observability, moving value from code creation to operational monitoring. Sanjit Singh (Morgan Stanley): Inquired about the evolution of data observability as a growth area. Pomel explained that data observability is now seen as critical for building new AI workloads and emphasized the strategic importance of recent acquisitions in this space. Raimo Lenschow (Barclays): Questioned the factors behind the raised guidance and gross margin changes. CFO David Obstler explained that guidance reflects recent trends but remains conservative, and margin pressure was due to increased cloud costs and investment in new functionality. Jake Roberge (William Blair): Asked about the durability of AI-native cohort growth and Flex Logs adoption. Pomel noted potential volatility due to customer concentration but stated that Flex Logs is driving net new use cases and higher platform usage. Brad Reback (Stifel): Sought clarity on Datadog's approach to on-prem and "bring your own cloud" workloads. Pomel indicated that Datadog is adapting solutions to address customer preferences and sees opportunity in supporting hybrid and on-prem environments. Looking ahead, the StockStory team will monitor (1) ongoing adoption of AI observability and security products, (2) the impact of sales capacity expansion on large enterprise deal volume, and (3) the integration and market traction of recent acquisitions like Eppo and Metaplane. The outcome of Datadog's DASH user conference in June and progress on margin optimization initiatives will also be important signposts for tracking execution. Datadog currently trades at a forward price-to-sales ratio of 11.5×. In the wake of earnings, is it a buy or sell? See for yourself in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. 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Yahoo
06-05-2025
- Business
- Yahoo
Datadog Sees 25% Q1 Growth, Hikes Guidance
Datadog (NASDAQ:DDOG) raises its full-year outlook to $3.215 billion$3.235 billion in revenue, driven by 25% Q1 growth and accelerating AI-related product adoption. In Q1, the cloud observability specialist reported $762 million in revenue, topping guidance and marking a 25% year-over-year increase (3% sequentially), according to CEO Olivier Pomel. Customer count climbed to 30,500 from 28,000 a year ago, with 3,770 clients now generating at least $100,000 in ARR88% of total ARR. The Flex Logs product hit $50 million ARR in just six quarters, the fastest ramp in Datadog's history, while Database Monitoring nears the same milestone with 60% year-over-year growth and over 5,000 customers. Recent acquisitions of Eppo and Metaplane bolster feature management and data observability suites. On profitability, CFO David Obstler highlighted $244 million of free cash flow (32% margin) and an 80.3% gross margin, modestly down from 81.7% last quarter as cloud hosting costs rose. Management plans optimizations to offset those pressures. Net revenue retention stayed in the 110% range, while gross retention held steady in the mid-to-high 90s. Billings hit $748 million, up 21% year-over-year. For Q2, Datadog sees revenue between $787 million and $791 million (22%23% growth) with non-GAAP EPS of $0.40$0.42. Full-year guidance now sits at $3.215 billion$3.235 billion in revenue (up $40 million) with operating income of $625 million$645 million and non-GAAP EPS of $1.67$1.71. Gross margins are expected to stay within historic ranges despite short-term headwinds. In Q&A, analysts pressed on AI-generated code's implicationsPomel noted that increased AI-written code amplifies the need for observability to validate and monitor dynamic applications. On cloud migration trends, Datadog sees steady growth aligned with hyperscaler reports, and CFO Obstler assured that expanded sales and marketing investments are driving productivity on par with previous cohorts. Why it matters: The raised guidance and standout product ramps underscore Datadog's ability to translate AI and migration tailwinds into sustained top-line and cash-flow growth. Investors will look to Q2 earnings in late July for confirmation that new AI offerings and bolt-on acquisitions continue fueling momentum. This article first appeared on GuruFocus.
Yahoo
06-05-2025
- Business
- Yahoo
Datadog (NasdaqGS:DDOG) Plans Q2 Revenue Up To US$791 Million
Datadog saw a 20% price increase over the past month, buoyed by positive updates during its latest earnings announcement. The company reported a significant sales increase in Q1 2025, showcasing a 25% rise compared to the previous year, despite a reduction in net income. Datadog's guidance for Q2 and 2025 revenue highlighted an optimistic outlook, aligning with broader market gains. Concurrently, the tech-heavy Nasdaq faced minor declines, reflecting investor caution amid ongoing tariff discussions and Federal Reserve meetings. Proposals to amend bylaws also surfaced, positioning Datadog for potential governance changes. We've discovered 1 risk for Datadog that you should be aware of before investing here. NasdaqGS:DDOG Revenue & Expenses Breakdown as at May 2025 Trump has pledged to "unleash" American oil and gas and these 22 US stocks have developments that are poised to benefit. The recent news regarding Datadog has likely reinforced the positive sentiment surrounding its growth narrative, particularly given its expanded focus on AI and product offerings like Flex Logs. Despite the enthusiasm, the company's reduction in net income highlights ongoing challenges, such as high sales expenses and potential volatility from AI-reliant customers. Over the past five years, Datadog's total shareholder return, including dividends, was 89.80%, indicating strong long-term performance. However, over the past year, Datadog's shares underperformed the US Software industry, which saw a 14.5% return, while Datadog experienced lesser gains. This context underscores both the company's growth potential and the competitive landscape it operates within. In terms of revenue and earnings forecasts, the firm's optimistic Q2 guidance and 2025 outlook point towards sustained growth in the near term. Analysts expect annual revenue growth of 20.5% over the next three years, with earnings projected to rise to $327.7 million by 2028. However, disparities in analyst expectations suggest underlying uncertainties, such as customer cost-cutting and competitive pressures. Currently, the share price at US$102.31 is discounted compared to the consensus price target of US$143.21, indicating a potential upside of approximately 28.6%. This suggests a cautious optimism among analysts regarding Datadog's ability to capitalize on its market opportunities, provided it successfully navigates existing challenges. The analysis detailed in our Datadog valuation report hints at an deflated share price compared to its estimated value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
23-02-2025
- Business
- Yahoo
Datadog in the Doghouse After Disappointing Forecast. Is It Time to Buy the Stock on the Dip?
Shares of Datadog (NASDAQ: DDOG) are down 19% since the cloud security platform provider issued a weaker-than-expected 2025 outlook with slower revenue growth and higher expenses. However, there could still be an opportunity in the stock as the company looks to transition from a platform that alerts customers of potential problems to one that takes action and fixes them. With that in mind, let's take a closer look at the company's most recent results and guidance to see if this is a buying opportunity. The fact that Datadog's 2025 revenue forecast of 18% to 19% growth came up short of analyst estimates wasn't a total surprise. The company is operating in a tight enterprise software spending environment, and management tends to be conservative with its guidance. Datadog uses a consumption model, and the company tends to base its forecast on current usage trends, which it then discounts. However, the bigger surprise was its operating margin guidance of 21% for 2025, which was well below the 25% that analysts were modeling. Datadog is looking to ramp up spending as it makes key investments in sales and marketing to help expand its presence in underserved markets. It will also look to add more salespeople and invest in its go-to-market strategies. On the research and development front, Datadog is focusing on areas such as Flex Logs and cloud management services. Turning to its Q4 results, Datadog saw revenue climb 25% to $738 million. Management said consumption trends were in line with expectations and stable year over year, with strong usage in October and November, followed by a typical December seasonal slowdown. Net dollar-based retention, which measures spending growth from existing customers, was in the high-110% range. It ended the year with 30,000 customers, of which 3,610 have annual recurring revenue (ARR) greater than $100,000 and 462 customers who spend more than $1 million. Half of its customers use more than four solutions, while more than a quarter use six or more. The company highlighted its infrastructure monitoring solution, which now contributes ARR of $1.25 billion, as well as its log management and APM products, which each have more than $750 million in ARR. The company is looking toward cloud security as a growing opportunity too. Datadog noted that artificial intelligence (AI) native customers were now 6% of its ARR, up from 3% a year ago. It is seeing increased interest in AI inference workloads. As AI inference costs come down and more enterprises develop their own AI capabilities and services, this should be an opportunity for Datadog as these resources will need monitoring. Adjusted EPS, meanwhile, came in at $0.49, up 11% from $0.44 a year ago. It generated free cash flow of $241 million in the quarter and $775 million for the year. For the current quarter, the company forecast Q1 revenue of between $737 million and $741 million, representing growth of around 21%. Adjusted EPS should be $0.41 to $0.43. While investors were disappointed with Datadog's guidance, especially on the expense side, increased investments should ultimately be good for the company over the long term. Meanwhile, it has a history of being conservative when it comes to forecasting revenue. At the same time, the company is seeing a lot of wins. Datadog added the most customers (800) in over a year and a half, and the number of large customers continues to grow. It also saw an uptick in net dollar retention from the previous few quarters. Longer term, Datadog has a solid opportunity as it looks to use AI to help not just observe problems but to automatically address any threats. It also should benefit as more enterprises look to develop and run their own AI solutions. Trading at a forward price-to-sales (P/S) multiple of 12.8 times, Datadog's stock is not cheap given its projected 18% to 19% growth this year. I wouldn't step into a declining growth story with a premium valuation due to the elevated downside risk. However, if the stock trades down to a P/S multiple around 10 times, Datadog becomes more appealing. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $348,579!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $46,554!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $540,990!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of February 21, 2025 Geoffrey Seiler 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. Datadog in the Doghouse After Disappointing Forecast. Is It Time to Buy the Stock on the Dip? was originally published by The Motley Fool
