Latest news with #cloudmonitoring
Globe and Mail
14-05-2025
- Business
- Globe and Mail
Analysts rate Datadog Inc. a 'Top Pick' with 35% Upside Forecasted
Datadog Inc. (DDOG) Datadog has been identified as a leading investment opportunity, primarily due to its significant advancements within the AI-driven cloud monitoring sector. The company has shown impressive financial performance, reporting a revenue increase of 25% year-over-year, reaching $762 million. This figure not only highlights Datadog's robust growth but also exceeds analyst expectations, reinforcing its position as a market leader. A key factor driving Datadog's positive outlook is its strategic focus on artificial intelligence. As more organizations embrace comprehensive observability solutions to monitor and optimize their IT environments, Datadog's AI-driven capabilities are becoming increasingly relevant and valuable. This positions the company well to capitalize on the ongoing digital transformation trends across various industries. Analysts are notably optimistic about Datadog's future, with an average recommendation rating of 1.49, which leans towards a 'Strong Buy.' Out of 39 brokerage firms covering the stock, 28 have given it a 'Strong Buy' rating, reflecting widespread confidence in the company's growth prospects. Furthermore, Datadog's customer engagement remains strong, evidenced by a dollar-based net retention rate of 110%. This metric indicates that existing customers are not only staying with the platform but are also expanding their spending, a promising indicator of sustained revenue growth. The average target price for Datadog's stock is $153.18, based on projections from 24 analysts. This aligns with Stock Target Advisor's comprehensive analysis, which highlights a strong foundation of positive signals, leading to a 'Very Bullish' overall rating. Despite some recent revisions to earnings estimates suggesting short-term caution, the long-term growth potential of Datadog remains compelling. The company's strategic positioning within the rapidly growing AI and cloud monitoring space, combined with strong customer loyalty and favorable analyst sentiment, underpins the positive investment outlook.
Yahoo
13-05-2025
- Business
- Yahoo
1 Super Stock Down 44% You'll Wish You'd Bought on the Dip, According to Wall Street
Datadog's cloud monitoring platform is used by 30,500 businesses around the world. The company is expanding into AI, and customers are flocking to some of its new products. The stock is down 44% from its 2021 record high, but Wall Street is very bullish on its prospects. 10 stocks we like better than Datadog › Cloud computing is the revolutionary technology that provides businesses with a cost-effective way to shift their operations online. But managing digital infrastructure can be tricky, because websites and online services need to be available 24/7 for customers and employees. That's where Datadog (NASDAQ: DDOG) comes in -- it developed a cloud monitoring platform which helps enterprises minimize downtime and, therefore, lost income. Datadog stock is trading 44% below its record high, which was set during the tech frenzy in 2021. It was unquestionably overvalued then, but the company never stopped expanding, so its stock is actually starting to look attractive at the current level. Wall Street appears to agree. The Wall Street Journal tracks 46 analysts who cover Datadog stock, and most of them have assigned it the highest possible buy rating, with not a single one recommending selling. Here's why investors might want to buy the dip. Datadog had 30,500 customers at the end of the 2025 first quarter (ended March 31), and they operate across a variety of industries including retail, financial services, healthcare, gaming, technology, and more. Cloud monitoring has become essential for all of them, but they use it in unique ways depending on the nature of their business. A retailer, for instance, might use Datadog to monitor its website infrastructure around the clock. It can immediately tell the owner if a certain group of customers is having trouble accessing the online store, so the technical issue can be fixed before it leads to a drop in sales. Similarly, Sony's Playstation Network uses Datadog to monitor infrastructure at all three of its main operations centers in Tokyo, San Diego, and San Francisco, allowing them to pool their resources to resolve outages more quickly. Datadog is now using its expertise to move into the artificial intelligence (AI) industry. It launched a monitoring tool for large language models (LLMs) last year, which helps developers track costs, troubleshoot technical issues, and even evaluate the quality of the outputs produced by each model, so they can make timely adjustments. During Q1, Datadog said the number of customers who were using the LLM Observability product more than doubled compared to six months earlier. The company also launched a monitoring product for businesses that use ready-made LLMs from OpenAI to deploy AI software, instead of developing their own models. The tool helps them track their consumption across the organization, so they can allocate resources more efficiently and create more accurate budgets. Overall, Datadog said 4,000 of its 30,500 customers were using at least one of its AI products in Q1. That number doubled compared to the year-ago period. Datadog generated $762 million in total revenue during Q1 2025. That represented year-over-year growth of 25%, and it was above the high end of management's guidance of $741 million. Chief Financial Officer David Obstler said AI-native customers accounted for 8.5% of the company's total revenue during the quarter. That might not sound like much, but it was more than double the 3.5% contribution it made in the year-ago period. The first-quarter result was so strong that management increased its full-year guidance by $40 million. Datadog is now expected to bring in $3.235 billion in total revenue during 2025 (at the high end of the range), up from $3.195 billion previously. Datadog remained profitable during the quarter despite investing heavily in growth. Its total operating costs grew by 26% year over year to $616 million, led by research and development spending, which accounted for more than half of that total. The company still delivered $0.07 in earnings per share (EPS) on a GAAP (generally accepted accounting principles) basis -- but that was down by 46% from the year-ago period. However, after stripping out one-off and non-cash expenses, Datadog delivered $0.60 in EPS on a non-GAAP basis. That was flat year over year, but it was significantly above the high end of management's forecast of $0.43. The Wall Street Journal tracks 46 analysts who cover Datadog stock, and 29 of them have given it the highest possible buy rating. Eight others are in the overweight (bullish) camp, and the remaining nine recommend holding. Not a single analyst recommends selling. They have an average price target of $137.66 for the stock, which implies a potential upside of 27% over the next 12 to 18 months. However, the Street-high target of $200 suggests the stock could surge by 85% instead. Datadog was trading at an eyewatering price-to-sales (P/S) ratio of over 60 in 2021, which was unsustainable. But the 44% decline in its stock, combined with the company's consistent revenue growth since then, have pushed its P/S ratio down to a more reasonable level of 13.8. That's nearly the cheapest it's been in five years, and is a 54% discount to its average P/S ratio of 30.2 over the same period. Datadog values its addressable market at $53 billion right now in the observability space alone, and expects it to grow at a compound annual rate of 11% until 2028. The company has barely scratched the surface of that opportunity based on its current revenue, which might be why Wall Street is so bullish about the potential of its stock. Plus, the AI revolution is still in its infancy, and it could expand Datadog's opportunity even further over the long term. As a result, it might be a great time to buy the stock considering its current valuation, especially for patient investors who are willing to hold it for the long run. Before you buy stock in Datadog, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Datadog wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor's total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 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 44% You'll Wish You'd Bought on the Dip, According to Wall Street was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
08-05-2025
- Business
- Globe and Mail
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). StockStory's Take 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. Key Insights from Management's Remarks 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. Drivers of Future Performance 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. Top Analyst Questions 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. Catalysts in Upcoming Quarters 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×. At this valuation, is it a buy or sell post earnings? The answer lies in our free research report. The Best Stocks for High-Quality Investors 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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