A solid first quarter lifted Datadog stock.
DreamstimeShares of Datadog were trading sharply higher Friday after the cloud-based monitoring and IT security company posted better-than-expected first-quarter financial results.
Datadog (ticker: DDOG) stock was up 8.1%, to $77.17, trimming its year-to-date decline to 20%.
The company reported revenue of $198.5 million, up 51% from a year ago, and ahead of its guidance range of $185 million to $187 million. Non-GAAP profits were 6 cents a share, ahead of guidance at 2 cents to 3 cents. Street consensus called for $186.7 million and 3 cents. Under generally accepted accounting principles, the company lost 4 cents a share.
For the second quarter, Datadog sees revenue of $211 million to $213 million, with non-GAAP profits of 3 cents to 4 cents a share; previous consensus called for $196.5 million and 3 cents.
Datadog now sees full-year revenue of between $880 million and $890 million, up from a previous forecast of between $825 million and $835 million. The company lifted its forecast for non-GAAP operating income to a range of $45 million and $55 million, from a previous forecast range of $35 million to $45 million. The company lifted its non-GAAP profit forecast to a range of 13 cents to 16 cents a share, from a previous forecast of 10 cents to 14 cents.
“We are pleased with our strong first quarter results, an excellent start to the year that demonstrated continued high growth at scale,” CEO Olivier Pomel said in a statement. “We continue to innovate at a rapid pace, delivering new products and features that leverage the strength of our observability platform to create value for our customers.”
The company also announced the appointment of Adam Blitzer as chief operating officer. He had been an executive at Salesforce.com (CRM) for the last eight years, most recently as executive vice president and general manager, Marketing Cloud, Commerce Cloud, and Community Cloud.
On Friday, William Blair analyst Bhavan Suri repeated his Outperform rating on Datadog shares. He’s impressed with the company’s heavy investment in its product suite, with research and development expenses up 76% in the first quarter, the fastest increase in six quarters. “Datadog shares trade at 17.2 times our 2022 revenue estimate, above the mean of its fast-growth [software as service group] peers,” he writes. “However, we believe this premium is supported by Datadog’s higher expected growth rate, strong unit economics, and attractive longer-term positioning. The stock is now down close to 40% from all-time highs and provides an attractive opportunity for investors to build a position.”
Needham analyst Jack Andrews repeated his Buy rating and lifted his price target to $150, from $141. Andrews wrote that strength in the quarter was driven by new customer growth and stronger-than-anticipated usage trends, with a record number of new large accounts. “Datadog delivers a strong combination of product/market fit that should enable the company to execute against a large opportunity with a capital efficient business model,” he wrote.
Write to Eric J. Savitz at eric.savitz@barrons.com
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May 07, 2021 at 10:17PM
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Datadog Shares Rally On Beat-And-Raise Earnings - Barron's
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