Datadog Inc., a leader in observability and security software-as-a-service, has exceeded expectations with its latest quarterly results. However, despite the positive performance, the company’s revenue forecast for the current quarter indicates minimal sequential growth, leading to some pressure on the stock during premarket trading on Tuesday.
Quarterly Performance and Outlook
In the first quarter, Datadog projects a revenue range of $587 million to $591 million, with adjusted earnings per share (EPS) expected to be between 33 cents and 35 cents. Analysts had initially estimated revenue of $587 million and adjusted EPS of 39 cents. However, the high end of Datadog’s revenue outlook only represents approximately $1 million in incremental revenue compared to the previous quarter. This factor has contributed to concerns among investors.
Looking ahead, Datadog’s full-year forecast anticipates revenue ranging from $2.555 billion to $2.575 billion, with adjusted EPS projected to be between $1.38 and $1.44. Analysts, on the other hand, had higher expectations, with consensus estimates of $2.586 billion in revenue and adjusted EPS of $1.77.
Financial Performance Highlights
The fourth quarter of the fiscal year resulted in net income of $54 million, or 15 cents per share, compared to a net loss of $29 million, or 9 cents per share, during the same period the previous year. On an adjusted basis, Datadog reported earnings of 44 cents per share, exceeding the FactSet consensus estimate of 43 cents per share.
The company’s revenue demonstrated strong growth, increasing to $589.6 million from $469.4 million in the previous year’s fourth quarter. This surpassed the FactSet consensus estimate of $568.7 million.
Customer Growth
Datadog saw a significant increase in its customer base, with 396 customers generating at least $1 million in annual recurring revenue as of the end of December. This represents a rise from the 317 customers reported during the same period last year.
Despite the positive results, Datadog’s stock experienced a 10% decline during premarket trading on Tuesday.
Datadog Inc. remains committed to providing innovative observability and security solutions, cementing its position as a leading player in the software-as-a-service industry.
