Datadog (DDOG) to Post Q1 Earnings: What's in the Offing?
Datadog DDOG is slated to release first-quarter 2022 results on May 5.
For the first quarter, the company expects revenues between $334 million and $339 million. Non-GAAP earnings are expected to be 11-12 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $337.30 million, suggesting an improvement of 69.88% from the year-ago quarter’s reported figure.
The consensus mark for earnings is pegged at 11 cents per share, unchanged in the past 30 days and indicating growth of 83.33% from the year-ago quarter’s levels.
Datadog’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 124.62%.
Factors to Note
Datadog’s first-quarter performance is expected to have benefited from cloud migration and digital transformation.
Solid adoption of newer products, including Real User Monitoring, Synthetic Monitoring and Application Performance Monitoring, is anticipated to have aided customer wins in the to-be-reported quarter.
Contributions from a strong cloud partner base, including Google Cloud, Microsoft Azure and Amazon Web Services, are expected to remain a key growth driver.
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
In the last reported quarter, this Zacks Rank #3 (Hold) company witnessed accelerated year-over-year growth in Infrastructure Monitoring ARR. The trend is likely to have continued in the to-be-reported quarter.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company had announced its integration with Confluent CFLT in November 2021, which is expected to have contributed to the hyper-growth in Infrastructure ARR in the to-be reported quarter.
With the integration in place, users running Confluent Cloud at any scale will be able to use Datadog to monitor their Confluent Cloud resources alongside the rest of their technology stack.
Datadog’s expanding portfolio of integrated solutions has been acting as a major catalyst in expanding its customer base. The company ended fourth-quarter 2021 with 2,010 customers with ARR of more than $100K, up 63% year over year. The firm’s dollar-based net retention rate was more than 130% in the last reported quarter, driven by increased usage and adoption of existing and new products. This momentum is likely to have continued in the to-be-reported quarter.
Moreover, continued investments and innovation with Watchdog and strengthening serverless capabilities are noteworthy. Datadog’s growing international presence is likely to have benefited its performance during the to-be-reported quarter.
Increasing expenses on research & development, marketing and headcount expansion amid stiff competition in the on-premises infrastructure monitoring space are expected to have weighed on margins in the first quarter.
Key Q1 Highlights
In January, Datadog announced that it has entered into a global partnership with Amazon’s AMZN Amazon Web Services (AWS). Per the collaboration, Datadog and Amazon’s AWS will work together to develop and deliver tighter product alignment in the upcoming years.
Datadog also received Federal Risk And Authorization Management Program (FedRAMP) Agency Authorization at moderate impact level, via the sponsorship from the Department of Veteran Affairs.
As a result, Datadog can now sell to US federal government agencies as well as the other public sector customers who use FedRAMP as an indicator of compliance and security.
In February, Datadog announced the acquisition of CoScreen, the collaboration partner for technical terms. The acquisition is anticipated to bring in new capabilities to the Datadog platform, thus enabling engineers to share their screens and work together during incident and security response, pair programming, prototyping, debugging and other activities in an integrated, joint workspace.
In March, Datadog was chosen as a Microsoft MSFT partner within the Azure Cloud Adoption Framework.
Per the Datadog-Microsoft partnership, Datadog will be integrating its monitoring and security capabilities with Azure’s full suite of services, thus helping organizations accelerate their cloud adoption process.
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