U.S. markets open in 5 hours 32 minutes
  • S&P Futures

    3,940.25
    +42.50 (+1.09%)
     
  • Dow Futures

    31,478.00
    +276.00 (+0.88%)
     
  • Nasdaq Futures

    12,062.00
    +183.75 (+1.55%)
     
  • Russell 2000 Futures

    1,799.00
    +24.10 (+1.36%)
     
  • Crude Oil

    111.65
    -0.56 (-0.50%)
     
  • Gold

    1,842.60
    +1.40 (+0.08%)
     
  • Silver

    21.98
    +0.07 (+0.33%)
     
  • EUR/USD

    1.0579
    -0.0009 (-0.08%)
     
  • 10-Yr Bond

    2.8550
    0.0000 (0.00%)
     
  • Vix

    28.51
    -2.45 (-7.91%)
     
  • GBP/USD

    1.2476
    +0.0001 (+0.01%)
     
  • USD/JPY

    127.9300
    +0.1360 (+0.11%)
     
  • BTC-USD

    30,260.47
    +1,094.41 (+3.75%)
     
  • CMC Crypto 200

    674.60
    +22.37 (+3.43%)
     
  • FTSE 100

    7,419.34
    +116.60 (+1.60%)
     
  • Nikkei 225

    26,739.03
    +336.19 (+1.27%)
     

Datadog (DDOG) Q3 Earnings Top Estimates, Revenues Rise Y/Y

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Datadog DDOG reported third-quarter 2021 non-GAAP earnings of 13 cents per share that beat the Zacks Consensus Estimate by 116.7% and surged 160% year over year.

The company reported net revenues of $270.5 million that beat the consensus mark by 9.3% and soared 75% year over year.

Quarter Details

Steady customer additions as well as continued growth of existing customers drove the top line in the third quarter. Datadog had more than 17,500 customers at the end of the third quarter, up from 13,100 in the year-ago quarter.

Of these customers, 1,800 have an annual run rate (ARR) of $100K or more, up 66% year over year. These customers generate about 80% of total ARR.

Datadog, Inc. Price, Consensus and EPS Surprise

Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. Price, Consensus and EPS Surprise

Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote

As of the end of the third quarter, 77% of customers used two or more products, up from 71% a year ago. Additionally, 31% of customers used four or more products, up from 20% in the year-ago quarter.

Markedly, Datadog’s dollar-based retention rate was above 130% in the third quarter, driven by increased usage and adoption of existing and new products.

During the quarter, the company launched 40 new products. Datadog announced the availability of CI visibility, session replay, funnel analysis, network device monitoring, Datadog Apps and Online Archives for Log Management.

The company launched private betas for Cloud Cost Management, Observability Pipelines, Universal Service Monitoring and Application Security. Moreover, the company announced official Datadog support of the Vector open-source product.

Operating Details

In the third quarter, Datadog’s adjusted gross margin contracted 90 basis points (bps) on a year-over-year basis to 77.6%.

Research & development, as a percentage of revenues, expanded 140 bps to 31%, driven by increased investments in Datadog’s platform.

Sales and marketing expenses, as a percentage of revenues, declined 830 bps to 23.9%. General & administrative expenses, as a percentage of revenues, declined 140 bps to 6.4%.

Datadog reported non-GAAP operating income of $44 million, up 218.8% year over year.

Balance Sheet & Cash Flow

As of Sep 30, 2021, Datadog had cash, cash equivalents and marketable securities of $1.5 billion compared with $1.4 billion as of Jun 30, 2021.

Operating cash flow was $67.4 million in the reported quarter, up from $57.7 million reported in the previous quarter.

Free cash flow during the quarter was $57.1 million compared with $42.3 million reported in the previous quarter.

Guidance

For the fourth quarter of 2021, Datadog anticipates revenues between $290 million and $292 million. Non-GAAP earnings are expected between 11 cents and 12 cents per share.

Non-GAAP operating income is expected in the range of $38 million to $40 million.

For full-year 2021, Datadog anticipates revenues between $993 million and $995 million. Non-GAAP earnings are expected between 39 cents and 40 cents.

Non-GAAP operating income is expected in the range of $133 million to $135 million.

Zacks Rank & Stocks to Consider

Currently, Datadog carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Applied Materials AMAT, Cisco Systems CSCO and Clearfield CLFD. While Clearfield sports a Zacks Rank #1 (Strong Buy), both Applied Materials and Cisco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield and Cisco are set to report earnings results on Nov 4 and 17, respectively. Applied Material is likely to report the same on Nov 11.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

Applied Materials, Inc. (AMAT) : Free Stock Analysis Report

Clearfield, Inc. (CLFD) : Free Stock Analysis Report

Datadog, Inc. (DDOG) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research