Datadog shares plummet despite expectation-topping quarterly results
Datadog Inc.’s shares closed 19% lower today after it posted quarterly results and guidance that topped expectations. New York-based Datadog is a major provider of observability software. It also sells cybersecurity tools, a user experience monitoring suite and various related products. Several factors may be at play behind today’s stock selloff. Some investors may have […] The post Datadog…
Datadog's shares fell 19% despite surpassing quarterly results and guidance. The New York-based company provides observability software, cybersecurity tools, and user experience monitoring. Investors might have locked in gains following a 90% share price increase last year. Datadog disclosed its largest customer, an unnamed AI provider, renewed a nine-figure contract, renewing hopes for the stock.
However, Datadog plans to cut product usage by decreasing user seats. Revenue rose 36% year-over-year to $1.12 billion, exceeding the FactSet consensus estimate of $1.08 billion. Over 40% of the company's revenue comes from customers who spend over $100,000 annually on its products. As of June 30, 4,720 customers fit this criteria, a 870 increase from the previous year.
CEO Olivier Pomel stated, "Datadog delivered a strong quarter...with 36% year-over-year revenue growth." The AI provider utilizes 17 Datadog products. Recent additions to the software portfolio include Bits Agent Builder, which creates AI agents for tasks like cybersecurity and outage troubleshooting, and Datadog Agent Console, which monitors user interaction with AI agents.
Despite investing over 30% of revenue in research and development, Datadog still expects to generate adjusted earnings of $2.52 per share on between $4.45 billion and $4.47 billion in revenue for the year.
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