Tuesday, Datadog Inc . (NASDAQ:DDOG) received a reaffirmed Sector Perform rating and a $151.00 price target from RBC Capital.
The cloud-computing company reported a robust beginning to the year, surpassing expectations on both revenue and earnings per share. The quarter saw revenue growth accelerate to 27%, which was a 3.8% beat compared to the forecasted 22.5%. This performance also marked an improvement from the previous quarter's 26% growth.
Despite the positive revenue and earnings figures, Datadog's billings were slightly below expectations at $618.1 million, a 21% year-over-year increase, compared to the consensus estimate of $623.2 million. This figure also represented a slowdown from the previous quarter's 35% growth. The company's trailing twelve-month net revenue retention rate remained stable in the mid-110% range.
Operating margins, cash flow from operations (CFO), and earnings per share (EPS) all exceeded consensus estimates. Datadog also experienced robust growth in its customer base, adding 700 net new customers, which is an increase from 500 in the last quarter. This growth was underscored by a 15% year-over-year increase in customers with an annual recurring revenue (ARR) of over $100,000.
The management team credited solid execution and continued innovation for the company's performance, including the general availability of IT Event management on its platform. Looking forward, Datadog has raised guidance for all metrics, with the full-year 2024 forecast increased by at least $35 million, surpassing the $21 million beat in the first quarter.
Despite the strong performance and raised guidance, Datadog's stock was down approximately 12% in premarket trading. This decline comes after the stock showed significant strength year-to-date compared to its peers. Further details were expected to be discussed during the earnings call scheduled for 8:00 AM ET.
InvestingPro Insights
Datadog Inc. (NASDAQ:DDOG) has demonstrated a strong start to the year, with its recent earnings report reflecting robust revenue growth and an expanding customer base. In line with this performance, InvestingPro data provides additional insights into the company's financial health and market valuation. As of the last twelve months ending in Q1 2023, Datadog's market capitalization stands at $38.09 billion, highlighting its significant presence in the cloud-computing sector.
One of the key metrics that stands out for Datadog is its impressive gross profit margin, which reached 80.76%, underlining the company's ability to maintain profitability amidst its growth trajectory. This is complemented by a strong revenue growth rate of 27.06% during the same period, reinforcing the positive trend noted in the recent earnings report.
Investors considering Datadog's stock should also be aware of its valuation multiples. The company is currently trading at a high earnings multiple, with a P/E ratio of 839.6 based on the last twelve months as of Q1 2023. This indicates a premium valuation, which may reflect the market's high expectations for future earnings growth.
Regarding InvestingPro Tips, two noteworthy points for potential investors are that Datadog holds more cash than debt on its balance sheet and that net income is expected to grow this year. These tips suggest a strong financial position and an optimistic outlook for the company's profitability. For those seeking further insights, there are an additional 12 tips available on InvestingPro. These can provide a deeper understanding of Datadog's financials and market potential, accessible through the dedicated InvestingPro page for Datadog: https://www.investing.com/pro/DDOG.
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