Yahoo Finance Datadog (DDOG) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Datadog DDOG reported first-quarter 2023 non-GAAP earnings of 28 cents per share, which increased 16.7% from the year-ago quarter.
The company’s net revenues of $481.7 million increased 32.7% year over year.
The Zacks Consensus Estimate for the bottom line was pegged at at a loss of 16 cents per share while that for the top line was $358 million.
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
Quarter Details
In the first quarter of 2023, Datadog had about 2,910 customers with an annual run rate of $100K or more, up from 2,250 in the year-ago quarter.
As of the end of the first quarter, 81% of customers used two or more products, which was in line with last year. Additionally, 43% of customers utilized four or more products, up from 35% in the year-ago quarter.
Datadog’s dollar-based retention rate was above 130% for the 23rd consecutive quarter, as customers increased their usage and adopted more products.
Operating Details
In the first quarter, Datadog’s adjusted gross margin remained unchanged on a year-over-year basis at 80%.
Research & development expenses rose 46.4% on a year-over-year basis to $150.2 million, driven by increased investments in Datadog’s platform. Research & development, as a percentage of revenues, increased 290 basis points (bps) to 31.2%.
Sales and marketing expenses increased 41.9% year over year to $121 million. Sales and marketing expenses, as a percentage of revenues, grew 160 bps to 25.1%.
General & administrative expenses increased 49% year over year, reaching $30.1 million in the reported quarter. General & administrative expenses, as a percentage of revenues, expanded 70 bps to 6.2%.
Datadog reported non-GAAP operating income of $86.4 million compared with $83.7 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2023, Datadog had cash, cash equivalents, restricted cash and marketable securities of $2 billion compared with $1.9 billion as of Dec 31, 2022.
Operating cash flow was $133.8 million in the reported quarter, up from $114.4 million reported in the previous quarter.
Free cash flow during the quarter was $116.3 million compared with $96.4 million in the prior quarter.
Guidance
For the second quarter of 2023, Datadog anticipates revenues between $498 million and $502 million. The Zacks Consensus Estimate for the same is pegged at $498.65 million.
Non-GAAP earnings are expected in the range of 27-29 cents per share. The consensus mark for earnings is pegged at 26 cents per share.
Non-GAAP operating income is expected in the range of $82-$86 million.
For 2023, Datadog anticipates revenues between $2.08 billion and $2.10 billion. The Zacks Consensus Estimate for the same is pegged at $2.08 billion.
Non-GAAP earnings are expected between $1.13 and $1.20 per share. The Zacks Consensus Estimate for earnings is pegged at $1.07 per share.
Non-GAAP operating income is expected in the range of $340-$360 million.
Q1 Highlights
Datadog had its strongest quarter for new logo ARR bookings. The sales of new logo and cross selling have been rising year over year and total ARR exceeded $2 billion for the first time.
In the first quarter, Datadog announced the general availability of Data Streams Monitoring, which makes it easier for organizations to manage and track the performance of event-driven applications that rely on technologies like Kafka and RabbitMQ to transfer data. Data Streams Monitoring is the first and only solution that automatically visualizes all interdependencies and key health metrics across all streaming data pipelines.
Datadog launched a new data center in Tokyo, Japan. This is Datadog’s first data center in Asia. It also adds to existing locations in the United States, Europe and AWS GovCloud.
Datadog announced the general availability of Application Vulnerability Management, which expands Datadog's application security capabilities by automatically uncovering and prioritizing the most important vulnerabilities in open-source libraries.
Some of the notable deals in first-quarter 2023 included seven-figure deals with a Fortune 500 health care company and a major university in Australia, a high seven-figure deal with one of the world’s largest fintech company and a six-figure deal with a multinational clothing company.
Zacks Rank & Stocks to Consider
Currently, Datadog carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some top-ranked stocks like Enfusion ENFN, Sea Limited SE and Box BOX, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enfusion, Sea Limited and Box are scheduled to report quarterly results on May 9, May 16 and May 30, respectively.
The Zacks Consensus Estimate for ENFN’s first-quarter 2023 earnings is pegged at 3 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for SE’s first-quarter 2023 earnings is pegged at 73 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for BOX’s first-quarter 2023 earnings is pegged at 27 cents per share, unchanged over the past 30 days.
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