Company Reports

Datadog is a premier software-as-a-service observability platform. "Observability" refers to the ability to assess a system’s current state using the data, or telemetry, it produces. Datadog’s observability solution deploys agents that run correlations across an enterprise’s technology platforms and then displays this telemetry in a single dashboard that surveys its entire technological infrastructure.

Datadog shares are down despite second-quarter earnings beating management's forecasts on both the top and bottom lines. The company guided to a future slowdown in spending from its largest artificial intelligence-native customer—OpenAI—which we suspect is the reason for the selloff.

Datadog shares are rallying after the company beat management's forecasts on both the top and bottom lines by significant margins in the first quarter. The company guided to continued strength in artificial intelligence workflow growth and a reacceleration in the legacy telemetry business.

Datadog is a premier software-as-a-service observability platform. "Observability" refers to the ability to assess a system’s current state using the data, or telemetry, it produces. Datadog’s observability solution deploys agents that run correlations across an enterprise’s technology platforms and then displays this telemetry in a single dashboard that surveys its entire technological infrastructure.

Datadog shares are rallying after fourth-quarter earnings beat management's forecasts on both the top and bottom lines. The firm reported positive updates on native and core customer adoption of artificial intelligence, but issued conservative guidance suggesting some margin compression.

Datadog is a premier software-as-a-service observability platform. "Observability" refers to the ability to assess a system’s current state using the data, or telemetry, it produces. Datadog’s observability solution deploys agents that run correlations across an enterprise’s technology platforms and then displays this telemetry in a single dashboard that surveys its entire technological infrastructure. Despite ongoing investor anxiety about how artificial intelligence will affect software models, we believe the observability industry has upside potential given the explosion of telemetry in an agentic world.

Datadog, Dynatrace, and Elastic are all trading down after Palo Alto Networks announced plans to acquire Chronosphere, an observability platform that targets artificial intelligence-focused companies, for 21 times annual recurring revenue.

Datadog is a premier software-as-a-service observability platform. "Observability" refers to the ability to assess a system’s current state using the data, or telemetry, it produces. Datadog’s observability solution deploys agents that run correlations across an enterprise’s technology platforms and then displays this telemetry in a single dashboard that surveys its entire technological infrastructure.

Datadog shares are rallying after third-quarter earnings beat management's forecast for revenue and EBIT. The firm gave positive updates on remaining performance obligations, or RPOs, customer counts, product adoption, and the impact of artificial intelligence.

We are transferring coverage of software observability platforms, Datadog and Dynatrace. Both have grown rapidly as enterprises have shifted from on-premises servers to cloud-based workflows and have benefited from the increasing complexity of enterprise technological infrastructures.

Datadog is a premier software-as-a-service observability platform. "Observability" refers to the ability to assess a system’s current state using the data, or telemetry, it produces. Datadog’s observability solution deploys agents that run correlations across an enterprise’s technology platforms and then displays this telemetry in a single dashboard that surveys its entire technological infrastructure.

Datadog reported stellar second-quarter results, with sales growing 28% to $827 million. With the firm's increased investments to capture AI-driven spending, expenses grew even faster, leading to a 460-basis-point adjusted margin compression.

Datadog reported solid first-quarter financial results that included sales of $762 million, up 25% year over year. The firm also raised its fiscal 2025 sales outlook following a strong start to the year.

Datadog reported solid fourth-quarter financial results, with sales growing 25% year over year and adjusted earnings per share expanding 11% to $0.49. For fiscal 2025, management expects sales growth of 19% and adjusted EPS of $1.70.

We believe Datadog is poised for financial success in the observability market. Its observability platform benefits from secular tailwinds driving an exponential increase in machine data for companies to monitor and analyze. In our view, the firm's sticky product portfolio, combined with a broad range of capabilities, has helped Datadog build a narrow economic moat around its business.

Datadog reported strong third-quarter financial results with the firm's sales growing 26% year over year and adjusted margins expanding 120 basis points to 25.1%. For the upcoming fourth quarter, management expect sales growth of 11% and adjusted operating margins of 23%.

We believe Datadog is poised for success in the observability market. Datadog's observability platform benefits from secular tailwinds driving an exponential increase in machine data for companies to monitor and analyze. In our view, the firm's sticky product portfolio, combined with a broad range of capabilities, has helped Datadog build a narrow economic moat around its business.

We are maintaining our $115 fair value estimate for narrow-moat Datadog after the firm reported solid second-quarter results, ahead of our estimates on topline and profitability. While the macro environment remains challenging as customers continue to rationalize their cloud spending, we remain impressed by Datadog’s ability to navigate this environment while continuing to grow its topline and improve its profitability. As customers increasingly leverage cloud workloads, a trend that has been accelerated as companies invest more in AI, we forecast strong demand for observability solutions that monitor those additional workloads and track the health of these cloud environments. At the same time, we think that a lot of our optimism is baked into Datadog’s current valuation with the company’s shares trading in the three-star range.

We are maintaining our $115 fair value estimate for shares of narrow-moat Datadog after the firm reported a strong start to fiscal 2024 with a set of robust financial results. As the tough macro of recent quarters gradually fades, we anticipate Datadog to find greater success upselling its existing customers as well as landing new ones. As a firm operating on a consumption-based pricing model, Datadog’s financials tend to react sharply to changes in customer demand. From a valuation perspective, after dropping sharply following the earnings report, we view Datadog as fairly valued.

We are maintaining our $115 fair value estimate for narrow-moat Datadog after the firm reported strong fourth-quarter results offset by weaker-than-expected guidance for 2024. On the macro front, Datadog noted continued demand stabilization, giving further credence to our belief that while 2023 was affected by customers cutting back spending on Datadog’s solutions, we will see a gradual recovery in 2024 and beyond. With its consumption-based model, Datadog is particularly susceptible to customer behavior; its quarterly results and outlook ebb and flow with customer usage trends. Although the shares traded down slightly on Feb. 13 after the earnings report, they still appear marginally overvalued relative to our fair value estimate.