Company Reports

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.

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 robust financial results for the third quarter of 2023. The positive impact of these results was tempered by our lowering of aggressive long-term growth estimates, leading to our fair value estimate remaining unchanged. On the macro front, management commentary on demand stabilization indicated that the brunt of cloud optimization, which has negatively impacted Datadog's financials, may be in the rearview mirror. As a company that operates on a consumption-based model, Datadog is susceptible to optimization as customers can decrease their spend on Datadog swiftly as they tighten their own fiscal belts. Encouragingly, Datadog saw usage trends improve sequentially in the third quarter and remain strong in the first month of the ongoing fourth quarter. We view these trends as a good omen for the firm and are still modeling strong revenue growth in fiscal 2024 as demand normalization continues.

We are lowering our fair value estimate for narrow-moat Datadog to $115 from $120 after the firm reported a mixed quarter with strong financial results more than offset by fiscal 2023 guidance below our expectations. While near-term macro headwinds continue to impact customer buying decisions, we were encouraged to hear management’s commentary on early signs of demand stabilization, based on buying behavior in July. It appears that the financial results, especially the weak sales guidance for the upcoming two quarters, left a lot lacking for investors with Datadog shares down double digits after the earnings report. We believe this selloff is overly punitive and that long-term investors have an opportunity to buy a high-quality SaaS name for a bargain.

We believe Datadog is poised for success in the observability space. 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 $120 fair value estimate for narrow-moat Datadog after the firm kicked off fiscal 2023 with a strong showing, showcasing both revenue growth and profitability ahead of our estimates. We believe that despite the near-term headwinds Datadog faces as customers optimize their spending on IT vendors, the firm stands to be a long-term winner in the observability space. We project that once the macro-related headwinds dissipate, there will be a strong bounce-back in customer demand as spending on public cloud providers ticks up. Despite Datadog shares being up more than 10% May 4 following the earnings report, we view Datadog as attractively priced for investors seeking long-term, high-quality SaaS exposure.

We are maintaining our fair value estimate for narrow-moat Datadog after the firm reported a mixed quarter with strong financial results offset by guidance for 2023 that was materially short of our expectations. We believe that ongoing customer cloud optimization is the driver behind Datadog’s lower-than-expected 2023 outlook as customers batten down the hatches amid a tough macro environment. In this environment, we maintain a positive outlook on the business overall and still believe that Datadog is top of mind for customers looking for observability solutions. With that in mind, we view Datadog as attractively priced for investors seeking long-term, high-quality SaaS exposure.

We believe Datadog is poised for success in the observability space. 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 believe Datadog is poised for success in the observability space. 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 believe Datadog is poised for success in the observability space. 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 lowering our fair value estimate for Datadog to $120 from $192 primarily due to trimming of our long-term forecasts, which, in retrospect, were too bullish. Part of our fair value cut is also informed by our belief that, in the near term, Datadog's clients will rein in certain spending as they optimize costs in a challenging macroeconomic environment. At the same time, we'd be remiss not to note that despite the tough conditions in the near term, we continue to view Datadog as a high-quality software name with strong cash flow generation and increased enterprise penetration. With shares trading around $75 after earnings, we still consider Datadog as attractively priced for investors that can tolerate near-term volatility.

We believe Datadog is poised for success in the full-stack monitoring and analysis space. Datadog's monitoring 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 monitoring capabilities, has helped Datadog build a narrow economic moat around its business.

We are maintaining our fair value estimate for Datadog of $192 per share after the firm reported solid second-quarter results better than our above-consensus expectations. We are impressed with the firm’s success in penetrating the enterprise market. We believe Datadog’s sticky product portfolio, a driver behind its narrow economic moat, and strong upselling into the enterprise space will enable the firm to deliver ongoing shareholder value. With shares trading around $105 intraday, we still view Datadog as attractively priced for investors looking for exposure to high-quality SaaS names.

We are maintaining our fair value estimate for Datadog of $192 after the firm kicked off fiscal 2022 with results better than our above-consensus expectations. We continue to be impressed with the firm’s penetration in the enterprise market. In our opinion, Datadog’s sticky product portfolio, a driver behind its narrow economic moat, and strong upselling into the enterprise space should allow the firm to deliver continued shareholder value. Shares are down in line with the market after these results, as broad and indiscriminate selling continues. With shares trading around $110 intraday, we still view Datadog as attractively priced for investors looking for exposure to high-quality SaaS names.

We are raising our fair value estimate for Datadog to $192 from $153 after the firm closed out fiscal 2021 with results above our expectations. We are also revising growth estimates as the company exceeded our expectations on penetration in the enterprise market. We continue to have a positive outlook on the company as it benefits from secular tailwinds while executing strongly. In our opinion, Datadog’s sticky product portfolio, a driver behind its narrow economic moat, and strong upselling into the enterprise space will allow the firm to deliver continued shareholder value. Despite shares up 15% at the market open, we still view Datadog as attractively priced for investors looking for exposure to high-quality SaaS names.

We believe Datadog is poised for success in the full-stack monitoring and analysis space. Datadog's monitoring 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 monitoring capabilities, has helped Datadog build a narrow economic moat around its business.

We are initiating coverage of Datadog with a fair value estimate of $153 per share, narrow economic moat rating, positive moat trend rating, and very high uncertainty rating. We currently view shares as marginally undervalued.

We believe Datadog is poised for success in the full-stack monitoring and analysis space. Datadog's monitoring 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 monitoring capabilities, has helped Datadog build a narrow economic moat around its business.