Datadog Beats Q3 Estimates, Margins Show Mixed Results

Datadog, Inc DDOG reported its quarterly results on Thursday.

The New York-based company clocked fiscal third-quarter revenue growth of 26% year-on-year to $690.02 million, beating the analyst consensus estimate of $664.32 million.

Adjusted EPS of 57 cents beat the analyst consensus estimate of 40 cents. 

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As of Sept. 30, Datadog had 3,490 customers with an ARR of $100,000 or more, increasing 12% Y/Y.

The adjusted gross margin declined by 100 bps to 81%. The adjusted operating margin increased by 100 bps to 25%. 

Datadog held cash and equivalents of $3.2 billion as of Sept. 30, generating $204 million in free cash flow.

According to Olivier Pomel, co-founder and CEO of Datadog, the company delivered a solid performance in the third quarter, achieving 26% revenue growth year-over-year. Pomel highlighted the ongoing expansion of Datadog’s platform to support customers in monitoring, securing, and managing essential cloud applications.

Outlook: Datadog expects fourth-quarter revenue of $709 million–$713 million versus the consensus of $664.32 million. It projects an adjusted EPS of $0.42–$0.44 versus the consensus of 40 cents.

Datadog expects fiscal 2024 revenue of $2.656 billion-$2.660 billion (prior $2.62 billion–$2.63 billion) versus the consensus of $2.63 billion. It projects an adjusted EPS of $1.75–$1.77 (prior $1.62–$1.66) versus the consensus of $1.65.

Previously, on CNBC’s Mad Money Lightning Round, Jim Cramer praised Datadog as an impressive company, noting it attracted acquisition offers of $20 billion before its public debut. Despite recognizing its strengths, he expressed caution, indicating some reservations about enterprise software and suggesting he still needs to be fully confident.

Price Action: DDOG stock is down 0.1% at $128.14 at last check Thursday.

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