We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Datadog (DDOG) Falls 7.2% MTD: Should Investors Buy the Dip?
Read MoreHide Full Article
Datadog (DDOG - Free Report) , a leading cloud monitoring and analytics platform, has seen its stock decline 7.2% month to date (MTD), underperforming the Zacks Computer and Technology sector’s dip of 4%. This pullback has some investors wondering if it is a buying opportunity for the high-growth software company.
For 2024, DDOG expects revenues between $2.59 billion and $2.61 billion. Non-GAAP earnings are projected between $1.51 and $1.57 per share. Non-GAAP operating income is expected in the range of $585-$605 million.
The Zacks Consensus Estimate for 2024 revenues and earnings is pegged at $2.6 billion and $1.54 per share, respectively. This indicates year-over-year an improvement of 22.1% in the top line and 16.7% in the bottom line. The earnings estimate has remained steady over the past 30 days.
Image Source: Zacks Investment Research
Despite the stock's recent weakness, Datadog continues to deliver strong top-line growth. In the first quarter, the company reported revenue growth of 26.9% year over year, reaching $611.25 million. This robust top-line expansion underscores Datadog's continued ability to capture market share in the growing observability and application performance monitoring sectors. The platform's ability to provide unified insights across cloud environments gives it an edge over competitors.
Month-to-date Performance
Image Source: Zacks Investment Research
Datadog's Multi-Cloud Strategy Fuels Growth in Observability Market
Datadog continues to ride the wave of digital transformation, leveraging its robust cloud-based monitoring and analytics platform to meet the growing demand for modern observability, cloud security and service management solutions. As organizations accelerate their cloud migration efforts, Datadog's comprehensive offerings have positioned it as a key player in the rapidly evolving cloud infrastructure market.
The company's commitment to innovation has been a driving force behind its success. By consistently expanding its portfolio with cutting-edge features such as serverless monitoring, real user monitoring and security monitoring, Datadog has demonstrated its ability to stay ahead of evolving customer needs. This focus on product development has not only helped the company maintain its competitive edge but has also contributed to its growing market recognition.
Datadog's customer-centric approach has yielded impressive results, particularly in attracting and retaining high-value clients. As of the first quarter of 2024, the company reported 3,340 customers with an annual run rate (ARR) of $100,000 or more, representing a 14.8% year-over-year increase. These customers accounted for approximately 87% of the total ARR, underscoring Datadog's success in capturing enterprise-level business.
The company's multi-product strategy has shown strong adoption, with 82% of customers using two or more products as of Mar 31, 2024, up from 81% in the previous year. Moreover, 47% of customers utilized four or more products, compared to 43% in the year-ago quarter, indicating successful cross-selling and upselling efforts.
Datadog's strategic partnerships with major cloud providers, including Amazon (AMZN - Free Report) -owned Amazon Web Services (AWS), Alphabet (GOOGL - Free Report) -owned Google Cloud, and Microsoft (MSFT - Free Report) Azure, have further solidified its position in the multi-cloud landscape. As an AWS Partner Network (APN) Advanced Technology Partner, Datadog offers seamless integration with AWS infrastructure and services. Similar deep integrations exist with Google Cloud services, while a strategic partnership with Microsoft Azure enhances observability and security capabilities for Azure customers.
The company's multi-cloud and multi-vendor approach allows customers to monitor their entire cloud infrastructure from a single platform, regardless of the cloud providers they use. This unified view enables organizations to optimize performance, troubleshoot issues and maintain robust security across diverse cloud environments.
Datadog's Competitive Landscape and Valuation: A Closer Look
Datadog operates in a competitive observability and monitoring market, facing rivals such as New Relic, Dynatrace and Splunk. While Datadog has differentiated itself through its unified platform and multi-cloud integrations, its competitors also offer robust solutions and have established customer bases. Additionally, tech giants like Microsoft and Amazon have their own monitoring tools, potentially posing a threat to Datadog's market share.
Additionally, the company's valuation may be a concern for some investors, as the stock trades at a premium compared to the broader Zacks Internet - Software industry. As of the latest data, Datadog’s forward 12-month P/S ratio hovers around 13.79X, reflecting investors' high growth expectations. This valuation is justified by Datadog's strong revenue growth, expanding customer base and increasing product adoption.
DDOG’s P/S F12M Ratio Depicts Stretched Valuation
Image Source: Zacks Investment Research
Conclusion
As businesses increasingly adopt multi-cloud and hybrid cloud strategies, Datadog's comprehensive observability solutions across different cloud environments position the company for continued growth. By aligning itself with industry giants like Amazon, Google and Microsoft, Datadog has established itself as a trusted partner for organizations, helping them navigate the complexities of modern cloud architectures and setting the stage for sustained success in the evolving cloud monitoring and analytics market.
The stock sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a combination that indicates a good investment opportunity, per the Zacks proprietary quantitative model.
Image: Bigstock
Datadog (DDOG) Falls 7.2% MTD: Should Investors Buy the Dip?
Datadog (DDOG - Free Report) , a leading cloud monitoring and analytics platform, has seen its stock decline 7.2% month to date (MTD), underperforming the Zacks Computer and Technology sector’s dip of 4%. This pullback has some investors wondering if it is a buying opportunity for the high-growth software company.
For 2024, DDOG expects revenues between $2.59 billion and $2.61 billion. Non-GAAP earnings are projected between $1.51 and $1.57 per share. Non-GAAP operating income is expected in the range of $585-$605 million.
The Zacks Consensus Estimate for 2024 revenues and earnings is pegged at $2.6 billion and $1.54 per share, respectively. This indicates year-over-year an improvement of 22.1% in the top line and 16.7% in the bottom line. The earnings estimate has remained steady over the past 30 days.
Image Source: Zacks Investment Research
Despite the stock's recent weakness, Datadog continues to deliver strong top-line growth. In the first quarter, the company reported revenue growth of 26.9% year over year, reaching $611.25 million. This robust top-line expansion underscores Datadog's continued ability to capture market share in the growing observability and application performance monitoring sectors. The platform's ability to provide unified insights across cloud environments gives it an edge over competitors.
Month-to-date Performance
Image Source: Zacks Investment Research
Datadog's Multi-Cloud Strategy Fuels Growth in Observability Market
Datadog continues to ride the wave of digital transformation, leveraging its robust cloud-based monitoring and analytics platform to meet the growing demand for modern observability, cloud security and service management solutions. As organizations accelerate their cloud migration efforts, Datadog's comprehensive offerings have positioned it as a key player in the rapidly evolving cloud infrastructure market.
The company's commitment to innovation has been a driving force behind its success. By consistently expanding its portfolio with cutting-edge features such as serverless monitoring, real user monitoring and security monitoring, Datadog has demonstrated its ability to stay ahead of evolving customer needs. This focus on product development has not only helped the company maintain its competitive edge but has also contributed to its growing market recognition.
Datadog's customer-centric approach has yielded impressive results, particularly in attracting and retaining high-value clients. As of the first quarter of 2024, the company reported 3,340 customers with an annual run rate (ARR) of $100,000 or more, representing a 14.8% year-over-year increase. These customers accounted for approximately 87% of the total ARR, underscoring Datadog's success in capturing enterprise-level business.
The company's multi-product strategy has shown strong adoption, with 82% of customers using two or more products as of Mar 31, 2024, up from 81% in the previous year. Moreover, 47% of customers utilized four or more products, compared to 43% in the year-ago quarter, indicating successful cross-selling and upselling efforts.
Datadog's strategic partnerships with major cloud providers, including Amazon (AMZN - Free Report) -owned Amazon Web Services (AWS), Alphabet (GOOGL - Free Report) -owned Google Cloud, and Microsoft (MSFT - Free Report) Azure, have further solidified its position in the multi-cloud landscape. As an AWS Partner Network (APN) Advanced Technology Partner, Datadog offers seamless integration with AWS infrastructure and services. Similar deep integrations exist with Google Cloud services, while a strategic partnership with Microsoft Azure enhances observability and security capabilities for Azure customers.
The company's multi-cloud and multi-vendor approach allows customers to monitor their entire cloud infrastructure from a single platform, regardless of the cloud providers they use. This unified view enables organizations to optimize performance, troubleshoot issues and maintain robust security across diverse cloud environments.
Datadog's Competitive Landscape and Valuation: A Closer Look
Datadog operates in a competitive observability and monitoring market, facing rivals such as New Relic, Dynatrace and Splunk. While Datadog has differentiated itself through its unified platform and multi-cloud integrations, its competitors also offer robust solutions and have established customer bases. Additionally, tech giants like Microsoft and Amazon have their own monitoring tools, potentially posing a threat to Datadog's market share.
Additionally, the company's valuation may be a concern for some investors, as the stock trades at a premium compared to the broader Zacks Internet - Software industry. As of the latest data, Datadog’s forward 12-month P/S ratio hovers around 13.79X, reflecting investors' high growth expectations. This valuation is justified by Datadog's strong revenue growth, expanding customer base and increasing product adoption.
DDOG’s P/S F12M Ratio Depicts Stretched Valuation
Image Source: Zacks Investment Research
Conclusion
As businesses increasingly adopt multi-cloud and hybrid cloud strategies, Datadog's comprehensive observability solutions across different cloud environments position the company for continued growth. By aligning itself with industry giants like Amazon, Google and Microsoft, Datadog has established itself as a trusted partner for organizations, helping them navigate the complexities of modern cloud architectures and setting the stage for sustained success in the evolving cloud monitoring and analytics market.
The stock sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a combination that indicates a good investment opportunity, per the Zacks proprietary quantitative model.
You can see the complete list of today’s Zacks #1 Rank stocks here