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Datadog (DDOG - Free Report) reported second-quarter 2024 non-GAAP earnings per share (EPS) of 43 cents, which increased 19.4% from the year-ago quarter and beat the Zacks Consensus Estimate by 22.86%.
The company’s net revenues of $645.28 million rose 26.7% year over year and beat the Zacks Consensus Estimate by 3.62%.
The company ended the quarter with 28,700 customers, up from 26,100 in the prior-year period.
In the second quarter, Datadog had 3,390 customers with an annual run rate (ARR) of $100,000 or more, which increased 13% year over year. These customers generated about 87% of the total ARR.
As of Jun 30, 2024, 83% of customers used two or more products, up from 82% in the year-ago quarter. Additionally, 49% of customers utilized four or more products, up from 45% in the year-ago quarter.
Datadog’s net revenue retention was in the mid-110s as customers increased their usage and adopted more products.
Operating Details
Datadog’s adjusted gross margin increased 80 basis points (bps) on a year-over-year basis to 82.1%.
Research & development expenses rose 14.2% on a year-over-year basis to $180.9 million, driven by increased investments in DDOG’s platform. Research & development, as a percentage of revenues, decreased 310 bps to 28%.
Sales and marketing expenses rose 30.7% year over year to $157 million. Sales and marketing expenses, as a percentage of revenues, expanded 80 bps to 24.3%.
General & administrative expenses increased 17.7% year over year, reaching $34.1 million in the reported quarter. General & administrative expenses, as a percentage of revenues, contracted 40 bps to 5.3%.
Datadog reported a non-GAAP operating income of $157.5 million compared with $106.5 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, Datadog had cash, cash equivalents, restricted cash and marketable securities of $3 billion compared with $2.8 billion as of Mar 31, 2024.
Operating cash flow was $164 million in the reported quarter, down from $212 million reported in the previous quarter.
Free cash flow during the quarter was $144 million compared with $187 million in the previous quarter.
Guidance
For the third quarter of 2024, Datadog anticipates revenues between $660 million and $664 million. Non-GAAP EPS is expected in the range of 38-40 cents. Non-GAAP operating income is expected in the band of $146-$150 million.
For 2024, DDOG expects revenues between $2.62 billion and $2.63 billion. Non-GAAP EPS is projected between $1.62 and $1.66. Non-GAAP operating income is expected in the range of $620-$630 million.
Zacks Rank & Other Stocks to Consider
Currently, Datadog sports a Zacks Rank #1 (Strong Buy).
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Datadog (DDOG) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Datadog (DDOG - Free Report) reported second-quarter 2024 non-GAAP earnings per share (EPS) of 43 cents, which increased 19.4% from the year-ago quarter and beat the Zacks Consensus Estimate by 22.86%.
The company’s net revenues of $645.28 million rose 26.7% year over year and beat the Zacks Consensus Estimate by 3.62%.
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
Quarter Details
The company ended the quarter with 28,700 customers, up from 26,100 in the prior-year period.
In the second quarter, Datadog had 3,390 customers with an annual run rate (ARR) of $100,000 or more, which increased 13% year over year. These customers generated about 87% of the total ARR.
As of Jun 30, 2024, 83% of customers used two or more products, up from 82% in the year-ago quarter. Additionally, 49% of customers utilized four or more products, up from 45% in the year-ago quarter.
Datadog’s net revenue retention was in the mid-110s as customers increased their usage and adopted more products.
Operating Details
Datadog’s adjusted gross margin increased 80 basis points (bps) on a year-over-year basis to 82.1%.
Research & development expenses rose 14.2% on a year-over-year basis to $180.9 million, driven by increased investments in DDOG’s platform. Research & development, as a percentage of revenues, decreased 310 bps to 28%.
Sales and marketing expenses rose 30.7% year over year to $157 million. Sales and marketing expenses, as a percentage of revenues, expanded 80 bps to 24.3%.
General & administrative expenses increased 17.7% year over year, reaching $34.1 million in the reported quarter. General & administrative expenses, as a percentage of revenues, contracted 40 bps to 5.3%.
Datadog reported a non-GAAP operating income of $157.5 million compared with $106.5 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, Datadog had cash, cash equivalents, restricted cash and marketable securities of $3 billion compared with $2.8 billion as of Mar 31, 2024.
Operating cash flow was $164 million in the reported quarter, down from $212 million reported in the previous quarter.
Free cash flow during the quarter was $144 million compared with $187 million in the previous quarter.
Guidance
For the third quarter of 2024, Datadog anticipates revenues between $660 million and $664 million. Non-GAAP EPS is expected in the range of 38-40 cents. Non-GAAP operating income is expected in the band of $146-$150 million.
For 2024, DDOG expects revenues between $2.62 billion and $2.63 billion. Non-GAAP EPS is projected between $1.62 and $1.66. Non-GAAP operating income is expected in the range of $620-$630 million.
Zacks Rank & Other Stocks to Consider
Currently, Datadog sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks to consider from the broader Computer and Technology sector are Bilibili (BILI - Free Report) , Cisco Systems (CSCO - Free Report) and Applied Materials (AMAT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bilibili’s shares have lost 14.8% year to date. BILI is set to report second-quarter 2024 results on Aug 22.
Cisco Systems’ shares have plunged 13.5% year to date. CSCO is slated to post fourth-quarter fiscal 2024 results on Aug 14.
Applied Materials’ shares have gained 19.5% year to date. AMAT is set to release third-quarter fiscal 2024 results on Aug 15.