Datadog raised its annual forecasts on August 8, driven by strong demand for AI-powered cybersecurity services. The company’s upward revision highlights the growing importance of AI in cybersecurity amid rising digital threats. Companies invest heavily to safeguard their digital assets, benefiting firms like Datadog with advanced security solutions.
The shift to cloud infrastructure has further fueled Datadog’s growth, attracting big-name clients like Peloton and Samsung Electronics. Datadog’s second-quarter revenue climbed to $645 million, exceeding analysts’ expectations, with an adjusted profit per share of 43 cents. The company’s emphasis on research and development has enabled rapid innovation and helped it outpace competitors.
Rising digital threats have spotlighted AI-powered cybersecurity solutions. Datadog’s better-than-expected earnings and raised forecasts make the cybersecurity sector a promising playground for investors. The company’s shares rose nearly 3% in premarket trading, and its new annual revenue forecast is $2.62 to $2.63 billion.
As companies rely more on cloud infrastructure, cloud security becomes crucial. Datadog’s innovative security products protect cloud environments and applications, catering to this demand. This strategy aligns with the expanding cloud market, pointing to long-term growth potential.
Datadog (DDOG) reported quarterly earnings of $0.43 per share for Q2, surpassing the Zacks Consensus Estimate of $0.35 per share. This is an improvement from the company’s $0.36 per share earnings a year ago. The earnings surprise this quarter amounted to 22.86%.
Datadog posted revenues of $645.28 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 3.62%.
Datadog raises annual revenue forecast
This compares to year-ago revenues of $509.46 million.
The company has topped consensus revenue estimates four times over the last four quarters. Despite these strong quarterly results, Datadog shares have declined about 11% since the beginning of the year, in contrast to the S&P 500’s gain of 9%. Investors are keen to know what’s next for the stock.
Ahead of this earnings release, the estimate revisions trend for Datadog was favorable, resulting in a Zacks Rank #1 (Strong Buy) for the stock. The shares are expected to outperform the market in the near future. The current consensus EPS estimate for the coming quarter is $0.36 on $660.43 million in revenues and $1.54 on $2.6 billion in revenues for the current fiscal year.
Datadog has shown strong quarterly performance, consistently surpassing earnings and revenue estimates. Despite a recent dip in share price, the company’s positive earnings outlook and favorable industry position suggest potential for outperformance in the near future. Datadog’s stock rose premarket on Thursday after the company’s second quarter results beat estimates and the company raised its full-year outlook.
The company expects third quarter revenue to be between $660M and $664M, which was above the estimate of $663.46M. Non-GAAP net income per share is expected to be between $0.38 and $0.40, versus the consensus of $0.36. Datadog anticipates full-year 2024 revenue to be between $2.62B and $2.63B, versus the prior forecast range of $2.59B to $2.61B provided during first quarter results in May.
For the second quarter ended June 30, non-GAAP net income surged about 48% year-over-year to $0.43, while revenue grew around 27% year-over-year to about $645.28M. Both top and bottom-line results beat estimates. Datadog executed well in the second quarter, with 27% year-over-year revenue growth, continued customer growth, and expanding multi-product adoption across our platform,” said Datadog’s Co-Founder and CEO Olivier Pomel.
As of June 30, the company had about 3,390 customers with annual recurring revenue (ARR) of $100,000 or more, an increase of 13% from about 2,990 as of June 30, 2023.
