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Q3 Earnings Review: Cloud Monitoring Stocks Led by Datadog (NASDAQ:DDOG)


Kayode Omotosho /
2022/01/10 8:47 am EST
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The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s have a look at how the cloud monitoring stocks have fared in Q3, starting with Datadog (NASDAQ:DDOG).

Software is eating the world, increasing organizations’ reliance on digital-only solutions. As more workloads and applications move to the cloud, the reliability of the underlying cloud infrastructure becomes ever more critical, and ever more complex. To solve the challenge, companies and their engineering teams have turned to a range of cloud monitoring tools that provide them with visibility to troubleshoot the issues in real time.

The 5 cloud monitoring stocks we follow reported a strong Q3; on average, revenues beat analyst consensus estimates by 4.66%, while on average next quarter revenue guidance was 4.68% above consensus. The technology selloff has been putting pressure on the SaaS stocks since November and with Nasdaq just suffering its worst three-day start to a year since 2008, many of the software names are down more than 30% .

Best Q3: Datadog (NASDAQ:DDOG)

Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) is a software as a service platform that makes it easier to monitor cloud infrastructure and applications.

Datadog reported revenues of $270.4 million, up 74.8% year on year, beating analyst expectations by 9.14%. It was an impressive quarter for the company, with a very optimistic guidance for the next quarter and an exceptional revenue growth.

"We are pleased with our third quarter performance, with revenue growth accelerating to 75% year-over-year. We saw broad-based strength across customer segments and products," said Olivier Pomel, co-founder and CEO of Datadog.

Datadog Total Revenue

Datadog pulled off the strongest analyst estimates beat and fastest revenue growth of the whole group. The company added 190 enterprise customers paying more than $100,000 annually to a total of 1,800. The stock is down 15.5% since the results and currently trades at $141.

Read why we think that Datadog is one of the best cloud monitoring stocks, our full report is free.

New Relic (NYSE:NEWR)

With the name being an anagram of its founder, Lew Cirne, New Relic (NYSE:NEWR) makes a monitoring software that collects, scores, and analyses performance data about a client's IT stack.

New Relic reported revenues of $195.6 million, up 17.8% year on year, beating analyst expectations by 7.4%. It was a very strong quarter for the company, with accelerating growth in large customers and a very optimistic guidance for the next quarter.

New Relic Total Revenue

New Relic achieved the highest full year guidance raise but had the slowest revenue growth among its peers. The company added 47 enterprise customers paying more than $100,000 annually to a total of 1,011. The stock is up 12.1% since the results and currently trades at $102.

Is now the time to buy New Relic? Access our full analysis of the earnings results here, it's free.

Slowest Q3: Sumo Logic (NASDAQ:SUMO)

Founded in 2010 by Christian Beegden who went from driving a cab in Germany to landing an internship at Amazon, Sumo Logic (NASDAQ:SUMO) is software as a service data analytics platform that helps companies get insight into what is happening in their servers and applications.

Sumo Logic reported revenues of $62 million, up 19.5% year on year, beating analyst expectations by 1.9%. It was a decent quarter for the company, narrowly beating analyst estimates.

Sumo Logic had the weakest performance against analyst estimates in the group. The stock is down 13% since the results and currently trades at $11.85.

Read our full analysis of Sumo Logic's results here.

Dynatrace (NYSE:DT)

Founded in Austria in 2005, Dynatrace (NYSE:DT) provides companies with software that allows them to monitor the performance of their full technology stack, from software applications to the infrastructure they run on.

Dynatrace reported revenues of $226.3 million, up 34.2% year on year, beating analyst expectations by 2.58%. It was a solid quarter for the company, with a strong top line growth.

Dynatrace had the weakest full year guidance update among the peers. The stock is down 31.7% since the results and currently trades at $53.

Read our full, actionable report on Dynatrace here, it's free.

PagerDuty (NYSE:PD)

Started by three former Amazon engineers, PagerDuty (NYSE:PD) is a software as a service platform that helps companies respond to IT incidents fast and make sure that any downtime is minimized.

PagerDuty reported revenues of $71.7 million, up 33.4% year on year, beating analyst expectations by 2.29%. It was a very strong quarter for the company, with accelerating customer growth.

The company added 386 customers to a total of 14,486. The stock is down 6.79% since the results and currently trades at $31.27.

Read our full, actionable report on PagerDuty here, it's free.

The author has no position in any of the stocks mentioned