As cloud monitoring stocks’ Q1 earnings season wraps, let's dig into this quarter's best and worst performers, including Datadog (NASDAQ:DDOG) and its peers.
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 4 cloud monitoring stocks we track reported a weaker Q1; on average, revenues beat analyst consensus estimates by 1.71%, while on average next quarter revenue guidance was 1.58% under consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows, but cloud monitoring stocks held their ground better than others, with the share prices up 5.27% since the previous earnings results, on average.
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 $481.7 million, up 32.7% year on year, beating analyst expectations by 2.72%. It was a mixed quarter for the company, with a decent beat of analyst estimates but decelerating growth in large customers.
"We are pleased with our execution in the first quarter, with 33% year-over-year revenue growth, continued customer growth, and increased multi-product adoption by our customers," said Olivier Pomel, co-founder and CEO of Datadog.
Datadog pulled off the fastest revenue growth of the whole group. The company added 130 enterprise customers paying more than $100,000 annually to a total of 2,910. The stock is up 45.8% since the results and currently trades at $96.1.
Is now the time to buy Datadog? Access our full analysis of the earnings results here, it's free.
Best Q1: 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 $314.5 million, up 24.5% year on year, beating analyst expectations by 3.23%. It was a strong quarter for the company, with a full year guidance beating analysts' expectations and very optimistic guidance for the next quarter.
Dynatrace delivered the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is up 8.99% since the results and currently trades at $51.04.
Is now the time to buy Dynatrace? Access our full analysis of the earnings results here, it's free.
Weakest Q1: 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 $103.2 million, up 20.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for the next quarter below Consensus. The full year revenue guidance also missed and was lowered.
PagerDuty had the weakest performance against analyst estimates and weakest full year guidance update in the group. The company lost 155 customers and ended up with a total of 15,089. The stock is down 17.3% since the results and currently trades at $22.95.
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 $242.5 million, up 17.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for the upcoming quarter and the full year both falling short of Consensus expectations.
New Relic had the slowest revenue growth among the peers. The stock is down 16.4% since the results and currently trades at $68.97.
The author has no position in any of the stocks mentioned