Datadog (DDOG) Q3 Earnings: What To Expect

Jabin Bastian /
2022/11/02 3:39 am EDT

Cloud monitoring software company Datadog (NASDAQ:DDOG) will be reporting results tomorrow before market hours. Here's what investors should know.

Last quarter Datadog reported revenues of $406.1 million, up 73.8% year on year, beating analyst revenue expectations by 6.51%. It was a decent quarter for the company, with exceptional revenue growth but decelerating growth in large customers. The company added 170 enterprise customers paying more than $100,000 annually to a total of 2,420.

Is Datadog buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Datadog's revenue to grow 53.1% year on year to $414.3 million, slowing down from the 74.8% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.16 per share.

Datadog Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 8.44%.

Looking at Datadog's peers in the software development segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. Bandwidth delivered top-line growth of 13.5% year on year, beating analyst estimates by 5.32% and F5 Networks reported revenues up 2.64% year on year, exceeding estimates by 1.17%. F5 Networks was down 1.13%, and Bandwidth was up 5.51%. Read our full analysis of Bandwidth's results here and F5 Networks's results here.

There has been positive sentiment among investors in the software segment, with the stocks up on average 2.98% over the last month. Datadog is down 9.78% during the same time, and is heading into the earnings with analyst price target of $130.70, compared to share price of $80.57.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.