Cloud monitoring software company Datadog (NASDAQ:DDOG) will be announcing earnings results tomorrow morning. Here's what investors should know.
Datadog beat analysts' revenue expectations by 3.3% last quarter, reporting revenues of $611.3 million, up 26.9% year on year. It was a strong quarter for the company, with an impressive beat of analysts' ARR (annual recurring revenue) estimates and accelerating growth in large customers. It added 150 enterprise customers paying more than $100,000 annually to reach a total of 3,340.
Is Datadog a buy or sell going into earnings? Read our full analysis here, it's free.
This quarter, analysts are expecting Datadog's revenue to grow 22.7% year on year to $625.1 million, slowing from the 25.4% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.36 per share.
The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Datadog has a history of exceeding Wall Street's expectations, beating revenue estimates every single time over the past two years by 4% on average.
Looking at Datadog's peers in the software development segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Bandwidth delivered year-on-year revenue growth of 19%, meeting analysts' expectations, and Cloudflare reported revenues up 30%, topping estimates by 1.6%. Bandwidth traded down 33.3% following the results while Cloudflare was up 6.9%.
Read our full analysis of Bandwidth's results here and Cloudflare's results here.
Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed inflation signals have led to uncertainty around rate cuts, and while some of the software development stocks have fared somewhat better, they have not been spared, with share prices down 4.8% on average over the last month. Datadog is down 17.1% during the same time and is heading into earnings with an average analyst price target of $144 (compared to the current share price of $104.98).
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