What Happened:
Shares of cloud monitoring software company Datadog (NASDAQ:DDOG) jumped 7.22% in the after-market session after the company reported an impressive 'beat and raise' quarter. First-quarter results exceededed analysts' revenue, operating profit, free cash flow, and earnings per share (EPS) expectations. While next quarter's revenue guidance was roughly in-line, operating income guidance was ahead. The bright spot was full year guidance--the company raised revenue and operating profit guidance from previous, both of which were above Consensus estimates. Overall, it was an impressive quarter.
What is the market telling us:
Datadog's shares are very volatile and over the last year have had 57 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 29 days ago, when the company dropped 6.69% on the news that the ADP payrolls report showed that the private sector added 145k jobs in March, much lower than analysts' expectations for 210k. This triggered concerns of a potential recession amid continued comments from Fed officials that rate hikes are still needed to tame inflation. As a reminder, higher rates have a negative impact on equity valuations, as future cash flows must be discounted back.
Datadog is up 4.94% since the beginning of the year, but at $75.79 per share it is still trading 36.3% below its 52-week high of $119 from May 2022. Investors who bought $1,000 worth of Datadog's shares at the IPO in September 2019 would now be looking at an investment worth $2,010.
Is now the time to buy Datadog? Access our full analysis of the earnings results here, it's free.