Datadog Q4 EPS Grows Over 3x; Shares Up 12%

Datadog, Inc. (NASDAQ: DDOG) shares gained over 12% on February 9 to close at $174.51, after the monitoring and analytics platform provider delivered a blowout fourth-quarter results and also provided its FY2022 guidance well above the analyst expectations.

The quarterly beat was driven by robust larger customers and revenues growth attributed to continued business efficiencies, as well as strong execution.

Q4 Outperformance

Notably, adjusted earnings of $0.20 per share more than trebled year-over-year and massively beat analysts’ expectations of $0.12 per share. The company reported earnings of $0.06 per share for the prior-year period.

Furthermore, revenues jumped 84% year-over-year to $326.2 million and exceeded consensus estimates of $291.48 million.

The increase in revenues reflected robust growth of larger customers, with 216 customers with annual recurring revenue (ARR) of $1 million or more, up 114% compared to 101 customers a year ago.

Similarly, adjusted operating margin grew 1200 bps to 22% during the quarter.

FY2022 Outlook

Based on robust Q4 results, management provided the financial guidance for FY2021.

For FY2022, the company forecasts adjusted earnings in the range of $0.45 to $0.51 per share, while the consensus estimate is pegged at $0.57 per share. Revenues are forecast to be in the range of $1.51 billion to $1.53 billion, versus the consensus estimate of $1.41 billion.

For the first quarter of FY2022, adjusted earnings are likely to range between $0.10 and $0.12 per share, while the consensus estimate is pegged at $0.11 per share. Revenues are projected to be in the range of $334 million to $339 million, versus the consensus estimate of $306.6 million.

CEO Comments

Looking ahead, Datadog CEO, Olivier Pomel, commented, “We continue to believe we’re in early days with our opportunities in observability. And we are just starting our efforts in cloud security and developer-focused products. We have much to do, and we’re excited about what we’re working on for 2022 and beyond.”

Wall Street’s Take

Following the upbeat Q4 results, Goldman Sachs analyst Kash Rangan increased the price target on the stock to $250 (43.2% upside potential) from $225 and reiterated a Buy rating.

Overall, the stock has a Strong Buy consensus rating based on 12 Buys, 1 Hold and 1 Sell. The average Datadog stock price forecast of $208 implies 19.13% upside potential from current levels.

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