Datadog (DDOG) has just released its second-quarter results, and they’re impressive across the board. The company saw a significant revenue increase of 27% year-over-year, reaching $645 million. This growth is a testament to Datadog’s success in boosting its customer base and rolling out new products.
DDOG’s Strong Quarter
Datadog’s financial performance for Q2 2024 speaks volumes. The company reported a GAAP operating income of $13 million, reflecting a 2% operating margin. On a non-GAAP basis, the operating income surged to $158 million, with a 24% operating margin. GAAP EPS was $0.12, up from $0.10 in the same quarter last year. Meanwhile, non-GAAP EPS came in at $0.43, a significant increase from $0.24 in Q2 2023, beating analysts’ consensus estimate of $0.37. The company’s operating cash flow was robust at $164 million, with free cash flow totaling $144 million. Datadog also maintained a strong cash position, with $3 billion in cash, cash equivalents, and marketable securities as of June 30, 2024.
Datadog’s Customer Growth & Strengthening Leadership
Datadog’s customer base continues to expand impressively. The company now counts around 3,390 customers with annual recurring revenue (ARR) of $100,000 or more, up from about 2,990 a year ago. This growth reflects a solid 13% increase in high-value customers.
The quarter also saw the addition of key personnel to the team. Yanbing Li joined as Chief Product Officer, bringing over 25 years of experience from companies like Google and VMware. Meanwhile, David Galloreese was appointed as Chief People Officer, adding his extensive HR expertise from firms like Figma and Walmart.
DDOG’s Exciting New Products
Datadog didn’t just hit the financial and customer metrics; it also made strides in its product offerings. At its DASH 2024 conference, the company released a slew of new products and capabilities. These include the general availability of LLM Observability, which allows developers to monitor and improve large language models, and Datadog Kubernetes Autoscaling, which automates resource optimization for Kubernetes environments.
Other important innovations include Data Jobs Monitoring, which helps data engineers detect and fix problematic data jobs, and Log Workspaces, a collaborative space for advanced log and dataset analysis. Datadog also introduced Datadog App Builder, a low-code tool for creating and integrating self-service applications into monitoring stacks.
DDOG’s Forward Guidance
Datadog is optimistic about the future. For Q3 2024, the company expects revenue to fall between $660 million and $664 million, with non-GAAP operating income projected between $146 million and $150 million. Non-GAAP net income per share is anticipated to be between $0.38 and $0.40.
For the full year 2024, Datadog’s revenue guidance is set between $2.62 billion and $2.63 billion. The company forecasts non-GAAP operating income to range from $620 million to $630 million, with non-GAAP net income per share expected between $1.62 and $1.66.
Is Datadog a Buy or Sell?
Analysts remain bullish about DDOG stock, with a Strong Buy consensus rating based on 21 Buys and three Holds. Over the past year, DDOG has increased by more than 25%, and the average DDOG price target of $145.90 implies an upside potential of 29.3% from current levels. These analyst ratings are likely to change following DDOG’s results today.
