5 Best Cybersecurity Stocks to Buy Now

4. Datadog, Inc. (NASDAQ:DDOG)

Market cap as of August 15: $36.771 billion

Datadog, Inc. (NASDAQ:DDOG) is a New York-based system monitoring company that provides a monitoring and analytics platform for developers, IT operations teams, and business users.

Datadog, Inc. (NASDAQ:DDOG) outclassed the Wall Street estimates in its Q2 results after posting an EPS of $0.24, compared to the $0.15 estimates. The revenue of $406.14 million, outperformed the forecasts by $24.86 million and represented a 74% sequential growth. The company’s dollar-based retention rate was above 130% for the quarter. Furthermore, Datadog, Inc. (NASDAQ:DDOG) gross margin increased by 4.5% YoY to 80.8%. The company exited the quarter with cash and cash equivalents of $1.7 billion, $73 million in operating cash flow, and free cash flow for the quarter was recorded at $60.2 million.

Datadog, Inc. (NASDAQ:DDOG) provided the outlook for Q3 2022 and expects non-GAAP earnings in the range of $0.15-$0.17. The company’s revenue expectations are in the range of $410 and $414 million and operating income between $51 million to $55 million.

On August 5, Mizuho analyst Gregg Moskowitz reaffirmed a Buy rating on Datadog, Inc. (NASDAQ:DDOG) shares and lowered the price target to $170 from $175. The analyst noted that the company posted good Q2 results but the management pointed toward a slowdown in user growth among a few large customers.

Here is what Baron Funds had to say about Datadog, Inc. (NASDAQ:DDOG) in its Q1 2022 investor letter:

“Another example is Datadog, the leading infrastructure monitoring, application performance monitoring and log management software platform. Datadog’s stock declined 15% during the quarter, despite reporting sparkling operational results, with revenues accelerating to a growth rate of 84% year-over-year with 33% free cash flow margins, while guiding for 2022 significantly above expectations. Datadog added 4,600 new customers in the quarter, while existing customers continued to increase their spending on Datadog products at a rapid pace with the number of customers using four or more products increasing to 33% from 22% last year. While Datadog’s stock was down, its intrinsic value has undoubtedly increased. This is enabled by rapid innovation (Datadog released 13 new products in 2021) into a market that is benefiting from the secular growth in cloud, digital transformation, and the explosion in complexity as the number of vendors, diversity of technologies and related infrastructure continued to expand.”