Datadog’s Q1 Outlook Disappoint Investors

Datadog Inc. (NASDAQ:DDOG) has grown from a small startup in 2010 to a leading software company having a market value of around $34 billion. Datadog offers analytics and monitoring tools that help customers to monitor their stored data across different computing platforms. Its massive success in recent years has enabled it to compete with the likes of established players, such as Amazon and Microsoft, in the cloud space.

The company went public in September 2019 by pricing 24 million shares at $27. DDOG stock has been performing well since then. Its share price has soared about 230 percent since its initial public offering.

Datadog on Thursday announced better-than-expected financial results for the fourth quarter. However, its first-quarter outlook fell short of expectations, causing its shares to drop nearly 5 percent on Friday.

The cloud-monitoring company reported an adjusted profit of 6 cents per share for the three months ended Dec. 31, up from 3 cents per share in the comparable period of 2019. Revenue climbed 56 percent on a year-over-year basis to $177.5 million. Analysts on average were expecting earnings of 2 cents per share on $163.6 million in revenue.

CEO Olivier Pomel said, “the quarter closes a strong year in which we generated 66% revenue growth and positive free cash flow. In a year filled with unique challenges, we are proud of our execution and business performance.”

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Looking forward, Datadog expects to report adjusted earnings in the range of 2 cents per share to 3 cents per share for the current quarter, below the consensus forecast of 4 cents per share. Moreover, the company projected revenue between $825 million to $835 million for Q1, as compared to analysts’ average estimate of $802.6 million.