Datadog Inc is a leading monitoring and analytics platform for cloud-scale applications. Its mission is to empower organizations to enhance their digital performance by providing real-time visibility into their entire technology stack. Datadog's strategy focuses on integrating various monitoring tools into a single platform, enabling seamless collaboration across development, operations, and security teams. The company operates by offering a comprehensive suite of services, including infrastructure monitoring, application performance monitoring, and log management, which help businesses optimize their cloud environments and improve operational efficiency.

DATADOG INC

Datadog recently announced its fourth-quarter 2024 results, reporting a robust revenue of $738 million, reflecting a 25.1% increase year-over-year. Despite exceeding analyst estimates for non-GAAP earnings per share at $0.49, the technology leader in observability software is facing challenges as it provided disappointing guidance for 2025. This guidance forecasts revenue between $3.175 billion and $3.195 billion, significantly below Wall Street's expectation of $3.24 billion. Furthermore, projected adjusted earnings per share (EPS) of $1.65 to $1.70 were well below the anticipated $2.12.

The market reacted negatively to these projections, with shares falling over 10% in premarket trading. This decline coincides with a broader mixed earnings season where many firms outperformed expectations. Datadog executives noted a 10% increase in customer count, with 462 customers spending over $1 million annually, signaling solid user retention. However, the ongoing economic uncertainty and rising competition in cloud services are contributing to a slowdown in customer spending, particularly in cloud security services.

CEO Olivier Pomel emphasized ongoing innovation, highlighting new features aimed at cloud migration and artificial intelligence that may attract further investment. Analysts still view Datadog as a potential buying opportunity, with target prices suggesting a 21% upside from the current valuation, which stands at 71 times adjusted earnings. With projections of 22% annual earnings growth up to 2027, long-term investors may consider entering the stock despite current headwinds.

462 customers spending over $1 million annually

economic uncertainty and rising competition in cloud services

projections of 22% annual earnings growth

Datadog Shares Plummet 10% After Disappointing 2025 Revenue and Profit Forecasts Amidst Weakened Customer Spending