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Datadog Q1 Earnings: What to expect

Investors eagerly await Q1 earnings from monitoring and analytics platform provider Datadog (NASDAQ: DDOG). The company had one of the most successful enterprise software IPOs in recent years and its stock is currently trading 40% lower than its all-time high during February 2021. 

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The business had a busy 2020. We saw the announcement of an agreement to acquire Sqreen, a SaaS-based security platform, which was finalized last month. Datadog also acquired Timber Technologies, the creator of an observability data management product. The general availability of Incident Management was also launched, which is an enhanced security platform with two new beta offerings, along with plenty of other new features which were a hit with customers. 

 

When is Datadog’s earnings date? 

Datadog reports earnings for the first quarter of 2021 on Thursday, May 26 at 5:00 pm Eastern Time. 

 

How can I listen to Datadog’s earnings call?

To listen to the call and access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Datadog’s Investor Relations page.

 

What to expect from Datadog’s earnings

Here are a few things investors will be looking out for from Datadog’s earnings call:

Earnings and revenue growth: Revenues are expected to be between $185 million and $187 million, just a ~5% increase from the year-ago quarter revenue of $177.5 million. The company is expecting to post a quarterly non-GAAP net income per share of either $0.02 or $0.03 per share in its upcoming report, which could represent a year-over-year change of -50%. We can expect the company to post a non-GAAP operating income of between $8 million and $10 million. 

Customer growth and increased usage: I see the pandemic after-effects having a major knock-on impact on Datadog. It ended Q4 2020 with 1,253 large customers, which were generating more than $100,000 in annual recurring revenue (ARR). Over 70% of customers were using two or more products as of Q3 2020, with 20% using four or more products. The business has maintained an impressive net retention rate of over 130% for the past 14 consecutive quarters. However, as we pull out of the pandemic, more and more companies will begin to tackle backend infrastructure projects as companies prepare themselves for the updated future of work. Datadog’s product offering makes it ripe for growth in this space in 2021 and beyond. Investors should hope to see an increase in large customers with a higher number of these customers using more than two products. 

Keeping pace with 2020’s gains: Datadog’s stock price more than tripled in 2020. Therefore, we could see the business only tread water during Q1 2021 and FY 2021. Growth stocks will struggle to keep up with 2020’s impressive results all around and may have created a false sense of expectations for many investors — in other words, don’t get used to seeing growth levels similar to last years’. Being the first quarter of the new year, the upcoming earnings report should give us some insight as to what we can expect for the next three other quarters. 

 

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