Datadog (DDOG) Exceeds Earnings Expectations, Despite Revenue Outlook and Presidential Resignation Shaking Investor Confidence

• Datadog (DDOG) has reported its Q1 earnings and revenue, surpassing estimates. However, the company’s stock fell following the announcement that Amit Agarwal will step down as president at the end of 2024.
• The New York-based software company’s earnings for the March quarter were 44 cents per share on an adjusted basis, a 29% increase from the previous year. Revenue also saw a 27% increase to $611 million.
• Despite these positive results, the company’s billings, a key sales growth metric, rose by 21% to $618 million, falling short of the estimated $623 million.

Datadog’s Q1 earnings and revenue surpass estimates, but stock falls as President Amit Agarwal announces 2024 departure. The company’s billings also missed consensus estimates.

Q1 Earnings and Revenue

Datadog’s earnings for the March quarter were 44 cents per share on an adjusted basis, a 29% increase from the previous year. The company’s revenue also saw a 27% increase to $611 million, slightly accelerating growth for a second consecutive quarter. These figures surpassed analysts’ expectations, which predicted a profit of 34 cents per share on revenue of $590 million.

Billings Fall Short of Estimates

Despite the positive earnings and revenue results, Datadog’s billings, a key sales growth metric, rose by 21% to $618 million, falling short of the estimated $623 million. According to William Blair analyst Jake Roberge, this shortfall is attributed to general seasonality and large multiyear deals that occurred in Q4 of 2023.

Q2 Guidance

For the current quarter ending in June, Datadog expects revenue of $622 million at the midpoint of guidance. This figure slightly exceeds Wall Street analysts’ predictions of Q2 sales of $617 million. The company also forecasts earnings of 35 cents per share, compared to estimates of 34 cents.

Stock Performance

Prior to the earnings report, Datadog’s stock had gained 2% in 2024 and 62% over the past year. However, following the Q1 report and the announcement of Agarwal’s departure, the stock fell. The company’s stock currently holds a Relative Strength Rating of 86 out of a possible 99, according to IBD Stock Check-up.

Conclusion

Despite surpassing Q1 earnings and revenue estimates, Datadog’s stock fell following the announcement of President Amit Agarwal’s departure at the end of 2024. The company’s billings also fell short of estimates. Looking ahead, Datadog’s Q2 guidance slightly exceeds Wall Street predictions. However, the impact of this positive outlook may be tempered by the upcoming leadership transition.