Market Commentary

Datadog Drops As Tough Macro Weighs on Earnings

Rahul Joshua · 1 minute read

Shares of the cloud software company Datadog (DDOG:US) closed over 7% lower on Thursday after the company offered a full-year forecast that came in below the average analyst estimate.

For the fourth quarter, Datadog reported its revenue increased by 44% to $469.4 million, easily ahead of the $449.1 million estimate. The adjusted EPS came in at $0.26, again beating the $0.19 consensus.

For this quarter, the company offered a forecast for earnings of $0.22-$0.24 per share on revenue of $466-$470 million, which came in below the average analyst estimate for earnings of $0.24 per share on revenue of $482.3 million.

"We are pleased with our fourth quarter performance, as we delivered more value to more customers across our broadening platform, while driving strong profitability and cash generation," said Olivier Pomel, co-founder and CEO of Datadog. "We are proud of our strong execution in fiscal year 2022, with 63% year-over-year revenue growth, $418 million in operating cash flow, and $354 million in free cash flow."

Rep. Ro Khanna was the only Congress member who was trading Datadog stock last year. Congressman Khanna, representing California's 17th congressional district since 2017, was using the pullback in Datadog stock to invest in this high-growth software stock.

Rep. Khanna was buying shares in November when the stock was trading around $75 a share, as well as on January 09 of this year, when shares closed at $65.94.

Despite Thursday’s pullback, Datadog shares still trade at higher levels relative to Khanna’s entry prices. The stock closed at $82.47 on Thursday, up 17% year-to-date (YTD).