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Cloud Stocks: Datadog Performing Well Post Recent IPO

Posted on Monday, Mar 2nd 2020

One of the biggest IPOs in 2019 was that of monitoring and analytics platform provider Datadog. It went public in September last year on the NASDAQ under the ticker DDOG. It recently reported its fourth quarter results that shattered market estimates.

Datadog’s Background

New York-based Datadog was founded in 2010 by Olivier Pomel and Alexis Lê-Quôc, who met while working at Wireless Generation. Datadog was founded on the premise that the old model of siloed developers and IT operations engineers is broken, and that legacy tools used for monitoring static on-premise architectures do not work in modern cloud or hybrid environments. Datadog’s cloud native platform enables development and operations teams to collaborate, quickly build and improve applications, and drive business performance. 

In 2017, Datadog acquired the Paris-based Logmatic.io, a platform-agnostic service for querying and visualizing logs to monitor and troubleshoot online services. In 2019, Madumbo, an AI-based application testing platform joined Datadog.

With the introduction of its log management solution in 2018, it was one of the first companies to combine the “three pillars of observability” – metrics, traces, and logs. Today, our platform combines infrastructure monitoring, application performance monitoring, log management, user experience monitoring, and network performance monitoring in one integrated data platform.It provides a unified view across the IT stack, including infrastructure and application performance, as well as the real-time events impacting performance.

With respect to on-premise infrastructure monitoring, Datadog competes with IBM, Microsoft Corporation, Micro Focus, BMC, and Computer Associates. With respect to APM, it competes with Cisco, New Relic, and Dynatrace. In log management, it competes with Splunk and Elastic. Finally, in cloud monitoring, it competes with Amazon’s AWS, Alphabet’s GCP, and Microsoft’s Azure.

Datadog’s Financials

For 2019, Datadog’s revenue grew 83% to $362.8 million beating analyst estimates of $351 million. GAAP operating loss was $20.1 million and non-GAAP operating loss was $5.4 million. Non-GAAP net loss per diluted share was $0.01.

Fourth quarter revenue grew 85% to $113.6 million beating analyst estimate of $102 million. GAAP net income was $0.89 million compared to a loss of $6.6 million a year ago. Adjusted EPS was $0.03 versus analyst expectations of a loss of $0.14 per share.

As of December 31, 2019, Datadog had over 8,800 customers including 858 customers with ARR of $100,000 or more, an increase of 89% and 50 customers with ARR of $1 million or more, an increase of 72%.

For the first quarter, Datadog expects revenue between $117 million and $119 million and non GAAP net loss per share between $0.02 and $0.01. For 2020, the company expects revenue between $535 million and $545 million and non GAAP net loss per share between $0.07 and $0.03.

Prior to going public Datadog had raised $147.5 million from investors including RTP Ventures, Index Ventures, Ampilfy Partners, OpenView, Counter Venture Partners, Meritech Capital Partners, and ICONIQ Capital. Its last funding round was in January 2016 when it had raised $94.5 million at an undisclosed valuation.

Its stock is currently trading at $45.15 with a market cap of $13.41 billion. It went public in September at a list price of $27 and valuation of $7.8 billion.

Photo Credit: Trending Topics 2019/Flickr.com

This segment is a part in the series : Cloud Stocks


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