Olivier Pomel, co-founder and CEO of Datadog, speaks at the company’s Dash conference in San Francisco on August 3, 2023.
Cloud monitoring software company shares Data Dog surged nearly 30% in Tuesday trading after the company reported stronger-than-expected results. third quarter result and advice for the whole year.
The company reported quarterly revenue of $547.5 million, up 25% year over year, beating estimates. This growth rate was cconsistent with results in the second trimester. Analysts surveyed by LSEG, formerly known as Refinitiv, forecast revenue of $524.1 million. Datadog reported adjusted earnings per share of 45 cents, better than the 34 cents expected by analysts.
Datadog also raised its revenue and profit forecasts for the full year. The company now expects fourth-quarter revenue of between $564 million and $568 million, as well as revenue of approximately $2.1 billion for the full year. This amount was higher than consensus estimates of $543.3 million and $2.06 billion, respectively, according to a survey of analysts by LSEG.
Co-founder and CEO Olivier Pomel told analysts on a conference call that “native AI customers” contributed 2.5% to Datadog’s annualized revenue in the quarter. Pomel declined to confirm whether his company was working with OpenAI, Anthropic or Cohere. All three sell access to large language models that can compose text based on a few words of human input.
Datadog’s rise has buoyed other names in cloud computing, including MongoDB And Snowflake.
The latest forecast is the happiest of the whole year. Datadog stock fell significantly in August after it lowered its forecast, citing continued reductions in enterprise cloud spending.
Datadog creates cloud monitoring and security products that work with Amazon Web Services, Google Cloud and Microsoft Azure. The company was founded in 2010 and debuted on Nasdaq in 2019.
Cloud infrastructure providers reported in late October that cost-cutting efforts by some organizations were starting to falter. Like many cloud names, Datadog has not been immune to restrictions on businesses. Pomel validated this observation, saying that optimization activity among Datadog customers may be waning. “Overall, we continue to see the impact of optimization on our business, but we believe the intensity and scale of optimization we have experienced over the past few quarters is moderating,” he said. he declared on Tuesday.
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