DDOG - Datadog Q4 Earnings: Prepare For Growth Inflection

2024-02-14 08:16:49 ET

Summary

• Increasing cloud migration workloads, a shift from LLM training to inferencing, and rapid growth of emerging products should fuel Datadog’s revenue growth reacceleration over 2024.
• Massively increasing deal pipeline shows that recent improvement in fundamentals is just the beginning.
• Valuation suggests there is room for further upside, despite 65% rally in shares since the beginning of November.

Introduction and Investment thesis

Datadog ( DDOG ) has been a leading player in the modern, cloud-based IT observability market for many years, carving out an increasingly large pie from the market. Having its roots in infrastructure monitoring, the company broadened its scope to application performance monitoring, log management and cloud security services, reaching a total addressable market of $45 billion expected to grow by a CAGR of ~10% over the upcoming years. As the current annual revenue run rate of the company lies around $2.4 billion, it means there is still a lot of space to conquer....

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