SNOW - Datadog tumbles ~20% after slashing FY23 revenue outlook

2023-08-08 08:40:39 ET

Datadog ( NASDAQ: DDOG ) stock slumped ~20% premarket on Tuesday after the company reduced its full year revenue outlook and provided a Q3 revenue guidance which was seen below estimates.

Q2 non-GAAP EPS rose +50% Y/Y to $0.36, while revenue grew +25.4% Y/Y to $509.46M.

"We continued to execute well in the second quarter, with 25% year-over-year revenue growth, strong new logo bookings, continued customer growth, and increased multi-product adoption by our customers," said Datadog's Co-Founder and CEO Olivier Pomel.

As of June 30, the company had about 2,990 customers with ARR of $100K or more, up +24% from about 2,420 a year ago.

Datadog said that in Q2 it announced a new Large Language Model (LLM) observability solution and over a dozen new integrations, to help organizations building their LLM-based applications to monitor and troubleshoot LLM stacks.

In Q2 operating cash flow was $153.2M, with free cash flow of $141.7M. As of June 30, cash, cash equivalents, and marketable securities were $2.2B.

Pomel noted that last week at Datadog's annual user conference, the company launched new AI offerings including LLM Observability, the Bits AI assistant, and over a dozen new AI-related integrations. The company broadened its platform across Observability, Cloud Security, Developer Experience, and Cost Optimization use cases.

Outlook :

Q3 : Datadog expects Q3 revenue to be between $521M and $525M ( consensus $535.50M). Non-GAAP EPS is expected between $0.33 and $0.35 (consensus of $0.29).

Full year 2023 : The company cut is full year 2023 revenue outlook to be in the range of $2.05B to $2.06B, compared to prior range of $2.08B to $2.10B priovided during Q1 results in May. Consensus is $2.09B.

The company raised the outlook for non GAAP EPS and now anticipates it to be between $1.30 and $1.34 versus prior forecast of $1.13 to $1.20. Consensus of $1.17.

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