Investment firm Canaccord has revised its price target for Datadog (DDOG, Financial), reducing it from $150 to $145, while maintaining a Buy rating on the stock. Despite a turbulent first quarter for earnings overall, Datadog demonstrated impressive results. The company's robust performance in Q1 was characterized by significant growth in large customer expansions, notably within and beyond its AI-native customer base, highlighting its strong market position even amidst broader macroeconomic challenges.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 35 analysts, the average target price for Datadog Inc (DDOG, Financial) is $138.96 with a high estimate of $200.00 and a low estimate of $115.00. The average target implies an upside of 31.02% from the current price of $106.06. More detailed estimate data can be found on the Datadog Inc (DDOG) Forecast page.
Based on the consensus recommendation from 43 brokerage firms, Datadog Inc's (DDOG, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Datadog Inc (DDOG, Financial) in one year is $184.29, suggesting a upside of 73.76% from the current price of $106.06. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Datadog Inc (DDOG) Summary page.
DDOG Key Business Developments
Release Date: May 06, 2025
- Revenue: $762 million, up 25% year-over-year.
- Free Cash Flow: $244 million, with a free cash flow margin of 32%.
- Customer Count: Approximately 30,500 customers, up from about 28,000 a year ago.
- Large Customers: 3,770 customers with an ARR of $100,000 or more, up from about 3,340 a year ago.
- Gross Margin: 80.3%, compared to 81.7% last quarter and 83.3% a year ago.
- Operating Income: $167 million, with an operating margin of 22%.
- Billings: $748 million, up 21% year-over-year.
- Remaining Performance Obligations (RPO): $2.31 billion, up 33% year-over-year.
- Net Revenue Retention: High one-tens percent.
- Cash and Equivalents: $4.4 billion at the end of the quarter.
- Q2 Revenue Guidance: $787 million to $791 million, representing 22% to 23% year-over-year growth.
- Fiscal Year 2025 Revenue Guidance: $3.215 billion to $3.235 billion, representing 20% to 21% growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Datadog Inc (DDOG, Financial) reported Q1 2025 revenue of $762 million, marking a 25% year-over-year increase and exceeding the high end of their guidance range.
- The company saw a significant increase in large deals, signing 11 deals with a total contract value of $10 million or more, compared to just one in the same quarter last year.
- Datadog Inc (DDOG) experienced strong growth in its AI-native customer cohort, which now represents 8.5% of Q1 ARR, up from 3.5% a year ago.
- The company's Flex Logs product exceeded $50 million in ARR within six quarters, demonstrating rapid adoption and market opportunity.
- Datadog Inc (DDOG) maintained a high gross revenue retention rate in the mid- to high 90s, indicating strong customer loyalty and the mission-critical nature of its platform.
Negative Points
- Gross margin decreased to 80.3% from 83.3% in the year-ago quarter, partly due to higher-than-expected cloud hosting costs.
- Despite strong revenue growth, the company's operating margin decreased to 22% from 27% in the same quarter last year.
- There is potential volatility in revenue growth from the AI-native cohort due to customer concentration and rapid growth.
- The company noted a slight downtick in year-over-year usage growth among enterprise customers, attributed to quarter-to-quarter volatility.
- Datadog Inc (DDOG) faces challenges in optimizing cloud costs, which have risen more quickly than expected, impacting gross margins.
