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Olivier Pomel, co-founder and CEO of Datadog, speaks at the company’s Dash conference in San Francisco on August 3, 2023.
Data hound
Shares of cloud monitoring software company Data hound rose nearly 30% in Tuesday trading after the company reported stronger-than-expected third-quarter earnings and full-year guidance.
The company reported quarterly revenue of $547.5 million, up 25% year over year, exceeding expectations. That growth rate was in line with the second quarter results. Analysts polled by LSEG, formerly known as Refinitiv, had expected revenue of $524.1 million. Datadog reported adjusted earnings per share of 45 cents, better than the 34 cents analysts expected.
Datadog also raised its full-year revenue and profit guidance. The company now expects fourth-quarter revenue of between $564 million and $568 million, on top of full-year revenue of about $2.1 billion. That topped 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 “AI-native customers” contributed 2.5% of Datadog’s annualized revenue during 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 boosted other names in cloud computing, including MongoDB And Snowflake.
The latest guidelines are the happiest we’ve been all year. Shares of Datadog fell significantly in August after it revised its guidance downward, citing continued reductions in cloud spending by companies.
Datadog builds cloud monitoring and security products that work with Amazon Web services, Googling Cloud and Microsoft Azure. The company was founded in 2010 and debuted on the Nasdaq in 2019.
Cloud infrastructure providers indicated in late October that some organizations’ cost-cutting efforts are starting to wane. Like many other cloud names, Datadog has not been immune to corporate belt-tightening. Pomel confirmed that observation, saying optimization activity among Datadog customers could decline. “Overall, we continue to see the impact of optimization in our business, but we believe the intensity and breadth of optimization we have experienced in recent quarters is waning,” he said on Tuesday.
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