Cloud monitoring software company Datadog (NASDAQ:DDOG) announced better-than-expected revenue in Q3 CY2024, with sales up 26% year on year to $690 million. The company expects next quarter’s revenue to be around $711 million, close to analysts’ estimates. Its non-GAAP profit of $0.46 per share was also 15.7% above analysts’ consensus estimates.

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Datadog (DDOG) Q3 CY2024 Highlights:

• Revenue: $690 million vs analyst estimates of $664.5 million (3.8% beat)

• Adjusted EPS: $0.46 vs analyst estimates of $0.40 (15.7% beat)

• Adjusted Operating Income: $173 million vs analyst estimates of $148.8 million (16.3% beat)

• Revenue Guidance for Q4 CY2024 is $711 million at the midpoint, roughly in line with what analysts were expecting

• Management raised its full-year Adjusted EPS guidance to $1.76 at the midpoint, a 7.3% increase

• Gross Margin (GAAP): 80%, down from 81.1% in the same quarter last year

• Operating Margin: 2.9%, up from -0.8% in the same quarter last year

• Free Cash Flow Margin: 29.5%, up from 22.3% in the previous quarter

• Customers: 3,490 customers paying more than $100,000 annually

• Billings: $688.6 million at quarter end, up 13.5% year on year

• Market Capitalization: $43.27 billion

"Datadog executed well in the third quarter, with 26% year-over-year revenue growth. We continued to broaden our platform to help our customers observe, secure, and act on their mission-critical cloud applications," said Olivier Pomel, co-founder and CEO of Datadog.

Company Overview

Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) is a software-as-a-service platform that makes it easier to monitor cloud infrastructure and applications.

Cloud Monitoring

Software is eating the world, increasing organizations’ reliance on digital-only solutions. As more workloads and applications move to the cloud, the reliability of the underlying cloud infrastructure becomes ever more critical and ever more complex. To solve this challenge, companies and their engineering teams have turned to a range of cloud monitoring tools that provide them with the visibility to troubleshoot issues in real-time.

Sales Growth

Examining a company’s long-term performance can provide clues about its business quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Datadog’s 42.3% annualized revenue growth over the last three years was incredible. This is a great starting point for our analysis because it shows Datadog’s offerings resonate with customers.