Datadog Guides Fourth-Quarter Growth To 25% To 26% As Early Renewals At Better Prices Weigh On Revenue
Large customers renewed earlier than expected, trading bigger commitments for lower prices, CEO Olivier Pomel told analysts.
Datadog CEO Olivier Pomel said on the company's third-quarter earnings call Wednesday that several large customers renewed "way earlier than we thought we would," a good-news trend that he said creates a short-term drag on revenue. The monitoring-software company guided fourth-quarter revenue to $1.19 billion to $1.2 billion, or 25% to 26% growth, against 35% in the third quarter.
Bigger commitments, lower prices
Pomel told a Morgan Stanley analyst the renewals are
The largest customer sits at its floor
CFO David Obstler said the fourth-quarter guidance counts the largest customer at its minimum commitment. That customer spent
The business behind the numbers
Datadog sells a cloud-based platform that monitors and secures the applications and systems companies run in the cloud. Third-quarter revenue was $1.197 billion, up 35% from a year earlier and above the high end of guidance, with free cash flow of $251 million, a 21% margin.
Obstler said Datadog will give 2027 guidance on its year-end call.
Sources
- Datadog Reports Higher 3Q Profit, Revenue on Continued Adoption — MarketWatch
- Datadog Stock: Datadog Earnings Top Views. Shares Plunge On Weak Sales Outlook. | Investor's Business Daily — investors.com
- Datadog Beats Earnings Expectations. The Stock Acts as If It Didn’t. — Barron's
- Datadog: Q3 Earnings Snapshot — Associated Press
- Datadog Q3 earnings on deck: What to expect (DDOG:NASDAQ) — seekingalpha.com
