Datadog Shares Fall After Guidance Suggests Flat Fourth-Quarter Revenue Growth
Datadog (DDOG) reported strong third-quarter results, with revenue increasing 35% year-over-year to approximately $1.2 billion and a swing to a GAAP operating profit of $75 million. The company also saw its high-value customer base—those spending over $100,000 annually—grow by 20% to roughly 4,860 clients. Despite the strong performance, shares fell approximately 12% in pre-market trading due to cautious fourth-quarter guidance. Management expects revenue to remain flat compared to the third quarter, projecting between $1.19 billion and $1.20 billion. Additionally, adjusted operating income is expected to dip slightly in the coming quarter. The market reaction highlights concerns over slowing usage growth or management's conservative outlook. While profitability improved significantly due to revenue outpacing operating costs, free cash flow grew at only half the rate of revenue (17%), partly driven by a shrinkage in deferred revenue.
Tickers: $DDOG
Topics: free cash flow guidance operating profit revenue growth