DataDog DDOG Q4 2023 Earnings

Before market open on 2/13/2023 DataDog announced Q4 and Full Year 2023 Earnings

Three months ago on 11/7
they told us they would deliver up to $568M revenue guiding for 3.7% QoQ growth and 21% YoY growth
They beat that guidance by 3.8% and delivered $589.6M revenue, a 7.7% QoQ and 26% YoY revenue growth

All the relevant documents are found on DataDog Investor Relations

  • Press Release
  • Earnings Call Transcript
  • Supplemental Info: That’s a main doc I review since it has info for the last 8 Quarters

In addition to ER docs there was an Investor Day 2024 on Feb 15th, and there is a 165 slides pdf, and a recorded Video which is worth watching. I reviewed the pdf and watch parts of the presentations and I like what I see so far, especially the focus on ‘solving customers problems’ as a guiding principle for future growth.

Back to Earnings Highlights

(For the FullYear revenue was $2.13B, a 27% YoY growth)

Adjusted Gross Margin improved to above 83% (at Investor day they did mention that they used their own Cloud Cost Management product to drive efficiencies and that contributed to GM expansion)

Stock Based Compensation came in at 22% of revenue, $128M; similar to last Q.

Adjusted Operating Margin (which includes SBC) was 28%, $166.7M

Cash From Operations was huge $220.2M, a 37% of revenue, looks like a healthy increase in Deferred Revenue.

Free Cash Flow was $201.3M, a 34% of Rev, nice margin. Cap Exp about 3%.

So far P/L and Cash Flows are great

Now onto customers: a bit light add I think. The ended Q4 with 27300 paying customers, they added 500 new customers in a Q, compared to 700 last Q

For a cohort of $100K+ customers, they added 60 for a total of 3190, compare to 140 new customers in Q3

It seems to me a bit light

Maybe that’s why the guidance is a bit weaker for next Q (and since DataDog is mainly a consumption business)

For next Q they guide for $591M growth, a 0.2% QoQ, and 23% YoY. That’s a bit light on QonQ. If they beat that by 4% next Q they might come with $613M which would give us 27% YoY, we’ll see, no need to speculate

I have been trimming a bit of DataDog when it was in $130s and DataDog is about 11% of our Baconski Family Portfolio

The initial reaction to ER was $132 per share, with a fully diluted share count of 352.9M shares the Market Cap was $46.6B. Last Q the initial reaction was $103 and the stock reached as high as $138 (right before earngings), a 34% above that initial reaction

Good luck to all longs !