DDOG Q1 Review

Poffringa posted a great write up on his website Software Stack Investing discussing DDOG’s Q1 report. I know his work has been shared here before, but I also encourage you all to check out his other articles if you have not as they pertain to many stocks discussed here.


Rather than just posting the link to the article, I figured I would also give a bit of my thoughts on DDOG’s report. I thought it was a remarkable report, as did the market which sent the stock soaring. I was completely unsure how COVID was going to impact the business so I was very curious to see what kind of numbers they were going to report. Let’s just say that question was answered very quickly.

It appeared as if every single metric improved. The call was even more exciting, from CEO Olivier Pomel, “we believe it is more important than ever for businesses to operate online, and that the trends of digital transformation and cloud migration remain very much intact over the long-term and may even be accelerated or amplified. We believe we are well positioned to be a primary beneficiary of this trend and continue to win in the market.

Op Margins and FCF Margins are on an incredible trend. Since Q1 of last year, Op Margins have improved from -10.1% to 12.3%, improving every single quarter. FCF margins also improved from -1.2% to 14.7% YoY! To be able to produce 15% FCF margins while growing 87% YoY is unbelievable! It is no wonder the stock reacted the way it did.

Looking at Q2, they forecast 62% growth. I consider this to be pretty encouraging. They have beat their last two forecast by 11% each time. Assuming this trend continues, this would put revenues at $150M and growth just over 80% YoY. I will take that every day and twice on Sunday.

Before I found this board, I would have never touched a stock trading at an EV/S of ~47, however, I have been adding since the report at prices in the 60’s as my confidence and conviction has grown. The biggest reason I have the confidence to add at these levels is thanks to something I remember Saul saying about one of his companies, I am fairly certain he was referring to DDOG. It was along the lines of, I don’t know what the price will be next week, but I feel very certain this company will be worth more in the future than it is today.

That is exactly how I feel about DDOG. I do not think there is another company out there performing better with the exception of possibly CRWD. These companies are firing on all cylinders and yes, the valuations might be high but you are paying up for the best quality on the market. I can’t wait for June 2!



Thank you…GREAT INFO.

I bought a big share of DDOG (for me) as soon as it opened, because my LONGTIME CSCO had tried to buy it. (UNUSUAL Interest for CSCO from the other side of US.)

Not much interest in DDOG, back then…even tho I mentioned CSCO. StJ.

DDOG and CRWD are performing incredibly well and I share your enthusiasm for them. If you like them you will love LVGO, growing much faster (115% rev growth in latest qtr), I would argue has a larger addressable market with little meaningful competition (just now) and approx 1/2 the EV/S too.



Funny you mention LVGO - as soon as I posted that message I realized LVGO was another I should’ve put in that bunch alongside DDOG & CRWD. I have been buying pretty heavily in the 50’s following their most recent ER as well.

The three of them are all growing at rapid speed 80%+ YoY but what I love is how they are all driving towards profitability.

OpEx as % of revenues has decreased every single quarter for LVGO (from what I can find data on, 13 total) with the exception of one in which it increased 2%. This has allowed Adj. EBITDA to improve from -28.6% to 5.5% YoY!

I also really like Glen Tullman. It is easy to root for this company.


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Delighted to hear you are long on LVGO too. With DDOG & CRWD they represent best in class growth and as you shared, on trajectory to profitability. Totally agree Glen is very impressive and has surrounded himself with a quality team. To me the exec team is the most important of all investment considerations. I wish you all the very best.