Datadog (DDOG) Q1 Earnings Report Preview: What To Look For

Cloud monitoring software company Datadog (NASDAQ:DDOG) will be reporting results tomorrow morning. Here's what to expect.

Datadog beat analysts' revenue expectations by 3.8% last quarter, reporting revenues of $589.6 million, up 25.6% year on year. It was a mixed quarter for the company, with an impressive beat of analysts' ARR (annual recurring revenue) estimates but decelerating growth in large customers. It added 60 enterprise customers paying more than $100,000 annually to reach a total of 3,190.

Is Datadog a buy or sell going into earnings? Read our full analysis here, it's free.

This quarter, analysts are expecting Datadog's revenue to grow 22.8% year on year to $591.7 million, slowing from the 32.7% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.34 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Datadog has a history of exceeding Wall Street's expectations, beating revenue estimates every single time over the past two years by 4.6% on average.

Looking at Datadog's peers in the software development segment, some have already reported their Q1 results, giving us a hint as to what we can expect. F5's revenues decreased 3.1% year on year, meeting analysts' expectations, and Cloudflare reported revenues up 30.5%, topping estimates by 1.4%. F5 traded down 9.3% following the results while Cloudflare was also down 16.4%.

Read our full analysis of F5's results here and Cloudflare's results here.

Inflation fears have put pressure on growth stocks, and while some of the software development stocks have fared somewhat better, they have not been spared, with share prices down 3.1% on average over the last month. Datadog is down 1.3% during the same time and is heading into earnings with an average analyst price target of $148.2 (compared to the current share price of $124.1).

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