Datadog Lifts Revenue Outlook, Analysts Still Bark About Margins

Datadog Inc DDOG Tuesday announced upbeat first-quarter revenues.

Here are some key analyst takeaways.

• Wedbush analyst Daniel Ives maintained an Outperform rating, while reducing the price target from $155 to $140.
• Needham analyst Mike Cikos reaffirmed a Buy rating, while cutting the price target from $160 to $130.
• Cantor Fitzgerald analyst Thomas Blakey reiterated an Overweight rating and price target of $134.
• Goldman Sachs analyst Kash Rangan maintained a Buy rating and price target of $127.

Check out other analyst stock ratings.

Wedbush: Datadog reported its first-quarter results with "beats across the board," Ives said in a note. Bookings were strong during the quarter, with RPO (remaining performance obligations) coming in at $2.31 billion, up 33% year-on-year.

Management raised their 2025 revenue guidance to a range of $3.215 billion to $3.235 billion, above the Street's $3.20 billion estimate, as the company "maintains a solid pipeline across its entire customer base for cloud migration and digital transformation projects," Ives stated.

However, the operating margin guidance of $625 million to $645 million came in below the Street's $680.3 million estimate, Ives noted. The company is ramping up hiring plans while looking for “cost efficiencies in its cloud costs.”

Needham: Datadog reported solid quarterly results and guided to second-quarter revenue above consensus, Cikos said.

Datadog's sales representative headcount grew by more than 25% year-on-year, "with a greater emphasis on the Enterprise segment and International," he added.

Management indicated that AI-Natives had risen to 8.5% of ARR (annual recurring revenues), the analyst stated. However, the company lowered its 2025 operating profit guidance by $30 million "to account for $15 Million in OpEx tied to currency and $10 Million from the Eppo and Metaplane acquisitions," he further wrote.

Cantor Fitzgerald: Datadog reported strong first-quarter results. Its AI native cohort drove momentum. Plus, record levels of new logo bookings grew 70% year-over-year, Blakey wrote in a note. The company generated total revenue growth of 24.6%, higher than consensus expectations.

Management raised their full-year revenue guidance by $40 million, despite the first-quarter beat being $23 million. "We continue to believe Datadog is a unique asset in software, with market leadership in a strategically growing market centered on cloud-focused observabiltiy including AI," Blakey added.

Goldman Sachs: Datadog's NRR trended in the high 110s for a second straight quarter, Rangan said. The stock came under pressure due to the company's gross margins coming in below consensus and the second consecutive quarter of weaker-than-expected operating margin guidance for the full year.

"We view AI Revenue driven largely by inference as a positive, given this revenue stream's sustainability should ease investors' concerns around topline volatility," Rangan wrote.

DDOG Price Action: At the time of publication on Wednesday, shares of Datadog had declined by 0.89% to $105.12.

Read More:

• These Analysts Revise Their Forecasts On Datadog After Q1 Results

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