What happened
Shares of Datadog (DDOG 7.90%) were up 8.7% as of 11:23 a.m. ET on Thursday after the company held an investor meeting late Wednesday to discuss new product launches and opportunities for growth.
Analysts who attended the event walked away with a positive read on Datadog's near- and long-term growth trajectory. Software-as-a-service stocks (SaaS) have fallen out of favor with the market decline, but more robust growth will be needed to turn the stock around, since it has dropped 51% year to date. Here's the buzz that was driving the stock higher today.
NASDAQ: DDOG
Key Data Points
So what
Datadog announced several new products across observability, cloud security, and DevOps to tackle a $53 billion addressable market opportunity. Bank of America analyst Koji Ikeda spoke to customers and partners of the company to get a feel for current demand trends. Based on the feedback, Ikeda believes the demand trends remain healthy and that Datadog is likely to report revenue above guidance for 2022.
BTIG analyst Gray Powell came away with the same take on current demand but noted that there is still the potential for a slowdown in spending on Datadog's DevOps platform if the economy worsens in the next 12 months.
Now what
Datadog is guiding for third-quarter revenue growth of approximately 53% year over year, which would be a steep deceleration from the 74% growth in Q2 and 83% in Q1. That said, management is typically conservative with guidance, and given the near-term demand trends, that will likely prove the case again when the company announces earnings results on Thursday, Nov. 3.
