Datadog Stock: Q2, Strong Margin Expansion Preparing The Stock For Liftoff (NASDAQ:DDOG)

Summary

Datadog beat Q2 revenue and EPS estimates, showing strong spending patterns by enterprise customers and launching new AIOps and LLM Observability tools.
Revenue growth stabilizing around 25-26%, with impressive CAGR in revenue growth since FY19, but GenAI adoption needs to increase for meaningful valuation revision.
Strong margin expansion, adjusted operating income growth, and impressive growth rates projected, but valuation multiple may still be deemed rich by markets.

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Investment Thesis

DevOps industry leader Datadog (NASDAQ:DDOG) reported their Q2 earnings results today that showed the cloud software maker of DevOps tools delivered a beat on its Q2 revenue and EPS estimates.

Through the quarter, Datadog’s

Uttam Dey

Uttam is a growth-oriented investment analyst whose equity research primarily focuses on the technology sector. Semiconductors, Artificial Intelligence and Cloud software are some of the key sectors that are regularly researched and published by him. His research also focuses on other areas such as MedTech, Defense Tech, and Renewable Energy. In addition, Uttam also authors The Pragmatic Optimist Newsletter along with his wife, Amrita Roy, who is also an author on the newsletter as well as on this platform. Their newsletter gets regularly cited by leading publications such as the Wall Street Journal, Forbes, etc. Prior to publishing his research, Uttam worked in Silicon Valley, leading teams for some of the largest technology firms in the world, including Apple and Google.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of DT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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