Datadog Inc (NASDAQ:DDOG) stock opened Tuesday’s trading session down some 20% after softer-than-expected guidance for the remainder of 2023 broke the cloud services firm’s streak of impressing Wall Street.
Results for Datadog’s second quarter actually beat consensus market forecasts comfortably - with adjusted earnings marked at 36 cents per share, up 50% from this time last year and significantly ahead of expectations pitched at 28 cents.
Revenue for the quarter was up 25% at US$509 million, slightly better than the anticipated US$501.6 million.
"We continued to execute well in the second quarter, with 25% year-over-year revenue growth, strong new logo bookings, continued customer growth, and increased multi-product adoption by our customers," said chief executive Olivier Pomel.
Nevertheless, just over one month into the current quarter, however, the data company’s third-quarter guidance sees it losing pace versus bullish market expectations.
Today, the company said third-quarter revenue was eyed between US$521 million and US$525 million, shy of the US$536 million previously targeted by Wall Street analysts, meanwhile, earnings guidance is now pitched at 33 cents to 35 cents per share for the current quarter.
It comes after Datadog last month showcased a series of AI-centric product developments at a user conference.
Pomel, today, highlighted: “We announced dozens of new products and capabilities, showcasing our rapid innovation at scale.
“We launched new AI offerings including LLM Observability, the Bits AI assistant, and over a dozen new AI-related integrations.”
With partnerships with key hosting and service providers such as Amazon Web Services (AWS), Google, Microsoft, and IBM (among several others), Datadog specializes in ‘observability and security solutions’ for cloud applications.
For the full year, Datadog expects earnings in the range of US$1.30 to US$1.34 per share, with revenue ranging from US$2.05 billion to US$2.06 billion.
In New York, Datadog stock fell around 20% in opening deals though swiftly rallied to trade at US$88.70, down US$17.60 or 16.5% for the day.