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Here's Why Datadog Is A Long-Term Winner

Published 10/22/2021, 03:05 PM
Updated 07/09/2023, 06:31 AM

Datadog (NASDAQ:DDOG) provides monitoring and analytics tools, allowing IT teams insights from anywhere and at any time. 

Companies that use Datadog SaaS benefit from a better user experience, faster resolution of technical issues and interruptions, and a more straightforward decision-making process. 35% of the Fortune 100 companies are Datadog customers.

Management estimates its Total Addressable Market to be around $30 billion and expects it to grow substantially in the next decade. With a revenue of $607 million, Datadog has plenty of room to grow. 

Datadog had one software a few years ago. The company succeeded in creating new revenue streams. Today, it offers ten different services.

Last semester, the number of customers using at least two tools jumped 57% year over year. The number of customers using at least four of the tools almost tripled. 

The more features are used, the higher the switching cost. As of June 2021, the customer retention rate was an incredible 146%.

Datadog has continuously improved its product offering and managed to create strong partnerships. The company recently announced it was joining forces with Microsoft Azure to provide streamlined experiences for configuration. 

On July 1, Datadog announced a partnership with Salesforce (NYSE:CRM) to provide real-time monitoring and threat detection.

Fundamental Highlights

  • Revenue is forecast to grow 28.8% per year for the next three years.
  • Gross margin = 58%
  • Free Cash Flow is expected to rise by 54% per year for the next three years.
  • The company has never missed revenue and EPS expectations since 2019.
  • Datadog has exceeded EPS forecast by an average of 151% since 2019.
  • Revenue grew 664% per year past three years.
  • Cash from operations has climbed by 154% per year since 2019.
  • The cash to debt ratio stands at 178% as of July 2021.

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