Datadog Earnings Overshadowed By Leadership Shift

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Datadog (DDOG) stock is down more than 10% Tuesday even as the cloud monitoring and security firm beat top- and bottom-line expectations for its first quarter and raised its full-year outlook.

In the three months ended March 31, Datadog's revenue increased 27% year-over-year to $611 million. Its earnings per share (EPS) improved to 44 cents from 23 cents in the year-ago period.

"Datadog executed solidly in the first quarter, with 27% year-over-year revenue growth and continued product innovation across our platform," Datadog co-founder and CEO Olivier Pomel said in the press release.

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The results handily beat analysts' expectations, which had called for revenue of $591.3 million and earnings of 35 cents per share, according to Yahoo Finance.

The results also exceeded Datadog's outlook for the quarter, which had called for revenue in the range of $587 million to $591 million and EPS in the range of 33 cents to 35 cents.

As a result of the strong performance in the first quarter, Datadog raised its full-year outlook. It now expects revenue in the range of $2.59 billion to $2.61 billion and earnings per share in the range of $1.51 to $1.57, up from its previous outlook of revenue in the range of $2.555 billion to $2.575 billion and EPS in the range of $1.38 to $1.44.

In its appearance on the earnings calendar, Datadog also provided its outlook for the second quarter. The company is calling for revenue in the range of $620 million to $624 million and earnings in the range of 34 cents to 36 cents per share.

The Q2 outlook is inline with Wall Street's expectations, which calls for revenue of $620.6 million and EPS of 35 cents.

The report also indicated that Amit Agarwal will step down as president of Datadog at the end of this year, which some media outlets suggest is the reason for today's selloff in the tech stock. Agarwal is expected to join the company's board of directors upon his departure.

Is Datadog stock a buy, sell or hold?

Datadog stock has been choppy in 2024, down 6% so far. Still, shares remain nearly 50% higher year-over-year.

Analysts have a positive outlook for the cybersecurity stock. According to S&P Global Market Intelligence, analysts' average target price for DDOG is $148.19, representing implied upside of more than 30% to current levels. Additionally, the consensus recommendation is Buy.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.