Goldman Sachs Reiterates Buy Rating on Datadog (DDOG)

Goldman Sachs analyst Kash Rangan reiterated a Buy rating and $162.00 price target on Datadog (NASDAQ: DDOG).

The analyst comments "We reiterate our Buy rating and $162 Price Target on Datadog following solid F4Q results that saw Revenue +3.2% above Consensus and OpM / FCFM outperformance of +600 / +400 bps. The stock’s down ~10% on a weaker FY25 Revenue growth outlook of +18-19% - investors were likely looking for higher (vs. Street +22%) – and an OpM guide of +21% (contracting -400 bps vs. FY24). This broadly aligned with our CY25 Outlook view contemplating a more conservative guide given inherently limited visibility into out-quarter usage trends. From here, we see a path to a positive revision cycle on top and bottom-line given: 1) Inflecting NRR (from mid-110’s to high-110’s in F4Q) appears discounted in FY25 guide of +18-19%, paving way to upside (and drop-through on Op. Income) if recent usage patterns hold (esp. in SMB), and 2) Assuming annualized F4Q24 AI Customer Revenue as the FY25 base (~$120M) implies ‘Core’ Revenue growth of ~18% vs. F4Q24 exit growth rate of +23% (GSe), leaving us reasonably comfortable in Revenue upside even if we were to further reduce this assumption given uncertainty over AI customer usage volatility / optimization. Datadog also has a history of strong execution – outperforming initial FY23 Revenue growth / OpM guidance by +300 / +800 bps and FY24 by +500 / +400 bps. Combined with the health of in-quarter metrics, this leaves us constructive on Datadog returning to a beat-and-raise cadence while LT 20%+ growth remains in play with multiple secular tailwinds including platform consolidation and DX / Gen-AI and a robust expansion opportunity."

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Shares of Datadog closed at $148.09 yesterday.

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