Bearish Stock to Watch: Datadog Inc (NASDAQ: DDOG)

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Datadog Inc (NASDAQ: DDOG) stock fell over 4.9% in the pre-market session of Feb 12th, 2021 (Source: Google finance) after the company posted lower than expected results for the fourth quarter of FY 20. The company ended the year 2020 with 97 customers with an ARR of $1 million or more. The company ended the year with 1,253 customers with an ARR of $100,000 or more, up from 858 last year. The billings were $219.4 million, up 68% year over year. After adjusting for the timing of $6 million of billings in last year’s fourth quarter, pro forma billings growth was 61% year over year, which is strong and almost in line with revenue growth. Remaining performance obligations or RPO, was $434 million, up 78% year over year. The company has reported Non-GAAP net income in the four quarter was $19.1 million. DDOG has ended the fourth quarter with $1.5 billion in cash, cash equivalents, restricted cash and marketable securities. The company generated the cash flow from operations of $23.8 million in the quarter. The company generated the free cash flow of $16.7 million for a margin of 9%.

DDOG in the fourth quarter of FY 20 has reported the adjusted earnings per share of 6 cents, beating the analysts’ estimates for the adjusted earnings per share of 2 cents. The company had reported the adjusted revenue growth of 56 percent to $178 million in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $163.6 million. Gross profit in the fourth quarter was $137.6 million, representing a gross margin of 78%. This is compared to a gross margin of 79% last quarter and 78% in the year-ago period. The decline in gross margin sequentially is due to minor inefficiencies created from the investments in product and platform innovation. The company posted operating income of $18.1 million or 10% operating margin compared to an operating income of $7.9 million with a 7% margin in the year-ago period.

Meanwhile, the company has today signed a definitive agreement to acquire Sqreen, which is a SaaS based security platform that enables enterprises to detect, block and respond to application level attacks. The addition of Sqreen’s application security capabilities will offer development, security and operations teams a unified platform to deliver and manage secure and resilient applications. The deal is subject to certain customary closing conditions, including receipt of required regulatory approvals, and is expected to close in Q2 2021.

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