Datadog Inc (NASDAQ: DDOG) stock fell over 9.3% in the pre-market session of November 11th, 2020 (Source: Google finance) after the company posted lower than expected results for the third quarter of FY 20. Gross profit in the third quarter was $121.5 million, representing a gross margin of 79%. This is compared to a gross margin of 80% last quarter and 76% in the year ago period. The slight decrease in gross margin sequentially was due to minor inefficiencies created from the investments in product and platform innovation.
The company had ended the quarter with 1,107 customers with ARR of $100,000 or more, up from 727 last year. These customers generate about 75% of the ARR. The company has about 13,100 customers, up from about 9,500 last year. The company saw continued strength in the platform strategy with over 70% of the customers using two or more products and about 20% of the customers now using four or more products up from only 7% a year ago. Billings were $155.9 million, up 39% year-over-year. Remaining performance obligations or RPO was $316 million, up 50% for the year. The company had ended the quarter with $1.5 billion in cash, cash equivalents, restricted cash and marketable securities. The company generated the cash flow from operations of $36.3 million in the quarter.
DDOG in the third quarter of FY 20 has reported the adjusted earnings per share of 5 cents, while reported the adjusted revenue growth of 61 percent to $154.68 million in the third quarter of FY 20. The company reported operating income of $13.8 million or 9% operating margin compared to operating income of $726,000 or 1% in the year ago period.
For the full year 2020, revenue is expected to be in the range of $588 million to $590 million and non-GAAP net income per share is expected to be in the range of $0.17 to $0.18 per share.
Meanwhile, the company has extended strategic partnership with Google Cloud. Under this partnership, Datadog and Google will grow a relationship that began in 2019 with Datadog’s first European Google Cloud data center to now include new regions, making it even easier for organizations to access and implement Datadog’s monitoring and security platform.