Q3 Cloud Monitoring Earnings Review: First Prize Goes to Datadog (NASDAQ:DDOG)

Let’s dig into the relative performance of Datadog (NASDAQ:DDOG) and its peers as we unravel the now-completed Q3 cloud monitoring earnings season.

Software is eating the world, increasing organizations’ reliance on digital-only solutions. As more workloads and applications move to the cloud, the reliability of the underlying cloud infrastructure becomes ever more critical and ever more complex. To solve this challenge, companies and their engineering teams have turned to a range of cloud monitoring tools that provide them with the visibility to troubleshoot issues in real-time.

The 4 cloud monitoring stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 19.3% since the latest earnings results.

Best Q3: Datadog (NASDAQ:DDOG)

Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.

Datadog reported revenues of $885.7 million, up 28.4% year on year. This print exceeded analysts’ expectations by 3.9%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ annual recurring revenue estimates and EPS guidance for next quarter exceeding analysts’ expectations.

"Datadog had a strong third quarter, with 28% year-over-year revenue growth, $251 million in operating cash flow, and $214 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog.

Datadog pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. The company added 210 enterprise customers paying more than $100,000 annually to reach a total of 4,060. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 21.6% since reporting and currently trades at $121.95.

Read why we think that Datadog is one of the best cloud monitoring stocks, our full report is free.

Dynatrace (NYSE:DT)

With its platform processing over 30 trillion pieces of IT performance data daily, Dynatrace (NYSE:DT) provides an AI-powered platform that helps organizations monitor, secure, and optimize their applications and IT infrastructure across cloud environments.

Dynatrace reported revenues of $493.8 million, up 18.1% year on year, outperforming analysts’ expectations by 1.3%. The business had a satisfactory quarter with a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 19.9% since reporting. It currently trades at $39.76.

Is now the time to buy Dynatrace? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: Nutanix (NASDAQ:NTNX)

Originally pioneering hyperconverged infrastructure to break down traditional data center silos, Nutanix (NASDAQ:NTNX) provides a unified software platform that enables organizations to run applications and manage data across private, public, and hybrid cloud environments.

Nutanix reported revenues of $670.6 million, up 13.5% year on year, falling short of analysts’ expectations by 0.9%. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and revenue guidance for next quarter missing analysts’ expectations significantly.

Nutanix delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 14.3% since the results and currently trades at $51.

Read our full analysis of Nutanix’s results here.

PagerDuty (NYSE:PD)

Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE:PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.

PagerDuty reported revenues of $124.5 million, up 4.7% year on year. This print met analysts’ expectations. More broadly, it was a slower quarter as it recorded full-year revenue guidance missing analysts’ expectations significantly and revenue guidance for next quarter missing analysts’ expectations significantly.

PagerDuty delivered the highest full-year guidance raise but had the slowest revenue growth among its peers. The company added 76 customers to reach a total of 15,398. The stock is down 21.5% since reporting and currently trades at $11.93.

Read our full, actionable report on PagerDuty here, it’s free.

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