Datadog's (NASDAQ:DDOG) latest guidance failed to impress Wall Street. Sure, the fourth quarter looked solid$0.49 EPS on $738 million in revenue, both above expectationsbut the problem is what's ahead. Management's Q1 outlook of $0.41 to $0.43 EPS came in below the expected $0.46, and full-year guidance of $1.65 to $1.70 per share fell way short of analysts' $2.04 target. Revenue forecasts didn't help either, with the company projecting $3.175 billion to $3.195 billion, missing the $3.24 billion consensus.
So, what's going on? Growth among Datadog's biggest customers seems to be slowing. It ended 2024 with 462 enterprise clients generating $1 million+ in recurring revenueabout 25 fewer than analysts had hoped for. That said, there's still some momentum: clients spending over $100,000 grew 13% to 3,610, and major names like SoFi, Samsung, and Shell remain onboard. But in a world where corporate IT budgets are getting more cautious, the market wanted stronger signals of acceleration, not hesitation.
Investors wasted no time punishing the stock, sending it down 8.8% at 1.52pm today. That wipes out most of its recent gains, leaving shares barely up year-over-year. With tech stocks riding a wave of shifting enterprise demand, Datadog now has to prove it can keep scalingeven as its biggest customers tighten the purse strings.
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