Datadog Earnings: Datadog Shows Its Bite as Sales Remain Strong Despite Macro Pressures

We are maintaining our $120 fair value estimate for narrow-moat Datadog after the firm kicked off fiscal 2023 with a strong showing, showcasing both revenue growth and profitability ahead of our estimates. We believe that despite the near-term headwinds Datadog faces as customers optimize their spending on IT vendors, the firm stands to be a long-term winner in the observability space. We project that once the macro-related headwinds dissipate, there will be a strong bounce-back in customer demand as spending on public cloud providers ticks up. Despite Datadog shares being up more than 10% May 4 following the earnings report, we view Datadog as attractively priced for investors seeking long-term, high-quality SaaS exposure.