Datadog Closes Out 2022 With Strength Albeit a Muted Outlook for 2023; Maintain FVE at $120

We are maintaining our fair value estimate for narrow-moat Datadog after the firm reported a mixed quarter with strong financial results offset by guidance for 2023 that was materially short of our expectations. We believe that ongoing customer cloud optimization is the driver behind Datadog’s lower-than-expected 2023 outlook as customers batten down the hatches amid a tough macro environment. In this environment, we maintain a positive outlook on the business overall and still believe that Datadog is top of mind for customers looking for observability solutions. With that in mind, we view Datadog as attractively priced for investors seeking long-term, high-quality SaaS exposure.