Cloud of caution hangs ahead of Datadog Q4 earnings and 2023 outlook
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Datadog (NASDAQ:DDOG) is scheduled to announce Q4 earnings results on Thursday, February 16th, before market open.
The consensus EPS Estimate is $0.19 (-5.0% Y/Y) and the consensus Revenue Estimate is $448.07M (+37.4% Y/Y).
Over the last 3 months, EPS estimates have seen 1 upward revision and 2 downward. Revenue estimates have seen 0 upward revisions and 2 downward.
Investment bank KeyBanc Capital Markets downgraded Datadog (DDOG) earlier this month, noting lowered IT growth expectations for 2023 and that "during the last two quarters, slowing has spread even to cloud".
The analyst also noted that there may be issues for Datadog (DDOG) generating higher margins, due to increases in sales and R&D investments to keep its high revenue growth.
BTIG also downgraded the cloud software company in January, noting "weakening" checks and increasing difficulty to win new customers this year and gain traction in large enterprise companies amid macro challenges.
Datadog (DDOG), Snowflake (SNOW) and Fortinet (FTNT) may have the most to lose amid the software sector slowdown, as investors believe estimates have not come down far enough, according to a December note by BTIG.

A recent SA contributor analysis called out "too many warning signs recently" ahead of Datadog's Q4 earnings, including its pricing model and the current broad downturn in IT spending.
Given the overall lowered spending levels for cloud and cautious market sentiment, investors will be keeping a close eye on Datadog's guidance for its fiscal 2023.
Over the last 2 years, DDOG has beaten EPS estimates 100% of the time and has beaten revenue estimates 100% of the time.