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Datadog's Annual Revenue and Profit Fall Below Estimates as Enterprise Spending Lags

On February 13, Datadog projected its 2025 revenue and profits below Wall Street's expectations due to reduced customer spending on its cloud security services amidst budget cuts prompted by economic uncertainty. This led to a 10% decrease in the New York-based company's premarket trading shares.

The demand for Datadog's data monitoring services has been impacted by tough competition and high interest rates as enterprise customers reassess their spending priorities. Rising competition, including from Dynatrace, which aims to integrate security and data management platforms through artificial intelligence, presents challenges for Datadog in identifying technical issues and breaches within software.

Datadog anticipates generating revenue between $3.18 billion and $3.20 billion in fiscal 2025, falling short of the analysts' average expectation of $3.24 billion. The company's projected annual adjusted earnings per share range between $1.65 and $1.70, below the analysts' forecast of $2.05.

Additionally, Datadog's first-quarter revenue forecast of $737 million to $741 million trails the analyst estimate of $740.3 million. The projected quarterly adjusted EPS of 41 cents to 43 cents is also lower than the estimated 46 cents.

Despite this, the company's fourth-quarter revenue of $737.7 million exceeded market expectations of $714.5 million.