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Datadog Shares Tank Despite Strong Quarter, Raised Guidance

Shares of data monitoring and analytics firm Datadog tanked after hours Thursday following the company’s second quarter earnings release.

The company reported 68% growth in revenue to $140 million with earnings of 5 cents per share. The New York City-based company was expected to report revenue of $135.4 million with a profit of a penny per share.

“Our growth at scale amid the global pandemic demonstrates Datadog’s importance in enabling the digital operations of our customers.” said Olivier Pomel, co-founder and CEO of Datadog. “COVID-19 has illuminated the need to be digital-first and agile, as well as the cloud as the IT architecture of choice to achieve these outcomes.”

Despite this, the stock dropped more than 15% to $76.35 after hours on Thursday. Expectations were high, with shares of Datadog up nearly 140% year to date heading into the earnings report.

For the third quarter, the company expects revenue between $143 million and $145 million vs. analyst estimates of $140.3 million.

Earnings for the period are expected to be between break even and a penny, also ahead of analyst estimates of a loss of a penny for the quarter.

For the year, the company expects revenue between $566 million and $572 million vs. analyst estimates of $563.57 million. Earnings are expected to be between 11 cents and 13 cents per share, ahead of estimates of a nickel per share.

Datadog swung to a profit in the previous quarter, reporting earnings of $18.8 million, or 6 cents a share, from a loss of $6.9 million, or 9 cents, in the year-earlier period.

Shares of Datadog fell about 4.6% in trading during the day, closing just shy of $90 per share.