Datadog Enters the Market With a Bang

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Datadog Inc. (NASDAQ: DDOG) entered the markets with a bang on Thursday. Shares went out at $40.35, after pricing at $27 per share, above the expected price range. The company originally wanted to price its 24.0 million shares in the range of $24 to $26, with an overallotment option for an additional 3.6 million shares. At the $27 price point, the entire offering is valued up to $745.2 million.

The underwriters for the offering are Morgan Stanley, Goldman Sachs, JPMorgan, Credit Suisse, Barclays, Jefferies, RBC Capital Markets, JMP Securities, Raymond James, Stifel, William Blair and Needham.

This company is the monitoring and analytics platform for developers, IT operations teams and business users in the cloud age.

Datadog’s software as a service platform integrates and automates infrastructure monitoring, application performance monitoring and log management to provide unified, real-time observability of its customers’ entire technology stack. Datadog is used by organizations of all sizes and across a wide range of industries to enable digital transformation and cloud migration, drive collaboration among development, operations and business teams, accelerate time to market for applications, reduce time to problem resolution, understand user behavior and track key business metrics.

As of June 30, the company had roughly 8,800 customers, increasing from approximately 7,700, 5,400 and 3,800 customers as of December 2018, 2017 and 2016, respectively. Approximately 590 of these customers as of June 30 had annual run-rate revenue, of $100,000 or more.

In terms of its finances, the firm detailed in the filing:

We generated revenue of $100.8 million and $198.1 million in 2017 and 2018, respectively, representing year-over-year growth of 97%. Our revenue was $85.4 million in the six months ended June 30, 2018 compared to $153.3 million in the six months ended June 30, 2019, representing period-over-period growth of 79%. Substantially all of our revenue is subscription software sales. Our net (loss) income was $(2.6) million, $(10.8) million, $0.5 million and $(13.4) million for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019, respectively.

The company intends to use the net proceeds from this offering for working capital and general corporate purposes.

Shares of Datadog were last seen up about 35% at $36.46, in a range of $36.03 to $41.44 on the day thus far. About 13 million shares had moved as of 12:30 p.m. Eastern.


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