Cloud monitoring firm Datadog (NASDAQ:DDOG) has updated its annual revenue and profit forecasts following strong second-quarter results. The company’s revised projections come on the back of a significant uptick in demand for artificial intelligence-powered cybersecurity services. Businesses are ramping up their spending to protect digital assets due to rising online threats and hacking incidents.
The migration of data and applications to the cloud has further accelerated Datadog’s growth. The company, which serves over 3,000 clients including Peloton (NASDAQ:PTON) and Samsung Electronics (OTC), has expanded its portfolio with new security products designed to safeguard cloud environments and production applications.
Investment in Innovation Fuels Growth
Analysts attribute Datadog’s rapid innovation and competitive edge to its strategy of investing more in research and development than in sales and marketing. This approach has allowed the company to scale its products effectively, outperforming many of its competitors.
Shares of Datadog saw a nearly 3% increase in premarket trading following the announcement. The company now forecasts annual revenue between $2.62 billion and $2.63 billion, up from the previous estimate of $2.59 billion to $2.61 billion. Datadog also expects adjusted profit per share to range from $1.62 to $1.66, an increase from the earlier forecast of $1.51 to $1.57. For the third quarter, the company anticipates an adjusted profit of 38 cents to 40 cents per share, surpassing previous estimates of 37 cents.
For the quarter ending June 30, Datadog reported revenue of $645 million, exceeding the average analyst estimate of $624.9 million. The company achieved an adjusted profit of 43 cents per share, higher than the anticipated 37 cents. Datadog is also reportedly exploring the acquisition of GitLab (NASDAQ:GTLB), a cloud-based software developer backed by Google (NASDAQ:GOOG).
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