(Reuters) – Cloud monitoring company Datadog raised its annual revenue and profit forecasts on Thursday, betting on accelerating demand for its AI-based cybersecurity products.
Shares of the New York-based company rose 4.1% before later paring gains in volatile trading.
“Datadog reported very strong results and is on track for impressive new growth, driven in part by AI applications. Shares have risen significantly in recent weeks as investors had very high expectations, which which could lead to some volatility in trading today,” said Gil Luria, analyst, DA Davidson & Co.
Datadog increased its full-year revenue to about $2.66 billion, compared to a prior expectation of $2.62 billion to $2.63 billion. Analysts had expected revenue of $2.63 billion, according to data compiled by LSEG.
A growing number of Datadog customers are deploying their artificial intelligence applications in live production, which is expected to boost usage of the company’s products.
AI applications run in the cloud and large-scale migration to the cloud is expected, which bodes well for companies such as Datadog, which provide monitoring software for cloud infrastructure.
Datadog now sees adjusted earnings of between $1.75 and $1.77 per share for the full year, up from $1.62 to $1.66 per share previously. Analysts had expected adjusted earnings of $1.65.
Revenue for the quarter ended September 30 was $690 million, compared to an expectation of $664.3 million. It reported adjusted earnings of 46 cents per share, above analysts’ expectations of 40 cents.
(Reporting by Rishi Kant in Bangalore; editing by Pooja Desai and Tasim Zahid)