So DDOG reported earnings this morning. On initial report stock dropped 10% on what I assume was weak guidance(Forecasting Q1'23 would be flat to Q4'22). And lower than expected guidance for FY 2023. The problem is, they always do this. I started researching this after it dropped 10%, it seems to have rebounded a fair bit as of typing this post, but wanted to share results anyway.
Columns:
Revenue: (reported from ER)
Guidance: from previous quarter ER (I took the midpoint of their range. The ranges are small though, mostly 2-5 Million)
AS of: is the date the guidance for that quarter was given(from previous ER; the language is literally 'Guidance as of XXXX date')
% Quarter Completed: Reflects how much of the quarter was done by the as of date
| ER Quarter | Revenue (Actual) | Guidance (From PrevQ) | As Of | % Quarter Completed |
|---|---|---|---|---|
| Q1'21 | 198.5 | 186 | 2/11/21 | 54% |
| Q2'21 | 233.5 | 212 | 5/6/21 | 61% |
| Q3'21 | 270.5 | 247 | 8/5/21 | 62% |
| Q4'21 | 326.2 | 291 | 11/4/21 | 64% |
| Q1'22 | 363 | 336.5 | 2/10/22 | 55% |
| Q2'22 | 406.1 | 378 | 5/5/22 | 62% |
| Q3'22 | 436.5 | 412 | 8/4/22 | 64% |
| Q4'22 | 469.4 | 447 | 11/3/22 | 65% |
And for a comparison as to how bad/consistent their guidance is off
Forecasted QoQ is just guidance/actuals; both data points are from the same ER(so Q2'22 guidance/Q1'21 actuals from same ER)
| ER Quarter | Actual QoQ Growth | Forecasted QoQ Growth | Miss % |
|---|---|---|---|
| Q2'21 | 18% | 7% | -6.3% |
| Q3'21 | 16% | 6% | -9.2% |
| Q4'21 | 21% | 8% | -8.7% |
| Q1'22 | 11% | 3% | -10.8% |
| Q2'22 | 12% | 4% | -7.3% |
| Q3'22 | 7% | 1% | -6.9% |
| Q4'22 | 8% | 2% | -5.6% |
My questions is, is there a reason for this? With so much stock swings at ER being because of guidance, why would a company consistently forecast below. Is it incompetence on the part of the team doing the forecasting? Are they trying to keep their share price low to hamper stock options among employees in the firm? Especially since they are a growth stock. Is it simply, lower guidance = easier to beat?
They are listing these guidance with the quarters over half done.
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