Application observability firm Datadog Inc.’s stock popped again in extended trading today after it reported strong earnings and revenue that topped expectations and followed that up with bullish guidance.

The company reported a third-quarter profit before certain costs such as stock compensation of 13 cents per share on revenue of $270.5 million, up 75% from a year ago. Wall Street had been expecting the company to report a profit of just six cents per share on sales of $247.7 million.

The report delighted investors, with Datadog’s stock gaining more than 13% in after-hours trading.

Datadog co-founder and Chief Executive Olivier Pomel (pictured) said the company saw strength across multiple customer segments and products in the quarter. “Our high growth at scale demonstrates that we continue to be a trusted partner in our customers’ digital transformation and cloud journeys,” he added.

Datadog sells application monitoring and analytics tools that help developers and information technology teams to assess the health of their apps and keep an eye on the infrastructure that supports them. The platform is especially popular with DevOps teams, those that combine software developers with information technology staff, that build cloud-native apps and frequently update them, since it enables to keep a lid on any problems those regular changes might cause.

The company didn’t just see its revenue grow wildly, but also its customer base. At the end of the quarter, Datadog said it had 1,800 customers with annual recurring revenue of $100,000 or more, up 66% from a year ago. ARR is a key metric for investors because it shows how much recurring revenue the company can expect to receive based on its customers’ yearly subscriptions.

RBC Capital Markets analyst Matthew Hedberg said in a note to clients that “digital transformation and cloud migration continue to be driving forces of the business.”

During the quarter Datadog announced a new integration with Circle Internet Services Inc.’s continuous integration and delivery platform. With that move, developers using the very popular CircleCI CI/CD platform will be able to use Datadog more easily to visualize their application development pipeline metrics. So it’s an announcement that could well see yet more teams adopt its platform.

Datadog is also busy working on improvements to its own tools. “We continue to expand the features and functionality of our cloud native end-to-end observability platform,” Pomel said. “We are just getting started on our journey to break down silos between DevOps and security teams.”

Datadog executives issued confident guidance for the fourth quarter, saying they expect revenue of between $290 million and $292 million, some way ahead of Wall Street’s guidance of just $248 million in sales.

Photo: SiliconANGLE