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Datadog Inc. today posted second-quarter financial results that topped analysts’ revenue and adjusted its earnings expectations.

Datadog in conjunction announced the acquisition of Seekret Software Security Ltd., a startup with technology that helps companies manage their application programming interfaces. The terms of the deal were not disclosed.

New York-based Datadog provides a popular observability platform that companies use to detect technical issues in their cloud instances, corporate networks and other technology infrastructure. Datadog’s platform can also spot malfunctions in the applications running on a company’s infrastructure. Its feature set covers certain other use cases as well, including cyberattack detection.

Datadog closed its second quarter with revenue of $406 million, 74% more than a year ago. Analysts polled by FactSet had expected the company to report $382 million in revenue.

One contributor to Datadog’s better-than-expected top line growth was increased demand from large enterprises. The number of organizations that spend more than $100,000 a year the company’s platform rose to about 2,420 in the quarter from 1,570 a year earlier. Datadog counts major brands such as Samsung Electronics Co. Ltd., Comcast Corp. and Amazon.com Inc.’s Whole Foods unit among its customers. 

Datadog’s second-quarter profit surpassed the consensus analyst estimate as well. The company achieved adjusted operating income of $84.7 million, which translated into adjusted earnings of 24 cents per diluted share. Analysts had projected 15 cents per share.

Datadog’s third quarter and full-year guidance is broadly in line with analyst expectations. In the third quarter, the company estimates it will generate adjusted earnings of 15 to 17 cents per share on between $410 million and $414 million in revenue. Datadog expects to close its 2022 fiscal year with adjusted earnings per share of 74 to 81 cents, while revenue is projected to range from $1.61 billion to $1.63 billion.

“Customers of all sizes and in all industries are progressing along their digital transformation and cloud migration journeys,” said Datadog co-founder and Chief Executive Officer Olivier Pomel. “And with the broadening capabilities of our end-to-end, unified platform, Datadog is uniquely capable of helping customers reach their transformation goals.”

Against the backdrop of its earnings report, Datadog today disclosed that it has acquired Tel Aviv-based startup Seekret. The startup offers a platform that helps companies monitor their APIs and find potential technical issues.

Applications use APIs to exchange data with one another. An inventory tracking application, for example, might use the API of a database to access inventory information stored in that database. A large enterprise may have upwards of hundreds of APIs in its technology environment, each of which has to be separately managed and maintained.

Seekret’s platform promises to ease maintenance tasks for enterprises. The platform can automatically map out the APIs in a company’s technology environment. Then, it helps developers create tests that can be used to evaluate APIs’ reliability. 

The company also helps software teams with a number of related tasks. Before releasing an update to an API, software teams can use Seekret’s platform to determine whether the update might cause technical issues in applications that rely on the API. The startup also provides a tool that can automatically generate technical documentation explaining an API’s features.

Datadog said today that it will integrate Seekret’s platform with its observability and cybersecurity tools. Additionally, the company plans to build on the startup’s technology by developing “many more features” to ease API management. 

“APIs are the building blocks for modern software and are therefore essential to every Datadog customer,” said Renaud Boutet, Datadog’s senior vice president of product. “Adding Seekret’s platform will give us an opportunity to build many different capabilities for our customers for API observability, security and collaboration.”

Acquisitions play an important role in Datadog’s product strategy. Over the past few quarters, the company expanded its presence in the application security market by introducing new features that help with tasks such as detecting cyberattacks. To accelerate its development roadmap in this area, Datadog has acquired two application security startups over the past 18 months. 

Image: Datadog

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