Datadog (NASDAQ:DDOG) Issues Earnings Results, Beats Expectations By $0.07 EPS

Key Points

• Datadog beat quarterly expectations: EPS was $0.65 versus the $0.58 consensus, while revenue reached $1.12 billion, up 35.6% year over year and above the $1.08 billion estimate.
• Demand remained broad and strong, with expanding AI adoption, rising platform usage and Real User Monitoring ARR surpassing $200 million while growing more than 50% year over year.
• Management raised its fiscal 2026 outlook, but guidance reflects lower usage from the company’s largest customer; full-year revenue is projected at $4.45 billion-$4.47 billion and EPS at $2.50-$2.54.

Datadog (NASDAQ:DDOG - Get Free Report) announced its quarterly earnings data on Thursday. The company reported $0.65 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.58 by $0.07, FiscalAI reports. Datadog had a net margin of 4.48% and a return on equity of 5.67%. The business had revenue of $1.12 billion during the quarter, compared to the consensus estimate of $1.08 billion. During the same quarter last year, the firm earned $0.46 earnings per share. The firm's quarterly revenue was up 35.6% compared to the same quarter last year. Datadog updated its Q3 2026 guidance to 0.630-0.650 EPS and its FY 2026 guidance to 2.500-2.540 EPS.

Here are the key takeaways from Datadog's conference call:

• Q2 revenue reached $1.12 billion, up 36% year over year and above the high end of guidance, while record quarterly revenue additions and 25% free-cash-flow margins underscored strong execution.
• Core demand accelerated broadly, with non-AI customers growing in the high 20s percentage range and new-logo bookings particularly strong in enterprise. Net revenue retention remained in the low 120s, while gross retention stayed in the mid-to-high 90s.
• Platform adoption continued to expand, with 58% of customers using at least four products and 37% using six or more; Real User Monitoring surpassed $200 million in ARR and grew more than 50% year over year.
• AI-related demand is expanding across startups, hyperscalers and traditional enterprises, supporting Datadog’s AI observability, security and automation offerings. The company cited more than 750 AI customers, rapid growth in agent activity and several large AI-related wins.
• Management incorporated a usage reduction from its largest customer into guidance, contributing to a Q3 revenue outlook of $1.135 billion-$1.145 billion, or 28%-29% growth, and full-year revenue guidance of $4.45 billion-$4.47 billion, or 30% growth.

Datadog Stock Up 2.0%

NASDAQ DDOG traded up $4.64 on Friday, reaching $233.93. 8,531,977 shares of the stock traded hands, compared to its average volume of 4,713,936. Datadog has a 12 month low of $98.01 and a 12 month high of $292.72. The company has a market cap of $83.27 billion, a price-to-earnings ratio of 477.42, a PEG ratio of 23.23 and a beta of 1.54. The company has a fifty day moving average price of $249.29 and a 200-day moving average price of $177.85. The company has a debt-to-equity ratio of 0.23, a quick ratio of 3.40 and a current ratio of 3.20.

Key Stories Impacting Datadog

Here are the key news stories impacting Datadog this week:

• Positive Sentiment: Datadog delivered a strong second quarter: revenue rose 35.6% year over year to $1.12 billion, exceeding the $1.08 billion consensus estimate, while EPS of $0.65 topped expectations of $0.58 and increased from $0.46 a year earlier. Growth was broad-based across AI and non-AI demand, with billings and remaining performance obligations also supporting future revenue visibility. Datadog Q2 Earnings and Revenues Surpass Estimates
• Positive Sentiment: Management raised its fiscal 2026 outlook to approximately $4.45-$4.47 billion in revenue and $2.50-$2.54 in EPS. Third-quarter EPS guidance of $0.63-$0.65 is above the $0.52 analyst consensus, providing a positive catalyst despite revenue guidance being roughly in line with expectations. Datadog Beats Earnings and Raises Outlook
• Positive Sentiment: Citigroup raised its DDOG price target to $305 and reaffirmed a “Buy” rating. DA Davidson also maintained its “Buy” rating with a $315 target, suggesting analysts see significant upside following the pullback. Datadog Analyst Price Targets
• Neutral Sentiment: CEO Olivier Pomel sold 127,141 shares worth approximately $36.5 million under a pre-arranged Rule 10b5-1 plan. The sale reduced his holdings by about 17%, but the planned nature of the transaction limits its value as a signal about Datadog’s business outlook. Datadog CEO Stock Sale Filing
• Negative Sentiment: The earlier decline reflected a high valuation and exceptionally high investor expectations rather than a quarterly miss. Investors focused on slowing bookings growth and management’s disclosure that its largest customer, reportedly a major AI company, plans to reduce usage, creating a risk to consumption-based revenue. Datadog Major Customer Usage News

Insider Buying and Selling at Datadog

In other news, CTO Alexis Le-Quoc sold 53,912 shares of the firm's stock in a transaction on Monday, June 1st. The stock was sold at an average price of $271.05, for a total transaction of $14,612,847.60. Following the transaction, the chief technology officer owned 531,311 shares in the company, valued at approximately $144,011,846.55. This trade represents a 9.21% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Olivier Pomel sold 127,141 shares of the company's stock in a transaction dated Monday, May 11th. The stock was sold at an average price of $199.84, for a total transaction of $25,407,857.44. Following the completion of the sale, the chief executive officer directly owned 835,679 shares of the company's stock, valued at approximately $167,002,091.36. This trade represents a 13.21% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last ninety days, insiders have sold 1,502,163 shares of company stock worth $363,481,842. Insiders own 6.48% of the company's stock.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently made changes to their positions in the stock. JPL Wealth Management LLC purchased a new stake in shares of Datadog during the third quarter valued at about $27,000. Quarry LP bought a new position in shares of Datadog during the 3rd quarter worth approximately $45,000. DV Equities LLC purchased a new stake in Datadog during the fourth quarter valued at approximately $62,000. Geneos Wealth Management Inc. lifted its position in Datadog by 17.6% during the first quarter. Geneos Wealth Management Inc. now owns 769 shares of the company's stock valued at $76,000 after acquiring an additional 115 shares during the last quarter. Finally, GW&K Investment Management LLC lifted its position in Datadog by 964.3% during the fourth quarter. GW&K Investment Management LLC now owns 596 shares of the company's stock valued at $81,000 after acquiring an additional 540 shares during the last quarter. 78.29% of the stock is currently owned by hedge funds and other institutional investors.

Wall Street Analysts Forecast Growth

DDOG has been the topic of several recent analyst reports. Evercore increased their price target on Datadog from $225.00 to $265.00 and gave the stock an "outperform" rating in a report on Wednesday, June 10th. Needham & Company LLC upped their price objective on Datadog from $260.00 to $300.00 and gave the company a "buy" rating in a research report on Friday. Capital One Financial increased their target price on Datadog from $217.00 to $268.00 and gave the stock an "overweight" rating in a research note on Wednesday, June 17th. Truist Financial upgraded Datadog from a "hold" rating to a "buy" rating and lifted their target price for the stock from $190.00 to $300.00 in a research report on Monday, June 15th. Finally, Wedbush assumed coverage on shares of Datadog in a research note on Monday, June 15th. They set a "neutral" rating for the company. Two equities research analysts have rated the stock with a Strong Buy rating, thirty-eight have given a Buy rating, three have issued a Hold rating and two have given a Sell rating to the company. According to data from MarketBeat.com, Datadog presently has an average rating of "Moderate Buy" and an average target price of $276.32.

About Datadog

Datadog NASDAQ: DDOG is a cloud-based monitoring and observability platform that helps organizations monitor, troubleshoot and secure their applications and infrastructure at scale. Its software-as-a-service offering collects and analyzes metrics, traces and logs from servers, containers, cloud services and applications to provide real-time visibility into system performance and health. Datadog's platform is widely used by engineering, operations and security teams to reduce downtime, accelerate incident response and improve application reliability.

The company's product suite includes infrastructure monitoring, application performance monitoring (APM), log management, real user monitoring (RUM), synthetic monitoring and network performance monitoring, along with security-focused products such as security monitoring and cloud SIEM.

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