Datadog Stock Surges After Strong Earnings Beat
Datadog shares soared on Thursday after the cloud monitoring and analytics company reported stronger-than-expected first-quarter results and raised its full-year outlook.
The stock jumped more than 31% in early trading following the earnings release, as investors reacted positively to accelerating growth and bullish guidance.
Datadog Delivers Strong Revenue and Profit Growth
Datadog posted adjusted earnings of $0.60 per share for the first quarter, comfortably beating analyst expectations of $0.51 per share.
Revenue reached $1 billion during the quarter, marking a 32% increase year-over-year and coming in well above the consensus estimate of $959.9 million.
The company also reported adjusted operating income of $223 million, representing a strong 22% operating margin.
Meanwhile, operating cash flow climbed to $335 million, while free cash flow totaled $289 million.
Enterprise Customer Growth Continues
Datadog continued to expand its large customer base during the quarter.
The number of clients generating at least $100,000 in annual recurring revenue increased 21% year-over-year to approximately 4,550 as of March 31. A year earlier, the company had around 3,770 customers in that category.
CEO and co-founder Olivier Pomel said the company is benefiting from growing demand for cloud-based and AI-enabled solutions across multiple industries.
Pomel also highlighted Datadog’s ongoing investment in artificial intelligence technologies and said the company plans to showcase new innovations during its DASH user conference in June.
Second-Quarter Guidance Beats Expectations
For the second quarter, Datadog forecast revenue between $1.07 billion and $1.08 billion, ahead of analyst expectations of $994.5 million.
The company also projected adjusted earnings per share of $0.57 to $0.59, beating the Wall Street consensus estimate of $0.50.
The stronger guidance surprised many analysts, especially given cautious sentiment across the broader software sector.
Analysts See Further Upside Potential
Barclays analyst Raimo Lenschow noted that Datadog not only delivered 32% year-over-year growth, but also guided for additional acceleration in the second quarter — something the market had not expected.
According to Lenschow, the stock could continue moving higher after a relatively weak performance earlier in 2026, particularly as investor sentiment toward software companies begins to improve.
Full-Year Outlook Raised Significantly
Datadog also increased its full-year financial guidance.
The company now expects adjusted earnings per share between $2.36 and $2.44, up sharply from its previous forecast range of $2.08 to $2.16. The updated outlook also exceeded the average analyst estimate of $2.18.
Full-year revenue is now projected between $4.30 billion and $4.34 billion, compared to the prior guidance range of $4.06 billion to $4.10 billion.
The updated forecast also came in above Wall Street expectations of approximately $4.12 billion.
