Datadog’s stock surged over 8% in pre-market trading after the cloud-monitoring company reported better-than-expected Q2 results, with earnings per share reaching $0.46—beating estimates by 12.2%. Revenue climbed 28% year-over-year to $827 million, far exceeding the $790.9 million forecast. Key drivers included robust AI adoption, with AI-native customers now contributing 11% of total revenue, up from 8% last quarter. The company also achieved a milestone in its security segment, surpassing $100 million in annual recurring revenue with over 40% growth.
Raised Guidance and Analyst Optimism
Management raised its full-year revenue forecast to $3.312–$3.322 billion, while Q3 projections suggest $847–$851 million in sales. Analysts responded by lifting price targets, citing Datadog’s strong positioning in cloud observability and AI-driven demand. Despite a sharp decline in GAAP net income due to heavy investments, adjusted profitability and free cash flow ($165 million) underscored operational strength. With eight of the top ten AI firms as clients, Datadog remains a key beneficiary of cloud migration and AI expansion.
