Highlights

  • Datadog shares were trading at $269.65 on October 23, 2026, up 4.62%.
  • Second-quarter revenue rose 35.6% to $1,121.5 million, from $826.8 million a year earlier.
  • Net income rose to $44.6 million from $2.6 million in the prior-year quarter.
  • The company had approximately 4,720 customers with annual run-rate revenue of $100,000 or more, up from 3,850 a year earlier.

Datadog (NASDAQ: DDOG) shares were trading at USD 269.65 on October 23, 2026, up 4.62%. The company, which describes itself as the AI-powered observability and security platform for cloud applications, reported second-quarter results on August 6 showing accelerating revenue growth alongside a swing to larger GAAP profitability.

Datadog is headquartered in New York City and maintains various other global office locations.

Revenue and Profitability Both Climb Sharply

Total revenue for the quarter was $1,121.5 million, up 35.6% from $826.8 million a year earlier. Gross profit rose to $881.3 million from $660.8 million. Operating expenses increased to $875.9 million from $696.3 million, with research and development spending of $478.0 million, up from $387.5 million, and sales and marketing expenses of $311.5 million, up from $239.0 million. Operating income was $5.5 million, compared with an operating loss of $35.5 million a year earlier, as revenue growth outpaced the increase in expenses.

Net income for the quarter was $44.6 million, compared with $2.6 million a year earlier, boosted by interest income and other income, net, of $49.5 million, up from $44.7 million, which more than offset a higher income tax provision of $7.2 million versus $3.4 million. For the first six months of 2026, net income was $97.1 million, compared with $27.3 million in the comparable prior-year period, on revenue of $2,127.9 million, up from $1,588.3 million.

Large-Customer Base Continues to Expand

Datadog said that, as of June 30, 2026, it had approximately 4,720 customers with annual run-rate revenue of $100,000 or more, representing 91% of its total annual run-rate revenue, up from approximately 3,850 such customers a year earlier, representing 89% of annual run-rate revenue. The company defines annual run-rate revenue by annualizing monthly run-rate revenue, which aggregates monthly revenue from committed contractual amounts, additional usage, and usage-based subscriptions, and has said it monitors the growth of this large-customer cohort as an indicator of its ability to expand within enterprise accounts, while cautioning that the metric should be viewed independently of, and not as a substitute for, revenue recognized under GAAP.

Management has noted that sales to large enterprise customers typically involve longer sales cycles, more complex requirements and greater upfront investment than sales to smaller customers, given the need for configuration, integration services and pricing negotiations before broader deployment across an organization.

Retention Rate Improves, Though Largest Customer Trims Usage

Datadog’s trailing 12-month dollar-based net retention rate was in the low-120%’s as of June 30, 2026, up from approximately 120% a year earlier, which the company attributed to increased usage growth from existing customers, including a cohort of AI-native customers that contributed high single-digit percentage points to total year-over-year revenue growth in the quarter. However, the company disclosed that beginning in the third quarter of 2026, it saw its largest customer reduce usage of its platform, a development it said could affect future revenue growth and net retention if the trend continues or if other large customers behave similarly. As of June 30, 2026, Datadog held $435.0 million in cash and cash equivalents and $4.6 billion in marketable securities, with free cash flow of $567.8 million for the first six months of 2026, up from $409.7 million a year earlier.