Datadog sinks 17% despite raised guidance, Q2 beat

Investing.com -- Datadog reported second-quarter results that beat consensus estimates and raised its full-year outlook, but shares fell more than 17% in premarket trading Thursday, a move that may reflect profit-taking after the stock hit a fresh all-time closing high earlier in the week.

The cloud-scale monitoring and security platform reported second-quarter earnings per share (EPS) of $0.65, beating the consensus estimates of $0.58. Revenue rose 36% year-over-year to $1.12 billion, ahead of the $1.08 billion consensus estimate.

"Datadog delivered a strong quarter, with 36% year-over-year revenue growth, $316 million in operating cash flow, and $279 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog. "Our customers are building and deploying with AI, and they are using the Datadog platform to observe, secure, and act on their AI-enabled solutions."

As of June 30, the company had about 4,720 customers with annual recurring revenue of $100,000 or more, up 23% from roughly 3,850 a year earlier.

For the third quarter, Datadog guided to EPS of $0.63 to $0.65, above the $0.61 consensus, and revenue of $1.135 billion to $1.145 billion, ahead of the $1.11 billion consensus estimate.

For the full year 2026, the company raised its EPS guidance to $2.50 to $2.54, from $2.36 and $2.44 previously, and above the $2.42 consensus. Revenue is projected to range between $4.45 billion and $4.47 billion, up from a previous forecast of $4.30 billion to $4.34 billion, and also ahead of the $4.35 billion consensus.

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