DDOG
The headline: Datadog is still growing like a startup with a caffeine problem
Datadog’s Q2 2026 earnings call had the kind of tone investors usually like: revenue came in at $1.12 billion, up 36% year over year, and beat the top end of guidance. That’s not exactly “slow and steady wins the race” territory — that’s more like “the race is optional, we’re taking the express lane.”
The company also said it ended the quarter with 33,400 customers, including 4,720 with ARR of at least $100,000. In other words, more customers are not just trying Datadog — they’re actually making it part of the plumbing.
AI isn’t the side quest anymore
Management leaned hard into the AI story, saying growth is accelerating both for AI-native customers and for the old-school non-AI crowd too. Non-AI customer revenue growth jumped into the high 20%s from the mid-20s last quarter, which is a fancy way of saying AI demand isn’t the only engine here.
A few other nuggets investors will probably chew on:
- Datadog launched 100+ new products and features
- Bits AI is getting broader use in DevOps and AI stack observability
- The company called out a $30 million TCV deal with a major online media company
- AI-native customers are becoming more numerous and more diverse
That all suggests Datadog’s platform pitch is working: if you’re running modern software, you might need the whole observability toolkit, not just a single dashboard you stare at during outages.
The one wrinkle: the biggest customer blinked
The company’s Q3 guidance wasn’t weak, but it was intentionally cautious. Datadog guided Q3 revenue to $1.135 billion to $1.145 billion, implying 28% to 29% growth, and full-year revenue to $4.45 billion to $4.47 billion.
Why the restraint? Management said a usage reduction from its largest customer is weighing on the outlook. So yes, the growth machine is humming — but when one whale sneezes, the forecast machine still reaches for a tissue.
Big picture: Datadog is proving it can turn AI hype into actual usage, actual products, and actual revenue. Investors love a story — but they love recurring, high-growth revenue even more.