Key Highlights

● Quarterly revenue reached $1.12 billion, up 36% from $826.8 million.

● About 4,720 customers pay $100,000 or more annually, up 23%.

● Free cash flow was $279 million, a 25% margin.

● Full-year revenue guidance is now $4.45 billion to $4.47 billion.

Quarterly revenue passes $1.12 billion

Datadog, Inc. (NASDAQ:DDOG) reported second-quarter 2026 results on 6 August 2026, showing revenue of $1.12 billion, up 36% from $826.8 million a year earlier. The figure was reached as customers deploy artificial intelligence applications and need to monitor increasingly complex software estates. Management also raised its full-year revenue guidance, which is the clearest sign of how it reads demand for the remainder of 2026.

Business and sector

Datadog sells a cloud-based observability and security platform. Engineering, operations and security teams use it to collect metrics, logs, traces and other telemetry from applications and infrastructure, then analyse problems in one place. It competes in a crowded market that includes large cloud providers, specialist observability vendors and open-source tooling, and it earns revenue mainly through subscriptions and usage-based pricing.

Because usage is a significant part of the model, results depend on how much data customers send and how many products they adopt. Chief executive Olivier Pomel said customers are building and deploying with AI and that the company is innovating rapidly to help them manage rising complexity.

Latest reported results

For the quarter ended 30 June 2026, Datadog reported about 4,720 customers with annual recurring revenue of $100,000 or more, up 23% from roughly 3,850 a year earlier. Non-GAAP operating income was $257 million, a 23% margin. Operating cash flow was $316 million and free cash flow was $279 million, a 25% margin.

On a GAAP basis, net income was $44.6 million, or $0.12 per diluted share, while non-GAAP diluted earnings per share were $0.65. GAAP operating income was $5 million, close to break-even, so most of the gap between GAAP and non-GAAP profit reflects items the company excludes, including share-based compensation.

Financial performance and industry context

For the third quarter of 2026, Datadog guided to revenue of $1.135 billion to $1.145 billion, non-GAAP operating income of $260 million to $270 million and non-GAAP earnings per share of $0.63 to $0.65. For the full year, it now expects revenue of $4.45 billion to $4.47 billion, non-GAAP operating income of $1.01 billion to $1.03 billion and non-GAAP earnings per share of $2.50 to $2.54.

These are company forecasts, not reported results, and Datadog did not reconcile its non-GAAP guidance to GAAP, citing uncertainty over items such as stock-based compensation and employer payroll taxes on equity plans.

The wider industry context is heavy spending on cloud and AI infrastructure. Each new workload tends to add services, containers and data pipelines that need monitoring, which supports observability vendors, although the benefit depends on customers continuing to invest rather than optimising their existing consumption.

Risks and uncertainties

Datadog's own filings caution that recent rapid growth may not predict future growth. The company lists a history of operating losses, dependence on existing customers renewing and expanding, competition, technology change, security breaches, platform interruptions and data privacy rules among its risks. Macroeconomic, political and trade conditions, including tariffs, are also flagged.

Usage-based revenue can fluctuate if customers reduce data volumes or renegotiate commitments. The gap between non-GAAP and GAAP profitability also means reported earnings depend heavily on how equity compensation is treated.

Guidance to be tested in autumn

The next scheduled marker is the third-quarter 2026 report, where the company's guidance of $1.135 billion to $1.145 billion in revenue can be compared with the outcome. Readers may also watch growth in the number of customers paying $100,000 or more, free cash flow margin, and whether management again lifts its full-year range. Management commentary on AI-native customers and on how usage trends evolve through autumn will help readers judge durability.