Datadog lifts its outlook as its largest customer cuts usage
Datadog raises its annual revenue forecast while its largest customer reduces usage. Our comparison tracks how much of the upgrade is already delivered.
Ticker Byline
Datadog, Inc.
Datadog provides cloud software for monitoring applications, infrastructure and security. Customer spending depends on workloads, service usage and product adoption.
- Ticker
- DDOG
- Exchange
- XNAS
- SEC CIK
- 0001561550
Datadog's latest annual revenue forecast is $4.515 billion to $4.525 billion after third-quarter sales of $1.197 billion, up 35%. Nine-month revenue reached $3.325 billion.
The company also disclosed reduced usage by its largest customer during the third quarter and said that could slow revenue growth. The AI-native cohort, which includes that customer, contributed high-single-digit percentage points to the quarter's total year-over-year revenue growth.
Earlier expectations and the year-end outlook
August's quarterly revenue range was $1.135 billion to $1.145 billion. The annual range was $4.450 billion to $4.470 billion. The analysis of Datadog's outlook and customer usage shows that about 95% of the annual midpoint upgrade reflects sales already delivered above that earlier quarterly target.
The new explicit fourth-quarter sales forecast is $1.190 billion to $1.200 billion.
Reported and adjusted profit
| Measure | 2026 | 2025 |
|---|---|---|
| Revenue | 1,197.1 | 885.7 |
| GAAP operating income | 74.7 | (5.8) |
| Adjusted operating income | 334.3 | 207.4 |
| Net income | 118.3 | 33.9 |
The adjusted operating result excludes $237.2 million of stock-based compensation, alongside acquired-intangible amortization, payroll taxes on employee stock transactions and deal costs. For the full year, Datadog forecasts adjusted operating income of $1.095 billion to $1.105 billion and adjusted earnings of $2.73 to $2.75 a share.
Cash generation and financing
| Measure | Amount |
|---|---|
| Operating cash flow | 290.0 |
| Capital expenditures | 10.9 |
| Capitalized software costs | 28.4 |
| Free cash flow | 250.6 |
At September 30, cash and cash equivalents were $881.2 million, alongside $4.35 billion of marketable securities. Zero-coupon convertible notes had $1 billion of principal due in December 2029 and a carrying value of $986.6 million, net of issuance costs.
Completed acquisitions
Datadog completed three business combinations during the first nine months of 2026. Their combined purchase consideration was $191.5 million, comprising $98.5 million in cash net of acquired cash, $14.3 million of deferred holdbacks and restricted shares.
The cash-flow statement separately reports $115.6 million paid for business acquisitions during the nine months.
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