Datadog Raises 2026 Revenue Outlook After Profit Jump

The Tip Desk · November 4, 2026 · 2 min read

The observability platform guided 2026 revenue to as much as $4.525 billion after third-quarter results of $1.20 billion.

Datadog, Inc. (DDOG), the AI-powered observability and security platform, reported third-quarter revenue of $1.20 billion, a 35% increase from a year earlier, as year-over-year growth slowed from 36% in the second quarter.

GAAP operating income swung to $75 million, or a 6% margin, from a $5 million profit and 0% margin in the prior quarter. Non-GAAP operating income was $334 million, a 28% margin. GAAP net income was $0.32 a share; non-GAAP net income was $0.81 a share.

Co-founder and chief executive Olivier Pomel said the company delivered 35% year-over-year revenue growth, $290 million in operating cash flow, and $251 million in free cash flow, and that it was seeing strong adoption as customers scale digital operations and use of AI.

Customers with annual recurring revenue of $100,000 or more reached about 4,860 as of September 30, 2026, up 20% from about 4,060 a year earlier. That year-over-year increase was slower than the 23% rise reported at June 30.

Operating cash flow of $290 million and free cash flow of $251 million compared with $316 million and $279 million in the second quarter. Cash, cash equivalents, and marketable securities were $5.2 billion as of September 30.

The company introduced Scout 1.0, the first specialized model from its AI Research team, now powering Bits Investigation. Scout, in preview, achieves frontier-model performance at a fraction of inference cost, the company said, enabling more frequent, earlier investigations. Datadog also earned a Leader designation in the 2026 Forrester Wave for AIOps Platforms for the second consecutive year and was named the “Company to Beat” for observability platforms in Gartner’s 2026 AI Vendor Race report.

For the fourth quarter of 2026, Datadog expects revenue between $1.19 billion and $1.20 billion, non-GAAP operating income between $280 million and $290 million, and non-GAAP net income of $0.69 to $0.71 a share, assuming about 379 million weighted average diluted shares.

Full-year 2026 revenue guidance was raised to $4.515 billion to $4.525 billion from the $4.45 billion to $4.47 billion range issued with second-quarter results. The company now expects full-year non-GAAP operating income of $1.095 billion to $1.105 billion and non-GAAP net income of $2.73 to $2.75 a share, assuming about 375 million weighted average diluted shares.

Pomel said the company is developing specialized AI models through its AI Research team to help customers manage growing complexity and move toward autonomous operations.