DDOG · Datadog, Inc.

Datadog's first quarter 2026 results demonstrate strong execution and accelerating adoption of its AI-powered observability and security platform. Revenue grew 32% year-over-year to $1,006 million, driven by a 21% increase in customers with $100k+ annual recurring revenue (ARR), reaching approximately 4,550. The company's non-GAAP operating margin expanded to 22% from 20% in the prior year, reflecting operating leverage. GAAP operating income was $7 million (1% margin), while non-GAAP operating income reached $223 million. Non-GAAP net income per diluted share was $0.60, compared to $0.46 in the same quarter last year. Cash generation remained robust, with operating cash flow of $335 million and free cash flow of $289 million. The company ended the quarter with $4.8 billion in cash and marketable securities. Management highlighted several product launches, including GPU Monitoring, Bits AI Security Agent, and MCP Server, which are expected to drive further platform adoption. For the second quarter of 2026, Datadog guided revenue between $1.07 billion and $1.08 billion, and non-GAAP operating income between $225 million and $235 million. For the full year 2026, revenue is expected to be between $4.30 billion and $4.34 billion, with non-GAAP operating income between $940 million and $980 million. The guidance implies continued strong growth, albeit with some deceleration from the first quarter's 32% rate. The company's strategic focus on AI and enterprise customers positions it well in a competitive market, but investors should monitor the pace of customer additions and margin expansion.