Datadog Inc (NASDAQ:DDOG) stock climbed after it reported its quarterly results on Tuesday as the growing adoption of artificial intelligence fueled stronger demand for its cloud security products.
• Why is DDOG stock surging?
The software-as-a-service (SaaS) platform’s fiscal fourth-quarter revenue increased 29% year-over-year to $953.19 million, beating the analyst consensus estimate of $916.58 million.
Adjusted EPS of 59 cents beat the analyst consensus estimate of 56 cents. As of Dec. 31, Datadog had 4,310 customers with an ARR of $100,000 or more, an increase of 19% Y/Y.
The adjusted gross margin declined by 100 bps to 81%, and the adjusted operating margin remained resilient at 24%.
It also had cash and equivalents of $4.47 billion, generating $291 million in free cash flow.
Olivier Pomel, co-founder and CEO of Datadog, highlighted the delivery of over 400 new features and capabilities to support customers migrating to the cloud and deploying next-gen AI in production.
Almost 50% of its customers use four or more of its products, the company told Reuters, symbolising broader adoption of its platform and steady spending growth among existing clients.
Outlook
Datadog expects first-quarter 2026 revenue of $951 million-$961 million versus an analyst consensus estimate of $935.38 million. It expects a quarterly adjusted EPS of 49 cents to 51 cents against an analyst consensus estimate of 53 cents.
The company expects a fiscal 2026 revenue of $4.060 billion-$4.100 billion versus an analyst consensus estimate of $4.106 billion. It expects an adjusted EPS of $2.08-$2.16 versus an analyst consensus estimate of $2.36.
DDOG Price Action: Datadog stock is up 16.22% at $132.50 at publication on Tuesday.
Photo: PJ McDonnell via Shutterstock
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