Second Quarter 2026
Filed Aug 6, 2026Second quarter revenue grew 36% year-over-year to $1.12 billion
Revenue grew 36% year-over-year to $1.12 billion, operating cash flow was $316 million, free cash flow was $279 million, and the company guided to continued revenue growth in the third quarter and full year 2026.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $1.12 billion | – | 36% |
| GAAP operating incomeGAAP | $5 million | – | – |
| GAAP operating marginGAAP | 0% | – | – |
| Non-GAAP operating incomenon-GAAP | $257 million | – | – |
| Non-GAAP operating marginnon-GAAP | 23% | – | – |
| GAAP net income per diluted shareGAAP | $0.12 | – | – |
| Non-GAAP net income per diluted sharenon-GAAP | $0.65 | – | – |
| Operating cash flowother | $316 million | – | – |
| Free cash flownon-GAAP | $279 million | – | – |
| Cash, cash equivalents, and marketable securitiesGAAP | $5.0 billion | – | – |
| Customers with ARR of $100,000 or moreother | about 4,720 | – | 23% |
Third Quarter and Full Year 2026 outlook
- RevenueThird Quarter 2026: between $1.135 billion and $1.145 billion. Full Year 2026: between $4.45 billion and $4.47 billion.
- NoteThird Quarter 2026 non-GAAP operating income: between $260 million and $270 million.
- NoteThird Quarter 2026 non-GAAP net income per share: between $0.63 and $0.65, assuming approximately 378 million weighted average diluted shares outstanding.
- NoteFull Year 2026 non-GAAP operating income: between $1.01 billion and $1.03 billion.
- NoteFull Year 2026 non-GAAP net income per share: between $2.50 and $2.54, assuming approximately 376 million weighted average diluted shares outstanding.
What drove it
- As of June 30, 2026, Datadog had about 4,720 customers with ARR of $100,000 or more, an increase of 23% from about 3,850 as of June 30, 2025.
- Datadog acquired Adaptive ML to accelerate Datadog AI Research’s investment in world models and agentic LLM post-training for observability.
- Datadog launched more than 100 new capabilities at DASH 2026, including fully autonomous Bits AI, AI Guard, Bring Your Own Cloud, and Bits Agent Builder.
- Datadog launched AI-powered Bits Code, Bits Chat, and Bits Agent Builder for general availability.
Concerns
- GAAP operating income was $5 million and GAAP operating margin was 0%.
- Datadog stated that stock-based compensation and employer payroll taxes on equity incentive plans could be material to results computed in accordance with GAAP.
- The company cited risks related to customer subscription renewals and expansion, attracting new customers, competition, security breaches, platform interruptions, changing customer needs, data privacy and security requirements, and information technology spending.
What to watch
- Execution against third-quarter 2026 revenue guidance of between $1.135 billion and $1.145 billion.
- Execution against full-year 2026 revenue guidance of between $4.45 billion and $4.47 billion.
- The progression of GAAP profitability relative to reported GAAP operating income of $5 million and a 0% GAAP operating margin.
- Growth in customers with ARR of $100,000 or more after reaching about 4,720 as of June 30, 2026.
- Customer adoption of the more than 100 capabilities launched at DASH 2026 and the acquired Adaptive ML technology.
Balance sheet and cash flow
- Operating cash flow was $316 million.
- Free cash flow was $279 million.
- Cash, cash equivalents, and marketable securities were $5.0 billion as of June 30, 2026.
Analysis
Datadog reported second-quarter 2026 revenue of $1.12 billion, up 36% year-over-year. The company also reported about 4,720 customers with ARR of $100,000 or more as of June 30, 2026, up 23% from about 3,850 a year earlier. Management linked customer activity to AI deployment and the use of Datadog for observability, security, and action across AI-enabled solutions.
The profitability profile showed a substantial difference between GAAP and non-GAAP measures. GAAP operating income was $5 million and GAAP operating margin was 0%, while non-GAAP operating income was $257 million and non-GAAP operating margin was 23%. GAAP net income per diluted share was $0.12, compared with non-GAAP net income per diluted share of $0.65. The release identifies stock-based compensation, amortization of acquired intangibles, employer payroll taxes on employee stock transactions, M&A transaction costs, amortization of issuance costs, and an assumed tax provision among the adjustments used in non-GAAP measures.
Cash generation was meaningful in the reported period, with operating cash flow of $316 million and free cash flow of $279 million. Cash, cash equivalents, and marketable securities were $5.0 billion as of June 30, 2026. The company also disclosed the acquisition of Adaptive ML and a product push at DASH 2026 that included more than 100 new capabilities, including fully autonomous Bits AI, AI Guard, Bring Your Own Cloud, and Bits Agent Builder.
The third-quarter outlook calls for revenue between $1.135 billion and $1.145 billion, non-GAAP operating income between $260 million and $270 million, and non-GAAP net income per share between $0.63 and $0.65. Full-year 2026 guidance calls for revenue between $4.45 billion and $4.47 billion, non-GAAP operating income between $1.01 billion and $1.03 billion, and non-GAAP net income per share between $2.50 and $2.54. The filing does not provide a reconciliation of forward non-GAAP operating income or non-GAAP net income per share because of uncertainty and potential variability in reconciling items.
The key reported areas for investors are sustained 36% revenue growth, growth in the larger-customer base, the gap between GAAP and non-GAAP operating profitability, and the company’s ability to execute its third-quarter and full-year guidance. The release provides no segment revenue disclosure, so revenue mix by operating segment cannot be assessed from this filing text.
Management, verbatim
Datadog delivered a strong quarter, with 36% year-over-year revenue growth, $316 million in operating cash flow, and $279 million in free cash flow.
Olivier Pomel, co-founder and CEO
Our customers are building and deploying with AI, and they are using the Datadog platform to observe, secure, and act on their AI-enabled solutions.
Olivier Pomel, co-founder and CEO
We are innovating rapidly to help our customers manage rising complexity, and increasingly build autonomy into their operations.
Olivier Pomel, co-founder and CEO
Not in the filing
stated, not guessed- Prior-year revenue amount.
- Prior-quarter revenue amount and sequential revenue growth.
- Segment revenue, segment growth, and segment profitability.
- GAAP gross profit and GAAP gross margin.
- Non-GAAP gross profit and non-GAAP gross margin.
- GAAP net income amount.
- Non-GAAP net income amount.
- Prior-year and prior-quarter operating income, operating margin, net income, EPS, operating cash flow, and free cash flow.
- Capital expenditures and capitalized software development costs.
- Debt balance.
- Share repurchases, dividends, and other capital-return amounts.
- Changes in cash, cash equivalents, and marketable securities from prior periods.
- Third-quarter and full-year guidance for gross margin, operating expenses, and tax rate.
- Prior-period outlook for comparison with actual results.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.