Datadog (DDOG.O) shares surged 23% on Thursday, its second-best performance in company history, after posting quarterly revenue and profit that topped analyst estimates and issuing an upbeat forecast for the fourth quarter.
The cloud monitoring and security firm reported $885.7 million in revenue, a 28% year-over-year increase, far above the $852.8 million projected by analysts. For Q4, Datadog expects between $912 million and $916 million, comfortably exceeding Wall Street’s $887 million forecast.
CEO Olivier Pomel highlighted strong demand for AI-powered security and analytics tools, noting that the company is “innovating rapidly to help customers solve problems in the AI space.”
Over the past year, Datadog has introduced several AI innovations, including Bits AI Agents for SRE, LLM Observability upgrades, and the MCP Server, which links AI agents to corporate data sources. Its foundation model, TOTO, further strengthens Datadog’s role in AI infrastructure monitoring.
Adjusted earnings came in at 55 cents per share, beating the expected 45 cents, while customers generating over $100,000 in annual recurring revenue grew 16% year-over-year.
The results underscore Datadog’s growing influence as enterprises invest in AI-enhanced cloud tools to improve resilience and security.
