Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Datadog's Q2 FY2026 revenue increased 36% year-over-year, driven primarily by growth from existing customers, which accounted for about 70% of the increase according to management. The company turned profitable on both an operating and net income basis, but gross margin contracted to 79% as cloud infrastructure costs grew faster than revenue. An AI-native customer cohort, including its largest customer, contributed high single-digit percentage points to overall growth, but management disclosed that this largest customer began reducing usage in Q3, creating a potential headwind for future quarters.
Revenue
$1.12B
+35.64% YoY
EPS (Diluted)
$0.12
+1100.00% YoY
Gross Margin
78.6%
-1.3 pts YoY
Operating Income
$5.46M
+115.37% YoY
Source: SEC XBRL
Datadog (DDOG) reported Q2 FY2026 revenue of $1.12B, up 35.6% year over year. Operating margin was 0.5%, against -4.3% a year earlier. DDOG's fiscal Q2 FY2026 corresponds to calendar Q2 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Mar 2026 | 0.60 | 0.52 | Beat +15.9% |
| Dec 2025 | 0.59 | 0.57 | Beat +4.3% |
| Sep 2025 | 0.55 | 0.47 | Beat +15.9% |
| Jun 2025 | 0.46 | 0.43 | Beat +7.9% |
Compiled by AI from 10-Q Item 2 of this filing
Approximately 70% of the revenue increase came from existing customers, with new customers contributing the remaining 30%. However, management noted that the largest customer, part of an AI-native cohort that contributed high single-digit percentage points to growth, reduced usage starting Q3 FY2026.
Source: 10-Q Item 2 MD&A
As of June 30, 2026, Datadog had approximately 33,400 customers. Platform stickiness improved, with 85% of customers using 2+ products, 58% using 4+, and 13% using 10+, up across all metrics from a year earlier.
Source: 10-Q Item 2 MD&A
The trailing 12-month dollar-based net retention rate was in the low-120%'s, up from about 120% a year ago, indicating strong expansion within existing accounts, though the largest customer's usage reduction may pressure this metric in the future.
Source: 10-Q Item 2 MD&A
International revenue represented 27% of total revenue for the first half of FY2026, slightly down from 29% a year earlier, as the company continues to invest in EMEA and APAC for long-term growth.
Source: 10-Q Item 2 MD&A
Free cash flow reached $567.8 million for the six months ended June 30, 2026, up from $409.7 million a year earlier, providing ample liquidity to fund investments even as capital expenditures and capitalized software development costs rose.
Source: 10-Q Item 2 MD&A
Compiled by AI from 10-Q Item 1A of this filing · 2 high, 3 medium, 0 low
The company's largest customer, which is part of an AI-native cohort that contributed high single-digit percentage points to overall year-over-year revenue growth, began reducing usage starting Q3 FY2026. This could significantly decelerate revenue growth and harm financial performance if the trend continues or if other large customers follow suit.
Source: 10-Q Item 1A Risk Factors
Economic uncertainty, trade policies, inflation, and geopolitical conflicts may cause businesses to reduce IT spending, which could limit Datadog's ability to attract new customers and expand within existing ones. The delayed effect of subscription models may mask the impact initially but harm future results.
Source: 10-Q Item 1A Risk Factors
Datadog has a history of operating losses and may not sustain profitability if revenue growth does not outpace increasing investments in R&D, sales, and infrastructure. The company expects costs to rise, and failure to maintain profitability could erode shareholder value.
Source: 10-Q Item 1A Risk Factors
The company's rapid recent growth makes it difficult to forecast future results, and revenue growth rates are expected to decline. This increases the risk of business planning errors and stock price volatility if performance deviates from market expectations.
Source: 10-Q Item 1A Risk Factors
The observability and security market is highly competitive, with many larger players offering bundled solutions. If Datadog cannot effectively compete or differentiate its platform, it may lose market share and face pricing pressure, harming its growth and margins.
Source: 10-Q Item 1A Risk Factors
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 1.12 $B | 0.83 $B | +35.64% |
Cost of Revenue $M | 240.11 $M | 165.98 $M | +44.67% |
Gross Profit $M | 881.34 $M | 660.78 $M | +33.38% |
Operating Income $M | 5.46 $M | -35.50 $M | +115.37% |
Net Income $M | 44.56 $M | 2.65 $M | +1583.34% |
EPS (Basic) $ | 0.13 $ | 0.01 $ | +1200.00% |
EPS (Diluted) $ | 0.12 $ | 0.01 $ | +1100.00% |
R&D Expense $M | 477.97 $M | 387.48 $M | +23.35% |
Answers draw on this SEC filing and the data on this page
Expected release date, analyst estimates & what to watch
Datadog delivered strong Q1 FY2026 results with revenue surging 32.2% YoY to $1.006B, crossing the $1B quarterly milestone, while swinging to positive operating income of $7.3M and more than doubling net income to $52.6M.
Datadog delivered strong FY2025 revenue growth of 27.7% to $3.43B, but swung to an operating loss of $44.4M as R&D spending surged 34.3%, while net income declined 41.4% to $107.7M and operating cash flow remained robust at $1.05B.
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