Analysis
Datadog's stock fell 14% on November 4, 2026 after the company reported third-quarter revenue of $1.20 billion, up 35%, and guided the fourth quarter roughly flat, SiliconANGLE reported. The figures come from Datadog's earnings release. What changed since Pulse last covered the company, when The Information reported Datadog had offered about $4 billion for Upwind in October: the market is now pricing Datadog on one AI customer, not on acquisitions.
What Datadog does
Datadog, led by co-founder and CEO Olivier Pomel, sells an observability and security platform that monitors applications, infrastructure, data and AI models from one console, and it bills largely on usage. As of September 30 it had about 4,860 customers paying $100,000 or more a year, up 20% from about 4,060. Our Datadog deep dive covers the business model in full.
Datadog Q3 2026 results
- Revenue: $1.20 billion, up 35%, against a consensus of $1.1455 billion, per 24/7 Wall St..
- Operating income: GAAP $75 million, a 6% margin; non-GAAP $334 million, a 28% margin.
- EPS: GAAP $0.32 a share; non-GAAP $0.81, against a $0.6407 consensus per 24/7 Wall St.
- Cash flow: $290 million from operations and $251 million of free cash flow; $5.2 billion of cash and marketable securities.
- Guidance: fourth-quarter revenue of $1.19 billion to $1.20 billion; full-year revenue of $4.515 billion to $4.525 billion, up from $4.45 billion to $4.47 billion, per SiliconANGLE.
“As of September 30 it had about 4,860 customers paying $100,000 or more a year, up 20% from about 4,060.”
Why did Datadog stock fall?
Datadog's largest customer, an AI provider the company has not named, reduced usage in the third quarter while staying above its contractual minimum, and the fourth-quarter outlook assumes it spends only that minimum, SiliconANGLE reported. CFO David Obstler said growth excluding that customer is in the "low- to mid-30% range." Some large AI customers also renewed or extended contracts early, getting better pricing in exchange for bigger commitments, which Pomel called "short-term revenue headwinds as customers optimize usage and pricing," according to MarketBeat's call summary on Yahoo Finance.
The AI base is still growing: more than 850 AI companies now use Datadog, about 100 more than at the end of June, per SiliconANGLE, and MarketBeat counted 39 AI customers spending $1 million or more a year.
The stock closed at $190.47, down from $220.52, 24/7 Wall St. reported.
Datadog competitors and valuation
24/7 Wall St. compared Datadog with its closest listed peers:
- Datadog: market value of $63.36 billion, revenue growth of 35%.
- Dynatrace: market value of $13.22 billion, revenue growth of about 17%.
- Elastic: market value of $9.31 billion, revenue growth of about 15%.
Datadog's net revenue retention stayed in the low 120s, and remaining performance obligations rose 38% to $3.85 billion. Pulse reported in August that Palo Alto Networks once explored buying Datadog when it was valued above $40 billion; those talks never advanced.
The fourth-quarter guide is the test. If the big AI customer stays at its minimum, the low- to mid-30% growth of the rest of the base has to carry the number, and the early renewals at lower prices will keep weighing on revenue until those larger commitments are used up.