Datadog Q2 Revenue Jumps 36% to $1.12 Billion but Largest Customer Pullback Clouds Q3 Outlook

Datadog reported second-quarter 2026 revenue of $1.12 billion, up 36% year over year and ahead of Wall Street estimates, with non-GAAP earnings per share of $0.65 beating the consensus of $0.58. The company counted approximately 4,720 customers with annual recurring revenue above $100,000, up from about 3,850 a year earlier, and generated $279 million in free cash flow. CEO Olivier Pomel highlighted ongoing momentum from AI-driven customers, saying clients are using the Datadog platform to observe, secure, and act on their AI-enabled solutions, and noted the company landed two major hyperscaler customers for superintelligence lab training workloads.

Despite the strong print, third-quarter guidance of $1.135 billion to $1.145 billion, implying roughly 29% year-over-year growth, disappointed investors accustomed to the 36% pace just delivered. Management disclosed that its largest customer, identified by analysts as OpenAI, has begun reducing usage, creating a direct headwind to the near-term forecast. Stifel reiterated its rating on the stock after conducting its own analysis of OpenAI spending patterns.

The stock surged on August 10 alongside peers including Palantir, even as Monday.com fell roughly 6% on weak guidance the same day. Separately, Datadog also faces a governance question as it pursues a proposal to reincorporate from Delaware to Nevada, a move investor groups say carries implications for shareholder rights and board oversight. On August 5, CEO Pomel sold 127,141 shares for approximately $36.5 million under a pre-arranged 10b5-1 plan, reducing his direct holdings by about 17% to 612,747 shares, though he retains millions of additional derivative shares.