Datadog (3QD) Q2 2026 Earnings Report

The call presents a predominantly positive operational and financial picture: strong 36% YoY revenue growth, record sequential revenue added, robust cash generation, meaningful product and AI innovation, expanding customer monetization (more customers using multiple products and rising $100K+ customers), and strong bookings and retention metrics. Near-term conservatism in guidance is driven largely by a usage reduction at one very large customer and modest gross margin pressure from investments and event costs. Management emphasized accelerating demand across the broader customer base and derisked guidance to reflect the single‑customer variability.

Datadog guided Q3 revenue of $1.135–$1.145 billion (up ~28–29% year‑over‑year), non‑GAAP operating income of $260–$270 million (implying a 23–24% operating margin) and non‑GAAP EPS of $0.63–$0.65 on ~378 million diluted shares; for fiscal 2026 it expects revenue of $4.45–$4.47 billion (≈30% growth), non‑GAAP operating income of $1.01–$1.03 billion (≈23% margin) and non‑GAAP EPS of $2.50–$2.54 on ~376 million diluted shares. Management said the guide is conservative, incorporates a usage reduction from its largest customer, and assumes net interest & other income of about $180 million, cash taxes of $30–$40 million, a 21% non‑GAAP tax rate going forward, and CapEx plus capitalized software of roughly 4–5% of revenue.