Datadog, Inc. (NASDAQ:DDOG) posted stronger-than-expected fourth-quarter results, triggering a sharp rally in its shares, which jumped 7.9% in premarket trading as investors welcomed the cloud monitoring firm’s performance and upbeat near-term revenue outlook.
The AI-driven observability company reported adjusted earnings of $0.59 per share, beating the consensus estimate of $0.55. Quarterly revenue climbed 29% year on year to $953 million, comfortably ahead of analysts’ expectations of $917.01 million. Datadog also highlighted solid customer momentum, with 603 clients now generating at least $1 million in annual recurring revenue, up 31% from 462 a year earlier.
The stock’s rally was further supported by first-quarter revenue guidance of $951 million to $961 million, which topped market forecasts of around $935 million. That said, the company’s adjusted EPS outlook for Q1 of $0.49 to $0.51 came in below the $0.54 consensus estimate.
“We are pleased with our strong execution in fiscal year 2025, with 28% year-over-year revenue growth, $1,050 million in operating cash flow, and $915 million in free cash flow,” said Olivier Pomel, co-founder and CEO of Datadog.
Looking further ahead, Datadog expects full-year 2026 revenue of $4.06 billion to $4.10 billion, slightly under the $4.11 billion consensus. Adjusted earnings per share are projected at $2.08 to $2.16, compared with analysts’ expectations of $2.41.
In the fourth quarter, the company delivered a non-GAAP operating margin of 24% and generated $291 million in free cash flow, underscoring its ability to scale profitably despite a cautious longer-term outlook.