Datadog (DDOG) reports Q2 2026 earnings and revenue beats as sales grow 35.6% and free cash flow strengthens.
Stock Earnings Results
August 6, 2026
Table of Contents
August 6, 2026
Datadog, Inc. (NASDAQ: DDOG) reported second-quarter 2026 results above expectations, supported by strong revenue growth, a non-GAAP earnings beat, higher free cash flow, growth in large customers, and new AI-powered product launches.
Datadog is an AI-powered observability and security platform that helps businesses monitor applications, infrastructure, data, models, and security across the technology stack.
The company reported non-GAAP diluted EPS of $0.65, above estimates of $0.58, representing a 12.1% earnings surprise. Revenue came in at $1.12 billion, above estimates of $1.08 billion, with revenue growth of 35.6%.
Revenue increased 36% year-over-year to $1.12 billion.
GAAP operating income was $5 million.
GAAP operating margin was 0%.
Non-GAAP operating income was $257 million.
Non-GAAP operating margin was 23%.
GAAP diluted EPS was $0.12.
Non-GAAP diluted EPS was $0.65.
The quarter showed strong growth while Datadog continued investing in AI, observability, and security products.
Operating cash flow was $316 million.
Free cash flow was $279 million.
Free cash flow margin was 25%.
That compared with free cash flow of $165 million and a 20% free cash flow margin in the prior-year quarter.
The cash flow result matters because investors often watch whether high-growth software companies can convert revenue growth into durable cash generation.
Datadog had about 4,720 customers with annual recurring revenue of $100,000 or more as of June 30.
That was up 23% from about 3,850 customers a year earlier.
Growth in larger customers remains one of the company’s most important operating signals because it shows deeper adoption across enterprise accounts.
For Datadog, larger customer growth also supports cross-selling across observability, security, infrastructure monitoring, AI monitoring, and automation products.
Datadog launched more than 100 new capabilities at DASH 2026.
The updates included Bits AI for autonomous incident detection, investigation, and remediation.
The company also launched AI Guard to protect AI agents from prompt injection and poisoning attacks.
Other launches included Bring Your Own Cloud and Bits Agent Builder.
Datadog also launched AI-powered Bits Code, Bits Chat, and Bits Agent Builder for general availability.
These launches strengthen Datadog’s positioning around AI infrastructure, security, automation, and agent-based operations.
Datadog acquired Adaptive ML during the quarter.
Adaptive ML is a frontier AI startup developing a Reinforcement Learning Operations platform.
Datadog said the acquisition will support Datadog AI Research’s investment in world models and agentic LLM post-training for observability.
The deal adds another AI-focused layer to Datadog’s product roadmap as customers deploy more AI-enabled applications and infrastructure.
Datadog ended the quarter with $5.0 billion in cash, cash equivalents, and marketable securities.
The company reported $435 million in cash and cash equivalents.
Marketable securities totaled $4.55 billion.
Total assets were $7.55 billion.
The balance sheet gives Datadog flexibility to keep investing in product development, AI capabilities, sales capacity, and acquisitions.
For the third quarter of 2026, Datadog expects revenue of $1.135 billion to $1.145 billion.
The company expects non-GAAP operating income of $260 million to $270 million.
Non-GAAP EPS is expected to range from $0.63 to $0.65.
For full-year 2026, Datadog expects revenue of $4.45 billion to $4.47 billion.
Full-year non-GAAP operating income is expected to range from $1.01 billion to $1.03 billion.
Full-year non-GAAP EPS is expected to range from $2.50 to $2.54.
Datadog delivered a strong software earnings report.
Revenue beat expectations, non-GAAP EPS topped estimates, free cash flow increased, and large-customer growth remained strong. The company also continued pushing deeper into AI with Bits AI, AI Guard, Bits Agent Builder, Bits Code, Bits Chat, and the Adaptive ML acquisition.
The key question is whether Datadog can keep turning AI adoption, security complexity, and cloud infrastructure growth into sustained revenue growth and free cash flow.
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