Datadog Inc. shares rallied nearly 4% on Thursday after the cloud monitoring and analytics platform reported third-quarter earnings that handily beat Wall Street forecasts and raised its full-year outlook, underscoring robust demand for its observability solutions.
The company posted revenue of $886 million for the quarter, surpassing analyst expectations of $852.78 million and representing a 28% year-over-year increase.
Shares climbed 3.76% to close at approximately $163.00, up from the previous day’s close of $157.09.
Strong Profitability and Cash Generation
Datadog’s GAAP net income per diluted share reached $0.10, significantly exceeding the consensus estimate of $0.02.
The company demonstrated strong operational efficiency with a 23% non-GAAP operating margin and $214 million in free cash flow during the quarter.
“These results reflect the critical role our platform plays in helping organizations monitor, secure, and optimize their cloud infrastructure,” the company noted in its earnings materials.
Customer Growth Accelerates
The platform’s appeal continues to expand among enterprise clients, with approximately 4,060 customers now generating annual recurring revenue of $100,000 or more — a 16% increase from the prior year.
This growth highlights Datadog’s success in landing and expanding relationships with large organizations undergoing digital transformation.
Datadog maintained a strong balance sheet with $4.1 billion in cash, cash equivalents, and marketable securities, providing ample resources for continued investment in product development and strategic initiatives.
Raised Outlook Signals Confidence
Looking ahead, Datadog projects fourth-quarter revenue between $912 million and $916 million, with non-GAAP net income per share expected between $0.54 and $0.56.
For the full year 2025, the company now anticipates revenue between $3.386 billion and $3.390 billion, reflecting increased confidence in its growth trajectory.
Market Reception and Analyst Sentiment
The stock’s performance reflects strong investor confidence in Datadog’s competitive positioning.
Wall Street analysts remain overwhelmingly bullish, with 38 recommending a buy and only one suggesting a sell.
Over the past year, shares have gained 28.96%, including a 12.84% increase in just the past month.
The results come as businesses continue investing heavily in cloud infrastructure and require advanced tools to monitor performance, ensure security, and manage costs.
Datadog’s comprehensive platform addresses these needs through an integrated approach that spans infrastructure monitoring, application performance management, log management, and security.
As enterprises navigate increasingly complex hybrid and multi-cloud environments, Datadog’s strong quarter reinforces its position as a key player in the growing observability and cloud security markets.
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