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Datadog Q2 Earnings & Revenues Beat on Solid Customer Growth
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Key Takeaways
Datadog's AI-native revenues rose to 11% of total, up from 4% a year earlier.
High-ARR clients grew 13.6% y/y to about 3,850, driving 89% of ARR.
Security product ARR exceeded $100M, with mid-40% y/y growth.
Datadog (DDOG - Free Report) reported second-quarter 2025 non-GAAP earnings per share (EPS) of 46 cents, which beat the Zacks Consensus Estimate by 12.20%. The bottom line rose 7% from the year-ago quarter.
Datadog’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 13.41%. Revenues of $826.8 million beat the consensus mark by 4.55% and increased 28.1% year over year. (Read More: Datadog Q2 Earnings Surpass Estimates, Revenues Increase Y/Y).
The company ended the quarter with 31,400 customers, up from about 28,700 in the prior-year period, surpassing the Zacks Consensus Estimate by 0.75%. The figure increased 9.4% year over year.
Growth Momentum Across Customer Segments Drives Prospects
Datadog’s growth trajectory remains robust, underpinned by continued strength in its high-ARR customer base. The number of clients generating $100K or more in annual recurring revenues reached approximately 3,850 in the second quarter, reflecting a 13.6% year-over-year increase. These high-value accounts now contribute about 89% of total ARR, underscoring their central role in the company’s performance.
Multi-product adoption continues to reinforce platform stickiness and expansion opportunities. By the end of the quarter, 83% of customers were using at least two products, 52% were leveraging four or more, 29% utilized six or more and 14% had adopted eight or more solutions, demonstrating the effectiveness of Datadog’s land-and-expand model.
The AI-native customer segment is emerging as a major growth catalyst. These clients accounted for roughly 11% of total revenues in the second quarter, up sharply from 4% a year earlier, and contributed 10 percentage points to year-over-year revenue growth. This rapid adoption reflects the growing demand for observability and monitoring solutions tailored to AI-driven workloads.
Datadog’s security product suite continues to deliver outsized gains, now generating over $100 million in ARR with year-over-year growth in the mid-40% range. Together, these expanding customer and product segments position the company for sustained growth across its diversified portfolio.
Product Innovation Aids Growth Prospects
Datadog is pushing the boundaries of observability and monitoring with product launches.
At the DASH 2025 conference, the company unveiled over 125 new products, capabilities and features, showcasing its relentless focus on innovation to meet the evolving needs of developers, IT teams and security professionals. These advancements, spanning AI-powered automation, log management, developer tools and AI observability, are designed to deepen customer engagement and broaden platform adoption.
Among the most notable releases were three specialized AI agents, Bits AI SRE, Bits AI Dev Agent and Bits AI Security Analyst, each aimed at streamlining critical operational workflows. Datadog also rolled out powerful log management upgrades, including Archive Search, Flex Frozen and CloudPrem, enabling faster and more cost-efficient access to historical data.
The introduction of the Internal Developer Portal, built on live observability data, gives development teams unified, real-time insights to accelerate software delivery. In the AI space, Datadog expanded its observability toolkit with AI Agent Monitoring, LLM Experiments and the AI Agents Console, complemented by research breakthroughs like Toto, a cutting-edge time series model, and BOOM, a robust benchmarking framework, further cementing the company’s position as a leader in product innovation.
DDOG Provides Stable Q3 Guidance
For the third quarter of 2025, Datadog anticipates revenues between $847 million and $851 million, which represents 23% year-over-year growth. The Zacks Consensus Estimate for revenues is pegged at $848.45 million, indicating 22.96% year-over-year growth.
Non-GAAP EPS is expected to be 44-46 cents. The Zacks Consensus Estimate for earnings is pegged at 41 cents per share, up by a penny over the past 30 days and indicating a 10.87% year-over-year decline.
The company’s shares have appreciated 16.7% in the trailing 12 months, significantly underperforming the Zacks Computer and Technology sector’s return of 29.4%.
Image: Bigstock
Datadog Q2 Earnings & Revenues Beat on Solid Customer Growth
Key Takeaways
Datadog (DDOG - Free Report) reported second-quarter 2025 non-GAAP earnings per share (EPS) of 46 cents, which beat the Zacks Consensus Estimate by 12.20%. The bottom line rose 7% from the year-ago quarter.
Datadog’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 13.41%. Revenues of $826.8 million beat the consensus mark by 4.55% and increased 28.1% year over year. (Read More: Datadog Q2 Earnings Surpass Estimates, Revenues Increase Y/Y).
The company ended the quarter with 31,400 customers, up from about 28,700 in the prior-year period, surpassing the Zacks Consensus Estimate by 0.75%. The figure increased 9.4% year over year.
Growth Momentum Across Customer Segments Drives Prospects
Datadog’s growth trajectory remains robust, underpinned by continued strength in its high-ARR customer base. The number of clients generating $100K or more in annual recurring revenues reached approximately 3,850 in the second quarter, reflecting a 13.6% year-over-year increase. These high-value accounts now contribute about 89% of total ARR, underscoring their central role in the company’s performance.
Datadog, Inc. Revenue (TTM)
Datadog, Inc. revenue-ttm | Datadog, Inc. Quote
Multi-product adoption continues to reinforce platform stickiness and expansion opportunities. By the end of the quarter, 83% of customers were using at least two products, 52% were leveraging four or more, 29% utilized six or more and 14% had adopted eight or more solutions, demonstrating the effectiveness of Datadog’s land-and-expand model.
The AI-native customer segment is emerging as a major growth catalyst. These clients accounted for roughly 11% of total revenues in the second quarter, up sharply from 4% a year earlier, and contributed 10 percentage points to year-over-year revenue growth. This rapid adoption reflects the growing demand for observability and monitoring solutions tailored to AI-driven workloads.
Datadog’s security product suite continues to deliver outsized gains, now generating over $100 million in ARR with year-over-year growth in the mid-40% range. Together, these expanding customer and product segments position the company for sustained growth across its diversified portfolio.
Product Innovation Aids Growth Prospects
Datadog is pushing the boundaries of observability and monitoring with product launches.
At the DASH 2025 conference, the company unveiled over 125 new products, capabilities and features, showcasing its relentless focus on innovation to meet the evolving needs of developers, IT teams and security professionals. These advancements, spanning AI-powered automation, log management, developer tools and AI observability, are designed to deepen customer engagement and broaden platform adoption.
Among the most notable releases were three specialized AI agents, Bits AI SRE, Bits AI Dev Agent and Bits AI Security Analyst, each aimed at streamlining critical operational workflows. Datadog also rolled out powerful log management upgrades, including Archive Search, Flex Frozen and CloudPrem, enabling faster and more cost-efficient access to historical data.
The introduction of the Internal Developer Portal, built on live observability data, gives development teams unified, real-time insights to accelerate software delivery. In the AI space, Datadog expanded its observability toolkit with AI Agent Monitoring, LLM Experiments and the AI Agents Console, complemented by research breakthroughs like Toto, a cutting-edge time series model, and BOOM, a robust benchmarking framework, further cementing the company’s position as a leader in product innovation.
DDOG Provides Stable Q3 Guidance
For the third quarter of 2025, Datadog anticipates revenues between $847 million and $851 million, which represents 23% year-over-year growth. The Zacks Consensus Estimate for revenues is pegged at $848.45 million, indicating 22.96% year-over-year growth.
Non-GAAP EPS is expected to be 44-46 cents. The Zacks Consensus Estimate for earnings is pegged at 41 cents per share, up by a penny over the past 30 days and indicating a 10.87% year-over-year decline.
The company’s shares have appreciated 16.7% in the trailing 12 months, significantly underperforming the Zacks Computer and Technology sector’s return of 29.4%.
DDOG’s Zacks Rank & Other Stocks to Consider
Currently, Datadog carries a Zacks Rank #2 (Buy).
Vipshop (VIPS - Free Report) , Lumentum (LITE - Free Report) and NetEase, Inc. (NTES - Free Report) are some other top-ranked stocks from the broader Zacks Computer and Technology sector. Vipshop sports a Zacks Rank #1 (Strong Buy) at present, and Lumentum and NetEase carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Vipshop shares have gained 13.9% in the year-to-date period. VIPS is set to report its second-quarter 2025 results on Aug. 14.
Lumentum shares have appreciated 38.5% in the year-to-date period. VIPS is set to report its fourth-quarter fiscal 2025 on Aug. 12.
NetEase shares have jumped 44.2% in the year-to-date period. NTES is set to report its second-quarter 2025 results on Aug. 14.