We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Datadog's Infrastructure Monitoring Tops $2B ARR in Q3, Revenues Beat
Read MoreHide Full Article
Key Takeaways
Datadog's Q3 revenues surged 35% YOY to $1.197 billion, beating estimates by 4.82%.
Infrastructure Monitoring ARR topped $2 billion, growing in the mid-30s percentage range year over year.
Platform adoption strengthened as 61% of customers used four or more products, up from 54% a year ago.
Datadog, Inc. (DDOG - Free Report) reported third-quarter 2026 revenues of $1.197 billion, which increased 35% year over year and came above the high end of its guided range. The figure beat the Zacks Consensus Estimate by 4.82%. Although Datadog reports as a single segment, its Infrastructure Monitoring suite, the first product it launched more than a decade ago, remained a cornerstone of the quarter’s performance.
Infrastructure Monitoring annual recurring revenue (ARR) now exceeds $2 billion and is growing in the mid-30s percentage range year over year. The suite covers cloud infrastructure, on-premise servers, containers, serverless applications and GPU fleets, placing it at the center of cloud migration and AI deployments. Management noted that the acceleration was broad-based rather than driven solely by AI initiatives, with revenue growth from non-AI customers accelerating for the fifth straight quarter to the high-20s percentage range.
GPU monitoring has emerged as a key growth vector within the suite. The number of GPU devices monitored has risen eightfold so far in 2026, and new capabilities now extend beyond hardware reliability to help customers maximize fleet utilization and lower inference cost per request. However, management clarified that Infrastructure Monitoring growth is not directly tied to GPUs, as these products are not yet widely monetized.
Adjacent Cloud Cost Management also gained meaningful traction. More than one-third of its customers now track AI costs, with the number of such customers up more than 11 times. Beyond the three major cloud providers, AI providers have become the largest category of spend that customers monitor.
Infrastructure Monitoring’s role as an entry point continues to support platform adoption. At quarter-end, 61% of customers used four or more products, up from 54% a year ago, while 16% used 10 or more, up from 8%. Datadog ended the quarter with about 33,500 customers, while about 4,860 customers with ARR of $100,000 or more generated roughly 91% of ARR.
Datadog earned a Leader designation in the 2026 Forrester Wave for AIOps Platforms for the second consecutive year and was named the “Company to Beat” for observability platforms in Gartner’s 2026 AI Vendor Race report. It is also expanding its government platform to support Impact Level 5 workloads and introduced Scout 1.0, its first specialized AI model, now powering Bits Investigation.
For the fourth quarter of 2026, Datadog expects revenues of $1.19-$1.20 billion. Full-year 2026 revenues are projected to be between $4.515 billion and $4.525 billion. The guidance assumes only the minimum commitment from its largest customer, which reduced usage in the third quarter.
View the Zacks #1 Rank List
Image: Bigstock
Datadog's Infrastructure Monitoring Tops $2B ARR in Q3, Revenues Beat
Key Takeaways
Datadog, Inc. (DDOG - Free Report) reported third-quarter 2026 revenues of $1.197 billion, which increased 35% year over year and came above the high end of its guided range. The figure beat the Zacks Consensus Estimate by 4.82%. Although Datadog reports as a single segment, its Infrastructure Monitoring suite, the first product it launched more than a decade ago, remained a cornerstone of the quarter’s performance.
Infrastructure Monitoring annual recurring revenue (ARR) now exceeds $2 billion and is growing in the mid-30s percentage range year over year. The suite covers cloud infrastructure, on-premise servers, containers, serverless applications and GPU fleets, placing it at the center of cloud migration and AI deployments. Management noted that the acceleration was broad-based rather than driven solely by AI initiatives, with revenue growth from non-AI customers accelerating for the fifth straight quarter to the high-20s percentage range.
GPU monitoring has emerged as a key growth vector within the suite. The number of GPU devices monitored has risen eightfold so far in 2026, and new capabilities now extend beyond hardware reliability to help customers maximize fleet utilization and lower inference cost per request. However, management clarified that Infrastructure Monitoring growth is not directly tied to GPUs, as these products are not yet widely monetized.
Adjacent Cloud Cost Management also gained meaningful traction. More than one-third of its customers now track AI costs, with the number of such customers up more than 11 times. Beyond the three major cloud providers, AI providers have become the largest category of spend that customers monitor.
Infrastructure Monitoring’s role as an entry point continues to support platform adoption. At quarter-end, 61% of customers used four or more products, up from 54% a year ago, while 16% used 10 or more, up from 8%. Datadog ended the quarter with about 33,500 customers, while about 4,860 customers with ARR of $100,000 or more generated roughly 91% of ARR.
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
Datadog earned a Leader designation in the 2026 Forrester Wave for AIOps Platforms for the second consecutive year and was named the “Company to Beat” for observability platforms in Gartner’s 2026 AI Vendor Race report. It is also expanding its government platform to support Impact Level 5 workloads and introduced Scout 1.0, its first specialized AI model, now powering Bits Investigation.
For the fourth quarter of 2026, Datadog expects revenues of $1.19-$1.20 billion. Full-year 2026 revenues are projected to be between $4.515 billion and $4.525 billion. The guidance assumes only the minimum commitment from its largest customer, which reduced usage in the third quarter.
DDOG’s Zacks Rank & Stocks to Consider
DDOG currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Cisco Systems (CSCO - Free Report) , Analog Devices (ADI - Free Report) and NVIDIA (NVDA - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cisco Systems shares have gained 34.5% year to date. Cisco Systems is set to report first-quarter fiscal 2027 results on Nov. 12.
Shares of Analog Devices have risen 49.7% year to date. Analog Devices is slated to report fourth-quarter fiscal 2026 results on Nov. 24.
NVIDIA shares have gained 7.3% year to date. NVIDIA is set to report third-quarter fiscal 2027 results on Nov. 17.