Cloud monitoring platform Datadog (NASDAQ:DDOG) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 35.6% year on year to $1.12 billion. Guidance for next quarter’s revenue was optimistic at $1.14 billion at the midpoint, 2.9% above analysts’ estimates. Its non-GAAP profit of $0.65 per share was 11.4% above analysts’ consensus estimates.
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Datadog (DDOG) Q2 CY2026 Highlights:
- Revenue: $1.12 billion vs analyst estimates of $1.08 billion (35.6% year-on-year growth, 3.9% beat)
- Adjusted EPS: $0.65 vs analyst estimates of $0.58 (11.4% beat)
- Adjusted Operating Income: $257 million vs analyst estimates of $233.3 million (22.9% margin, 10.2% beat)
- The company lifted its revenue guidance for the full year to $4.46 billion at the midpoint from $4.32 billion, a 3.2% increase
- Management raised its full-year Adjusted EPS guidance to $2.52 at the midpoint, a 5% increase
- Operating Margin: 0.5%, up from -4.3% in the same quarter last year
- Free Cash Flow Margin: 24.9%, down from 28.7% in the previous quarter
- Customers: 4,720 customers paying more than $100,000 annually
- Billings: $1.18 billion at quarter end, up 38.1% year on year
- Market Capitalization: $100.8 billion
"Datadog delivered a strong quarter, with 36% year-over-year revenue growth, $316 million in operating cash flow, and $279 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog.
Company Overview
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Datadog grew its sales at an exceptional 39% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Datadog’s annualized revenue growth of 28.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Datadog reported wonderful year-on-year revenue growth of 35.6%, and its $1.12 billion of revenue exceeded Wall Street’s estimates by 3.9%. Company management is currently guiding for a 28.7% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 20.6% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is admirable and suggests the market is baking in success for its products and services.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Datadog’s billings punched in at $1.18 billion in Q2, and over the last four quarters, its growth was fantastic as it averaged 34.6% year-on-year increases. This alternate topline metric grew faster than total sales, meaning the company collects cash upfront and then recognizes the revenue over the length of its contracts - a boost for its liquidity and future revenue prospects. 
Enterprise Customer Base
This quarter, Datadog reported 4,720 enterprise customers paying more than $100,000 annually, an increase of 170 from the previous quarter. That’s a fair bit fewer contract wins than last quarter but about the same as what we’ve seen over the previous year, suggesting the company still has decent sales momentum despite the weaker quarter.
Key Takeaways from Datadog’s Q2 Results
We were impressed by how significantly Datadog blew past analysts’ billings expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. On the other hand, its new large contract wins slowed. Zooming out, we think this was a solid print. The market seemed to be hoping for more, and the stock traded down 17.3% to $234.23 immediately following the results.
So do we think Datadog is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).