Datadog (Datadog (DDOG)) just delivered a quarter that makes the AI hype feel very real. The cloud monitoring and security company reported first-quarter results that blew past Wall Street expectations, sending shares up 30% in premarket trading Thursday. The headline: revenue hit $1.006 billion for the first time, up 32% from a year ago, and well above the $961.31 million analysts were looking for.
Adjusted earnings came in at $0.60 per share, easily beating the consensus estimate of $0.51. The company also said it ended the quarter with 4,550 customers generating at least $100,000 in annual recurring revenue, a 21% increase from last year. That's a lot of big clients paying for Datadog's AI-enabled cloud security tools.
Margins held up nicely too. Adjusted gross margin stayed at 80%, and adjusted operating margin was 22%. The company had $4.8 billion in cash and marketable securities on hand, and generated $289 million in free cash flow during the quarter. So they're not just growing—they're growing profitably.
CEO Olivier Pomel said the strong quarter reflects customers' increasing adoption of modern cloud-based and AI-enabled technologies. He also noted that Datadog is using AI to accelerate development across its own platform and plans to unveil more innovations at its DASH user conference in June. That's a good sign for anyone wondering whether the AI tailwind has legs.
Looking ahead, Datadog's second-quarter outlook also topped expectations. The company expects revenue between $1.07 billion and $1.08 billion, versus analyst estimates of $994.66 million. Adjusted earnings are forecast at $0.57 to $0.59 per share, compared to the consensus of $0.50.
For the full year 2026, Datadog raised its revenue guidance to $4.30 billion to $4.34 billion, up from its prior forecast of $4.06 billion to $4.10 billion. Analysts had been expecting $4.12 billion. The company also lifted its adjusted earnings forecast to $2.36 to $2.44 per share, from $2.08 to $2.16 previously. Analysts were looking for $2.17.
The market clearly liked what it saw. Datadog shares were up 30.30% at $187.25 in premarket trading Thursday. That's a big move for a company that was already valued at over $50 billion. But when you beat estimates by that much and raise guidance so aggressively, investors tend to get excited.
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