Datadog Falls 10% as Fourth-Quarter Outlook Shows No Growth From Current Quarter
Early customer renewals at lower prices weigh on the near-term outlook, despite 35% revenue growth.
Datadog, which sells cloud software that monitors and secures the systems companies run in the cloud, fell 9.58% to $199.39 in Wednesday trading as of 10:22 a.m. ET, a loss of $7.6 billion in market value. The trigger was an outlook for the fourth quarter of $1.19 billion to $1.20 billion, which at best matches the $1.20 billion just reported.
A flat guide after 35% growth
The quarter just reported was up 35% from a year earlier, and net income under standard accounting more than tripled to $118.3 million. Adjusted earnings per share came to $0.81.
The outlook is what the stock reacted to. At the high end, fourth-quarter revenue would grow just $3 million from the third quarter, by MarketWatch's reading of the guidance.
Early renewals at lower prices
On the earnings call, management said its biggest AI customers keep renewing early, and at lower prices, creating a short-term drag on revenue. The fourth-quarter outlook also counts its largest customer at its minimum.
Datadog's platform covers infrastructure monitoring, application performance monitoring, log management, cloud security and more, drawing on one agent and over 1,000 integrations. As of December 31, 2025, it had approximately 32,700 customers in over 160 countries.
Up 62% this year, but sliding
Even after the drop, the shares were up about 62% for the year as of Tuesday's close, against about 11% for the S&P 500. They had already slid 21% over the previous month and sat 25% below their highest close of the past year, set on October 9.
Wednesday's decline was on pace to be the stock's second drop of 7% or more this month, and its biggest in a day since October 30, when it fell 11.5%.
Datadog's Scout 1.0, its first proprietary AI model, is the product line to watch for whether new AI offerings can offset the flat guide.
Sources
- Datadog Stock: Datadog Earnings Top Views. Shares Plunge On Weak Sales Outlook. | Investor's Business Daily — investors.com
- Datadog shares fall 18% after in-line fourth-quarter revenue outlook (DDOG:NASDAQ) — seekingalpha.com
- What Is Datadog (DDOG) Signaling With Scout 1.0 And Its AIOps Lead? — Yahoo Finance
- Datadog Plunges, Soft Q4 Sales Target Overshadows Stellar Cash Flow — benzinga.com
- Datadog’s stock extends steep declines in the wake of earnings — MarketWatch
- The company's filing (Datadog Inc.) — SEC filing
- Datadog Inc. — Form 10-Q for the quarter ended 2026-06-30 (quarterly results) — SEC EDGAR
