Datadog, Inc. (DDOG) · Nov 4, 2026 · Earnings
Beat — Non-GAAP diluted EPS $0.81 vs ~$0.64 consensus; revenue $1.197B vs ~$1.15B
Datadog earnings beat Q3 expectations, with 35% revenue growth, sharply higher adjusted margins and strong free cash flow.
Datadog is expanding its observability and security platform around cloud operations and AI workloads, while investors were watching whether growth could hold after management flagged lower usage from its largest customer. That concern was already reflected in Q3 guidance of $1.135B-$1.145B revenue and 23%-24% non-GAAP operating margins.
The quarter cleared both the market bar and Datadog’s own guide by a wide margin. Revenue reached $1.197B, up 35% year over year, versus published expectations of roughly $1.14B-$1.15B; non-GAAP diluted EPS was $0.81 versus consensus near $0.64. Datadog said, "Datadog delivered a strong third quarter, with 35% year-over-year revenue growth, $290million in operating cash flow, and $251million in free cash flow,"
| Metric | Q3 2026 | Q3 2025 | Consensus / guide |
|---|---|---|---|
| Revenue (Income Statement) | $1,197.1M (+35.2%) | $885.7M | ~$1,150M |
| Non-GAAP diluted EPS (Non-GAAP net income) | $0.81 | $0.55 | ~$0.64 |
| Non-GAAP operating margin (Operating margin reconciliation) | 28% | 23% | 23%-24% guide |
| Free cash flow (Free cash flow reconciliation) | $250.6M | $214.0M | — |
Profitability improved faster than revenue alone suggests. Non-GAAP operating margin expanded to 28% from 23% a year earlier and exceeded the 23%-24% Q3 guide, while GAAP operating income turned positive at $74.7M from a $5.8M loss. That makes this more than a simple top-line beat: Datadog converted the growth into materially better operating leverage.
Cash generation remains a meaningful strength, though stock compensation is still large. Operating cash flow rose to $290.0M and free cash flow to $250.6M, but quarterly stock-based compensation was $237.2M, nearly as large as free cash flow (Cash Flow statement; Stock-based compensation reconciliation). The underlying business is generating substantial cash, but the quality of adjusted profitability still needs to be read alongside that dilution-related expense.
The AI narrative gained supporting evidence, but the filing does not yet quantify AI-driven monetization. Datadog introduced Scout 1.0, a specialized model for investigating production issues, and said, "We are seeing strong adoption across our platform as customers scale their digital operations and use of AI." 〔0〕 The product and analyst recognition reinforce Datadog’s positioning, but the financial tables do not show how much of the quarter’s growth came specifically from AI demand.
Bottom line: This was a clear execution beat that strengthens Datadog’s growth-and-margin story despite the previously disclosed large-customer usage risk. It matters because both revenue and profitability came in well above the hurdle already set for the quarter, not merely because the company described the results favorably.
Q4 earnings report
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