Datadog Stock Surges 31% After Q1 Revenue Jumps 32% to $1.01 Billion

Quick Facts

• Datadog reported Q1 2026 revenue of $1.01 billion, beating estimates of $959.6 million with 32% year-over-year growth
• Shares jumped 31% after earnings per share of $0.60 topped consensus forecast of $0.51
• Company raised full-year 2026 revenue guidance to $4.30-$4.34 billion from prior forecast of $4.06-$4.10 billion

Datadog delivered exceptional first-quarter results that sent shares soaring 31% and sparked a broader rally in software stocks. The cloud monitoring company reported revenue of $1.01 billion, a 32% year-over-year increase that beat analyst estimates of $959.6 million.

The company posted adjusted earnings of $0.60 per share, topping the consensus forecast of $0.51. Free cash flow reached $289 million while operating cash flow hit $335 million.

“I’m very pleased to say that our teams executed very well and delivered revenue growth of 32% year-over-year, accelerating from 29% last quarter and 25% in the year ago quarter,” said CEO Olivier Pomel.

Datadog raised its full-year 2026 revenue guidance by more than $100 million to between $4.30 billion and $4.34 billion. The company also increased its adjusted earnings forecast to $2.36-$2.44 per share from its previous outlook of $2.08-$2.16 per share.

AI Infrastructure Drives Customer Growth

The company’s largest customers grew to 4,550 accounts paying over $100,000 annually. Total customers reached approximately 33,200, up from about 3,500 a year earlier. Annual Recurring Revenue surpassed $4 billion with growth accelerating each month of the quarter.

Pomel revealed that Datadog landed two major hyperscaler customers for training in their superintelligence labs. The company saw “broad-based acceleration of revenue growth across cohorts, including both our AI and non-AI customers,” he said.

Datadog specializes in monitoring systems for AI chips, models and agents, counting OpenAI and Amazon Web Services as customers. LLM Observability spans tripled quarter-over-quarter while Bits AI agent investigations more than doubled from December to March.

Software Sector Gets Boost

Datadog’s gains sparked a broader rally among software stocks. Snowflake and MongoDB both gained more than 10%, while Dynatrace and Elastic rose just over 5%.

“This was an eye-popping print,” wrote TD Securities analyst Andrew Sherman, who called it a “must-own stock.” The results helped restore confidence in a software sector that has faced disruption fears from AI advancement.

The performance demonstrates how companies that can deploy AI-native solutions while articulating their monetization path can ease investor concerns about AI disruption. Datadog’s observability platform becomes more critical as AI adoption creates increasingly complex monitoring needs.

Read more: Datadog’s stock jumps 31% on crushing earnings beat, showing there’s still hope for software