Shares of Datadog Inc (NASDAQ:DDOG) tanked in early trading on Thursday, after the company Wednesday reported its third-quarter results.
Here are some key analyst takeaways:
- Wedbush analyst Steven Wahrhaftig reaffirmed an Outperform rating, but cut the price target from $275 to $240.
- Rosenblatt Securities analyst Blair Abernethy reiterated a Buy rating, and cut the price target from $305 to $285.
- DA Davidson analyst Gil Luria reiterated a Buy rating and reduced the price target from $315 to $275.
- Cantor Fitzgerald analyst Thomas Blakey reaffirmed an Overweight rating and cut the price target from $327 to $260.
- BTIG analyst Gray Powell reiterated a Buy rating and lowered the price target from $289 to $260.
- Guggenheim Securities analyst Howard Ma maintained a Buy rating and price target of $300.
- Needham analyst Mike Cikos reiterated a Buy rating and price target of $300.
Check out other analyst stock ratings.
Wedbush: Datadog delivered strong beats across the board. Total revenue grew 35% year-on-year to $1.197 billion, surpassing Street expectations of $1.15 billion, Wahrhaftig said in a note. Total revenue was driven by strong adoption among the company’s AI and non-AI native customers, as well as more customers expanding their usage across more products, he added.
The strong results were, however, “largely overshadowed” by management’s disappointing fourth-quarter revenue guidance, the analyst stated. The revenue guide of $1.19-$1.2 billion implies around 25.5% year-on-year growth. The midpoint represents “the company’s first sequential growth decline since its IPO in 2019,” he further stated.
Rosenblatt Securities: Datadog reported higher-than-expected total revenue and operating expenses below the forecast, Abernethy said. This resulted in “operating margins of 28%, well above our 23.3% expectation,” he added.
Billings grew 30% year-on-year to $1.16 billion and RPO grew 38% to $3.85 billion, the analyst stated.
Datadog’s fourth-quarter revenue outlook includes “the minimum commitment from its largest customer and a near-term headwind from several large early renewals with higher commitments but better pricing,” he further wrote.
DA Davidson: Datadog delivered a strong beat in the quarter, with higher platform adoption across its customer base, while the AI native cohort broadens, Luria said. The company added 140 net new $100K ARR (annual recurring revenue customers, he added.
The analyst noted, however, that the year-on-year growth in new $100K customers decelerated for the first time after five consecutive quarters of acceleration. While fourth-quarter revenue guidance was “conservative,” management raised its 2026 revenue outlook by $60 million to $4.52 billion at the midpoint, above consensus expectations, he added.
Cantor Fitzgerald: Datadog’s revenue beat in the third quarter was higher than the average outperformance of around 4%, Blakey said. He noted that:
- Revenue growth excluding AI-native customers accelerated for the fifth consecutive quarter
- Growth excluding the largest customer accelerated, “highlighting strength across the broader business,”
- New customers contributed around 30% of year-on-year revenue growth versus around 25% a year ago. This reflects “larger initial lands and faster ramps.”
BTIG: While Datadog delivered “solid” results, investors are likely focusing on the fourth-quarter guide and trends at the company’s largest AI native customer, Powell said.
The midpoint of the fourth-quarter revenue guide of $1.195 billion came in below consensus of $1.202 billion and implies a sequential decline of around $2 million, he added.
“Overall, we think this print shows that DDOG’s core customer base and increasingly diverse AI customer cohort is capable of absorbing the single-customer variability,” the analyst further wrote.
Guggenheim Securities: “Datadog still has more treats than tricks to pull out of its bag,” Ma wrote. He expects the company to deliver a larger upside in the fourth quarter.
While the fourth-quarter outlook reflects deceleration, Datadog can comfortably reach over 30% growth in 2027, provided core growth holds steady at 29% and generates “the same amount of incremental revenue for all AI natives, which we believe may prove conservative,” the analyst stated.
Needham: Datadog reported “stellar” quarterly results, delivering “an outsized magnitude of outperformance,” Cikos said. The company has grown by more than 30% in each quarter so far this year, accelerating to 34% year to date, he added.
When adjusting for Datadog’s largest customer, the company’s business accelerated again to an estimated high-30% growth, the analyst added.
DDOG Price Action: Datadog shares had declined 5.70% to $177.96 at the time of publication on Thursday.
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