Cloud monitoring platform Datadog (NASDAQ: DDOG) reported Q3 2026 results beating Wall Street’s revenue expectations, with revenue up 35.2% year on year to $1.20 billion. The company expects next quarter’s revenue to be around $1.20 billion, close to analysts’ consensus estimates. Its non-GAAP profit of $0.81 per share was 26.4% above analysts’ consensus estimates.

For more on Datadog, read our full research report, available free.

"Datadog delivered a strong third quarter, with 35% year-over-year revenue growth, $290 million in operating cash flow, and $251 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog. "We are seeing strong adoption across our platform as customers scale their digital operations and use of AI."

Revenue growth

A company’s long-term revenue performance is one signal of its overall quality. Any business can deliver a good quarter or two, but the best consistently grow over the long term. Over the last five years, Datadog grew its revenue at a strong 37.2% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers.

Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Datadog’s annualized revenue growth of 29.9% over the last two years is below its five-year trend, but the results still suggest healthy demand.

This quarter, Datadog reported year-on-year revenue growth of 35.2%, and its $1.20 billion of revenue exceeded Wall Street’s consensus estimates by 4.6%. Company management is currently guiding for a 25.4% year-on-year increase in revenue next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 21.4% over the next 12 months, according to S&P, a deceleration versus the last two years. Despite the slowdown, this projection is strong and indicates the market expects success for its products and services.

Billings

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Datadog’s billings totaled $1.16 billion in Q3, and over the last four quarters, growth was strong, averaging 34.7% year on year. This performance aligned with its total revenue growth, indicating healthy customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth.

Enterprise customer base

This quarter, Datadog reported 4,860 enterprise customers paying more than $100,000 annually, an increase of 140 from the previous quarter. That’s notably fewer contract wins than last quarter but about in line with the pace over the previous year, suggesting the company still has steady revenue momentum despite the weaker quarter.

Key takeaways from Datadog’s Q3 results

Datadog delivered a decent quarter, with adjusted operating income well above Wall Street’s consensus estimates and next-quarter EPS guidance also far ahead of analysts’ consensus estimates. The outlook was not uniformly strong, however: Revenue guidance for next quarter was in line with expectations, and new large contract wins declined. Despite some key metrics topping expectations, investors were likely hoping for more. Shares plunged 16.1% to $185.08 immediately following the results.

Datadog’s latest quarter matters, but not nearly as much as longer-term fundamentals and valuation when deciding whether to buy the stock. Read the full research report here (it’s free).