Datadog Stock Before Q2 Earnings: Buy Now or Wait for Results?

Datadog DDOG is set to report second-quarter 2025 results on Aug. 7.

DDOG expects second-quarter 2025 revenues between $787 million and $791 million, representing year-over-year growth between 22% and 23%. The Zacks Consensus Estimate for revenues is pegged at $790.92 million for the quarter, suggesting a 22.57% rise from the year-ago quarter’s reported figure.

DDOG’s second-quarter 2025 diluted non-GAAP earnings per share are expected to be between 40 and 42 cents.

The Zacks Consensus Estimate for Datadog’s second-quarter earnings is pegged at 41 cents per share, unchanged over the past 30 days. The estimate indicates a year-over-year decline of 4.65%.

Datadog, Inc. Price and EPS Surprise

Datadog, Inc. price-eps-surprise | Datadog, Inc. Quote

Datadog’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 16.07%.

Let us see how things have shaped up for the upcoming announcement.

Key Factors to Note for DDOG’s Q2 Results

Datadog’s performance in the second quarter of 2025 is expected to have benefited from continued innovation across its AI-powered observability platform. The rollout of advanced modules like App Builder, On Call and security monitoring attracted growing enterprise adoption, particularly among AI-first and cloud-native organizations. Additionally, the acquisitions of Eppo and Metaplane significantly broadened the platform’s functionality by introducing feature experimentation and data observability. These advancements positioned the company as a more holistic and differentiated solution in the observability space, likely driving upsell momentum and increasing its footprint within existing customer environments.

Datadog’s large customer segment continued to grow steadily through the first quarter of 2025, reaching 3,770 clients with annual recurring revenues above $100,000, a 13% increase from the prior year. These enterprise customers play a strategic role in driving the company’s long-term growth, given their tendency to adopt a wider range of platform features and generate higher usage volumes. The ongoing expansion within this cohort is expected to have supported Datadog’s revenue momentum and product penetration during the second quarter.

Datadog’s second-quarter 2025 performance is expected to have benefited from strong enterprise momentum and an expanding pipeline. The company saw a roughly 70% year-over-year increase in dollar bookings for new logos in the first quarter of 2025, along with 11 large deals exceeding $10 million in total contract value, signaling growing deal size and deeper enterprise traction. These gains likely contributed to stronger revenue and platform expansion in the to-be-reported quarter.

Operating margin pressures likely persisted for Datadog in the second quarter of 2025, as profit expansion remained constrained by ongoing reinvestments and elevated cloud hosting costs. In the first quarter, the company’s non-GAAP operating margin declined from 27% to 22% year over year, while gross margin contracted by 300 basis points. These sustained cost headwinds are expected to have negatively impacted margins in the to-be-reported quarter.

What Our Model Says About DDOG Stock

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is exactly the case here.

Datadog has an Earnings ESP of +2.86% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some other companies worth considering, as our model shows that these also have the right combination of elements to beat on earnings in their upcoming releases:

StoneCo STNE has an Earnings ESP of +12.68% and currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

STNE shares have jumped 57.7% in the year-to-date period. STNE is set to report its second-quarter 2025 results on Aug. 7.

AvePoint AVPT has an Earnings ESP of +5.88% and a Zacks Rank #2 at present.

AVPT shares have risen 8.7% in the year-to-date period. AVPT is set to report its second-quarter 2025 results on Aug. 7.

Lumentum LITE has an Earnings ESP of +5.12% and sports a Zacks Rank #1 at present.

LITE shares have appreciated 27% in the year-to-date period. LITE is set to report its fourth quarter and fiscal 2025 results on Aug. 12.

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This article originally published on Zacks Investment Research (zacks.com).

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