Datadog Q4 Earnings & Revenues Surpass Estimates, Both Increase Y/Y

Datadog DDOG reported fourth-quarter 2025 non-GAAP earnings per share (EPS) of 59 cents, which increased 20.4% from the year-ago quarter and beat the Zacks Consensus Estimate by 7.27%.

The company’s net revenues of $953.19 million rose 29.2% year over year and beat the consensus estimate by 4.22%.

Q4 Details of DDOG

The company ended the fourth quarter with 32,700 customers, up from about 30,000 in the prior-year period.

In the quarter under review, Datadog had 4,310 customers with an Annualized Run Rate (ARR) of $100,000 or more, up from about 3,610 in the year-ago quarter. These customers generated about 90% of the total ARR.

Additionally, the company reported 603 customers with ARR of $1 million or more, representing a 30.5% increase from 462 in the year-ago period.

As of the end of the fourth quarter, 84% of customers used two or more products, up from 83% in the year-ago period. Additionally, 55% of customers utilized four or more products, up from 50% in the year-ago quarter. Furthermore, 33% of customers used six or more products, up from 26% a year ago, while 18% used eight or more products, up from 12% in the prior-year quarter. Datadog reported a trailing 12-month net revenue retention rate of approximately 120% in the fourth quarter, up from the high-110% range in the prior-year quarter.

Datadog, Inc. Price, Consensus and EPS Surprise

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

Operating Details of DDOG

In the fourth quarter, non-GAAP gross profit increased 28.8% year over year, reaching $776.3 million. Datadog's adjusted gross margin declined 100 basis points on a year-over-year basis to 81%. 

Research & development expenses grew 32.5% on a year-over-year basis to $280.3 million. Research & development, as a percentage of revenues, expanded 70 basis points to 29.4%. 

Sales and marketing expenses rose 26.5% year over year to $219.1 million. Sales and marketing expenses, as a percentage of revenues, contracted 50 basis points to 23%. 

General & administrative expenses increased 21% year over year, reaching $46.8 million in the reported quarter. General and administrative expenses, as a percentage of revenues, contracted 30 basis points to 4.9%.

Datadog reported a non-GAAP operating income of $230.1 million, up 28.4% year over year. However, its non-GAAP operating margin of 24% remained flat compared to the prior year.

Datadog's Balance Sheet & Cash Flow

As of Dec. 31, 2025, Datadog had cash, cash equivalents and marketable securities of $4.5 billion compared with $4.1 billion as of Sept. 30, 2025. Operating cash flow was $327 million in the reported quarter, up from $251 million reported in the previous quarter. Free cash flow during the quarter was $291 million compared with $214 million in the prior quarter, with a free cash flow margin of 30.5%.

Datadog's Guidance for First Quarter 2026 & Fiscal Year 2026

For the first quarter of 2026, Datadog anticipates revenues between $951-$961 million. Non-GAAP EPS is expected in the range of 49-51 cents. Non-GAAP operating income is expected in the band of $195-$205 million.

For fiscal 2026, Datadog anticipates revenues between $4.06 billion and $4.10 billion. Non-GAAP EPS is projected to be between $2.08 and $2.16. Non-GAAP operating income is expected in the range of $840-$880 million.

Datadog’s Zacks Rank & Other Stocks to Consider

Currently, Datadog carries a Zacks Rank #4 (Sell).

Analog Devices ADI, Applied Materials AMAT and MKS Inc. MKSI are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector.

MKS shares have gained 125.9% in the past 12-month period. MKSI is set to report its fourth-quarter 2025 results on Feb. 17, 2026. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices' shares have gained 58.5% in the past 12-month period. ADI currently carries a Zacks Rank #2 (Buy). The company is scheduled to release first-quarter 2026 results on Feb. 18, 2026.

Applied Materials shares have gained 80.4% in the past 12-month period. AMAT is scheduled to release its first-quarter 2026 results on Feb. 12, 2026. Applied Materials currently carries a Zacks Rank #2.

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