Datadog DDOG reported first-quarter 2026 non-GAAP earnings per share (EPS) of 60 cents, which increased 30.4% from the year-ago quarter and exceeded the company's guidance of 49-51 cents. The figure beat the Zacks Consensus Estimate by 20%.
The company's revenues of $1.006 billion rose 32% year over year and surpassed the prior guided range of $951-$961 million. The figure beat the consensus mark by 5.18%. This was the first quarter in which Datadog's quarterly revenues crossed the $1-billion mark.
Datadog, Inc. Price, Consensus and EPS Surprise
Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote
Q1 Details of DDOG
The company ended the first quarter with approximately 33,200 customers, up from about 30,500 in the prior-year period.
In the quarter under review, Datadog had about 4,550 customers with an Annualized Run Rate (ARR) of $100,000 or more, up from about 3,770 in the year-ago quarter. These customers generated about 90% of the total ARR.
As of the end of the first quarter, 56% of customers used four or more products, up from 51% in the year-ago period. Furthermore, 35% of customers used six or more products, up from 28% a year ago, while 20% used eight or more products, up from 13% in the prior-year quarter. Datadog reported a trailing 12-month net revenue retention rate in the low 120% range in the first quarter, up from approximately 120% in the prior quarter, while gross revenue retention remained stable in the mid-to-high 90% range.
Datadog's total ARR surpassed $4 billion in the quarter, and the company delivered an all-time record for the sequential ARR added. New logo annualized bookings also set an all-time record, more than doubling on a year-over-year basis. Of Datadog's 26 products, five generate more than $100 million in ARR, while another three are between $50 million and $100 million in ARR.
Operating Details of DDOG
In the first quarter, non-GAAP gross profit increased 32% year over year, reaching $807.2 million. Datadog's non-GAAP gross margin was 80.2%, declining 10 basis points on a year-over-year basis from 80.3%.
Research & development expenses on a non-GAAP basis grew 33% year over year to $300.4 million. Research & development, as a percentage of revenues, expanded 20 basis points to 29.9%.
Sales and marketing expenses on a non-GAAP basis rose 31.9% year over year to $235.3 million. Sales and marketing expenses, as a percentage of revenues, contracted nearly 10 basis points to 23.4%.
General & administrative expenses on a non-GAAP basis increased 17.3% year over year, reaching $48.1 million in the reported quarter. General and administrative expenses, as a percentage of revenues, contracted 60 basis points to 4.8%.
Datadog reported a non-GAAP operating income of $223.5 million, up 34.2% year over year. Its non-GAAP operating margin of 22% remained flat compared with the prior-year quarter.
Datadog's Balance Sheet & Cash Flow
As of March 31, 2026, Datadog had cash, cash equivalents and marketable securities of $4.8 billion compared with $4.5 billion as of Dec. 31, 2025. Operating cash flow was $335 million in the reported quarter, up from $327 million reported in the previous quarter. Free cash flow during the quarter was $289 million compared with $291 million in the prior quarter, with a free cash flow margin of 29%.
Billings totaled $1.03 billion in the quarter, up 37% year over year, while remaining performance obligations were $3.48 billion, up 51% year over year.
Datadog's Guidance for Q2 & 2026
For the second quarter of 2026, Datadog anticipates revenues between $1.07 billion and $1.08 billion. Non-GAAP EPS is expected in the range of 57-59 cents. Non-GAAP operating income is expected in the band of $225-$235 million.
For fiscal 2026, Datadog anticipates revenues between $4.30 billion and $4.34 billion. Non-GAAP EPS is projected to be between $2.36 and $2.44. Non-GAAP operating income is expected in the range of $940-$980 million.
Datadog’s Zacks Rank & Stocks to Consider
Datadog currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Analog Devices ADI, Applied Materials AMAT and Audioeye AEYE, each currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have gained 53.3% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Applied Materials shares have gained 66.8% in the year-to-date period. Applied Materials is scheduled to report its second-quarter 2026 results on May 14.
Audioeye shares have lost 23.3% in the year-to-date period. Audioeye is set to report its first-quarter 2026 results on May 13.
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