Earnings Analysis November 4, 2026

Datadog Inc ($DDOG) Q3 2026 Earnings Analysis: Both Revenue and Profit Beat Estimates, Q4 Guidance Stagnant

Earnings Report

Revenue: $1.19709 billion (up 35% YoY, vs. $1.146 billion expected) ✅ Beat

EPS (Earnings Per Share): $0.81 adjusted, $0.32 GAAP (vs. $0.64 expected, adjusted basis comparison) ✅ Beat

Guidance: New guidance provided | Q4 revenue $1.19 billion~$1.20 billion, adjusted EPS $0.69~$0.71, annual revenue $4.515 billion~$4.525 billion

Stock Reaction: After-hours -19.05% ($178.5, as of 11-04 21:12 KST)

Highlights

Revenue Growth: Q3 revenue of $1.19709 billion, a 35% increase compared to the same period last year

Profitability: Adjusted EPS of $0.81 exceeded the $0.64 expectation, and adjusted operating margin recorded 28%

Large Customers: Approximately 4,860 customers with annual recurring revenue (ARR) of over $100,000, a 20% increase from a year ago

GAAP operating income was $74.7 million, turning a profit from a $5.81 million loss in the same period last year. Operating cash flow was $290 million, free cash flow was $251 million, and cash and cash equivalents reached $5.2 billion.

Lowlights

Q4 Guidance: Revenue guidance of $1.19 billion~$1.20 billion has a midpoint lower than Q3 results

Cash Generation: Free cash flow margin fell to 21% from 24% in the same period last year

Cost Burden: Stock-based compensation was $237.18 million, accounting for approximately 20% of revenue

Capitalized software development costs increased from $20.73 million to $28.45 million. R&D expenses were $491.57 million, up 22% YoY, and the Q4 adjusted operating income guidance of $280 million~$290 million is below the $334.29 million recorded in Q3.

What the Company Said

CEO Olivier Pomel emphasized the 35% revenue growth and $290 million in operating cash flow. While the company is prioritizing AI operations and the development of specialized models, it provided a Q4 revenue outlook that remains at a similar level to Q3 results.

Market Reaction and Future Key Points

It has been confirmed that the midpoint of the Q4 revenue guidance falls below the recently announced Q3 revenue. This indicates a gap between the growth rate sustained through Q3 and the outlook for the next quarter.

We need to confirm whether actual Q4 revenue exceeds the upper end of the guidance at $1.20 billion.

We must monitor whether adjusted operating income remains within the guidance of $280 million to $290 million and whether it recovers to Q3 levels.

Whether the growth rate of customers with more than $100,000 in annual recurring revenue (ARR) maintains 20% is the benchmark for sustained growth.

Earnings Call Summary

Once the earnings call concludes and the company script is released, the key takeaways from the call will be added here. We will select and summarize only the most important points, such as how management explained performance and outlook, and what analysts inquired about.