Datadog reported third quarter revenue of 1.197 billion dollars, up 35 percent year over year and above the high end of its guidance, its first quarter above a billion dollars. Adjusted earnings were 0.81 dollars per share against a 0.64 dollar consensus. Non-GAAP operating income was 334 million dollars, a 28 percent margin, while GAAP operating income was 75 million dollars. Operating cash flow was 290 million dollars and free cash flow 251 million dollars.
The customer base kept widening. Datadog ended the quarter with about 33,500 customers and about 4,860 customers generating at least 100,000 dollars of annual recurring revenue, up from about 4,060 a year earlier. Chief executive Olivier Pomel said revenue growth from non-AI customers accelerated for a fifth consecutive quarter, into the high 20s percent range, and the infrastructure monitoring suite passed 2 billion dollars of annual recurring revenue.
The caution sits in the outlook and one disclosure. Fourth quarter revenue guidance of 1.19 billion to 1.20 billion dollars implies growth slowing to 25 to 26 percent and almost no sequential growth, and management said the guide assumes only the largest customer’s contractual minimum commitment after that customer reduced usage during the third quarter. Full year revenue guidance was nonetheless raised to 4.515 billion to 4.525 billion dollars, about 32 percent growth.
The shares fell about 14 percent on November 5. The pattern matches the rest of this earnings session: the beat was banked, and the stock was priced entirely on the deceleration and on concentration risk in a handful of large AI customers.