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Investing.com -- Datadog reported second-quarter results that topped consensus estimates and raised its full-year outlook, but shares fell more than 21% in premarket trading Thursday, a move that may reflect profit-taking after the stock hit a fresh all-time closing high earlier in the week.
The cloud-scale monitoring and security platform reported second-quarter earnings per share (EPS) of $0.65, beating the consensus estimates of $0.58. Revenue rose 36% year-over-year to $1.12 billion, ahead of the $1.08 billion consensus estimate.
"The initial reaction seems a bit extreme as the company delivered solid F2Q results and while the lack of revenue acceleration in 2H may weigh on the uber bull case, DDOG remains one of the best growth stories in software," Evercore analysts said in a post-earnings note.
As of June 30, the company had about 4,720 customers with annual recurring revenue of $100,000 or more, up 23% from roughly 3,850 a year earlier.
For the third quarter, Datadog guided to EPS of $0.63 to $0.65, above the $0.61 consensus, and revenue of $1.135 billion to $1.145 billion, ahead of the $1.11 billion consensus estimate.
For the full year 2026, the company raised its EPS guidance to $2.50 to $2.54, from $2.36 and $2.44 previously, and above the $2.42 consensus. Revenue is projected to range between $4.45 billion and $4.47 billion, up from a previous forecast of $4.30 billion to $4.34 billion, and also ahead of the $4.35 billion consensus.
"Datadog delivered a strong quarter, with 36% year-over-year revenue growth, $316 million in operating cash flow, and $279 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog. "Our customers are building and deploying with AI, and they are using the Datadog platform to observe, secure, and act on their AI-enabled solutions."
