Cloud monitoring platform Datadog (NASDAQ: DDOG) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 32.2% year on year to $1.01 billion. On top of that, next quarter’s revenue guidance ($1.08 billion at the midpoint) was surprisingly good and 8.3% above what analysts were expecting. Its non-GAAP profit of $0.60 per share was 18.3% above analysts’ consensus estimates.
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Datadog (DDOG) Q1 CY2026 Highlights:
- Revenue: $1.01 billion vs analyst estimates of $959.6 million (32.2% year-on-year growth, 4.9% beat)
- Adjusted EPS: $0.60 vs analyst estimates of $0.51 (18.3% beat)
- Adjusted Operating Income: $223.5 million vs analyst estimates of $204 million (22.2% margin, 9.6% beat)
- The company lifted its revenue guidance for the full year to $4.32 billion at the midpoint from $4.08 billion, a 5.9% increase
- Management raised its full-year Adjusted EPS guidance to $2.40 at the midpoint, a 13.2% increase
- Operating Margin: 0.7%, up from -1.6% in the same quarter last year
- Free Cash Flow Margin: 28.7%, down from 30.5% in the previous quarter
- Customers: 4,550 customers paying more than $100,000 annually
- Billings: $1.03 billion at quarter end, up 37.2% year on year
- Market Capitalization: $51.15 billion
"Datadog executed to a strong quarter, with 32% year-over-year revenue growth, $335 million in operating cash flow, and $289 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog.
Company Overview
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ: DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Datadog’s sales grew at an incredible 40.5% compounded annual growth rate over the last five years. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Datadog’s annualized revenue growth of 27.5% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Datadog reported wonderful year-on-year revenue growth of 32.2%, and its $1.01 billion of revenue exceeded Wall Street’s estimates by 4.9%. Company management is currently guiding for a 30% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 16.7% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above the sector average and indicates the market sees some success for its newer products and services.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Datadog’s billings punched in at $1.03 billion in Q1, and over the last four quarters, its growth was fantastic as it averaged 32% year-on-year increases. This alternate topline metric grew faster than total sales, meaning the company collects cash upfront and then recognizes the revenue over the length of its contracts - a boost for its liquidity and future revenue prospects. 
Enterprise Customer Base
This quarter, Datadog reported 4,550 enterprise customers paying more than $100,000 annually, an increase of 240 from the previous quarter. That’s in line with the number of contract wins in the last quarter and quite a bit above what we’ve seen over the previous year, confirming that the company is maintaining its sales momentum.
Key Takeaways from Datadog’s Q1 Results
We were impressed by how significantly Datadog blew past analysts’ billings expectations this quarter. We were also glad its EPS guidance for next quarter trumped Wall Street’s estimates. Lastly, full-year revenue guidance was raised. Zooming out, we think this quarter was very good, with multiple positives and no major blemishes. The stock traded up 23.9% to $177.99 immediately following the results.
Datadog put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
