Datadog

Revenue grew 36% year over year to 1.12 billion dollars in the second quarter of 2026, faster than the 32% pace they posted just one quarter earlier. Big customers paying 100,000 dollars or more a year climbed 23% to about 4,720, up from roughly 3,850 a year ago. Growth speeding up at this size is rare, and it means customers are leaning harder on the platform, not less.

Datadog pulled in 316 million dollars of operating cash and 279 million dollars of free cash flow in a single quarter, with 5 billion dollars in cash on the balance sheet. Non-GAAP operating margin hit 23%, and full year guidance now points to as much as 4.47 billion dollars in revenue and 1.03 billion dollars in non-GAAP operating income. That lets them buy companies like Adaptive ML and launch over 100 new features without borrowing a dime.

GAAP operating income was just 5 million dollars on 1.12 billion dollars of revenue, a 0% margin, because heavy stock based pay and aggressive AI spending eat the reported bottom line. Net margins sit near 4% on a trailing basis. The stock carries a premium price for a company whose accounting profits are still barely above breakeven.

Amazon, Microsoft, and Google all sell their own monitoring tools bundled into cloud bills and can discount hard. Datadog has to keep proving it deserves a separate line item, and its own third quarter guidance of 1.135 to 1.145 billion dollars implies growth cooling from this quarter's 36%. Newer AI monitoring startups are chasing the same budgets too.