Datadog Shares Fall 14% Despite Robust Q3 Results

Overview

• Datadog reported $1.20 billion in revenue for the third quarter, a 35% year‑over‑year increase that the company said reflected continued demand for its observability and security platform.
• The company generated $290 million in operating cash flow and $251 million in free cash flow and held $5.2 billion in cash, cash equivalents, and marketable securities at quarter end.
• GAAP and non‑GAAP results diverged sharply with GAAP operating income of $75 million (6% margin) versus non‑GAAP operating income of $334 million (28% margin), and the company warned GAAP results could be materially affected by equity‑compensation accounting and employer payroll taxes.
• Datadog issued fourth‑quarter revenue guidance of about $1.19 billion to $1.20 billion and full‑year revenue guidance of $4.515 billion to $4.525 billion while projecting ranges for non‑GAAP operating income and EPS.
• The company highlighted product and AI momentum, including the launch of Scout 1.0 and industry recognition from Forrester and Gartner, but shares fell roughly 14% to about $189 as traders focused on accounting and compensation uncertainty.