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data dog Shares rose 23% on Thursday after the company reported third-quarter sales that beat Wall Street expectations and issued a strong outlook for the fourth quarter.
It was the second-best day on record, behind November 2023, when stocks rose 28%.
The company’s revenue increased 28% year over year to $885.7 million, beating LSEG analysts’ expectations of $852.8 million.
The cloud software company expects fourth-quarter revenue to be between $912 million and $916 million, well above Wall Street’s estimate of $887 million.
As demand for artificial intelligence-powered cloud security products continues to grow, Datadog has deployed multiple AI technologies and security tools over the past year.
“Datadog’s R&D team is rapidly innovating to help our customers solve problems in the AI space,” CEO Olivier Pommer said in a release.
In June, the company released Bits AI Agents for SRE, an AI assistant that instantly investigates alerts and drafts incident response and status updates. Datadog also added several new features to LLM observability over the summer, including agent AI monitoring and expanded LLM experiments.
In June, Datadog also released the MCP server and its underlying model TOTO, which connects AI agents and data sources.
Adjusted earnings per share were 55 cents, beating FactSet analysts’ expectations of 45 cents.
The number of customers with at least $100,000 in annual recurring revenue increased 16% during the quarter.
Datadog reported net income of 33.9 million, or 10 cents per share. Last year, the company had net income of $51.7 million, or 14 cents per share.
Datadog’s year-to-date stock price chart.
