Datadog stock surged in early trading after the cloud monitoring and security software company reported a blowout first-quarter performance and lifted its outlook for the year. The company posted revenue of $1.01 billion for Q1 CY2026, marking its first-ever quarter above the $1 billion mark, with sales up 32.2% year on year.
Adjusted earnings per share came in at $0.60, ahead of analyst estimates of $0.51 - an 18.3% beat. Management raised the midpoint of full-year revenue guidance to $4.32 billion from $4.08 billion, a 5.9% increase, and bumped full-year adjusted EPS guidance to $2.40 at the midpoint, representing a 13.2% raise.
Early trading reflected investor enthusiasm. Datadog stock climbed +31.08% in morning trading after the report, and was described as up nearly 31% in pre-market trade on Thursday as the move looked set to rank as the biggest single-day gain since the company's 2019 debut. That price action translated into roughly $12.03 billion of market value added.
Olivier Pomel, CEO, said, "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," adding, "We are helping customers of all sizes and industries deploy modern, cloud-based, AI-enabled solutions."
Pomel also highlighted expansion among AI-native customers, noting that "AI native customers cohort continued to grow and diversify rapidly, both in the number of customers we serve and the scale of those customers." Management disclosed that Datadog has won deals with two of the world’s largest AI research firms.
Separately, Datadog announced it achieved FedRAMP High certification for Datadog for Government. FedRAMP High is one of the federal government's most stringent cloud security and compliance standards, a certification that the company said enables U.S. government agencies and contractors to adopt modern observability for secure workloads.
The strong operational and financial read-throughs from Datadog's release helped trigger a sympathy rally across the software sector. The broader U.S. market provided a constructive backdrop on the same day, with the S&P 500 up +0.06%, the Dow Jones up +0.13%, and the NASDAQ up +0.27% as oil prices fell sharply on hopes of a U.S.-Iran peace agreement.
What drove the share move
- First quarterly revenue above $1 billion and 32.2% year-over-year sales growth.
- Adjusted EPS beat and an upward revision to full-year revenue and EPS guidance.
- Management emphasis on accelerating AI-native customer adoption and new deals with major AI research firms.
- Achievement of FedRAMP High certification for the company’s government offering.
Taken together, the combination of milestone revenue, a dramatic guidance raise, growing AI-centric customer traction, and government-grade security certification constituted a rare convergence of catalysts that investors rewarded with a substantial re-rating of the stock.