Abstract
Datadog will publish its fourth-quarter fiscal results on February 10, 2026 Pre-Market, and investors expect solid top-line growth with expanding profitability and resilient demand heading into 2026.
Market Forecast
Consensus points to continued expansion this quarter, with revenue expected at $0.92 billion, up 28.28% year over year, EBIT at $0.22 billion with a 29.60% forecast YoY increase, and adjusted EPS of $0.56, up 27.10% year over year. Gross profit margin and net profit margin are expected to remain high, while adjusted EPS growth reflects continued operating leverage and efficient cost scaling. The main business is expected to maintain healthy expansion driven by customer additions and upsell momentum, while revenue concentration in subscriptions continues to underpin predictability. Observers expect cloud security and observability cross-sell to be the most promising catalyst, supported by robust new logo wins and expansion among large customers.
Last Quarter Review
Datadog reported last quarter revenue of $0.89 billion, a gross profit margin of 80.09%, GAAP net profit attributable to shareholders of $0.03 billion with a net profit margin of 3.83%, and adjusted EPS of $0.55, with revenue up 28.35% year over year. Operating discipline and strong demand from large customers supported margin expansion and a sizable EPS beat versus internal and external expectations. The main business was led by Subscription Services revenue of $0.89 billion, reflecting robust adoption across observability and security offerings and benefiting from upsell into existing accounts.
Current Quarter Outlook
Main business momentum
Subscription revenue remains the core driver this quarter, supported by steady new logo additions and ongoing expansion within the enterprise base. Sales cycles are showing stability as customers prioritize observability and cost-efficient platform consolidation, which tends to favor Datadog’s unified model. With consumption patterns normalizing compared with last year’s volatility, the company is positioned for continued sequential dollar-based net retention at healthy levels. Given the prior quarter’s outperformance, investors will monitor usage trends among larger customers and the mix of suite adoption, which can enhance average revenue per customer and support durable growth. The trajectory of multi-product penetration, notably across logging, APM, infrastructure monitoring, and security modules, should have an outsized impact on near-term revenue cadence.
Most promising catalyst: Security and cross-sell
Security offerings integrated with observability are viewed as a meaningful incremental growth lever this quarter. Demand for cloud security posture management, application security, and real-time threat detection has been growing, and customers increasingly prefer a unified pane for telemetry and risk signals. Product breadth facilitates easier attach rates, and when combined with improved ingestion efficiency, can bolster gross margin resilience even at higher data volumes. Success here would show up as higher multi-product adoption metrics and incremental contribution from security ARR. If security attach continues to rise, the mix shift could raise revenue quality and retention, benefiting forward-looking net expansion trends and supporting the path to scale profitability.
Most impactful stock-price factors
Three variables are most likely to sway the share price around the print: revenue growth versus guidance, margin progression, and commentary on usage trends among large accounts. A revenue outcome that exceeds the high end of the company’s guided range, coupled with sustained gross margins near the 80.00% level and continued improvement in operating margin, would reinforce the profitability narrative and support valuation. Management commentary on customer optimization behavior will be scrutinized for signals on 2026 spend elasticity, especially in sectors sensitive to macro budgets. Any signs of accelerating cross-sell, higher enterprise penetration, or rising contribution from AI-related observability workloads would likely be interpreted positively, while evidence of elongated sales cycles or renewed optimization could weigh on sentiment.
Analyst Opinions
The dominant view among institutions is bullish, with a majority expecting Datadog to deliver an in-line to better revenue print and sustained margin progress, driven by platform consolidation and steady enterprise adoption. Analysts highlight the improving pattern of consumption and the durability of high gross margins around 80.00% as support for upside in adjusted EPS. Several high-profile research desks emphasize the traction of security modules and the cross-sell opportunity with observability as differentiators that can support above-consensus revenue durability into 2026. The prevailing thesis points to a favorable risk-reward skew if Datadog demonstrates consistent multi-product expansion and provides constructive usage commentary for large accounts, while a minority caution that a return of optimization could moderate growth if macro conditions soften.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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