Datadog Conference: CEO Says AI and Enterprise Growth Are Accelerating

Datadog’s growth is accelerating: CEO Olivier Pomel said the company achieved roughly 36% year-over-year growth in its latest quarter, with both AI-focused and broader enterprise customers contributing. Non-AI customer growth increased to the high-20% range from about 18% a year earlier.

AI is expanding the observability opportunity: AI deployments require monitoring additional layers such as GPUs, models, agents and security interactions, while Datadog currently holds about 13%–14% of the observability market and serves roughly half of the Fortune 500.

Datadog is broadening its AI and security strategy: Bits AI is expanding beyond alert investigations, with the company transitioning toward AI-credit pricing. Datadog is also investing heavily in R&D and targeting security, digital experience monitoring and synthetic testing as future growth areas.

Datadog NASDAQ: DDOG CEO and Founder Olivier Pomel said the company is seeing accelerating growth across both AI-focused customers and its broader enterprise customer base as organizations expand cloud and artificial-intelligence deployments. Speaking with Citi enterprise software analyst Fatima Boolani, Pomel said Datadog has grown by roughly an order of magnitude in revenue since its 2019 initial public offering. He said the company reported approximately 36% year-over-year growth in its most recent quarter following several quarters of sequential acceleration.

Pomel said growth was not limited to companies primarily focused on AI. He said Datadog's non-AI customer segment accelerated from about 18% year-over-year growth a year earlier to growth in the high 20% range, reflecting broader adoption of AI-related infrastructure and applications.

Observability in the AI transition Pomel compared the current AI transition with the earlier migration to cloud computing, saying both shifts require companies to operate more digital infrastructure, ship software faster and manage increasingly interconnected development, operations and security functions.

He said an estimated 70% to 80% of the technology stack used by AI companies resembles the infrastructure used by non-AI companies. However, AI deployments add new layers to monitor, including GPUs, models, agents, agent outcomes, security and interactions with external systems.

“The part of the business growing the fastest is the part that has to do with the buildup at the infrastructure and the application layer,” Pomel said. While Datadog is also seeing more traffic from AI-related workloads such as agent traces, he said those newer workloads point more to the future direction of the market than to the current primary driver of business.

Pomel said Datadog has roughly 13% to 14% share of the observability market, which he described as growing at annual rates ranging from 15% to 30%, depending on the source. He added that the company serves about half of the Fortune 500 and sees substantial room to expand its relationships with large customers.

Bits AI and evolving pricing Pomel described Datadog’s AI strategy as “Datadog for AI” and “AI for Datadog.” The latter includes Bits AI, the company’s AI agent offering, which initially focused on investigating alerts and has since expanded to include a chatbot, code optimization and tools for building agents and applications within Datadog.

He said Bits AI is being used by a large number of customers, but its effects are not yet readily visible in the company’s fina...