Datadog Sees AI, Platform Expansion Fueling Accelerating Growth

Datadog’s growth is accelerating, with quarterly revenue growth reaching 36% at a $1.1 billion scale, supported by platform expansion, market-share gains and demand from customers modernizing technology stacks for AI workloads. Customer adoption is broadening across company sizes and geographies, with users adding products over time through Datadog’s integrated platform; cohorts signed five years ago continue to expand, reflected in net retention in the low 120% range. AI is becoming a major growth opportunity as Datadog serves more than 750 AI-native customers and expands monitoring for production applications, GPUs and large language models, while investing in Bits AI and adjacent products such as cloud workload security and service management.

Datadog NASDAQ: DDOG Chief Financial Officer David Obstler said the company’s recent growth has been supported by a broader product platform, market-share gains and expanding demand across customer sizes and geographies. In a conference discussion with Canaccord Genuity technology analyst Kingsley Crane, Obstler said the company has benefited from customers modernizing technology stacks and preparing infrastructure for artificial intelligence workloads. Crane characterized Datadog’s latest quarter as featuring 36% growth at a $1.1 billion scale, accelerating from 32%, and noted that growth had accelerated over the past five quarters. Obstler said the results reflected investments in the platform that have expanded the product portfolio and enabled greater cross-selling.

Platform adoption and customer expansion Obstler said growth has not been limited to AI-native companies. He said enterprise customers have accelerated adoption of the Datadog platform, driven by demand for integrated, real-time observability and security capabilities.

He pointed to what he described as substantial market-share gains, saying Datadog added $115 million in revenue sequentially during the last quarter. The company’s platform approach appeals to customers seeking a “single pane of glass” for monitoring and security, he said. Datadog’s customer expansion model generally unfolds over multiple years, according to Obstler. Customers often initially use other vendors, then add Datadog products as existing contracts come up for renewal. The company sells capacity through a credit-based model, allowing customers to use different products on the platform. Obstler said cohorts signed five years ago are continuing to expand, supported by product additions and vendor consolidation. He cited net retention in the low 120% range as evidence of the durability of that expansion motion. Customers increasingly adopt more Datadog products over time, rather than switching all tools at once. Modern and mission-critical workloads have increasingly been directed to Datadog for monitoring, Obstler said. Datadog works with customers on capacity planning under contracts that generally span at least one year and can extend to three years.

AI-native customers and production workloads Obstler said AI-native companies represent a smaller percentage of Datadog’s annual recurring revenue than cloud-native customers did during the COVID-era technology boom, but the group is growing quickly. He said Datadog had more than 750 AI-native customer...