Datadog, Inc.: revenue up 36%, but shares fell 19% – market doubts sustainability

6 августа Datadog, Inc. раскрыла результаты за второй квартал 2026 года: выручка выросла на 35,6% год к году до 1 121,5 млн долларов, чистая прибыль – на 1583,3%, до 44,6 млн. Однако акции на релизе упали на 19%, а с тех пор потеряли ещё 20,4%. При текущей цене акции выглядят скорее привлекательно: рост ускоряется, но рынок требует подтверждения, что маржа начнёт восстанавливаться.

Key takeaways

— Revenue in Q2 2026 grew 35.6% YoY – accelerating from 32.2% a quarter earlier

— Net profit jumped 1583.3% YoY, but from a low base: in Q2 2025 it was only $2.6 million

— EBITDA margin in Q2 2026 was 2.1% versus -3.0% a year earlier – still low, but improving

— Operating cash flow over the last twelve months was $1,100 million, well above net profit

— The company maintains a net cash position: $4,693 million at the end of Q2 2026

— Shares fell 19% on the release day and another 20.4% after – market disappointed by guidance despite strong report

— On the portal's model, the upside potential of the shares is only 4% from the current price

Attractiveness

Key figures, USD bn

Revenue in Q2 2026 grew 35.6% YoY – accelerating from 32.2% a quarter earlier

In Q2 2026, Datadog, Inc. revenue reached $1,121.5 million, up 35.6% year-over-year. This is an acceleration from 32.2% in Q1 2026 and 29.2% in Q4 2025. The company has been growing faster for several consecutive quarters: 24.6% in Q1 2025, 28.1% in Q2, 28.4% in Q3, 29.2% in Q4.

The growth driver remains the increase in large customers: the number of clients with ARR over $100k reached approximately 4,720, up 23% year-over-year (from about 3,850). The company is also actively developing its AI direction: Bits Code, Bits Chat, and Bits Agent Builder were launched, and Adaptive ML was acquired to strengthen AI research.

Net profit jumped 1583.3% YoY, but from a low base: in Q2 2025 it was only $2.6 million

Net profit in Q2 2026 was $44.6 million versus $2.6 million a year earlier – growth of 1583.3%. However, this dynamic is explained by an extremely low base: a year ago profit was almost zero due to loss-making operations.

Operating profit in Q2 2026 was only $5.5 million, corresponding to an operating margin of about 0%. The bulk of net profit was formed by interest income and other income ($49.5 million), not by core operations. This is important when assessing earnings quality.

EBITDA margin in Q2 2026 was 2.1% versus -3.0% a year earlier – still low, but improving

EBITDA in Q2 2026 was $23.3 million, giving a margin of 2.1%. A year earlier the margin was negative: -3.0%. There is improvement, but the level remains low for a company with a market capitalization of nearly $82 billion.

The main reason for the low margin is high spending on research and development ($478 million for the quarter) and sales ($311.5 million). The company continues to invest heavily in development, which weighs on profitability. GAAP operating margin in Q2 2026 was 0%, as stated in the report.

Operating cash flow over the last twelve months was $1,100 million, well above net profit

Over the last twelve months (four quarters from Q3 2025 to Q2 2026), operating cash flow was $1,100 million. For comparison, net profit over the same period was significantly lower – about $177.6 million (sum of quarterly values).

The gap is mainly explained by non-cash expenses, primarily stock-based compensation ($220.3 million per quarter). In Q2 2026, operating cash flow was $315.9 million, and free cash flow was $278.7 million (after capital expenditures and capitalized software development costs).

The company maintains a net cash position: $4,693 million at the end of Q2 2026

At the end of Q2 2026, cash and marketable securities totaled $5.0 billion, while debt was only convertible notes of $985.5 million. Net cash position was $4,693 million. This gives the company a huge financial cushion.

During the quarter, the net cash position increased by $4.6 billion (in ruble terms), related to investment in marketable securities. Interest income in Q2 2026 was $49.5 million, significantly supporting net profit.

Shares fell 19% on the release day and another 20.4% after – market disappointed by guidance despite strong report

The closing price before the release was $283.17, shares fell 19% on the release day, and by September 9, 2026, they lost another 20.4% from the post-release price. The cumulative decline from the pre-report level is approximately 35%. Market capitalization is now about $81.9 billion.

The reason for the decline is not weak actual results, but likely the guidance for Q3 and full year 2026, which the market considered insufficiently optimistic. The company expects Q3 revenue of $1.135–1.145 billion, implying a slowdown to about 20% YoY (calculated based on Q3 2025 data).

On the portal's model, the upside potential of the shares is only 4% from the current price

Our valuation model, based on EBITDA growth and target multiple, shows that Datadog, Inc. shares have an upside potential of only 4% from the current price. This means the market has already largely priced in the expected margin improvement.

With a current market capitalization of about $81.9 billion and EBITDA over the last twelve months of approximately $78.3 million (sum of quarterly values), the EV/EBITDA multiple exceeds 1000x, which is extremely high. Even with rapid revenue growth, the current valuation leaves little room for error.

Valuation on the latest reported figures

Bottom line

The Q2 2026 report is strong: revenue accelerated to 35.6%, net profit grew 1583.3%, albeit from a low base, and operating cash flow over 12 months reached $1,100 million. The company maintains a huge net cash position of $4.7 billion, reducing risks. However, operating margin remains near zero, and Q3 guidance points to a possible slowdown. Shares have fallen 35% from pre-report levels, and the valuation now looks more reasonable, but the portal's model shows only 4% upside. Verdict: rather attractive – provided the company confirms its ability to restore margins and sustain high growth rates.