Datadog, Inc. Q1 FY2026 earnings call

• Business drivers: Revenue growth 32% YOY, broad-based acceleration including AI and non-AI customers. Non-AI customer revenue growth accelerated to mid-20% YOY. Churn low, gross revenue retention mid- to high 90s. • Product adoption: Platform strategy resonates, more customers using multiple products. • Product launches: AI for Datadog includes MCP server, AI security agent, Bit Assistant. Datadog for AI includes GPU monitoring. Launched experiments, APM recommendations, plans for U.K. data center, received FedRAMP High certification. • Sales and marketing: Landed large deals with AI research divisions, online recruiting platform, Fortune 500 bank, global hedge fund, insurance company, travel group, fintech company.

Revenue was $9.1 billion, up 32% year-over-year. Ended Q1 with about 33,200 customers and about 4,550 customers with an ARR of $100,000 or more, generating about 90% of ARR. Generated free cash flow of $289 million with a free cash flow margin of 29%. Total ARR exceeds $4 billion, quarterly revenue exceeded $1 billion for the first time. 56% of customers use 4 or more products, 35% use 6 or more, 20% use 8 or more. 5 products over $100 million in ARR, 3 between $50 million and $100 million, 18 earlier stage products.

• Second quarter: Revenues expected $1.07 billion - $1.08 billion (29%-31% YOY growth), non-GAAP operating income $225 million - $235 million (21%-22% operating margin). • Fiscal 2026: Revenues expected $4.3 billion - $4.34 billion (25%-27% YOY growth), non-GAAP operating income $940 million - $980 million (22%-23% operating margin), non-GAAP net income per share $2.36 - $2.44.

Q: How much code going into production is driving Datadog activity?

A: More applications being created, complexity in production increasing, seen across platform.

Q: How does heterogeneity of silicon affect Datadog?

A: Heterogeneity of silicon is a trend in favor, more need to make sense of everything.

Q: Thoughts on agent triaging vs human engineers?

A: Both agent and human usage increasing, business model works regardless.

Q: Consolidation of open source tooling?

A: Most companies have open source, Datadog helps unify, save money.

Q: Why training opportunity inflecting now?

A: Training turning into production, scaled by many companies.

Q: Confidence in 2Q guide?

A: ARR growth in previous quarter, broad-based adds.

Q: Structural changes to capital intensity?

A: Run most workloads on cloud, low CapEx.

Q: Security for agents?

A: Agents built with security in mind, integrate into whole security posture.

Q: Higher conservatism on largest customer?

A: Higher degree of conservatism applied to largest customer, same methodology as before.

Q: Hyperscalers using Datadog?

A: Use Datadog for broad set of products, interested in GPU monitoring.

Q: New cloud prem offering?

A: Potential incremental growth opportunity, investing heavily, see customer traction.