Datadog Raises 2026 Outlook but Guides Q4 Revenue Flat, and Shares Sink About 14%

Datadog DDOG shares fell about 14% on Wednesday, trading near $188.72 late in the session per SentiSense's delayed quote, after the company guided fourth-quarter revenue to $1.19 billion to $1.20 billion, essentially flat with the quarter it had just reported. The stock had closed at $220.52 on Tuesday and fell as much as 16.1% before the open.

The third quarter itself was strong. Revenue rose 35% from a year earlier to $1.20 billion, ahead of a consensus near $1.14 billion, and non-GAAP EPS of $0.81 beat the $0.64 estimate by $0.17. Free cash flow was $251 million, and the number of customers with annual recurring revenue of $100K or more grew 20% to about 4,860, according to the company's release. Datadog also raised its full-year 2026 revenue outlook to $4.515 billion to $4.525 billion, above the $4.48 billion consensus, and guided full-year non-GAAP EPS to $2.73 to $2.75.

The problem is the fourth quarter. BTIG said the guide came in below the Street's roughly $1,202 million and that management assumes its largest customer falls back to its minimum commitment after spending well above it in the third quarter. That puts customer concentration at the center of the debate. BTIG cut its price target to $260 from $289 but kept its Buy rating; despite one MarketBeat headline, no rating downgrade was identified among the day's analyst actions.

Investors will likely watch whether that large customer's spending normalizes or stays elevated, and whether growth outside it holds up. BTIG noted that growth among non-AI customers accelerated for a fifth straight quarter, which would matter more if the biggest account steps down.