Datadog Inc (NASDAQ:DDOG) reported first quarter results that topped Wall Street expectations and raised its full-year guidance, prompting Wedbush to lift its price target on the cloud monitoring and analytics company to $220 from $190 while maintaining its 'Outperform' rating.
Shares of Datadog surged almost 30% to about $186 on Thursday afternoon.
The company posted first quarter revenue of $1.01 billion, up 32% year-over-year and above analyst expectations of about $960 million.
Adjusted earnings came in at $0.60 per share, ahead of consensus estimates of $0.51.
Wedbush wrote that the quarter “featured strong beats across the board once again,” highlighting that revenue surpassed $1 billion for the first time as Datadog continued to benefit from accelerating demand tied to both AI-native and traditional enterprise customers.
The analysts said the results reinforced Datadog’s “mission-critical positioning at the center of cloud migration, digital transformation, and AI adoption.”
Datadog also reported continued expansion among large customers. The company ended the quarter with approximately 4,550 customers generating more than $100,000 in annual recurring revenue, up 21% from a year earlier.
Billings increased 37% year over year to $1.03 billion, while remaining performance obligations rose 51% to $3.48 billion.
According to Wedbush, Datadog experienced its “strongest quarter of sequential usage growth from existing customers while adding a record number of new customers.”
The analysts also noted that annualized bookings growth and average land size doubled from the prior-year period.
Non-GAAP operating income totaled $223.5 million, representing a 22.2% margin, while free cash flow reached $289.1 million despite higher hiring and research and development spending.
Datadog significantly raised its fiscal 2026 outlook, now forecasting revenue between $4.30 billion and $4.34 billion, compared with prior guidance of $4.06 billion to $4.10 billion. The updated range also exceeded analyst expectations of roughly $4.12 billion.
The company also lifted its non-GAAP earnings outlook to $2.36 to $2.44 per share from a prior range of $2.08 to $2.16.
Wedbush wrote that the stronger outlook was driven by “all-time record sequential ARR add/new logo annualized bookings,” alongside “broad-based strength across AI-native customers” and re-accelerating growth among non-AI customers.
The analysts described the quarter and raised guidance as transformation for Datadog, adding that the results demonstrate “AI is a powerful demand catalyst rather than a disruptive threat.”
Wedbush added that Datadog’s position across cloud migration, digital transformation, and AI training and inference workloads creates “a multi-year runway for accelerating growth and continued share gains.”