Datadog Shares Drop as Soft Fourth Quarter Guidance Signals Growth Slowdown

11:18 AM EST, 11/04/2026 (MT Newswires) -- Datadog (DDOG) shares plunged Wednesday after the cloud monitoring and security platform issued a soft fourth-quarter revenue forecast, signaling a growth deceleration despite third-quarter results topping Wall Street's estimates. The company expects fourth-quarter non-GAAP net income per share between $0.69 and $0.71 on revenue of $1.19 billion to $1.20 billion. Analysts polled by FactSet project non-GAAP EPS of $0.64 on revenue of $1.20 billion. The higher end of fourth-quarter revenue guidance implies an annual growth rate of 26% down from 35% growth in the third quarter. The stock fell more than 13% in Wednesday trading but remains about 41% higher for the year. For the third quarter, the company reported non-GAAP net income of $0.81 per share, up from $0.55 in the prior-year period. Analysts expected $0.64. Revenue in the three months ended Sept. 30 climbed 35% to $1.20 billion, ahead of expectations for $1.15 billion. Truist Securities said Wednesday that despite third-quarter results beating expectations, the guidance "continues to disappoint." "We believe the results will be viewed as negative, particularly given the prior outlook already contemplated a meaningful reduction in usage from (Datadog's) largest AI-native customer," the brokerage added. The company raised its full-year adjusted earnings per share guidance to $2.73 to $2.75 on revenue of $4.515 billion to $4.525 billion, from its previous forecast of $2.50 to $2.54 per share on revenue of $4.45 billion to $4.47 billion. Analysts polled by FactSet expect non-GAAP EPS of $2.54 on revenue of $4.48 billion. Full-year 2026 revenue guidance represents about 32% year-over-year growth, Chief Financial Officer David Obstler said during the earnings call, according to a FactSet transcript. "(Artificial intelligence) is another large growth driver for us today as AI workloads move into production to drive more cloud consumption and more usage of the Datadog platform, and we see that today across our business," Chief Executive Olivier Pomel said on the call. "All 15 of the top 15 AI leaders are our customers. And more broadly, we now serve over 850 AI customers, up from about 750 last quarter." Earlier in the week, Wedbush Securities said it expected the company to report a "beat-and-raise" driven by opportunities across both AI and non-AI customers. Cloudflare (NET) is slated to report third-quarter earnings Thursday, while Snowflake (SNOW) and MongoDB (MDB) will announce fiscal quarter results next month. Price: 192.21, Change: -28.31, Percent Change: -12.84