Datadog drops 13% before the bell after a $1.20 billion quarter and a guide that goes no higher

Datadog shares were trading at $191.10 at 8:50 a.m. ET on Wednesday, down $29.42 or 13.34% from Tuesday's close of $220.52, according to Nasdaq.com pre-market data. The drop came after the observability software company reported third-quarter results that beat its own forecast and then gave a fourth-quarter outlook that does not grow from here.

The quarter

In its earnings release, filed with the SEC on Wednesday, Datadog reported:

• Revenue of $1.20 billion, up 35% from a year earlier.
• GAAP operating income of $75 million (6% margin); non-GAAP operating income of $334 million (28% margin).
• Non-GAAP earnings of $0.81 a share; GAAP earnings of $0.32 a share.
• Operating cash flow of $290 million and free cash flow of $251 million.
• About 4,860 customers paying $100,000 or more in annual recurring revenue, up 20% from about 4,060 a year ago.

The number behind the number

The headline is a beat. Datadog's August release guided third-quarter revenue to $1.135 billion to $1.145 billion. The reported $1.20 billion is roughly $55 million to $65 million above that range, about 5%.

The guidance is where the stock is reacting. Datadog now expects fourth-quarter revenue of $1.19 billion to $1.20 billion. That is at or slightly below the quarter just reported, after revenue rose from $1.12 billion in the second quarter to $1.20 billion in the third.

Datadog revenue guidance	Range
Q3, as guided Aug. 6	$1.135B to $1.145B
Q3, reported Nov. 4	$1.20B
Q4, guided Nov. 4	$1.19B to $1.20B
Full year, guided Aug. 6	$4.45B to $4.47B
Full year, guided Nov. 4	$4.515B to $4.525B

The full-year raise tells the same story. The range moved up by $55 million to $65 million at its ends, about the size of the third-quarter beat. In other words, the company passed through what it had already earned and left its expectation for the rest of the year where it was. The release gives no explanation for the fourth-quarter figure, so we cannot say whether it is conservative.

Non-GAAP operating income guidance for the fourth quarter, $280 million to $290 million, is also below the $334 million just reported.

Why a good quarter can still cost 13%

The market had pushed expectations up. Datadog closed Tuesday at $220.52 for a market value of about $68.9 billion, according to Nasdaq.com, inside a 52-week range of $98.01 to $300.68. Our chart shows the shares had already fallen about 25% from their October 9 peak before the report, so the reaction is a drop on top of a pullback, not a fall from the high.

For a stock priced on growth, the question is whether 35% growth is the floor or the peak. A fourth-quarter guide equal to the third quarter implies growth slowing from 35% unless the year-ago comparison is unusually soft; we have not checked last year's fourth quarter in this report and so do not put a growth figure on it.

Who it matters to

Datadog sells monitoring tools to engineering teams, so its customer count is a read on cloud spending by larger companies. The growth in $100,000-plus customers, 20% in a year, is the steadier part of the report. Pre-market prices can reverse by the open, and thin early trading exaggerates moves, so the regular-session reaction is the one to watch.

What we are watching: the conference call, held at 8 a.m. ET, for any explanation of the fourth-quarter figure, and the 10-Q for the details. For the broader session, see Before the bell.

Sources: Datadog earnings releases on SEC EDGAR (Nov. 4 and Aug. 6, 2026); Nasdaq.com quote and summary data at 8:50 a.m. ET, Nov. 4, 2026; Yahoo Finance price history. Pre-market data may be delayed. This is market information, not investment advice.