Datadog cites lower usage from major AI customer in 2026 outlook

Second-quarter results beat estimates as annual sales range trails forecasts

Datadog said its full-year revenue outlook reflects reduced usage from one of its biggest customers. Chief Financial Officer David Obstler said during a call with analysts that the reduction was incorporated into the company’s third-quarter and full-year 2026 guidance.

“Regarding our largest customer, we have seen a usage reduction which is incorporated in our Q3 and full year 2026 guidance,” Obstler said.

The company identified the customer only as a leading artificial intelligence company. The customer recently signed a nine-figure renewal deal with Datadog, while management declined to share its identity or explain why its usage was declining.

Executives said the customer uses 17 Datadog products to gain visibility on production workloads at a very large scale. Management also said Datadog continued to gain momentum with other clients.

“We don’t control what’s happening to a specific customer, but we do have a great amount of control on what’s happening to everything else in the business,” Obstler said.

Datadog expects full-year revenue of $4.45 billion to $4.47 billion. The range is higher than its previous guidance but below analysts’ projection of $4.69 billion.

The company raised its 2026 adjusted earnings-per-share outlook to $2.50 to $2.54, from a previous range of $2.36 to $2.44.

Datadog’s outlook for the third quarter was ahead of analysts’ estimates. The company projected revenue of $1.14 billion to $1.15 billion and adjusted earnings per share of 63 cents to 65 cents. Analysts forecast $1.12 billion in revenue and 61 cents a share in adjusted earnings.

In the second quarter, revenue rose 36% to $1.12 billion, compared with the $1.08 billion analysts surveyed by FactSet had expected. Profit increased to $44.6 million, or 12 cents a share, from $2.65 million, or 1 cent a share, a year earlier.

Excluding certain one-time items, Datadog reported adjusted earnings of 65 cents a share, ahead of the 58 cents analysts had anticipated, according to FactSet.