Datadog Inc ((DDOG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Datadog Inc. recently held its Q2 2025 earnings call, which showcased a strong financial performance with notable growth in revenue, customer base, and product adoption. The positive sentiment was driven by the increasing influence of AI native customers and broad platform adoption. However, there were some concerns regarding potential revenue volatility from AI native customers and the stable yet moderate growth in enterprise usage.
Strong Revenue Growth
Datadog reported a robust revenue of $827 million for Q2 2025, marking a 28% increase year-over-year and a 9% rise quarter-over-quarter. This growth underscores the company’s successful strategies in expanding its market presence and enhancing its service offerings.
Increased Customer Base
The company saw a significant increase in its customer base, ending Q2 with approximately 31,400 customers, up from around 28,700 a year ago. This growth highlights Datadog’s ability to attract and retain a diverse range of clients across various sectors.
AI Native Cohort Growth
AI native customers have become a pivotal part of Datadog’s revenue stream, representing about 11% of Q2 revenues, up from 8% in the previous quarter and 4% in the year-ago quarter. This trend reflects the growing importance of AI in driving business value.
Platform Adoption
Datadog’s platform adoption remains strong, with 83% of customers using two or more products. Furthermore, 52% of customers are using four or more products, 29% are using six or more, and 14% are using eight or more products, indicating deepening customer engagement.
Security Suite Milestone
The company’s security suite of products has reached a significant milestone, generating over $100 million in annual recurring revenue (ARR) and growing at a mid-40s percent year-over-year. This achievement underscores the increasing demand for robust security solutions.
Significant Customer Expansions
Datadog secured several substantial deals, including a 3-year contract worth more than $60 million with a major bank and a nearly 7-figure annualized deal with a leading U.S. insurance company. These deals highlight the trust and reliance large enterprises place in Datadog’s solutions.
Record Product Announcements
At the DASH user conference, Datadog announced over 125 new products and features, showcasing its commitment to innovation and continuous improvement in its offerings.
Potential Revenue Volatility
Despite the strong performance, Datadog acknowledged potential revenue volatility from its AI native cohort, which could impact future financial outcomes.
Operating Margin Decrease
The Q2 operating margin stood at 20%, a decrease from 24% in the year-ago quarter. This decline suggests increased investments or rising costs that may need to be managed moving forward.
Moderate Enterprise Usage Growth
Enterprise customer usage growth remained stable, indicating limited expansion compared to the dynamic growth seen in AI native customers. This suggests a need for strategies to enhance enterprise engagement.
Forward-Looking Guidance
Datadog provided optimistic guidance for Q3 and the full fiscal year 2025, projecting Q3 revenue between $847 million and $851 million, a 23% year-over-year growth. For the full year, revenue is expected to range from $3.312 billion to $3.322 billion, reflecting a 23% to 24% growth. The company plans to maintain its operating margin at 20% and continues to invest in AI and other growth areas.
In summary, Datadog’s Q2 2025 earnings call reflected a positive outlook with strong financial performance and strategic growth initiatives. While there are concerns about potential revenue volatility, the company’s focus on AI and platform adoption positions it well for future success.