Datadog Shares Fall About 14% Despite Strong Q3 Results
Direct answer
Datadog shares fell about 14% on November 4, 2026, even though the company reported a strong third quarter. Revenue rose 35% from a year earlier, but investors focused on a fourth quarter outlook that was almost flat compared with the third quarter.
What happened
Datadog, a cloud monitoring and security company, reported third quarter 2026 revenue of $1.197 billion, up 35% from $885.7 million a year earlier. Adjusted earnings per share were $0.81, above the $0.64 consensus reported by The Motley Fool, while revenue was above the $1.14 billion consensus. GAAP net income rose to $118.3 million from $33.9 million a year earlier. Operating cash flow was $290 million, free cash flow was $251 million, and cash, cash equivalents, and marketable securities were $5.2 billion at September 30, 2026. These figures come from Datadog’s third quarter results release, reported by Morningstar via GlobeNewswire.
For the fourth quarter, Datadog guided revenue to $1.19 billion to $1.20 billion, with non-GAAP operating income of $280 million to $290 million and non-GAAP earnings per share of $0.69 to $0.71. The midpoint of that revenue range, $1.195 billion, is slightly below the $1.197 billion reported in the third quarter, so the outlook points to almost no sequential growth. For the full year, Datadog raised its revenue guidance to $4.515 billion to $4.525 billion and its non-GAAP earnings per share guidance to $2.73 to $2.75, up from $2.50 to $2.54.
Shares closed at $220.52 on Tuesday, November 3, 2026. On Wednesday, they fell about 14% to about $189, as reported by The Motley Fool. Analyst commentary noted the fourth quarter outlook was in line with expectations rather than ahead of them, which disappointed investors after a strong quarter.
A related earnings story is AMD, which beat expectations as data center sales nearly doubled: https://investclaritypath.com/amd-beats-expectations-data-center-sales-q3-2026/
Why it matters for beginners
A share price can fall even after a good quarter, because investors compare results with what they already expected and with the outlook for the next quarter. A beat means results were better than forecasts. Guidance is management’s forecast for a future period. When guidance is only in line with expectations, after a period of fast growth, some investors may lower their view of near term growth, and the share price can fall.
Datadog sells software that helps companies watch their apps, servers, and security systems, so demand for it is linked to spending on cloud and artificial intelligence systems. One quarter does not decide a company’s future, and a falling share price does not by itself mean a business is weak. This article is for education only and does not recommend buying or selling any shares.
What to watch next
Watch fourth quarter revenue against the $1.19 billion to $1.20 billion range. Watch whether growth in the first quarter of 2027 picks up again after the flat fourth quarter outlook. Watch customer growth and demand for monitoring and security products. Watch wider spending on cloud and artificial intelligence systems.
FAQ
What does Datadog do?
Datadog provides cloud monitoring, analytics, and security software that helps companies track apps, infrastructure, and AI workloads.
Why did the shares fall if revenue beat expectations?
Because the fourth quarter revenue outlook was almost flat compared with the third quarter and only in line with expectations, so investors focused on slower near term growth rather than the strong quarter just reported.
What is adjusted earnings per share?
It is earnings per share after removing selected accounting items, so it is often used to compare underlying performance. It should be read alongside GAAP results, which follow standard accounting rules.
What is guidance?
Guidance is a company’s own forecast for a future period, such as next quarter revenue or earnings. Actual results can differ from guidance.
Sources
Datadog, Datadog Announces Third Quarter 2026 Financial Results, November 4, 2026, via Morningstar and GlobeNewswire: https://www.morningstar.com/news/globe-newswire/9869547/datadog-announces-third-quarter-2026-financial-results
The Motley Fool, Why Datadog Stock Took a Dive Today, November 4, 2026: https://www.fool.com/investing/2026/11/04/why-datadog-stock-took-a-dive-today/
This article is for general information and education only. It is not legal or financial advice.
