Datadog's stock slides after earnings. This is what's nagging at investors.

By Hannah Pedone

The cloud-monitoring company faced a high bar due to its strong stock performance this year and ended up beating expectations by less than it did in the prior quarter

Shares of Datadog were down 19.5% on Thursday.

The bar was high for Datadog heading into earnings, given that shares had more than doubled on the year.

And while the cloud-monitoring company may have delivered revenue results and guidance that were better than the consensus view, investors seemed to be looking for more.

Shares of Datadog were down 19.5% on Thursday.

Datadog (DDOG) reported revenue of $1.12 billion, up 36% from the prior-year quarter and above the $1.08 billion that analysts tracked by FactSet were expecting. The company reported adjusted earnings per share of 65 cents, compared with 46 cents in the prior-year quarter. Wall Street was expecting 58 cents.

The company guided for third-quarter revenue of between $1.135 billion and $1.145 billion and adjusted earnings per share of between 63 cents and 65 cents, assuming approximately 378 million weighted average diluted shares outstanding. Analysts were looking for $1.11 billion in revenue and 61 cents in adjusted EPS for the third quarter.

Evercore ISI analyst Vinod Srinivasaraghavan wrote in a Thursday note that investors' initial reaction seemed "a bit extreme," since he deemed the results to be "solid."

But TD Cowen analyst Andrew Sherman wrote in a Thursday note that Datadog's beat and raise was "not enough" for investors. He flagged that the revenue beat for the second quarter was slightly smaller than the beat the company delivered last quarter.

Even though the guidance beat expectations, he said it only calls for a $24 million sequential increase in revenue from the second quarter, if the company hits the upper part of its guidance for third-quarter revenue.

For 2026, Datadog is expecting revenue of between $4.45 billion and $4.47 billion and adjusted earnings per share of between $2.50 and $2.54.

Previously Datadog was guiding for revenue of between $4.3 billion and $4.34 billion and adjusted earnings per share of between $2.36 and $2.44. Analysts were looking for $4.35 billion in revenue and $2.42 in adjusted earnings per share for the full year.

See also: Supply-chain legend Tim Cook finally meets his match with Apple's memory crunch

-Hannah Pedone

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08-06-26 0946ET