So Datadog (DDOG) just popped 14% on Tuesday, and suddenly everyone’s acting like they knew this was coming all along. Sure, Jan.
Here’s what actually happened: The company that helps other companies figure out why their apps are crashing (because apparently that’s a $4 billion business now) just dropped some pretty solid earnings. We’re talking $953 million in Q4 revenue – up 29% year-over-year, which is their fastest growth in recent quarters. Not too shabby for a company whose stock is still down 35% from its November high.
But here’s where it gets interesting. Datadog isn’t just growing – they’re getting stickier than a toddler’s fingers after Halloween. About 33% of their customers now use six or more of their products, up from 26% last year. That’s the corporate equivalent of getting someone hooked on your entire Netflix catalog instead of just one show.
Think of Datadog as the friend who always knows what’s wrong with your computer, except they do it for massive companies running cloud applications. They monitor everything – logs, databases, user experience, security – basically playing digital detective 24/7. And in our increasingly AI-powered world, that’s becoming pretty essential.
The numbers are genuinely impressive: 603 customers are now paying over $1 million annually (up 31%), and they’re sitting on $915 million in free cash flow. That’s real money, not monopoly money or crypto promises.
But – and there’s always a but – management threw some cold water on the party with their 2026 guidance. They’re projecting about 18-19% growth for the full year, which sounds great until you realize they just posted 29% growth. It’s like your friend telling you they’re “probably” going to have a good time at the party they’re already enjoying.
The plot twist? They’ve got one massive customer that’s making them nervous. Management basically admitted this whale could swim away and mess up their whole vibe. We’re talking about someone who likely represents a meaningful chunk of revenue – probably one of those AI hyperscalers burning through compute like it’s going out of style.
So what’s the verdict? Datadog is clearly doing something right. They’re in the sweet spot of helping companies manage increasingly complex digital infrastructure, and their “land and expand” strategy is working beautifully. Once you’re using six of their products, good luck untangling that mess to switch to a competitor.
But at current prices, even after the recent beating, this isn’t exactly a screaming buy. The valuation is still pretty rich, and that customer concentration risk is real. It’s like dating someone who’s great but still talks about their ex a lot – proceed with caution.
If you’re the patient type who likes growth stories with actual fundamentals, maybe start with a small position. Just don’t bet the farm on it. After all, in a world where everything is becoming more digital and more complex, someone’s got to keep the lights on – and Datadog seems pretty good at that job.