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DDOG · Q2 2026
Archived report (Q2 2026). Latest deep dive →
The quarter in brief
Growth re-accelerated to +36% ($1,121M) on AI-native workloads and GAAP operating income finally crossed zero (+$5M vs a $36M loss) — but the real net income ($45M) is mostly interest on the cash pile, and $220M of stock-based compensation (20% of revenue) remains the gap between GAAP and the non-GAAP story.
Net Income
$45M
up ×17 y/y
Revenue
$1,121M
up 35.6% y/y
Operating Income
$5 *M
Gross Profit
$881M
up 33.4% y/y
All figures in $M.
| Line item | Amount and change |
|---|---|
| Revenue | $1,121 · +35.6% |
| Cost of Revenue | $240 · +44.7% |
| Gross Profit | $881 · +33.4% · 78.6% margin |
| R&D | $478 · +23.4% · 43% of revenue |
| Sales & Marketing | $312 · +30.3% |
| G&A | $86 · +23.8% |
| Operating Income | $5 * · vs −$36M a year ago |
| Interest & Other Income, Net | $50 · +10.9% |
| Interest Expense | $3 |
| Pretax Income | $52 · +750% |
| Income Taxes | $7 · 13.9% rate |
| Net Income | $45 · ×17 · 4.0% margin · EPS $0.12 |
Verdict: growth re-accelerated to +36% ($1,121M) on AI-native workloads and GAAP operating income finally crossed zero (+$5M vs a $36M loss) — but the real net income ($45M) is mostly interest on the cash pile, and $220M of stock-based compensation (20% of revenue) remains the gap between GAAP and the non-GAAP story.
SBC $220M (19.6% of revenue). Interest & other income $50M/qtr on the cash pile. Diluted shares 371M (+3.4% y/y — SBC dilution).
Source and notation
Source: Datadog press release 8-K EX-99.1 (SEC EDGAR).
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Chart: “DDOG Q2 2026: where the revenue went” by Who Reports Today, https://whoreportstoday.com/t/ddog/q2-2026. Licensed under CC BY 4.0.
<figure> <a href="https://whoreportstoday.com/t/ddog/q2-2026"><img src="https://whoreportstoday.com/t/ddog/q2-2026/sankey.png" alt="DDOG Q2 2026: where the revenue went" loading="lazy" style="max-width:100%;height:auto"></a> <figcaption>Source: <a href="https://whoreportstoday.com/t/ddog/q2-2026">Who Reports Today</a>, licensed under <a href="https://creativecommons.org/licenses/by/4.0/">CC BY 4.0</a></figcaption> </figure>
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<a href="https://whoreportstoday.com/t/ddog/q2-2026">DDOG Q2 2026 earnings chart (Who Reports Today)</a>
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- Operating income is barely positive ($5.5M on $1.1B of revenue) — Datadog spends 43% of revenue on R&D ($478M); GAAP profitability is a choice deferred in favor of product breadth.
- Stock-based compensation is $220M — 19.6% of revenue and 40× the operating income; diluted share count grows ~3% a year, the hidden cost of the model.
- Net income ($44.6M) is mostly financial: $49.5M of interest income on the cash hoard exceeds the whole operating result.
- Revenue growth re-accelerated to +36% from ~+27% a year ago — AI-native customers (LLM observability) are the stated driver.
- Gross margin 78.6% (down ~1.3 pts) — cloud hosting costs for AI-heavy workloads grow slightly faster than revenue.
What distorts the picture in this report and what to watch beyond the headlines.
DDOG — Datadog is a technology company that provides monitoring and analytics services for cloud-scale applications.
It offers tools for infrastructure monitoring, application performance, and security observability, primarily serving enterprises using cloud environments.
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