Datadog Faces Analyst Warning As OpenAI Spending Risks Threaten Future Growth

Core Viewpoint - Datadog reported strong fiscal second-quarter results, with revenue and adjusted EPS exceeding analyst expectations, but the stock traded lower following the announcement [1][10]. Financial Performance - Fiscal second-quarter revenue increased by 28% year-over-year to $826.76 million, surpassing the analyst consensus estimate of $790.97 million [1][3]. - Adjusted EPS was 46 cents, beating the consensus estimate of 42 cents [1][4]. - Adjusted operating income reached $164.1 million, with an operating margin of 19.8% [3][10]. - Gross margin improved to 80.9% [4]. Growth Drivers - Strong usage trends from existing customers and momentum in the AI-native cohort contributed 11% of total revenue and 10 percentage points to year-over-year growth [2][6]. - AI-native customers accounted for 11% of revenue, up from 8% in the previous quarter, indicating a significant increase in adoption [6][11]. - Security revenue surpassed $100 million in annual recurring revenue (ARR), growing in the mid-40% range year-over-year [3][6]. Guidance and Outlook - For the third quarter of 2025, management guided revenue to be between $847 million and $851 million, with operating income projected at $176 million to $180 million, and EPS between $0.44 and $0.46 [4][9]. - Full-year 2025 revenue guidance was raised to $3.312 billion to $3.322 billion, with operating profit expected to be between $684 million and $694 million, and EPS projected at $1.80 to $1.83 [4][7]. Analyst Ratings - Needham maintained a Buy rating with a price forecast of $175, while RBC Capital and Bank of America Securities also maintained positive ratings with price forecasts of $165 and $175, respectively [5][8][12]. - Analysts noted Datadog's industry-leading growth and expanding AI customer base as key factors supporting their ratings [5][12].