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Datadog is trading sharply higher following its Q4 earnings report this morning, as the cloud monitoring and security platform delivered a solid beat on EPS and an especially strong beat on revenue. The company also guided Q1 revenue well above analyst expectations, reinforcing confidence that growth momentum is reaccelerating across both its core customer base and AI-native customers.

• Q4 revenue increased 29.2% yr/yr to $918.7 mln, marking DDOG's strongest revenue growth rate since 1Q23. The company beat nicely on EPS, while Q1 EPS guidance came in modestly below consensus despite the upside revenue outlook.
• Robust sequential usage growth from existing customers was a key driver of top-line performance in Q4. Revenue growth excluding AI-native customers accelerated to 23% yr/yr, up from 20% in Q3, signaling broad-based improvement across the core business.
• AI-native customers remain a major growth engine, with revenue growth significantly outpacing the rest of the business. As of today, 14 of the top 20 AI-native companies are Datadog customers, including several of the largest players in the space.
• New logo bookings were very strong, as go-to-market teams converted a record number of new customers during the quarter.
• A metric that stood out was RPO, which at $3.46 bln, was up 52% yr/yr, while current RPO grew 40% yr/yr. Management continues to see favorable demand trends tied to cloud migration, noting that many large enterprises remain early in their cloud adoption journey.

Briefing.com Analyst Insight:

Datadog's results suggest the company is exiting its recent growth slowdown with renewed momentum. Encouragingly, revenue growth is accelerating across the broader customer base, not just among AI-native clients, pointing to healthier underlying demand. At the same time, Datadog's strong positioning with leading AI-native companies provides an additional growth lever as those customers move into production. While valuation remains a consideration following the stock's sharp move higher, the combination of accelerating revenue, strong RPO growth, and low churn supports a constructive medium- to long-term outlook.