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Investing.com - Needham has reiterated its Buy rating and $175.00 price target on Datadog (NASDAQ:DDOG) following the company’s second-quarter 2025 results that exceeded expectations. According to InvestingPro data, analysts’ price targets currently range from $105 to $200, with a strong consensus recommendation of 1.59 (Buy).
The cloud monitoring and analytics platform reported stronger-than-anticipated usage trends from existing customers, with particular strength from its AI-Native customer cohort. This AI-Native segment now contributes 11% to Datadog’s total revenue and accounts for 10 percentage points of year-over-year revenue growth, up from 8% and 6 percentage points respectively in the first quarter of 2025. The company’s overall revenue growth stands at 25.54%, supported by impressive gross profit margins of 80.15%. InvestingPro analysis reveals 13 additional key insights about Datadog’s performance and valuation metrics.
Datadog’s core enterprise business maintained consistent usage growth compared to recent trends, while the company saw improved usage growth from small/medium businesses and mid-market customers compared to the previous quarter.
The company’s security business has reached a significant milestone, surpassing $100 million in annual recurring revenue (ARR) and growing at a mid-40% rate year-over-year.
Needham highlighted Datadog’s strong positioning with AI-Native companies, noting that eight of the top ten organizations in this segment are now Datadog customers, and cited the positive impact of recent sales representative hiring as contributing factors to the company’s performance. The company’s strong market position is reflected in its financial metrics, with net income expected to grow this year and analysts projecting continued profitability.
In other recent news, Datadog reported stronger-than-expected earnings for the second quarter of 2025. The company achieved earnings per share of $0.46, surpassing the projected $0.41, and reported revenue of $827 million, exceeding the anticipated $790.9 million. This performance highlights a 12.2% earnings surprise. Additionally, revenue growth for the quarter was 28%, which was approximately 5% above Rosenblatt’s forecast. Operating margins reached 19.8%, marking an improvement over the previous quarter. In light of these results, both DA Davidson and Rosenblatt have raised their price targets for Datadog to $170, maintaining a Buy rating. DA Davidson attributed this to Datadog’s strong quarter, driven by AI native activity and other business segments. These developments indicate positive momentum for the company in the current financial landscape.
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