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Investing.com - Evercore ISI raised its price target on Datadog (NASDAQ:DDOG), currently trading at $136.38 with a market capitalization of $47.1 billion, to $170 from $132 on Friday, maintaining an Outperform rating following the company’s strong second-quarter results. According to InvestingPro data, the stock has shown impressive momentum with a 19.57% return over the past year.
The cloud monitoring company reported revenue of $827 million, representing 28% growth year-over-year, which accelerated from 25% in the previous quarter and significantly exceeded management’s guidance range of $787-791 million. Operating margins reached 20%, in line with analyst estimates, while maintaining an impressive gross profit margin of 80.15%.
Datadog’s management raised its full-year 2025 revenue guidance by approximately $92 million to $3,312-3,322 million, representing 24% growth, which exceeds Street estimates of $3,240 million. The company also increased its fiscal year 2025 operating margin guidance from 20% to 21%.
The AI-native customer base continues to grow rapidly, representing 11% of second-quarter revenue, up from 8% in the first quarter of 2025 and 4% in the second quarter of 2024. These customers contributed 10 percentage points to revenue growth, up from 6 percentage points in the previous quarter.
Management noted potential increased volatility in the AI-native cohort as customers might optimize their cloud and observability usage over time, which contributes to some conservatism in the guidance. The company’s net revenue retention rate expanded to approximately 120% from high-110% quarter-over-quarter. InvestingPro analysis indicates the company maintains a GOOD financial health score, though current valuations suggest the stock is slightly overvalued. For detailed insights and 13 additional ProTips, visit InvestingPro’s comprehensive research report.
In other recent news, Datadog reported strong second-quarter earnings for 2025, surpassing analyst expectations. The company posted an earnings per share (EPS) of $0.46, above the projected $0.41, and revenue of $827 million, exceeding the anticipated $790.9 million. This performance was highlighted by a 28% revenue growth, which was approximately 5% higher than some forecasts. Analysts have responded positively, with Needham maintaining a $175 price target and DA Davidson and Rosenblatt both raising their price targets to $170, citing strong usage growth driven by AI-native activity. Datadog’s AI-Native customer segment contributed significantly to this growth, now accounting for 11% of the company’s total revenue. Operating margins also showed improvement, reaching 19.8%. These developments have led to a favorable outlook from analysts, who continue to rate the stock as a Buy.
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