DDOG 2Q25: Strong Result as Expected, so is Risk

Driven by OpenAI’s strong growth, DDOG delivered a solid set of results with 2Q25 numbers, 3Q25 guidance, and full-year guidance all came in ahead of expectations.

• 2Q25 revenue grew 28% YoY, beating buy-side expectations by ~2 ppts and the high end of guidance by ~4 ppts — the largest beat in several quarters.

• 2Q25 adjusted operating profit beat by ~8%; operating margin beat by ~1 ppt.

• 3Q25 revenue guidance: +23% YoY, ~2 ppts above buy-side expectations.

• 3Q25 OPM guidance back to ~21%.

• FY25 revenue growth guidance raised to 23–24%, raising more than the 2Q beat. Implied 4Q growth just under 20%, above buy-side at ~17–18%.

Management emphasized that rapid expansion of AI-native customers was the main driver.

• AI-native customers accounted for ~11% of 2Q25 revenue (up ~3 ppts QoQ)

• The cohort contributed to ~10% of 2Q revenue growth, implying a slight QoQ slowdown in non-AI revenue growth (19.4% > 18.8%).

• The quarter ended with more than a dozen of AI-native customers above $1M ARR (vs. 10 in 1Q25), with several nearing $10M.

As flagged in our preview, the risk of OpenAI in-sourcing could pressure growth in coming quarters—especially 2026—and weigh on sentiment. The set of result suggest the incremental impact from OpenAI was greater than expected.

Management indicated that ex-OpenAI customer growth in 2Q was stable vs. 1Q, suggesting no clear acceleration in new ARR from other AI-native customers.