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According to a recent report, the global cloud monitoring market is estimated to grow at 23% CAGR to reach $14.7 billion by 2033 from $2.8 billion in 2025. The growth in the market is being driven by the increased adoption of cloud services by businesses globally who are shifting their workloads to public, private, and hybrid cloud environments. Datadog (Nasdaq: DDOG), a leading provider of essential monitoring and security platform for cloud applications, is seeing a strong growth in the demand for their products as well.
 

Datadog’s Financials

For the second quarter, Datadog’s revenues grew 28% to $827 million, ahead of market estimates of $791 million. Non-GAAP earnings per share came in at $0.46, up 6% and ahead of the market expectations of $0.41 per share. It ended the quarter with 3,850 customers with ARR of $100,000 or more, growing 14% over the year.

For the current quarter, Datadog projects revenues of $847-$851 million, compared with market estimates of $820 million. Datadog expects to end the year with revenues of $3.312-$3.322 billion, compared with the earlier guidance of $3.215-$3.322 billion.
 

Datadog’s Product Expansion

Datadog continues to improve its product offerings by leveraging AI capabilities and by building tools to monitor the rising AI adoption. Earlier this summer, it announced the release of new agentic AI monitoring and experimentation capabilities to provide organizations with end-to-end visibility, rigorous testing capabilities, and centralized governance of both in-house and third-party AI agents.

As organizations integrate AI into their products and workflows, they are missing the visibility into how their AI systems behave, what the automated agents are doing and whether they are delivering real business value. By bringing observability best practices to the AI stack, Datadog is hoping to bridge this gap.

Datadog’s LLM Observability product will include new capabilities that will allow organizations to monitor agentic systems, run structured LLM experiments, and evaluate usage patterns and the impact of both custom and third-party agents. This capability will accelerate and secure the deployment of AI tools within the organizations.

Additionally, Datadog released Code Security, a new tool that will empower developers and security teams to detect and prioritize vulnerabilities in their custom code and open-source libraries. The offering uses AI to drive remediation of issues in both AI and traditional applications. It also prioritizes risks based on runtime threat activity and business impact. The tool comes with deep integrations with developer tools to help developers remediate vulnerabilities without disrupting development pipelines. 

To support the development teams, Datadog also launched an Internal Developer Portal (IDP), which claims to be the first and only developer portal built on live observability data. Datadog realizes the need for developers to navigate an expanding set of requirements while ensuring that they understand the systems and services their code depends on in real time.

Unlike static portals, Datadog’s IDP automatically maps services and dependencies to offer a one-stop-shop for real-time performance, service ownership and engineering knowledge. The IDP helps developers build, test, deploy and monitor software, while providing platform engineers can focus on reliability, security, and monitoring standards.

The solution offers a faster triage, better decision making, and improved coordination capability through a live system of record showing what software is running, who is responsible for it, and how it is performing across an organization; pre-built, pre-approved templates for developers to accomplish tasks; out-of-the-box and custom pass/fail rules that allow platform engineers and engineering managers to track compliance with reliability; and out-of-the-box visibility into engineering reliability, software delivery performance and compliance.

Meanwhile, Datadog continues to add to its agentic capabilities with the launch of the Bits AI SRE, Bits AI Dev Agent, and Bits AI Security Analyst agents. The Bits AI series is a list of Datadog’s generative AI assistant tools that helps engineers solve application issues real time. These agents are built on a flexible system of shared tasks and infrastructure that promises to be a scalable way to deploy agents.

Bits AI SRE is a 24×7 on-call responder that performs early triage using telemetry and service context to surface initial investigation findings before responders log in. It assigns appropriate owners, aligns parties with incident summaries and status updates, and proactively suggests next steps.

Bits AI Dev Agent detects issues, generates code fixes, and opens pull requests tailored to organizations’ technology stack to allow users to quickly review and merge changes directly.

Bits AI Security Analyst autonomously triages cloud security information and event management signals, conducts in-depth investigations of potential threats, and delivers reasoned resolution recommendations without human prompting. Currently in Preview mode, these agents will be generally available soon to streamline agentic security.

Datadog’s stock is trading at $157.36 with a market capitalization of $54.9 billion. It touched a 52-week high of $170.08 in December last year and has recovered from the 52-week low of $81.63 that it had fallen to in April this year.

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