Datadog (DDOG) Q4 2025 Deep Dive: AI Actionability, Enterprise Acceleration, and the "Rule of 40"

In this episode, we break down Datadog’s (DDOG) Q4 2025 earnings and their strategic outlook for 2026. Management revealed a revenue beat of $953 million (up 29% YoY) and a record $1.63 billion in bookings, signaling a massive acceleration in the broader enterprise market outside of just AI-native customers.

Key topics covered in this episode:

• The Financials: How Datadog maintains "Rule of 40" status with 29% revenue growth and a 31% Free Cash Flow margin.

• The "AI Actionability" Pivot: We analyze CEO Olivier Pomel’s strategy to shift from merely observing problems to using "Bits AI" agents to fix them. We also explain the two buckets of AI growth: "AI for Datadog" (internal features like the AI SRE agent) and "Datadog for AI" (observability for customers' LLM stacks).

• Platform Stickiness: The "Platformization Scorecard" shows that 18% of customers now use 8+ products, the highest margin and stickiest segment for the company.

• The Bear vs. Bull Debate: Is AI cannibalizing software seats, or creating more complexity? Management argues that the rise of agents creates more systems to monitor, not fewer.

• 2026 Outlook: A look at the conservative guidance of $4.1 billion in revenue for 2026 and why analysts watch the "remaining performance obligations" (RPO) growth of 52% as a leading indicator of future re-acceleration.