Cloud security firm Datadog raised its annual revenue forecast and surpassed quarterly sales estimates on Tuesday, driven by growth in large customers and AI-powered workloads.

Figure 1. Datadog Boosts 2025 Revenue Outlook as AI-Driven Cloud Security Soars.

The company has seen significant benefits from the increased adoption of artificial intelligence technologies, fueling strong demand for its cloud monitoring and security platform. Figure 1 shows Datadog Boosts 2025 Revenue Outlook as AI-Driven Cloud Security Soars.

On Monday, Datadog acquired Eppo, a feature flagging and experimentation platform, to enhance its AI and product analytics capabilities, helping customers develop products faster and with reduced risk.

“We are innovating rapidly across the Datadog platform to help customers observe, secure, and act to solve mission-critical business problems in their modern cloud environments,” said CEO Olivier Pomel.

Datadog’s newer offerings, including App Builder and On-Call, are exceeding expectations, while its security monitoring service is attracting strong customer interest, according to analysts.

The company now projects full-year 2025 revenue between $3.22 billion and $3.24 billion, up from its previous forecast of $3.18 billion to $3.20 billion. Analysts had expected around $3.20 billion in revenue, based on data from LSEG.

In the first quarter, total revenue rose 25% year-over-year to $761.6 million, beating analysts’ forecast of $741.5 million.

Overview of Datadog’s Business Growth

Datadog, a leading cloud security and monitoring company, has increased its annual revenue forecast due to strong demand for its services. This growth is driven by more companies adopting artificial intelligence (AI) technologies, which require advanced cloud security and monitoring solutions.

Impact of AI on Cloud Security Demand

As AI-powered workloads become more common, organizations need better tools to monitor and secure their cloud environments. Datadog’s AI-driven cloud security platform is meeting this rising demand, helping the company attract large customers and boost sales.

New Products Driving Success

Datadog’s newer products, such as App Builder (a tool for creating applications) and On-Call (a service for incident management), are performing exceptionally well. Alongside these, its security monitoring solutions are gaining significant interest from customers, fueling overall revenue growth.

Financial Highlights and Forecast

The company reported a 25% year-over-year increase in first-quarter revenue, reaching $761.6 million, surpassing analyst expectations. Based on this strong performance, Datadog has raised its full-year 2025 revenue forecast to between $3.22 billion and $3.24 billion, up from the previous estimate.

Strategic Expansion through Acquisition

To further strengthen its AI and analytics capabilities, Datadog recently acquired Eppo, a platform for feature flagging and experimentation. This acquisition aims to help customers build and improve products faster while reducing risks, supporting Datadog’s long-term growth strategy.

Reference:

1. https://cio.economictimes.indiatimes.com/news/cloud-computing/datadog-lifts-annual-revenue-forecast-on-ai-driven-cloud-security-demand/120950453?utm_source=top_news&utm_medium=sectionListing
2. https://www.reuters.com/technology/datadog-lifts-annual-revenue-forecast-ai-driven-cloud-security-demand-2025-05-06/

Cite this article:

Priyadharshini S (2025), Datadog Raises Annual Revenue Forecast Amid Growing Demand for AI-Powered Cloud Security, AnaTechMaz, pp.137