Can Datadog's Accelerating Security ARR Power Its Next Leg of Growth?

Datadog’s DDOG security portfolio is emerging as a meaningful growth catalyst as the company moves beyond its observability foundation into broader security operations. Its multi-layered suite spans Cloud SIEM for threat detection and investigation, Cloud Security Posture Management for misconfiguration and compliance analysis, Application Security Management for runtime protection and Software Security Assurance for vulnerability assessment across the development lifecycle. Security Annual Recurring Revenue grew in the mid-50% range year over year during the third quarter of 2025, indicating strong adoption of Datadog’s newer security layers relative to its core portfolio. The company also benefits from an enterprise base of about 4,060 customers generating more than $100,000 in ARR, which provides a steady channel for cross-selling security modules without the friction of onboarding new accounts.The Zacks Consensus Estimate for Datadog’s 2025 revenues is pegged at $3.39 billion, indicating 26% year-over-year growth as multi-product usage deepens. However, sustaining this momentum will require Datadog to navigate several structural challenges. The security market remains highly competitive, with established vendors investing heavily in cloud-native threat detection and posture management. Enterprises reassessing their tool stacks may favor consolidated platforms but could also extend evaluation cycles. Although interest in unified observability-security architectures is rising, adoption remains uneven across industries and geographies. How effectively Datadog balances innovation, platform breadth and enterprise budget dynamics will determine the durability of its security-led growth in the years ahead.DDOG Faces Intensifying CompetitionDatadog faces strong competition from SentinelOne S and CloudflareNET as all three target unified cloud-security adoption. SentinelOne competes with Datadog by positioning its threat detection and cloud-workload capabilities as a streamlined alternative for security teams and SentinelOne increasingly pursues the same consolidation budgets Datadog targets. Cloudflare also competes directly by integrating security telemetry across its network and Zero Trust layers, and Cloudflare frequently emphasises faster incident response to challenge Datadog’s platform strengths. Both SentinelOne and Cloudflare are pushing deeper into cloud-security convergence, intensifying competitive pressure on Datadog’s expanding security suite.DDOG's Price Performance, Valuation & EstimatesShares of Datadog have appreciated 28.7% in the past six months, outperforming the Zacks Internet-Software industry’s decline of 2.8% and the Zacks Computer and Technology sector’s return of 26.1%.DDOG’s Price PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, Datadog is trading at a forward 12-month price-to-sales ratio of 13.45X, higher than the industry’s 4.98X. DDOG carries a Value Score of F.DDOG’s ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for DDOG’s 2025 earnings is pegged at $2 per share, up by 16 cents over the past 30 days. The earnings figure suggests a 9.89% increase year over year.Datadog, Inc. Price and Consensus Datadog, Inc. price-consensus-chart | Datadog, Inc. QuoteDDOG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SentinelOne, Inc. (S): Free Stock Analysis Report Cloudflare, Inc. (NET): Free Stock Analysis Report Datadog, Inc. (DDOG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks