Datadog, a leading provider of cloud-based monitoring and analytics solutions, released its second-quarter earnings results on August 4. While the company saw mixed financial performance, with revenue slightly missing expectations and gross margin falling short, it provided strong guidance for the third quarter and full year 2026.

Revenue for the quarter came in at $940-980 million, slightly below the Street’s estimate of $953 million. Gross margin was 70 basis points (bps) below expectations, while earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was 100 bps above the Street’s forecast. Net revenue retention rate (NRR) declined by 1 percentage point quarter over quarter (qoq) to 102%.

On the positive side, Datadog raised its third-quarter and full-year 2026 guidance, with midpoint growth of +14% year over year (yoy) for the second half of 2026. This suggests that the company is confident in its ability to continue growing despite the mixed financial performance in the second quarter.

Industrials/Energy:
The Industrials/Energy sector saw two companies report earnings, with one beating expectations and the other missing.

(+) SEI: Second-quarter revenue of $219 million beat consensus by $8 million, while adjusted pro forma earnings per share (EPS) of $0.39 exceeded expectations by $0.05. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $108 million was $9 million above consensus. The company expanded three longer-term contracts adding over $100 million in annual EBITDA, leading to a raise in third-quarter adj EBITDA guide.

(+) TLN: Second-quarter adj EBITDA of $374 million beat consensus by $28 million, while operating revenue of $747 million was $109 million above expectations. The company is progressing its pipeline of 4 gigawatts (GW) of land development and DC contracting options, with guidance for the full year raised.

(+) ATI: EBITDA beat by $28 million on sales that were $126 million above consensus, while earnings per share (EPS) exceeded expectations by $0.13. Full-year EPS was meaningfully higher at $4.90-$5.18 versus $3.99-$4.27 prior, driven by $1.14-$1.19 billion in EBITDA versus $975 million-$1.03 billion prior.

(+) PH: Fourth-quarter earnings per share (EPS) of $9.27 beat consensus by $0.64, while revenue of $5.76 billion was $127 million above expectations, driven by 8% organic growth. Guidance for 2027 was raised to $34.25-$35.25, implying a 4% move pending the call. Orders were up 19%, with 16% in North America, 24% internationally, and 18% in aerospace.

Overall, while Datadog’s second-quarter results were mixed, the company’s strong guidance for the third quarter and full year 2026 suggests that it is confident in its ability to continue growing despite the challenges faced in the quarter. The Industrials/Energy sector saw two companies beat expectations and one miss, with positive results from SEI and TLN offset by a miss from ATI. PH provided a clearing event with a 6% upside and guidance for 2027 raised to $34.25-$35.25.