Investing.com -- Datadog, Inc. (NASDAQ: DDOG) reported fourth quarter earnings that exceeded analyst expectations, sending shares soaring 7.9% premarket as investors cheered the cloud monitoring company's strong performance and positive revenue outlook.

The AI-powered observability platform posted adjusted earnings per share of $0.59 for the fourth quarter, beating analyst estimates of $0.55. Revenue jumped 29% YoY to $953 million, significantly outpacing the consensus forecast of $917.01 million. The company also reported impressive customer growth, with 603 customers generating annual recurring revenue of $1 million or more, up 31% from 462 a year ago.

Datadog's stock surge reflects investor enthusiasm for both the earnings beat and the company's first quarter revenue guidance of $951-961 million, which exceeds analyst expectations of $935 million. However, the company's EPS guidance of $0.49-$0.51 for Q1 fell short of the $0.54 consensus estimate.

"We are pleased with our strong execution in fiscal year 2025, with 28% year-over-year revenue growth, $1,050 million in operating cash flow, and $915 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog.

For the full fiscal year 2026, Datadog projects revenue between $4.06 billion and $4.10 billion, slightly below the analyst consensus of $4.11 billion. The company expects adjusted EPS of $2.08-$2.16, also below the $2.41 consensus estimate.

The fourth quarter saw Datadog achieve a non-GAAP operating margin of 24%, generating $291 million in free cash flow.