The Contracted Revenue Datadog Stock Bears Are Ignoring

Beyond the impressive sales figures, one number in Datadog’s filings offers a clearer view of its future growth and a surprising answer to the biggest risk.

When you look at a high-growth stock like Datadog (DDOG), the conversation almost always lands on two things: its impressive revenue growth and the nagging fear that it cannot last. Skeptics point to intense competition and the law of large numbers as reasons the music might soon slow down. But buried in the financials is a single metric that suggests the opposite may be happening.

That number is Remaining Performance Obligations, or RPO. It represents all the future revenue the company has already locked in under contract but has not yet billed. It is the clearest forward-looking indicator of sales momentum you can find. And for Datadog, it tells a compelling story.

What’s Behind That 51% Jump?

In its latest quarter, Datadog’s RPO grew to $3.48 billion. That is a 51% jump from the same period a year ago. For context, that is significantly faster than the company’s already strong 32% year-over-year revenue growth. When your backlog of contracted business is growing much faster than your current sales, it is a powerful signal of accelerating demand.

This is far more than an accounting curiosity. This backlog is fueled by customers signing more multi-year deals, which management noted increased the RPO duration. These are not fleeting, usage-based commitments; they are longer-term contracts that provide a stable, predictable foundation for future revenue. This growth is also supported by what the company called a new, all-time record for new logo bookings, which more than doubled versus a year ago quarter. Beyond simply signing up, new customers are committing to bigger, longer deals that feed this growing backlog.

How This Backlog Answers The Biggest Worry

The most persistent concern for Datadog investors is concentration risk. Management is open about it, stating in its guidance that it applies a higher degree of conservatism to our largest customer. This naturally makes investors nervous about the potential impact of a single account on the company’s overall performance.

This is precisely where the RPO figure becomes so material. A 51% year-over-year expansion in contracted future revenue, driven by a record number of new logos, shows that the company’s growth engine is broad-based. While any single large customer is important, this swelling backlog provides a substantial cushion. It demonstrates that the company’s future is not tethered to one relationship but is instead being secured by a widening base of customers making long-term commitments.

For investors, the headline revenue figure shows where Datadog has been. The RPO growth shows where it is likely going. The key thing to watch is whether this backlog growth continues to outpace recognized revenue, confirming the company is still signing future business faster than its current growth rate reflects.

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