Will Datadog's non-AI customer usage growth revert below 18% YoY in any quarter reported by H1 2026?

The Q4 2025 data fundamentally changes the calculus. Non-AI usage growth accelerated to 23% YoY, widening the buffer above the 18% threshold from 2pp to 5pp. Three consecutive quarters of acceleration (18% -> 20% -> 23%) establishes a clear upward trend, not a cyclical peak. Management confirmed acceleration continued into January 2026, providing a real-time data point well into Q1. With Q4 already resolved at 23%, only Q1 and Q2 2026 remain as triggers — reducing the window from 3 quarters to 2. For YES, growth would need to decline 5+ percentage points in 1-2 quarters, which historically has only occurred during severe cloud optimization cycles (2022-23). The catch-up spending thesis is significantly weakened by 3 quarters of sustained acceleration. The primary remaining risk is an exogenous macro shock, but even the 2022-23 slowdown took 3-4 quarters to compress growth meaningfully.

Q4 2025 at 23% YoY is the most decisive data point yet. The trajectory is unambiguously accelerating: 18% -> 20% -> 23% across three consecutive quarters. New logo bookings continuing to double YoY provides a compounding growth base. Management's January commentary removes significant uncertainty about Q1 2026 — if January trends are still accelerating, it's extremely unlikely Q1 as a whole reverts below 18%. That leaves effectively only Q2 2026 as a realistic trigger quarter, and even then growth would need to drop 5+ points from wherever Q1 lands. The sibling market calibration feedback shows the ensemble was insufficiently confident on NO outcomes for DDOG — the guide-and-raise pattern consistently delivers stronger results than expected. I assign 10% primarily for true tail risk: a sudden macro shock, a major customer loss, or a one-time usage adjustment that creates a single-quarter anomaly.

While the acceleration trend is impressive, I give slightly more weight to potential reversion factors than the pure momentum case. Even with 23% in Q4 and January acceleration, several risks persist: (1) the qualitative disclosure method means 23% could actually be 21-25%, and a moderate slowdown could be characterized as 'approximately 17%' in a future quarter; (2) if the acceleration reflects pull-forward of enterprise monitoring expansion, a natural pause could occur; (3) tariff and trade policy uncertainty in early 2026 could cause enterprise IT spending hesitation. However, the weight of evidence strongly favors sustained above-18% growth. A 5pp decline in 1-2 quarters from an accelerating base is a low-probability scenario absent a major catalyst. I weight this at 12% to account for unknown unknowns and the inherent uncertainty of forecasting 2 quarters out.

The updated data makes this market heavily skewed toward NO. Q4 2025 non-AI growth at 23% YoY is 5 percentage points above the threshold, up from 20% in Q3. The 3-quarter acceleration trend (18% -> 20% -> 23%) combined with management confirming January continuation makes a Q1 reversion below 18% extremely unlikely. For Q2 2026, growth would need to decline 5+ points from wherever Q1 lands — which would require a sharp, sudden downturn unprecedented in Datadog's history outside of the COVID/optimization cycle. New logo bookings doubling provides a structural floor. The calibration feedback from sibling markets confirms the ensemble should be more confident on DDOG NO outcomes. Only a genuine macro recession or black swan event could plausibly cause this magnitude of deceleration in the timeframe.

The prior batch estimated 23% YES when growth was at 20% with a 2pp buffer. Now with 23% growth (5pp buffer), 3 quarters of acceleration, January continuation confirmed, and only 2 remaining trigger quarters, the probability should be substantially lower. I estimate the per-quarter probability of dipping below 18% at roughly 5-6%, so across 2 quarters the compound probability is approximately 10-11%. The key scenarios that could trigger YES: (1) sudden enterprise cloud spending freeze from macro shock (~4% probability per quarter), (2) Datadog-specific event like a major customer churn or pricing backlash (~1% per quarter), (3) measurement artifact in qualitative disclosure (~1% per quarter). Against these, management's forward-looking January commentary provides unusual real-time visibility into Q1.

Updating from the prior batch: the key changes are (1) Q4 growth at 23% vs 20% — widening buffer from 2pp to 5pp, (2) acceleration over 3 consecutive quarters vs 2 — strengthening the trend, (3) only 2 remaining trigger quarters vs 3 — narrowing the window, (4) January acceleration confirmed — providing forward visibility. Each of these independently pushes the probability down. The catch-up spending debate, which was the strongest bull case for YES, has been materially weakened by 3 quarters of acceleration — catch-up spending typically creates a one-time step-up, not sustained multi-quarter acceleration. The insider selling pattern continues but is all 10b5-1 and consistent with historical patterns. I assign 10% as the irreducible uncertainty floor for a 2-quarter horizon with potential macro risks.

Non-AI growth accelerated to 23% YoY in Q4 2025, creating a 5pp buffer above the 18% threshold. With 3 quarters of consecutive acceleration and January continuation confirmed, Q1 2026 is very likely to stay above 18%. Only Q2 2026 presents meaningful risk. A 5pp+ decline from an accelerating base in 1-2 quarters would be exceptional. Probability set at 10% for tail risk.

While the Q4 data is strongly positive, I weigh macro uncertainty more heavily. Enterprise IT spending faces headwinds from potential trade policy disruption, interest rate uncertainty, and AI spending crowding out monitoring budgets. The qualitative disclosure method means a growth rate of 19% could be characterized as 'high teens' vs 'approximately 20%' — disclosure ambiguity adds risk near boundaries. Two quarters is still enough time for a spending freeze to compress usage growth. However, the 5pp buffer and acceleration trend make this unlikely. I set 14% to reflect higher macro and disclosure uncertainty.

The data strongly supports NO. Growth at 23% and accelerating into January means Q1 2026 is almost certainly above 18%. For Q2, the base of doubled new logos and broadening platform adoption creates structural support. Calibration feedback shows the ensemble should be more confident on DDOG NO outcomes. The 2022-23 optimization cycle — the only comparable deceleration — took 3-4 quarters to materially compress growth. With only 2 quarters remaining and a 5pp buffer, 8% captures the residual tail risk.