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Datadog shares jumped 20% on Thursday after the software company reported third-quarter revenue that topped Wall Street estimates and issued a strong forecast for the fourth quarter.

The company reported revenue of $885.7 million, which was up 28% year over year, and topped the $852.8 million expected by LSEG analysts.

The cloud software company expects fourth quarter revenue to reach between $912 million and $916 million, far surpassing Wall Street’s projections of $887 million.

As artificial intelligence-driven demand for cloud-security products has continued to increase, Datadog has been rolling out multiple AI technologies and security tools over the past year.

“The Datadog R&D team is innovating rapidly to help our customers solve problems in the AI space,” CEO Olivier Pomel said in a release.

The company launched in June Bits AI Agents for SRE, an AI assistant that immediately investigates alerts and drafts incident responses and status updates. Datadog also added multiple new features to its LLM Observability over the summer, including agentic AI monitoring and expanded LLM experimentation.

In June, Datadog also released its MCP Server, which connects AI agents with data sources, and its foundation model TOTO.

Adjusted earnings per share came in at 55 cents, which beat FactSet analyst expectations of 45 cents.

The number of customers with at least $100,000 in annual recurring revenue grew 16% for the quarter.

Datadog reported net income of 33.9 million, or 10 cents per share. Last year, the company had $51.7 million in net income, or 14 cents per share.