Shares of IT observability platform company Datadog closed down 19 percent despite quarterly results and a full-year outlook that beat market expectations. SiliconANGLE said on Wednesday a large AI customer's plan to reduce product usage and profit-taking selling were seen weighing on the stock.

Datadog posted second-quarter revenue of $1.12 billion, up 36 percent from a year earlier. That topped the FactSet-compiled market forecast of $1.08 billion. Adjusted operating profit was $257 million and adjusted earnings per share were $0.65. The market estimate was $0.58.

Its full-year outlook also exceeded expectations. Datadog projected 2026 revenue of $4.45 billion to $4.47 billion and adjusted earnings per share of $2.52 at the midpoint. Market estimates were $4.36 billion in revenue and adjusted earnings per share of $2.46.

Datadog executives said a large AI customer, which they did not name, recently renewed a nine-figure dollar contract but plans to reduce product usage this year. Datadog's shares have risen more than 90 percent over the past year, which was also cited as a factor prompting some investors to take profits.

Its customer base expanded. Customers spending more than $100,000 a year accounted for more than 40 percent of total revenue, and the number of such customers was about 4,720 as of June 30, up 870 from a year earlier. More than half of all customers use at least 4 products. The large AI customer that renewed its contract uses 17 products.

Datadog launched Beats Agent Builder and Datadog Agent Console in June. Beats Agent Builder supports building AI agents tailored for tasks such as detecting cybersecurity issues and responding to incidents. Datadog Agent Console monitors how users use AI agents. Datadog invests more than 30 percent of revenue in research and development and recently acquired Adaptive ML to accelerate internal AI development.