Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $1.2 billion | up 35% year-over-year |
| Operating Income | $334 million | 28% operating margin |
| Gross Profit | $972 million | 81.2% margin |
| Customers with $100,000+ ARR | 4,860 | up from 4,060 a year ago |
| Billings | $1.16 billion | up 30% year-over-year |
Guidance and outlook
- Q4 revenue is expected to be in the range of $1.19 billion to $1.2 billion, representing 25% to 26% year-over-year growth.
- Q4 non-GAAP operating income is expected to be in the range of $280 million to $290 million, implying a 24% operating margin.
- Q4 non-GAAP net income per share is expected to be in the $0.69 to $0.71 range.
- Fiscal year 2026 revenue is expected to be in the range of $4.515 billion to $4.525 billion, representing approximately 32% year-over-year growth.
- Fiscal year 2026 non-GAAP operating income is expected to be in the range of $1.095 billion to $1.105 billion, implying a 24% operating margin.
- Fiscal year 2026 non-GAAP net income per share is expected to be in the $2.73 to $2.75 range.
How management sounded
Positive (+6 on our -10 to +10 scale). Management highlighted accelerating growth in non-AI customers and strong AI product adoption, while maintaining a conservative guidance approach regarding their largest customer. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Q4 Guidance and Largest Customer
Asked: Did anything change in the underlying assumptions for the Q4 guide regarding the largest customer?
Answer: Management noted that while the largest customer spent above their minimum commitment in Q3, the Q4 guidance only includes the minimum commitment, which is a conservative approach.
AI Native Cohort Sequentials
Asked: How should investors model the sequential growth of the AI native cohort given early renewals?
Answer: Management explained that while early renewals create some short-term revenue headwinds due to pricing adjustments, they reflect long-term growth and platform expansion, and the cohort is broadening, which will provide more stability over time.
Bits AI Monetization
Asked: How is Bits AI monetized and what is the adoption trend?
Answer: Bits AI is monetized through AI credits on top of the platform, and it has seen the strongest launch in the company's history, with management focusing on passing efficiency gains to customers to drive broader usage.
Infrastructure Monitoring Growth
Asked: How sustainable is the growth in infrastructure monitoring given the $2 billion ARR milestone?
Answer: Management stated that growth is accelerating across the broader customer base, not just AI, and that GPU-related monetization is still an opportunity for the future rather than a primary driver of current growth.
What to watch before the next call
- The consumption patterns of the company's largest customer relative to their minimum commitment.
- The impact of early renewals from large AI customers on short-term revenue growth.
- The adoption and monetization progress of newer AI products like Bits AI and Agent Observability.
