Datadog said one of its biggest customers is reducing usage, which is weighing on its outlook.

The data-security company still posted growth in the second quarter, but shared a full-year sales outlook that was below Wall Street estimates. The guidance includes reduced usage from a leading artificial intelligence company, which just signed a nine-figure renewal deal with Datadog.

"Regarding our largest customer, we have seen a usage reduction which is incorporated in our Q3 and full year 2026 guidance," Chief Financial Officer David Obstler said during a call with analysts Thursday.

The stock was down 16% to $238.08 in morning trading.

Datadog expects annual revenue to be $4.45 billion to $4.47 billion. While the outlook was an increase from previous guidance, it was below analysts' projection of $4.69 billion.

The company also raised its 2026 adjusted earnings per share outlook to $2.50 to $2.54, up from $2.36 to $2.44.

Datadog's outlook for the current third quarter was still ahead of estimates. It projects $1.14 billion to $1.15 billion in revenue and 63 cents to 65 cents in adjusted earnings per share. Analysts are forecasting $1.12 billion in revenue and 61 cents a share in adjusted earnings.

The customer that is reducing its usage uses 17 Datadog products to gain visibility on production workloads at a very large scale, executives said. Management declined to share details about the customer or why it was cutting back on usage, and emphasized that it was still gaining momentum with other clients.

"We don't control what's happening to a specific customer, but we do have a great amount of control on what's happening to everything else in the business," Obstler said.

Profit in the second quarter was $44.6 million, or 12 cents a share, up from $2.65 million, or 1 cent a share, a year earlier.

Stripping out certain one-time items, adjusted per-share earnings were 65 cents, ahead of the 58 cents anticipated by analysts, according to FactSet.

Revenue climbed 36% to $1.12 billion. Analysts surveyed by FactSet forecast revenue of $1.08 billion.