Datadog, a leading security software provider, experienced a significant surge in stock value following the release of their third-quarter earnings report. The company not only surpassed profit expectations but also provided a promising outlook driven by an increasing number of customers transitioning to the cloud.

In Q3, Datadog earned 45 cents per share, surpassing analysts' predictions of 34 cents per share. Additionally, the reported revenue of $547.5 million exceeded the predicted value of $524.7 million.

At the end of the quarter, Datadog boasted a total of 3,130 customers with an annual recurring revenue of $100,000 or more, marking a 20% increase compared to the same period last year.

As a result, the stock experienced a remarkable 23% surge in premarket trading on Tuesday, reaching $97.50.

Looking ahead to the fourth quarter, Datadog's revenue is expected to range between $564 million and $568 million, outperforming analysts' estimates of $544.9 million.

Datadog CEO, Olivier Pomel, expressed optimism about the company's trajectory, stating, "Companies across all industries and sizes are building cloud applications and services to deliver positive business outcomes, including more users, higher revenue growth, improved productivity, and cost savings."

This positive sentiment contrasts with Pomel's cautious stance on customer spending in August, where he mentioned that some larger spending customers were closely analyzing their expenses.

Following the release of Datadog's upbeat commentary, shares of other software companies also experienced gains. Cloud computing company Snowflake (SNOW) saw a 7.3% increase, database management program MongoDB (MDB) rose by 6.3%, and search engine analytics provider Elastic (ESTC) enjoyed a 4.9% gain.

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