Datadog Inc. shares dropped by approximately nineteen percent on Thursday after the IT infrastructure monitoring software developer presented its second-quarter report. The decline occurred despite the company’s financial metrics exceeding analyst forecasts and management raising its full-year guidance.

Company revenue in the second quarter grew by thirty-six percent year-over-year to 1.12 billion dollars, while adjusted earnings per share reached 65 cents compared to the expected 57 to 59 cents. The number of customers spending 100,000 dollars or more annually on the company’s services increased by twenty-three percent to 4,720.

The company also raised its full-year revenue forecast to between 4.45 and 4.47 billion dollars. However, investors were cautious about the third-quarter outlook: expected revenue of 1.135 to 1.145 billion dollars indicates a slowing growth rate to twenty-nine percent year-over-year, down from thirty-six percent in the previous quarter.

The negative market reaction was driven by high stock valuations, which traded at a multiple of over ninety times expected annual earnings prior to the report and had nearly tripled from their 52-week low. Given such elevated expectations, even a moderate slowdown in sequential revenue growth triggered a large-scale sell-off of the shares.