Pete Buttigieg announced in a speech in his hometown of South Bend, Indiana, Sunday night that he is suspending his bid for the Democratic presidential nomination.

The big picture: The 38-year-old, gay, former small-town mayor ran a historic campaign and shocked the political world by surging to the top of the Democratic field and winning the Iowa caucuses in January. But his inability to gain traction with black voters, as exemplified by his poor showing in Saturday's South Carolina primary, called into question the long-term viability of his campaign.

Buttigieg was third in the field in terms of pledged delegates, winning 26 across Iowa (14), New Hampshire (9) and Nevada (3). He did not finish above the necessary 15% threshold to win delegates in South Carolina.

What they're saying: "At this point in the race, the best way to keep faith with those goals and ideals is to step aside and help bring our party and our country together, so tonight I am making the difficult decision to suspend my campaign for the presidency," Buttigieg said in his South Bend speech.

"I will do everything in my power to ensure that we have a new Democratic president come January."

Between the lines: It's not yet clear which candidate will benefit from Buttigieg's exit. He was widely perceived as sharing a moderate ideological lane with Joe Biden, the winner of the South Carolina primary, but a recent Morning Consult poll showed a tight race for second-choice among Buttigieg supporters.

Bernie Sanders: 21%

Joe Biden/Elizabeth Warren: 19%

Michael Bloomberg: 17%

There is speculation that Buttigieg will make a formal endorsement now that he's out of the race. Buttigieg and Biden have "exchanged voicemails" since the news broke of him suspending his campaign, according to a source familiar with the situation.

On the night of the Nevada caucuses, Buttigieg criticized Sanders — who came in first — for what he characterized as exclusionary politics.

"I believe the best way to defeat Donald Trump ... is to broaden and galvanize the majority that supports us on critical issues," Buttigieg said. "Sen. Sanders believes in an inflexible, ideological revolution that leaves out most Democrats, not to mention most Americans."

The bottom line: Buttigieg was the first openly gay major presidential candidate in U.S. history, and he'll be a player in Democratic politics for a long time to come. With Sen. Bernie Sanders threatening to run away with the nomination on Super Tuesday, the former mayor's exit could significantly shake up the dynamics of the race.

This story is breaking news. Please check back for updates.