The unaudited condensed consolidated financial statements within this document include the accounts of Datadog, Inc. and its wholly-owned subsidiaries ("Datadog" or the "Company"), and have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP").
The Company also discloses the following non-GAAP financial measures within this document: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per basic share, non-GAAP net income (loss) per diluted share, free cash flow, and free cash flow margin. Datadog uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Datadog's financial performance. Datadog believes they are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. Datadog's non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Datadog's reported financial results.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.
Datadog defines non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin and non-GAAP net income (loss) as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense; (2) the amortization of acquired intangibles; (3) employer payroll taxes on employee stock transactions; (4) M&A transaction costs; (5) amortization of issuance costs; and (6) an assumed provision for income taxes based on our long-term projected tax rate. Non-GAAP financial measures prior to April 1, 2025 have not been adjusted for M&A transaction costs, as such costs were not material to our results of operations in such prior periods. Our estimated long-term projected tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in Datadog's geographic earnings mix, or other changes to our strategy or business operations. We will re-evaluate our long-term projected tax rate as appropriate.
Datadog defines free cash flow as net cash provided by operating activities, minus capital expenditures and minus capitalized software development costs, if any. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.
Management believes these non-GAAP financial measures are useful to investors and others in assessing Datadog's operating performance due to the following factors:
Stock-based compensation. Datadog utilizes stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.
Amortization of acquired intangibles. Datadog views amortization of acquired intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of acquired intangibles is an expense that is not typically affected by operations during any particular period.
Employer payroll taxes on employee stock transactions. Datadog excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of Datadog's common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of Datadog's business.
M&A transaction costs. Datadog views acquisition-related expenses, such as transaction costs, as costs that are not necessarily reflective of operational performance during a period. In particular, Datadog believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.
Amortization of issuance costs. In June 2020 and December 2024, Datadog issued $747.5 million of 0.125% convertible senior notes due 2025 and $1.0 billion of 0.00% convertible senior notes due 2029, respectively. Debt issuance costs, which reduce the carrying value of the convertible debt instrument, are amortized as interest expense over the term. The expense for the amortization of debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.
Additionally, Datadog's management believes that the non-GAAP financial measure free cash flow is meaningful to investors because it is a measure of liquidity that provides useful information in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business. Free cash flow represents net cash provided by operating activities, reduced by capital expenditures and capitalized software development costs, if any. The reduction of capital expenditures and amounts capitalized for software development facilitates comparisons of Datadog's liquidity on a period-to-period basis and excludes items that management does not consider to be indicative of our liquidity.
Operating MetricsDatadog's number of customers with ARR of $100,000 or more is based on the ARR of each customer, as of the last month of the quarter.
We define the number of customers as the number of accounts with a unique account identifier for which we have an active subscription in the period indicated. Users of our free trials or tier are not included in our customer count. A single organization with multiple divisions, segments or subsidiaries is generally counted as a single customer. However, in some cases where they have separate billing terms, we may count separate divisions, segments or subsidiaries as multiple customers.
We define ARR as the annualized revenue run-rate of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly recurring revenue, or MRR, and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts, additional usage, usage from subscriptions for a committed contractual amount of usage that is delivered as used, and monthly subscriptions. ARR and MRR should be viewed independently of revenue, and do not represent our revenue under GAAP on a monthly or annualized basis, as they are operating metrics that can be impacted by contract start and end dates and renewal rates. ARR and MRR are not intended to be replacements or forecasts of revenue.
A further indication of the propensity of our customer relationships to expand over time is our dollar-based net retention rate, which compares our ARR from the same set of customers in one period, relative to the year-ago period. We calculate dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end, or the Prior Period ARR. We then calculate the ARR from these same customers as of the current period-end, or the Current Period ARR. Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months, but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the point-in-time dollar-based net retention rate. We then calculate the weighted average of the trailing 12-month point-in-time dollar-based net retention rates, to arrive at the trailing 12-month dollar-based net retention rate.
Condensed Consolidated Statements of Operations(In thousands, except per share data; unaudited)
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
Revenue $ 737,727 $ 761,553 | $ 826,760 | $ 885,651 $ 953,194 $1,006,426 $1,121,454 $ 1,197,090 | |||||
Cost of revenue (1)(2)(3) 144,178 157,628 | 165,978 | 176,457 186,894 209,228 240,113 237,167 | |||||
Gross profit 593,549 603,925 | 660,782 | 709,194 766,300 797,198 881,341 959,923 | |||||
Operating expenses: | |||||||
Research and development (1)(3) 316,314 341,061 | 387,482 | 401,982 417,926 435,298 477,968 491,570 | |||||
Sales and marketing (1)(2)(3) 207,947 214,291 | 239,026 | 238,729 264,377 279,823 311,519 303,298 | |||||
General and administrative (1)(3)(4) 59,896 60,993 | 69,774 | 74,292 74,641 74,750 86,399 90,349 | |||||
Total operating expenses 584,157 616,345 | 696,282 | 715,003 756,944 789,871 875,886 885,217 | |||||
Operating income (loss) 9,392 (12,420) | (35,500) | (5,809) 9,356 7,327 5,455 74,706 | |||||
Operating income | |||||||
Interest expense (5) (2,643) (2,963) | (3,075) | (2,421) (2,600) (3,119) (3,255) (3,235) | |||||
Interest income and other income, net 47,077 47,179 | 44,663 | 43,897 46,714 54,722 49,533 53,108 | |||||
Other income, net 44,434 44,216 | 41,588 | 41,476 44,114 51,603 46,278 49,873 | |||||
Income before provision for income taxes 53,826 31,796 | 6,088 | 35,667 53,470 58,930 51,733 124,579 | |||||
Provision for income taxes 8,232 7,154 | 3,441 | 1,782 6,903 6,356 7,175 6,263 | |||||
Net income $ 45,594 $ 24,642 | $ 2,647 | $ 33,885 $ 46,567 $ 52,574 $ 44,558 $ 118,316 | |||||
Net income per share - basic $ 0.13 $ 0.07 | $ 0.01 | $ 0.10 $ 0.13 $ 0.15 $ 0.13 $ 0.33 | |||||
Net income per share - diluted $ 0.13 $ 0.07 | $ 0.01 | $ 0.10 $ 0.13 $ 0.15 $ 0.12 $ 0.32 | |||||
Weighted average shares used in calculating net income per share: | |||||||
Basic 340,320 343,097 | 346,185 | 348,645 350,892 353,272 356,253 358,617 | |||||
Diluted 360,940 363,078 | 358,725 | 362,001 365,516 364,731 371,023 375,014 | |||||
(1) Includes stock-based compensation expense as follows: | |||||||
Cost of revenue $ 8,052 $ 6,651 | $ 6,783 | $ 8,038 $ 8,257 $ 8,558 $ 9,256 $ 9,514 | |||||
Research and development 97,276 105,735 | 112,445 | 124,288 127,058 123,671 131,682 146,376 | |||||
Sales and marketing 33,598 34,125 | 37,442 | 41,463 43,442 42,298 47,098 49,226 | |||||
General and administrative 19,535 17,754 | 23,792 | 26,769 26,629 22,314 32,215 32,065 | |||||
Total $ 158,461 $ 164,265 | $ 180,462 | $ 200,558 $ 205,386 $ 196,841 $ 220,251 $ 237,181 | |||||
(2) Includes amortization of acquired intangibles as follows: | |||||||
Cost of revenue $ 1,104 $ 894 | $ 1,518 | $ 1,451 $ 1,565 $ 1,282 $ 1,310 $ 2,056 | |||||
Sales and marketing 207 203 | 188 | 277 277 358 362 366 | |||||
Total $ 1,311 $ 1,097 | $ 1,706 | $ 1,728 $ 1,842 $ 1,640 $ 1,672 $ 2,422 | |||||
(3) Includes employer payroll taxes on employee stock transactions | as follows: | ||||||
Cost of revenue $ 68 $ 186 | $ 165 | $ 169 $ 175 $ 188 $ 392 $ 270 | |||||
Research and development 7,410 9,582 | 11,819 | 8,177 10,605 11,276 21,211 13,522 | |||||
Sales and marketing 873 1,570 | 1,359 | 1,480 1,514 1,895 3,632 2,626 | |||||
General and administrative 1,653 2,225 | 2,724 | 1,061 989 3,635 2,408 2,443 | |||||
Total $ 10,004 $ 13,563 | $ 16,067 | $ 10,887 $ 13,283 $ 16,994 $ 27,643 $ 18,861 | |||||
(4) Includes M&A transaction costs as follows: | |||||||
General and administrative $ - $ - | $ 1,373 | $ - $ 201 $ 695 $ 2,010 $ 1,119 | |||||
Total $ - $ - | $ 1,373 | $ - $ 201 $ 695 $ 2,010 $ 1,119 | |||||
(5) Includes amortization of issuance costs as follows:
Interest expense $ 1,089 $ 1,819 $ 1,691 $ 1,046 $ 1,046 $ 1,047 $ 1,049 $ 1,050
Total $ 1,089 $ 1,819 $ 1,691 $ 1,046 $ 1,046 $ 1,047 $ 1,049 $ 1,050
Non-GAAP Condensed Consolidated Statements of Operations(In thousands, except per share data; unaudited)
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |
Revenue | $ 737,727 | $ 761,553 | $ 826,760 | $ 885,651 | $ 953,194 | $1,006,426 | $1,121,454 | $ 1,197,090 |
Cost of revenue | 134,954 | 149,897 | 157,512 | 166,799 | 176,897 | 199,200 | 229,155 | 225,327 |
Gross profit | 602,773 | 611,656 | 669,248 | 718,852 | 776,297 | 807,226 | 892,299 | 971,763 |
Operating expenses: | ||||||||
Research and development | 211,628 | 225,744 | 263,218 | 269,517 | 280,263 | 300,351 | 325,075 | 331,672 |
Sales and marketing | 173,269 | 178,393 | 200,037 | 195,509 | 219,144 | 235,272 | 260,427 | 251,080 |
General and administrative | 38,708 | 41,014 | 41,885 | 46,462 | 46,822 | 48,106 | 49,766 | 54,722 |
Total operating expenses | 423,605 | 445,151 | 505,140 | 511,488 | 546,229 | 583,729 | 635,268 | 637,474 |
Operating income | 179,168 | 166,505 | 164,108 | 207,364 | 230,068 | 223,497 | 257,031 | 334,289 |
Other income (loss): | ||||||||
Interest expense | (1,554) | (1,144) | (1,384) | (1,375) | (1,554) | (2,072) | (2,206) | (2,185) |
Interest income and other income, net | 47,077 | 47,179 | 44,663 | 43,897 | 46,714 | 54,722 | 49,533 | 53,108 |
Other income, net | 45,523 | 46,035 | 43,279 | 42,522 | 45,160 | 52,650 | 47,327 | 50,923 |
Income before provision for income taxes | 224,691 | 212,540 | 207,387 | 249,886 | 275,228 | 276,147 | 304,358 | 385,212 |
Provision for income taxes | 8,232 | 7,154 | 3,441 | 1,782 | 6,903 | 6,356 | 7,175 | 6,263 |
Non-GAAP net income before non-GAAP tax adjustments | 216,459 | 205,386 | 203,946 | 248,104 | 268,325 | 269,791 | 297,183 | 378,949 |
Income tax effects and adjustments (1) | 38,953 | 37,479 | 40,110 | 50,694 | 50,895 | 51,635 | 56,740 | 74,632 |
Non-GAAP net income after non-GAAP tax adjustments | $ 177,506 | $ 167,907 | $ 163,836 | $ 197,410 | $ 217,430 | $ 218,156 | $ 240,443 | $ 304,317 |
Non-GAAP net income per share before non-GAAP tax adjustments -basic | $ 0.64 | $ 0.60 | $ 0.59 | $ 0.71 | $ 0.76 | $ 0.76 | $ 0.83 | $ 1.06 |
Non-GAAP net income per share before non-GAAP tax adjustments -diluted | $ 0.60 | $ 0.57 | $ 0.57 | $ 0.69 | $ 0.73 | $ 0.74 | $ 0.80 | $ 1.01 |
Non-GAAP net income per share after non-GAAP tax adjustments - basic | $ 0.52 | $ 0.49 | $ 0.47 | $ 0.57 | $ 0.62 | $ 0.62 | $ 0.67 | $ 0.85 |
Non-GAAP net income per share after non-GAAP tax adjustments - diluted | $ 0.49 | $ 0.46 | $ 0.46 | $ 0.55 | $ 0.59 | $ 0.60 | $ 0.65 | $ 0.81 |
Weighted average shares used in calculating non-GAAP net income per share: | ||||||||
Basic | 340,320 | 343,097 | 346,185 | 348,645 | 350,892 | 353,272 | 356,253 | 358,617 |
Diluted | 360,940 | 363,078 | 358,725 | 362,001 | 365,516 | 364,731 | 371,023 | 375,014 |
1) Non-GAAP financial information for the periods shown are adjusted for an assumed provision for income taxes based on our long-term projected tax rate of 21%. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
Condensed Consolidated Balance Sheets(In thousands; unaudited)
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ 1,246,983 | $ 1,079,854 | $ 489,030 | $ 540,602 | $ 401,305 | $ 426,360 | $ 434,957 | $ 881,230 |
Marketable securities | 2,942,076 | 3,369,820 | 3,421,940 | 3,599,737 | 4,073,531 | 4,332,257 | 4,550,481 | 4,352,357 |
Accounts receivable, net | 598,919 | 490,172 | 604,174 | 549,648 | 741,262 | 680,434 | 827,345 | 793,977 |
Deferred contract costs, current | 56,095 | 58,832 | 62,090 | 67,201 | 76,022 | 81,687 | 87,350 | 94,735 |
Prepaid expenses and other current assets | 67,042 | 77,660 | 67,442 | 80,917 | 90,160 | 104,468 | 108,424 | 108,995 |
Total current assets | 4,911,115 | 5,076,338 | 4,644,676 | 4,838,105 | 5,382,280 | 5,625,206 | 6,008,557 | 6,231,294 |
Property and equipment, net | 226,970 | 249,916 | 283,084 | 307,609 | 338,093 | 378,944 | 409,634 | 438,173 |
Operating lease assets | 172,512 | 203,074 | 215,626 | 218,682 | 214,674 | 213,260 | 206,037 | 229,256 |
Goodwill | 360,381 | 361,738 | 530,982 | 530,043 | 530,568 | 540,543 | 706,721 | 706,644 |
Intangible assets, net | 3,711 | 2,626 | 17,239 | 16,810 | 14,968 | 14,929 | 23,157 | 19,736 |
Deferred contract costs, non-current | 86,573 | 90,501 | 95,568 | 105,943 | 126,708 | 136,264 | 145,028 | 157,958 |
Other assets | 24,077 | 26,188 | 35,240 | 35,278 | 36,553 | 42,866 | 48,541 | 55,967 |
TOTAL ASSETS $ 5,785,339 $ 6,010,381 $ 5,822,415 $ 6,052,470 $ 6,643,844 $ 6,952,012 $ 7,547,675 $ 7,839,028 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 107,731 $ 98,442 $ 198,767 $ 135,243 $ 148,791 $ 174,801 $ 313,529 $ 266,417
Accrued expenses and other current
liabilities 127,136 138,238 148,028 175,198 209,595 208,549 230,548 228,610
Operating lease liabilities, current 31,970 34,228 39,955 35,989 39,369 41,401 44,218 46,177
Convertible senior notes, net,
current 634,023 634,780 - - - - - -
Deferred revenue, current 961,853 949,135 966,442 974,264 1,193,646 1,231,152 1,286,690 1,235,133
Total current liabilities 1,862,713 1,854,823 1,353,192 1,320,694 1,591,401 1,655,903 1,874,985 1,776,337
Operating lease liabilities, non-
current
196,905
227,974
243,115
260,926
256,187
259,155
248,038
274,462
Convertible senior notes, net, non-
current 979,282 980,314 981,357 982,402 983,449 984,496 985,545 986,595
Deferred revenue, non-current 22,693 21,560 29,866 29,028 68,711 50,918 50,860 65,081
Total liabilities 3,070,976 3,093,707 2,626,658 2,613,352 2,911,638 2,963,790 3,180,515 3,123,216
Other liabilities 9,383 9,036 19,128 20,302 11,890 13,318 21,087 20,741
Additional paid-in capital 2,689,013 2,860,643 3,130,130 3,335,703 3,579,010 3,801,272 4,139,000 4,383,737
STOCKHOLDERS' EQUITY
Common stock 3 3 3 3 3 3 3 3
Accumulated other comprehensive
Retained earnings 30,048 54,690 57,337 91,222 137,789 190,363 234,921 353,237
(loss) income (4,701) 1,338 8,287 12,190 15,404 (3,416) (6,764) (21,165)
Total stockholders' equity 2,714,363 2,916,674 3,195,757 3,439,118 3,732,206 3,988,222 4,367,160 4,715,812
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$ 5,785,339 $ 6,010,381 $ 5,822,415 $ 6,052,470 $ 6,643,844 $ 6,952,012 $ 7,547,675 $ 7,839,028
Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income $ 45,594 $ 24,642 | $ 2,647 | $ | 33,885 | $ 46,567 | $ 52,574 | $ 44,558 | $ | 118,316 |
Adjustments to reconcile net income to net cash provided by operating | activities: | |||||||
Depreciation and amortization 15,706 11,255 | 12,822 | 15,048 | 16,631 | 17,923 | 19,489 | 20,790 | ||
Accretion of discounts on marketable securities (12,393) (10,370) | (10,927) | (10,855) | (12,364) | (11,880) | (12,480) | (12,743) | ||
Amortization of issuance costs 1,089 1,819 | 1,691 | 1,046 | 1,046 | 1,047 | 1,049 | 1,050 | ||
Net loss on conversion inducement and capped call settlement 599 - | - | - | - | - | - | - | ||
Amortization of deferred contract costs 14,279 14,853 | 15,977 | 17,231 | 18,712 | 20,325 | 22,077 | 23,827 | ||
Stock-based compensation, net of amounts capitalized 158,461 164,265 | 180,462 | 200,558 | 205,386 | 196,841 | 220,251 | 237,181 | ||
Non-cash lease expense 7,002 8,389 | 9,001 | 9,060 | 9,001 | 9,073 | 9,517 | 9,749 | ||
Allowance for credit losses on accounts receivable 4,473 4,520 | 3,895 | 3,967 | 4,642 | 4,953 | 5,641 | 8,510 | ||
Loss (gain) on disposal of property and equipment 1,308 (145) | 977 | 1,314 | (5) | 1,134 | 534 | 1,226 | ||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net (116,327) 104,227 | (115,899) | 50,559 | (196,255) | 55,874 | (151,649) | 24,858 | ||
Deferred contract costs (24,725) (21,519) | (24,301) | (32,718) | (48,298) | (35,545) | (36,505) | (44,141) | ||
Prepaid expenses and other current assets (16,581) (10,263) | 11,343 | (13,116) | (9,263) | (14,445) | (730) | (2,737) | ||
Other assets (4,639) (1,217) | (1,821) | (162) | (606) | (522) | (1,955) | (4,551) | ||
Accounts payable 17,034 (10,712) | 96,352 | (61,341) | 12,329 | 21,500 | 133,620 | (50,416) | ||
Accrued expenses and other liabilities 4,083 5,648 | (3,250) | 30,010 | 20,481 | (3,877) | 6,975 | (3,633) | ||
Deferred revenue 170,265 (13,851) | 21,086 | 6,984 | 259,065 | 19,647 | 55,480 | (37,335) | ||
Net cash provided by operating activities 265,228 271,541 | 200,055 | 251,470 | 327,069 | 334,622 | 315,872 | 289,951 | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of marketable securities (507,309) (970,302) | (751,477) | (795,593) | (1,082,469) | (1,304,965) | (1,132,495) | (787,465) | ||
Maturities of marketable securities 428,445 555,938 | 697,172 | 631,163 | 603,384 | 1,046,415 | 598,288 | 984,455 | ||
Proceeds from sale of marketable securities 233 (76) | 13,212 | (11) | 17,979 | (57) | 323,146 | (3) | ||
Purchases of property and equipment (7,761) (8,748) | (15,152) | (16,786) | (8,892) | (11,358) | (9,889) | (10,872) | ||
Capitalized software development costs (16,495) (18,402) | (19,550) | (20,732) | (27,156) | (34,173) | (27,279) | (28,445) | ||
Cash paid for acquisition of businesses, net of cash acquired (6,477) (1,818) | (115,272) | (192) | (700) | (10,660) | (101,650) | (3,299) | ||
Net cash (used in) provided by investing activities (109,364) (443,408) | (191,067) | (202,151) | (497,854) | (314,798) | (349,879) | 154,371 | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from exercise of stock options 2,243 1,673 | 1,685 | 1,271 | 1,809 | 9,711 | 2,754 | 2,368 | ||
Proceeds for issuance of common stock under the employee stock purchase plan 21,179 - | 28,578 | - | 28,238 | - | 39,067 | - | ||
Proceeds from issuance of 2029 Convertible Senior Notes, net of issuance costs 978,881 - | (190) | - | - | - | - | - | ||
Proceeds from settlement of capped calls related to 2025 Convertible Senior Notes 54,725 - | - | - | - | - | - | - | ||
Purchase of capped calls related to 2029 Convertible Senior Notes (100,900) - | - | - | - | - | - | - | ||
Repayments of 2025 Convertible Senior Notes (196,704) (20) | (635,527) | - | - | - | - | - | ||
Net cash provided by (used in) financing activities 759,424 1,653 | (605,454) | 1,271 | 30,047 | 9,711 | 41,821 | 2,368 | ||
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |
Effect of exchange rate changes on cash and cash equivalents | (5,723) | 3,085 | 5,642 | 982 | 1,441 | (4,480) | 783 | (417) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 909,565 | (167,129) | (590,824) | 51,572 | (139,297) | 25,055 | 8,597 | 446,273 |
CASH AND CASH EQUIVALENTS - Beginning of period | 337,418 | 1,246,983 | 1,079,854 | 489,030 | 540,602 | 401,305 | 426,360 | 434,957 |
CASH AND CASH EQUIVALENTS - End | ||||||||
of period | $1,246,983 | $1,079,854 $ 489,030 $ 540,602 $ 401,305 $ 426,360 $ 434,957 $ 881,230 | ||||||
Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026
Reconciliation of gross profit and gross margin
GAAP gross profit $ 593,549 $ 603,925 $ 660,782 $ 709,194 $ 766,300 $ 797,198 $ 881,341 $ 959,923
Plus: Stock-based compensation
expense
8,052
6,651
6,783
8,038
8,257
8,558
9,256
9,514
Plus: Amortization of acquired
intangibles 1,104 894 1,518 1,451 1,565 1,282 1,310 2,056
270
392
188
175
169
165
186
68
Plus: Employer payroll taxes on
employee stock transactions
GAAP gross margin | 80 % | 79 % | 80 % | 80 % | 80 % | 79 % | 79 % | 80 % |
Non-GAAP gross margin | 82 % | 80 % | 81 % | 81 % | 81 % | 80 % | 80 % | 81 % |
Reconciliation of operating expenses |
Non-GAAP gross profit $ 602,773 $ 611,656 $ 669,248 $ 718,852 $ 776,297 $ 807,226 $ 892,299 $ 971,763
GAAP research and development | $ 316,314 $ 341,061 $ 387,482 $ 401,982 $ 417,926 $ 435,298 $ 477,968 $ 491,570 | ||||||
Less: Stock-based compensation expense | (97,276) (105,735) (112,445) (124,288) (127,058) (123,671) (131,682) (146,376) | ||||||
Less: Employer payroll taxes on employee stock transactions | (7,410) (9,582) (11,819) (8,177) (10,605) (11,276) (21,211) (13,522) | ||||||
Non-GAAP research and development | $ 211,628 $ 225,744 $ 263,218 $ 269,517 $ 280,263 $ 300,351 $ 325,075 $ 331,672 | ||||||
GAAP sales and marketing | $ 207,947 $ 214,291 $ 239,026 | $ 238,729 | $ 264,377 | $ 279,823 | $ 311,519 | $ 303,298 | |
Less: Stock-based compensation expense | (33,598) (34,125) (37,442) | (41,463) | (43,442) | (42,298) | (47,098) | (49,226) | |
Less: Amortization of acquired intangibles | (207) (203) (188) | (277) | (277) | (358) | (362) | (366) | |
Less: Employer payroll taxes on employee stock transactions | (873) (1,570) (1,359) | (1,480) | (1,514) | (1,895) | (3,632) | (2,626) | |
Non-GAAP sales and marketing | $ 173,269 $ 178,393 $ 200,037 | $ 195,509 | $ 219,144 | $ 235,272 | $ 260,427 | $ 251,080 | |
GAAP general and administrative | $ 59,896 $ 60,993 $ 69,774 | $ 74,292 | $ 74,641 | $ 74,750 | $ 86,399 | $ 90,349 | |
Less: Stock-based compensation expense | (19,535) (17,754) (23,792) | (26,769) | (26,629) | (22,314) | (32,215) | (32,065) | |
Less: Employer payroll taxes on employee stock transactions | (1,653) (2,225) (2,724) | (1,061) | (989) | (3,635) | (2,408) | (2,443) | |
Less: M&A transaction costs (1) | - - (1,373) | - | (201) | (695) | (2,010) | (1,119) | |
Non-GAAP general and administrative | $ 38,708 $ 41,014 $ 41,885 | $ 46,462 | $ 46,822 | $ 48,106 | $ 49,766 | $ 54,722 | |
Reconciliation of operating (loss) income and operating margin | |||||||
GAAP operating income (loss) $ 9,392 $ (12,420) | $ (35,500) | $ (5,809) | $ 9,356 | $ 7,327 | $ 5,455 | $ 74,706 | |
Plus: Stock-based compensation expense 158,461 164,265 | 180,462 | 200,558 | 205,386 | 196,841 | 220,251 | 237,181 | |
Plus: Amortization of acquired intangibles 1,311 1,097 | 1,706 | 1,728 | 1,842 | 1,640 | 1,672 | 2,422 | |
Plus: Employer payroll taxes on employee stock transactions 10,004 13,563 | 16,067 | 10,887 | 13,283 | 16,994 | 27,643 | 18,861 | |
Plus: M&A transaction costs (1) - - | 1,373 | - | 201 | 695 | 2,010 | 1,119 | |
Non-GAAP operating income $ 179,168 $ 166,505 | $ 164,108 | $ 207,364 | $ 230,068 | $ 223,497 | $ 257,031 | $ 334,289 | |
GAAP operating margin 1 % (2)% | (4)% | (1)% | 1 % | 1 % | 0 % | 6 % | |
Non-GAAP operating margin 24 % 22 % | 20 % | 23 % | 24 % | 22 % | 23 % | 28 % | |
The three months ended June 30, 2025 were adjusted for M&A transaction costs, and these adjustments were applied prospectively, as these costs were not material to the consolidated results of operations in the prior periods.
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |
Reconciliation of net income | ||||||||
GAAP net income | $ 45,594 | $ 24,642 | $ 2,647 | $ 33,885 | $ 46,567 | $ 52,574 | $ 44,558 | $ 118,316 |
Plus: Stock-based compensation expense | 158,461 | 164,265 | 180,462 | 200,558 | 205,386 | 196,841 | 220,251 | 237,181 |
Plus: Amortization of acquired intangibles | 1,311 | 1,097 | 1,706 | 1,728 | 1,842 | 1,640 | 1,672 | 2,422 |
Plus: Employer payroll taxes on employee stock transactions | 10,004 | 13,563 | 16,067 | 10,887 | 13,283 | 16,994 | 27,643 | 18,861 |
Plus: M&A transaction costs (1) | - | - | 1,373 | - | 201 | 695 | 2,010 | 1,119 |
Plus: Amortization of issuance costs | 1,089 | 1,819 | 1,691 | 1,046 | 1,046 | 1,047 | 1,049 | 1,050 |
Non-GAAP net income before non-GAAP tax adjustments | 216,459 | 205,386 | 203,946 | 248,104 | 268,325 | 269,791 | 297,183 | 378,949 |
Income tax effects and adjustments (2) | 38,953 | 37,479 | 40,110 | 50,694 | 50,895 | 51,635 | 56,740 | 74,632 |
Non-GAAP net income after non-GAAP tax adjustments | $ 177,506 | $ 167,907 | $ 163,836 | $ 197,410 | $ 217,430 | $ 218,156 | $ 240,443 | $ 304,317 |
Non-GAAP net income per share before non-GAAP tax adjustments -basic | $ 0.64 | $ 0.60 | $ 0.59 | $ 0.71 | $ 0.76 | $ 0.76 | $ 0.83 | $ 1.06 |
Non-GAAP net income per share before non-GAAP tax adjustments -diluted | $ 0.60 | $ 0.57 | $ 0.57 | $ 0.69 | $ 0.73 | $ 0.74 | $ 0.80 | $ 1.01 |
Non-GAAP net income per share after non-GAAP tax adjustments -basic | $ 0.52 | $ 0.49 | $ 0.47 | $ 0.57 | $ 0.62 | $ 0.62 | $ 0.67 | $ 0.85 |
Non-GAAP net income per share after non-GAAP tax adjustments -diluted | $ 0.49 | $ 0.46 | $ 0.46 | $ 0.55 | $ 0.59 | $ 0.60 | $ 0.65 | $ 0.81 |
Shares used in non-GAAP net income | per share calculations: | |||||||
Basic | 340,320 343,097 | 346,185 | 348,645 | 350,892 | 353,272 | 356,253 | 358,617 | |
Diluted | 360,940 363,078 | 358,725 | 362,001 | 365,516 | 364,731 | 371,023 | 375,014 | |
The three months ended June 30, 2025 were adjusted for M&A transaction costs, and these adjustments were applied prospectively, as these costs were not material to the consolidated results of operations in the prior periods.
Non-GAAP financial information for the periods shown are adjusted for an assumed provision for income taxes based on our long-term projected tax rate of 21%. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |
Net cash provided by operating activities | $265,228 | $271,541 | $200,055 | $251,470 | $327,069 | $334,622 | $315,872 | $289,951 |
Less: Purchases of property and equipment | (7,761) | (8,748) | (15,152) | (16,786) | (8,892) | (11,358) | (9,889) | (10,872) |
Less: Capitalized software development costs | (16,495) | (18,402) | (19,550) | (20,732) | (27,156) | (34,173) | (27,279) | (28,445) |
Free cash flow | $240,972 $244,391 $165,353 $213,952 $291,021 $289,091 $278,704 $ 250,634 | |||||||
Free cash flow margin | 33 % | 32 % | 20 % | 24 % | 31 % | 29 % | 25 % | 21 % |
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |
Net dollar-based retention rate | high-110%'s | high-110%'s | about 120% | about 120% | about 120% | low-120%'s | low-120%'s | low-120%'s |
Total customers | 30,000 | 30,500 | 31,400 | 32,000 | 32,700 | 33,200 | 33,400 | 33,500 |
Customers with equal or greater than $1 million ARR | 462 | 603 | ||||||
Customers with equal or greater than $100,000 ARR | 3,610 | 3,770 | 3,850 | 4,060 | 4,310 | 4,550 | 4,720 | 4,860 |
Percentage of ARR comprised by $100k+ customers | 88 % | 88 % | 89 % | 89 % | 90 % | 90 % | 91 % | 91 % |
Percentage of customers using 2+ products | 83 % | 83 % | 83 % | 84 % | 84 % | 85 % | 85 % | 86 % |
Percentage of customers using 4+ products | 50 % | 51 % | 52 % | 54 % | 55 % | 56 % | 58 % | 61 % |
Percentage of customers using 6+ products | 26 % | 28 % | 29 % | 31 % | 33 % | 35 % | 37 % | 41 % |
Percentage of customers using 8+ products | 12 % | 13 % | 14 % | 16 % | 18 % | 20 % | 22 % | 26 % |
Percentage of customers using 10+ products | 5 % | 6 % | 7 % | 8 % | 9 % | 11 % | 13 % | 16 % |
AJ Ljubich
Datadog Investor Relations IR@datadoghq.com
Sabrina Morse
Datadog Public Relations Press@datadoghq.com
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