10-QPeriod: Q1 FY2021

Datadog, Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 7, 2021For Securities:DDOG

Summary

Datadog, Inc. reported revenue of $198.5 million for the first quarter of 2021, a 51% increase year-over-year, demonstrating strong growth driven by both new and existing customers. Despite robust revenue expansion, the company incurred a net loss of $13.1 million for the quarter, a shift from the $6.5 million net income in the prior year's first quarter. This change was influenced by significant increases in operating expenses, particularly in research and development (up 94%) and cost of revenue (up 76%), which impacted gross margin. The company ended the quarter with a strong liquidity position, holding $369.7 million in cash and cash equivalents and $1.18 billion in marketable securities. Operating cash flow remained positive at $51.7 million, and free cash flow was $44.5 million, indicating healthy cash generation capabilities to support ongoing operations and investments. Datadog continues to expand its customer base, reaching approximately 15,200 customers by the end of Q1 2021, up from 11,500 a year prior, and also saw growth in customers with an Annual Recurring Revenue (ARR) of $100,000 or more, reaching 1,437. The dollar-based net retention rate remained above 130%, highlighting strong customer loyalty and expansion within the existing base.

Financial Highlights

50 data points
Beta

Revenue

$198.55M

76.5% Gross Margin

Net Income

-$13.07M

-6.6% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$1.95B

Cash & Equivalents

$369.71M

Free Cash Flow

$50.65M

Financial Statements
Beta
Revenue$198.55M
Cost of Revenue$46.67M
Gross Profit$151.88M
R&D Expenses$79.27M
Operating Expenses$164.71M
Operating Income-$12.83M
Interest Expense$5.47M
Net Income-$13.07M
EPS (Basic)$-0.04
EPS (Diluted)$-0.04
Shares Outstanding (Basic)306.03M
Shares Outstanding (Diluted)306.03M

Key Highlights

  • 1Revenue grew 51% year-over-year to $198.5 million in Q1 2021.
  • 2Net loss for the quarter was $13.1 million, compared to a net income of $6.5 million in Q1 2020.
  • 3Operating expenses increased significantly, with R&D up 94% and Sales & Marketing up 42%.
  • 4Gross margin decreased from 80% to 76% due to increased cloud infrastructure costs.
  • 5Company ended Q1 2021 with $369.7 million in cash and cash equivalents and $1.18 billion in marketable securities.
  • 6Positive operating cash flow of $51.7 million and free cash flow of $44.5 million were generated.
  • 7Customer count grew to approximately 15,200, with 1,437 customers generating $100,000+ ARR.

Frequently Asked Questions

Datadog reported a 51% year-over-year increase in revenue for Q1 2021, reaching $198.5 million. However, the company incurred a net loss of $13.1 million for the quarter, a change from the net income of $6.5 million reported in Q1 2020. This shift was primarily driven by increased operating expenses, particularly in research and development and cost of revenue.

Datadog maintains a strong liquidity position, ending Q1 2021 with $369.7 million in cash and cash equivalents and $1.18 billion in marketable securities. The company generated positive operating cash flow of $51.7 million and free cash flow of $44.5 million, indicating healthy cash generation to support its growth initiatives.

Datadog's growth is driven by acquiring new customers and expanding within its existing customer base. The company now serves approximately 15,200 customers, up from 11,500 in the prior year. Furthermore, the number of customers with an Annual Recurring Revenue (ARR) of $100,000 or more increased to 1,437. The dollar-based net retention rate remained strong, above 130%, highlighting successful expansion within existing accounts.

Datadog experienced significant increases in operating expenses, with research and development expenses rising by 94% and sales and marketing expenses by 42% year-over-year. Cost of revenue also increased by 76%. These increased investments, while supporting growth and innovation, led to a decrease in gross margin from 80% to 76% and contributed to the company reporting a net loss for the quarter.