10-QPeriod: Q3 FY2021

Datadog, Inc. Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:DDOG

Summary

Datadog, Inc.'s (DDOG) Q3 2021 filing shows robust top-line growth with revenue increasing by 75% year-over-year to $270.5 million for the three months ended September 30, 2021. This growth was driven by both new customer acquisition and expansion within the existing customer base, as indicated by a dollar-based net retention rate above 130%. The company continues to invest heavily in research and development (R&D), which increased by 100% year-over-year, reflecting a commitment to innovation and platform expansion. While revenue growth is strong, the company reported a net loss of $5.5 million for the quarter, an improvement from the $15.2 million net loss in the prior year's quarter. This was accompanied by an increase in cost of revenue and operating expenses, largely due to increased headcount and investments in cloud infrastructure. Despite the net loss, operating cash flow remained strong at $170.8 million for the nine months ended September 30, 2021, and the company ended the period with a healthy cash and marketable securities balance of $1.47 billion, indicating good liquidity.

Financial Highlights

51 data points
Beta

Revenue

$270.49M

76.6% Gross Margin

Net Income

-$5.48M

-2.0% Net Margin

EPS (Diluted)

$-0.02

Total Assets

$2.19B

Cash & Equivalents

$286.97M

Free Cash Flow

$64.06M

Financial Statements
Beta
Revenue$270.49M
Cost of Revenue$63.33M
Gross Profit$207.16M
R&D Expenses$112.67M
Operating Expenses$212.05M
Operating Income-$4.89M
Interest Expense$4.91M
Net Income-$5.48M
EPS (Basic)$-0.02
EPS (Diluted)$-0.02
Shares Outstanding (Basic)310.25M
Shares Outstanding (Diluted)310.25M

Key Highlights

  • 1Revenue grew 75% year-over-year to $270.5 million in Q3 2021.
  • 2Dollar-based net retention rate remained above 130%, indicating strong customer expansion.
  • 3R&D expenses increased by 100% year-over-year to $112.7 million, reflecting continued investment in product development.
  • 4Net loss improved to $5.5 million in Q3 2021, compared to $15.2 million in Q3 2020.
  • 5Operating cash flow was $170.8 million for the nine months ended September 30, 2021.
  • 6Total assets grew to $2.19 billion, with $1.18 billion in marketable securities.
  • 7The company acquired two SaaS-based companies in Q1 2021, contributing $238.6 million to goodwill.

Frequently Asked Questions

Datadog demonstrated strong revenue growth, with a 75% year-over-year increase to $270.5 million for the three months ended September 30, 2021, and a 65% increase to $702.6 million for the nine months ended September 30, 2021. This indicates a continued upward trend in revenue.

While Datadog is investing heavily in R&D and operating expenses, leading to a net loss, the net loss has improved year-over-year. The net loss for Q3 2021 was $5.5 million, compared to $15.2 million in Q3 2020. The company is prioritizing growth and innovation, with a strong focus on expanding its platform and customer base, which is reflected in its strategic investment decisions.

Datadog maintains a strong liquidity position. As of September 30, 2021, the company had $287.0 million in cash and cash equivalents and $1.18 billion in marketable securities, totaling over $1.47 billion in liquid assets. This financial strength is further supported by $170.8 million in cash flow from operations for the first nine months of 2021.

The significant increase in operating expenses, particularly R&D, is driven by investments in personnel, including increased headcount for engineering, product, and design teams. Increased cloud hosting costs and general overhead expenses to support business growth also contribute to the rise in operating expenses.