10-QPeriod: Q2 FY2024

Datadog, Inc. Quarterly Report for Q2 Ended Jun 30, 2024

Filed August 9, 2024For Securities:DDOG

Summary

Datadog, Inc. reported strong financial performance in its Q2 2024 10-Q filing, with revenues reaching $645.3 million for the quarter, a 27% increase year-over-year. This growth was driven by both new customer acquisition and, more significantly, expansion within its existing customer base, with approximately 75% of revenue growth coming from existing clients. The company demonstrated a healthy gross margin of 81% and a significant increase in operating income, shifting from a loss in the prior year's comparable quarter to a $12.6 million operating income. Net income also turned positive, reaching $43.8 million. Furthermore, Datadog generated substantial operating cash flow of $376.7 million for the first six months of the year, leading to a free cash flow of $330.5 million, indicating strong operational efficiency and financial health. The company maintains a robust liquidity position with $411.0 million in cash and cash equivalents and $2.5 billion in marketable securities as of June 30, 2024.

Financial Highlights

51 data points
Beta

Revenue

$645.28M

80.9% Gross Margin

Net Income

$43.82M

6.8% Net Margin

EPS (Diluted)

$0.12

Total Assets

$4.41B

Cash & Equivalents

$410.96M

Free Cash Flow

$160.01M

Financial Statements
Beta
Revenue$645.28M
Cost of Revenue$123.50M
Gross Profit$521.78M
R&D Expenses$274.60M
Operating Expenses$509.16M
Operating Income$12.62M
Interest Expense$1.14M
Net Income$43.82M
EPS (Basic)$0.13
EPS (Diluted)$0.12
Shares Outstanding (Basic)334.94M
Shares Outstanding (Diluted)356.74M

Key Highlights

  • 1Revenue grew 27% year-over-year to $645.3 million for the three months ended June 30, 2024.
  • 2Gross margin remained strong at 81% for both the three and six-month periods.
  • 3Operating income turned positive, reaching $12.6 million for the quarter, compared to a loss in the prior year's comparable period.
  • 4Net income was $43.8 million for the quarter and $86.5 million for the six months ended June 30, 2024, a significant improvement from net losses in the prior year.
  • 5Operating cash flow was $376.7 million for the first six months of 2024, up from $286.9 million in the same period last year.
  • 6Free cash flow was $330.5 million for the first six months of 2024.
  • 7The company ended the quarter with a strong liquidity position, holding $411.0 million in cash and cash equivalents and $2.5 billion in marketable securities.

Frequently Asked Questions

Datadog reported a 27% year-over-year revenue growth for the three and six months ended June 30, 2024. The company highlighted that approximately 75% of this revenue increase was attributable to growth from existing customers, with the remaining 25% coming from new customers. This indicates a strong land-and-expand strategy.

The company has transitioned to profitability, reporting a net income of $43.8 million for the three months ended June 30, 2024, and $86.5 million for the first six months of the year. This is a significant improvement from the net losses reported in the same periods of 2023. Operating cash flow was robust at $376.7 million for the first six months of 2024, and free cash flow stood at $330.5 million, demonstrating strong cash generation capabilities.

As of June 30, 2024, Datadog has total assets of $4.41 billion. The company maintains a strong liquidity position with $411.0 million in cash and cash equivalents and $2.55 billion in marketable securities. Total liabilities are $2.01 billion, with total stockholders' equity at $2.41 billion.

Datadog has outstanding 0.125% convertible senior notes due 2025 with a net carrying amount of $744.0 million as of June 30, 2024, which are classified as current liabilities. The conditional conversion feature was not triggered in the quarter ended June 30, 2024. The company also entered into capped call transactions to partially offset potential dilution from conversions, costing $89.6 million recorded in additional paid-in capital.