10-QPeriod: Q1 FY2025

Datadog, Inc. Quarterly Report for Q1 Ended Mar 31, 2025

Filed May 7, 2025For Securities:DDOG

Summary

Datadog, Inc. (DDOG) reported its first-quarter 2025 results, demonstrating continued strong revenue growth and expanding customer adoption. Total revenue reached $761.6 million, a 25% increase year-over-year, driven by both new customer acquisition and expansion within the existing customer base. The company highlighted robust growth in customers with Annual Recurring Revenue (ARR) of $100,000 or more, and a dollar-based net retention rate in the high 110s, indicating successful upselling and cross-selling. While the company is investing heavily in research and development and sales and marketing, leading to an increase in operating expenses, it has also seen significant growth in operating cash flow. The balance sheet remains strong with substantial cash and marketable securities. A key upcoming event is the maturity of its 2025 Convertible Senior Notes in June 2025, which the company plans to settle through a combination of cash and stock.

Financial Highlights

51 data points
Beta

Revenue

$761.55M

79.3% Gross Margin

Net Income

$24.64M

3.2% Net Margin

EPS (Diluted)

$0.07

Total Assets

$6.01B

Cash & Equivalents

$1.08B

Free Cash Flow

$262.79M

Financial Statements
Beta
Revenue$761.55M
Cost of Revenue$157.63M
Gross Profit$603.92M
R&D Expenses$341.06M
Operating Expenses$616.35M
Operating Income-$12.42M
Interest Expense$2.02M
Net Income$24.64M
EPS (Basic)$0.07
EPS (Diluted)$0.07
Shares Outstanding (Basic)343.10M
Shares Outstanding (Diluted)363.08M

Key Highlights

  • 1Revenue grew 25% year-over-year to $761.6 million for the first quarter of 2025.
  • 2Customers with ARR of $100,000 or more increased to 3,770, representing 88% of ARR.
  • 3Dollar-based net retention rate remained strong, in the high 110s, indicating effective expansion with existing customers.
  • 4Net income decreased to $24.6 million from $42.6 million in the prior year, primarily due to increased operating expenses, particularly in R&D and cloud infrastructure costs.
  • 5Operating cash flow increased significantly by 28% to $271.5 million.
  • 6The company ended the quarter with $1.1 billion in cash and cash equivalents and $3.4 billion in marketable securities.
  • 7The 2025 Convertible Senior Notes mature in June 2025, with the company planning to settle them using a mix of cash and stock.

Frequently Asked Questions

Datadog reported revenue of $761.6 million for the first quarter of 2025, representing a 25% increase compared to the same period in the prior year. Approximately 75% of this growth was attributed to existing customers, with the remaining 25% from new customers.

Datadog increased its operating expenses, particularly in research and development (up 26%) and sales and marketing (up 23%), to support growth and innovation. This, along with increased cloud infrastructure costs affecting gross margin, led to a decrease in net income to $24.6 million from $42.6 million in Q1 2024. However, operating cash flow saw a significant increase of 28% to $271.5 million.

Datadog maintains a strong liquidity position, ending the quarter with $1.08 billion in cash and cash equivalents and $3.37 billion in marketable securities. The company believes its current cash, marketable securities, and operating cash flow will be sufficient to meet its cash requirements for the next 12 months and beyond.

Datadog has two series of convertible senior notes: the 2025 Notes and the 2029 Notes. The 2025 Notes, totaling $747.5 million, are set to mature in June 2025. The company plans to settle these notes through a combination of cash (up to the principal amount) and shares of Class A common stock for the remainder. The 2029 Notes, totaling $1.0 billion, do not bear interest and mature in December 2029. As of March 31, 2025, the 2025 Notes were classified as current liabilities.