01—Abstract
Summary
Summary of the 10-Q filed May 7, 2025. Cited figures are marked; the original filing is the authoritative source.
Datadog, Inc. (DDOG) reported its first-quarter 2025 results, demonstrating continued strong revenue growth and expanding customer adoption.
Total revenue reached $761.6 milliona, 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.
02—Key points
Key Highlights
- Revenue grew 25% year-over-year to $761.6 million for the first quarter of 2025.
- Customers with ARR of $100,000 or more increased to 3,770, representing 88% of ARR.
- Dollar-based net retention rate remained strong, in the high 110s, indicating effective expansion with existing customers.
- Net 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.
- Operating cash flow increased significantly by 28% to $271.5 million.
- The company ended the quarter with $1.1 billion in cash and cash equivalents and $3.4 billion in marketable securities.
- The 2025 Convertible Senior Notes mature in June 2025, with the company planning to settle them using a mix of cash and stock.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Datadog kept $0.03.
- Revenue$761.6M100.0%
- Cost of revenue−$157.6M20.7%
- Gross profit$603.9M79.3%
- Operating costs−$616.3M80.9%
- Operating income−$12.4M1.6%
- Interest, other & tax$37.1M4.9%
- Net income$24.6M3.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 7, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $761.55M$611.25M | +24.6% |
| Cost of Revenue | $157.63M$110.10M | +43.2% |
| Gross Profit | $603.92M$501.15M | +20.5% |
| R&D Expenses | $341.06M$269.99M | +26.3% |
| Operating Expenses | $616.35M$489.16M | +26.0% |
| Operating Income | -$12.42M$12.00M | −203.5% |
| Interest Expense | $2.02M$1.08M | +86.2% |
| Net Income | $24.64M$42.63M | −42.2% |
| EPS (Basic) | $0.07$0.13 | −46.2% |
| EPS (Diluted) | $0.07$0.12 | −41.7% |
| Shares Outstanding (Basic) | 343.10M331.81M | +3.4% |
| Shares Outstanding (Diluted) | 363.08M355.98M | +2.0% |
05—Questions
Frequently Asked Questions
What is Datadog's revenue growth for Q1 2025?
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.
How is Datadog managing its expenses, and how is it impacting profitability?
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.
What is the company's liquidity position?
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.
What is the status of Datadog's convertible notes?
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.
06—Continue