01—Abstract
Summary
Summary of the 10-Q filed August 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Datadog, Inc. (DDOG) reported robust financial performance for the six months ended June 30, 2026.
Revenue grew by 34% year-over-year to $2.1 billiona, driven by strong expansion from existing customers (75% of growth) and new customer acquisition (25% of growth). The company achieved profitability, with net income of $97.1 million for the period, a significant increase from $27.3 million in the prior year. Operating cash flow remained strong at $650.5 million, and free cash flow reached $567.8 million.
The balance sheet is healthy, with $435.0 millionb in cash and cash equivalents and $4.6 billion in marketable securities, providing ample liquidity for the next 12 months and beyond. However, investors should note management's commentary about a potential deceleration in revenue growth due to reduced usage from their largest customer starting in Q3 2026. Additionally, despite increased revenue, gross margin saw a slight decrease due to higher cloud infrastructure costs.
02—Key points
Key Highlights
- Revenue for the six months ended June 30, 2026, increased by 34% year-over-year to $2.13 billion.
- Net income for the six months ended June 30, 2026, was $97.1 million, a substantial increase from $27.3 million in the same period last year.
- Operating cash flow was $650.5 million for the six months ended June 30, 2026, up from $471.6 million in the prior year.
- Free cash flow (non-GAAP) was $567.8 million for the six months ended June 30, 2026.
- Total current assets increased to $6.01 billion as of June 30, 2026, primarily driven by increases in cash, marketable securities, and accounts receivable.
- The company has approximately 33,400 customers as of June 30, 2026, up from 31,400 as of June 30, 2025.
- Approximately 4,720 customers had an annual run-rate revenue (ARR) of $100,000 or more as of June 30, 2026, representing 91% of ARR.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Datadog kept $0.04.
- Revenue$1.12B100.0%
- Cost of revenue−$240.1M21.4%
- Gross profit$881.3M78.6%
- Operating costs−$875.9M78.1%
- Operating income$5.5M0.5%
- Interest, other & tax$39.1M3.5%
- Net income$44.6M4.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed August 6, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $1.12B$826.76M | +35.6% |
| Cost of Revenue | $240.11M$165.98M | +44.7% |
| Gross Profit | $881.34M$660.78M | +33.4% |
| R&D Expenses | $477.97M$387.48M | +23.4% |
| Operating Expenses | $875.89M$696.28M | +25.8% |
| Operating Income | $5.46M-$35.50M | +115.4% |
| Interest Expense | $1.05M$1.86M | −43.5% |
| Net Income | $44.56M$2.65M | +1583.3% |
| EPS (Basic) | $0.13$0.01 | +1200.0% |
| EPS (Diluted) | $0.12$0.01 | +1100.0% |
| Shares Outstanding (Basic) | 356.25M346.19M | +2.9% |
| Shares Outstanding (Diluted) | 371.02M358.73M | +3.4% |
05—Questions
Frequently Asked Questions
What is Datadog's revenue growth and profitability performance for the period?
Datadog reported strong revenue growth of 34% year-over-year, reaching $2.13 billion for the six months ended June 30, 2026. The company also demonstrated significant improvement in profitability, with net income rising to $97.1 million for the same period, compared to $27.3 million in the prior year. This indicates a successful scaling of the business while improving earnings.
What is the company's cash position and cash flow generation?
Datadog maintains a strong liquidity position, with $435.0 million in cash and cash equivalents and $4.6 billion in marketable securities as of June 30, 2026. The company generated $650.5 million in operating cash flow and $567.8 million in free cash flow for the six months ended June 30, 2026, highlighting robust cash generation capabilities to fund operations and future investments.
Are there any potential risks or headwinds mentioned that investors should be aware of?
Management noted a potential deceleration in revenue growth due to reduced usage from their largest customer starting in the third quarter of 2026. Additionally, gross margin saw a slight decrease compared to the prior year, primarily attributed to increased third-party cloud infrastructure costs. The company also highlighted ongoing investments in research and development, sales, and marketing as part of its growth strategy.
How is customer growth and expansion trending?
Datadog continues to expand its customer base, reaching approximately 33,400 customers as of June 30, 2026. The company is also seeing strong expansion within its existing customer base, with 4,720 customers generating $100,000 or more in ARR, representing 91% of total ARR. The dollar-based net retention rate was in the low 120%'s as of June 30, 2026, indicating healthy growth from existing customer relationships, although an increase in usage growth from existing customers was partially offset by a reduction from the largest customer.
06—Continue