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Datadog 8-K Report, Financial Results (Feb 13, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 13, 2024
Period End
February 13, 2024
Security
DDOG
In the record · 2019–202610-K710-Q218-K44

DDOG filed 7 annual reports (10-K), 21 quarterly reports (10-Q) and 44 current reports (8-K) between 2019 and 2026.

  1. Material agreement8-K · Jun ’20Jun ’20
  2. Leadership change8-K · Mar ’26Mar ’26

01—Abstract

Summary

Summary of the 8-K filed February 13, 2024. Cited figures are marked; the original filing is the authoritative source.

Datadog reported strong fourth-quarter and full-year 2023 results on February 13, 2024.

Q4 revenue reached $589.6 milliona, up 26% year-over-year, and full-year revenue hit $2.13 billion, up 27%. Customer expansion remained a key driver: customers with ARR of $1 million or more rose 25% to 396, and customers with ARR of $100,000 or more rose 15% to about 3,190. Profitability improved meaningfully.

Q4 GAAP operating margin was 5% and non-GAAP operating margin was 28%, while full-year GAAP operating loss narrowed to $(33.5) million and non-GAAP operating margin reached 23%. Full-year operating cash flow was $660.0 millionb and free cash flow was $597.5 million, a 28% free cash flow margin, supported by $2.6 billion in cash and marketable securities. The company guided to Q1 2024 revenue of $587–591 million and full-year 2024 revenue of $2.555–2.575 billion, implying continued growth in the mid-20% range.

Management also changed its non-GAAP net income presentation to include an assumed 21% long-term tax rate, which reduced non-GAAP EPS by $0.32c for FY2023. Investors should note that this change lowers comparability with prior non-GAAP EPS figures and prior guidance, which did not reflect the tax adjustment. GAAP results remain thinner than non-GAAP figures because stock-based compensation was $482.3 million for the year, a substantial cost that the company excludes from its adjusted metrics.

Investors will want to weigh this gap alongside the strong cash generation and growth. The company also announced an Investor Day for February 15, 2024.

02—Key points

Key Highlights

  1. Q4 2023 revenue of $589.6 million grew 26% year-over-year; FY2023 revenue of $2.13 billion grew 27%.
  2. Customers with ARR of $1 million or more increased 25% to 396, and customers with ARR of $100,000 or more increased 15% to about 3,190.
  3. FY2023 GAAP operating loss narrowed to $(33.5) million from $(58.7) million, while non-GAAP operating margin expanded to 23% from 19%.
  4. FY2023 operating cash flow of $660.0 million and free cash flow of $597.5 million, a 28% free cash flow margin.
  5. FY2024 guidance calls for revenue of $2.555–2.575 billion and non-GAAP EPS of $1.38–1.44, with Q1 2024 revenue guided to $587–591 million.
  6. Non-GAAP net income now includes an assumed 21% long-term tax rate, reducing FY2023 non-GAAP EPS by $0.32 and affecting comparability with prior periods and guidance.
  7. Company held $2.6 billion in cash, cash equivalents, restricted cash and marketable securities at year-end 2023; an Investor Day is scheduled for February 15, 2024.

03—Questions

Frequently Asked Questions

  1. How did Datadog perform in the fourth quarter of 2023?

    Revenue grew 26% year-over-year to $589.6 million. GAAP operating income was $27.7 million (5% margin), and non-GAAP operating income was $166.7 million (28% margin). Q4 operating cash flow was $220.2 million and free cash flow was $201.3 million.

  2. What is the company's outlook for 2024?

    Datadog guided to full-year 2024 revenue of $2.555–2.575 billion and non-GAAP operating income of $535–555 million. Non-GAAP EPS is expected to be $1.38–1.44 on about 361 million diluted shares. Q1 2024 revenue is expected between $587 and $591 million.

  3. Why did Datadog change how it calculates non-GAAP net income?

    Beginning with this report, non-GAAP net income includes an assumed provision for income taxes based on a 21% long-term projected tax rate. This reduced non-GAAP EPS by $0.11 in Q4 and $0.32 for FY2023. Prior guidance issued November 7, 2023 did not reflect this adjustment, so figures are not directly comparable.

  4. How significant is stock-based compensation to Datadog's profitability?

    Stock-based compensation was $482.3 million in FY2023, well above the company's GAAP operating loss of $(33.5) million. Because the company excludes it from non-GAAP metrics, investors should evaluate GAAP and non-GAAP results together when assessing earnings quality.

  5. How strong is Datadog's balance sheet and cash generation?

    Datadog ended 2023 with $2.6 billion in cash, cash equivalents, restricted cash and marketable securities. It also generated $597.5 million of free cash flow for the year, and its $747.5 million convertible senior notes due 2025 carry a low 0.125% coupon.

04—Continue

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