Datadog Announces Third Quarter 2026 Financial Results
Robust growth of larger customers, with about 4,860 $100k+ ARR customers, up from about 4,060 a year ago
Launched Scout 1.0, Datadog's first specialized model, now powering Bits Investigation NEW YORK-- Datadog, Inc. (NASDAQ:DDOG), the leading AI-powered observability and security platform, today announced financial results for its third quarter ended September 30, 2026.
"Datadog delivered a strong third quarter, with 35% year-over-year revenue growth, $290 million in operating cash flow, and $251 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog. "We are seeing strong adoption across our platform as customers scale their digital operations and use of AI."
Pomel added, "We are innovating rapidly, including developing specialized AI models through our AI Research team, to help customers manage growing complexity and move towards autonomous operations."
• Non-GAAP operating income was $334 million; non-GAAP operating margin was 28%.
• GAAP net income per diluted share was $0.32; non-GAAP net income per diluted share was $0.81.
• Cash, cash equivalents, and marketable securities were $5.2 billion as of September 30, 2026.
• As of September 30, 2026, we had about 4,860 customers with ARR of $100,000 or more, an increase of 20% from about 4,060 as of September 30, 2025.
• Earned a Leader designation in the 2026 Forrester Wave for AIOps Platforms, for the second consecutive year. Datadog received the highest scores possible in eleven criteria including Innovation, Roadmap, and AI Governance.
• Introduced Scout 1.0, Datadog AI Research team's first specialized model for investigating production issues. Scout (in Preview) now powers Bits Investigation and achieves frontier-model performance at a fraction of the inference cost—enabling more frequent, earlier investigations that reduce on- call burden and accelerate incident response.
• Recognized as the "Company to Beat" for observability platforms in Gartner’s 2026 AI Vendor Race report, which assessed competitive positioning and market influence across the observability landscape.
Based on information as of today, November 4, 2026, Datadog is providing the following guidance:
◦ Non-GAAP net income per share between $0.69 and $0.71, assuming approximately 379 million weighted average diluted shares outstanding.
◦ Non-GAAP net income per share between $2.73 and $2.75, assuming approximately 375 million weighted average diluted shares outstanding.
Datadog has not reconciled its expectations as to non-GAAP operating income, or as to non-GAAP net income per share, to their most directly comparable GAAP measure as a result of uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation and employer payroll taxes on equity incentive plans. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to Datadog’s results computed in accordance with GAAP.
hat: Datadog financial results for the third quarter of 2026 and outlook for the fourth quarter and the full year 2026
• Dial in: To access the call in the U.S., please register here . Callers are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.
• Replay: A replay of the call will be archived on the investor relations website
Datadog is the leading observability and security platform for the AI era, providing businesses with unified visibility across the technology stack to manage complexity at scale. It brings applications, infrastructure, data, models, and security into one place, using AI to detect and resolve issues before they impact customers. Trusted globally by Fortune 500 companies and high-growth AI leaders, Datadog enables businesses to move faster with clarity and confidence.
This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the federal securities laws, including but not limited to statements regarding Datadog’s strategy, product and platform capabilities, the growth in and ability to capitalize on long-term market opportunities including the pace and scope of cloud migration, digital transformation and AI deployment, gross margins, operating margins including with respect to sales and marketing, research and development expenses, net interest and other income, cash taxes, capital expenditures and capitalized software, and Datadog’s future financial performance, including its outlook for the fourth quarter and the full year 2026 and related notes and assumptions. These forward-looking statements are based on Datadog’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause Datadog’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to (1) our recent rapid growth may not be indicative of our future growth; (2) our history of operating losses; (3) our limited operating history; (4) our dependence on existing customers purchasing additional subscriptions and products from us and renewing their subscriptions; (5) our ability to attract new customers; (6) our ability to effectively develop and expand our sales and marketing capabilities; (7) risk of a security breach; (8) risk of interruptions or performance problems associated with our products and platform capabilities; (9) our ability to adapt and respond to rapidly changing technology or customer needs; (10) the competitive markets in which we participate; (11) risks associated with successfully managing our growth; (12) risks associated with changing laws, regulations, and contractual obligations related to data privacy and security and (13) general market, political, economic, and business conditions including concerns about trade policies, tariffs, reduced economic growth and associated decreases in information technology spending. These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission (SEC), including in the section entitled “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed with the SEC on August 6, 2026. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2026 and other filings and reports that we may file from time to time with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward- looking statements will occur. Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements.
Datadog discloses the following non-GAAP financial measures in this release and the earnings call referencing this press release: non-GAAP gross profit, non- GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, non-GAAP net income (loss) per basic share, free cash flow and free cash flow margin. Datadog uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Datadog’s financial performance. Datadog believes they are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. Datadog’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non- GAAP financial measures used by other companies and exclude expenses that may have a material impact on Datadog’s reported financial results.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.
Datadog defines non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin and non-GAAP net income (loss) as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense; (2) the amortization of acquired intangibles; (3) employer payroll taxes on employee stock transactions; (4) M&A transaction costs; (5) amortization of issuance costs; and (6) an assumed provision for income taxes based on our long-term projected tax rate. Non-GAAP
financial measures prior to April 1, 2025 have not been adjusted for M&A transaction costs, as such costs were not material to our results of operations in such prior periods. Our estimated long-term projected tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in Datadog's geographic earnings mix, or other changes to our strategy or business operations. We will re-evaluate our long- term projected tax rate as appropriate. Datadog defines free cash flow as net cash provided by operating activities, minus capital expenditures and minus capitalized software development costs, if any. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.
Management believes these non-GAAP financial measures are useful to investors and others in assessing Datadog’s operating performance due to the following factors:
Stock-based compensation. Datadog utilizes stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.
Amortization of acquired intangibles. Datadog views amortization of acquired intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of acquired intangibles is an expense that is not typically affected by operations during any particular period.
Employer payroll taxes on employee stock transactions. Datadog excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of Datadog’s common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of Datadog’s business.
M&A transaction costs . Datadog views acquisition-related expenses, such as transaction costs, as costs that are not necessarily reflective of operational performance during a period. In particular, Datadog believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.
Amortization of issuance costs. In June 2020 and December 2024, Datadog issued $747.5 million of 0.125% convertible senior notes due 2025 and $1.0 billion of 0% convertible senior notes due 2029, respectively. Debt issuance costs, which reduce the carrying value of the convertible debt instrument, are amortized as interest expense over the term. The expense for the amortization of debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.
Additionally, Datadog’s management believes that the non-GAAP financial measure free cash flow is meaningful to investors because it is a measure of liquidity that provides useful information in understanding
and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business. Free cash flow represents net cash provided by operating activities, reduced by capital expenditures and capitalized software development costs, if any. The reduction of capital expenditures and amounts capitalized for software development facilitates comparisons of Datadog's liquidity on a period-to-period basis and excludes items that management does not consider to be indicative of our liquidity.
Datadog’s number of customers with ARR of $100,000 or more is based on the ARR of each customer, as of the last month of the quarter.
We define the number of customers as the number of accounts with a unique account identifier for which we have an active subscription in the period indicated. Users of our free trials or tier are not included in our customer count. A single organization with multiple divisions, segments or subsidiaries is generally counted as a single customer. However, in some cases where they have separate billing terms, we may count separate divisions, segments or subsidiaries as multiple customers.
We define ARR as the annualized revenue run-rate of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly recurring revenue, or MRR, and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts, additional usage, usage from subscriptions for a committed contractual amount of usage that is delivered as used, and monthly subscriptions. ARR and MRR should be viewed independently of revenue, and do not represent our revenue under GAAP on a monthly or annualized basis, as they are operating metrics that can be impacted by contract start and end dates and renewal rates. ARR and MRR are not intended to be replacements or forecasts of revenue.
ASSETS September December CURRENT ASSETS: 30,2026 31,2025 ────────────────────────────────────────────────────────────────────────────── Cash and cash $ 881,230 $ 401,305 equivalents Marketable 4,352,357 4,073,531 securities Accounts receivable, net of allowance for credit losses of $29,260 and 793,977 741,262 $19,292 as of September 30, 2026 and December 31, 2025, respectively Deferred contract costs, 94,735 76,022 current Prepaid expenses and 108,995 90,160 other current assets Total current 6,231,294 5,382,280 assets Property and 438,173 338,093 equipment, net Operating lease 229,256 214,674 assets Goodwill 706,644 530,568 Intangible 19,736 14,968 assets, net Deferred contract costs, 157,958 126,708 non-current Other assets 55,967 36,553 TOTAL ASSETS $ 7,839,028 $ 6,643,844 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts $ 266,417 $ 148,791 payable Accrued expenses and 228,610 209,595 other current liabilities Operating lease liabilities, 46,177 39,369 current Deferred revenue, 1,235,133 1,193,646 current Total current 1,776,337 1,591,401 liabilities Operating lease liabilities, 274,462 256,187 non-current Convertible senior notes, 986,595 983,449 net, non-current Deferred revenue, 65,081 68,711 non-current Other 20,741 11,890 liabilities Total 3,123,216 2,911,638 liabilities STOCKHOLDERS' EQUITY: Common stock 3 3 Additional 4,383,737 3,579,010 paid-in capital Accumulated other comprehensive -21,165 15,404 (loss) income Retained 353,237 137,789 earnings Total stockholders’ 4,715,812 3,732,206 equity TOTAL LIABILITIES AND $ 7,839,028 $ 6,643,844 STOCKHOLDERS' EQUITY
1) Non-GAAP financial information for the periods shown are adjusted for an assumed provision for income taxes based on our long-term projected tax rate of 21%. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
All product and company names herein may be trademarks of their registered owners.
Full text with the tables
Exhibit 99.1
Datadog Announces Third Quarter 2026 Financial Results
November 4, 2026
Third quarter revenue grew 35% year-over-year to $1.20 billion
Robust growth of larger customers, with about 4,860 $100k+ ARR customers, up
from about 4,060 a year ago
Launched Scout 1.0, Datadog's first specialized model, now powering Bits
Investigation
NEW YORK-- Datadog, Inc. (NASDAQ:DDOG), the leading AI-powered observability and
security platform, today announced financial results for its third quarter ended
September 30, 2026.
"Datadog delivered a strong third quarter, with 35% year-over-year revenue
growth, $290 million in operating cash flow, and $251 million in free cash
flow," said Olivier Pomel, co-founder and CEO of Datadog. "We are seeing strong
adoption across our platform as customers scale their digital operations and use
of AI."
Pomel added, "We are innovating rapidly, including developing specialized AI
models through our AI Research team, to help customers manage growing complexity
and move towards autonomous operations."
Third Quarter 2026 Financial Highlights:
• Revenue was $1.20 billion, an increase of 35% year-over-year.
• GAAP operating income was $75 million; GAAP operating margin was 6%.
• Non-GAAP operating income was $334 million; non-GAAP operating margin was 28%.
• GAAP net income per diluted share was $0.32; non-GAAP net income per diluted
share was $0.81.
• Operating cash flow was $290 million, with free cash flow of $251 million.
• Cash, cash equivalents, and marketable securities were $5.2 billion as of
September 30, 2026.
Third Quarter & Recent Business Highlights:
• As of September 30, 2026, we had about 4,860 customers with ARR of $100,000 or
more, an increase of 20% from about 4,060 as of September 30, 2025.
• Earned a Leader designation in the 2026 Forrester Wave for AIOps Platforms,
for the second consecutive year. Datadog received the highest scores possible in
eleven criteria including Innovation, Roadmap, and AI Governance.
• Introduced Scout 1.0, Datadog AI Research team's first specialized model for
investigating production issues. Scout (in Preview) now powers Bits
Investigation and achieves frontier-model performance at a fraction of the
inference cost—enabling more frequent, earlier investigations that reduce on-
call burden and accelerate incident response.
• Recognized as the "Company to Beat" for observability platforms in Gartner’s
2026 AI Vendor Race report, which assessed competitive positioning and market
influence across the observability landscape.
Fourth Quarter and Full Year 2026 Outlook:
Based on information as of today, November 4, 2026, Datadog is providing the
following guidance:
• Fourth Quarter 2026 Outlook:
◦ Revenue between $1.19 billion and $1.20 billion.
◦ Non-GAAP operating income between $280 million and $290 million.
◦ Non-GAAP net income per share between $0.69 and $0.71, assuming approximately
379 million weighted average diluted shares outstanding.
• Full Year 2026 Outlook:
◦ Revenue between $4.515 billion and $4.525 billion.
◦ Non-GAAP operating income between $1.095 billion and $1.105 billion.
◦ Non-GAAP net income per share between $2.73 and $2.75, assuming approximately
375 million weighted average diluted shares outstanding.
Datadog has not reconciled its expectations as to non-GAAP operating income, or
as to non-GAAP net income per share, to their most directly comparable GAAP
measure as a result of uncertainty regarding, and the potential variability of,
reconciling items such as stock-based compensation and employer payroll taxes on
equity incentive plans. Accordingly, reconciliation is not available without
unreasonable effort, although it is important to note that these factors could
be material to Datadog’s results computed in accordance with GAAP.
Co
nference Call Details:
•
W
hat: Datadog financial results for the third quarter of 2026 and outlook for the
fourth quarter and the full year 2026
• When: November 4, 2026 a t 8:00 A.M. Eastern Time (5:00 A.M. Pacific Time)
• Dial in: To access the call in the U.S., please register here . Callers are
encouraged to dial into the call 10 to 15 minutes prior to the start to prevent
any delay in joining.
• Webcast: https://investors.datadoghq.com (live and replay)
• Replay: A replay of the call will be archived on the investor relations
website
About Datadog
Datadog is the leading observability and security platform for the AI era,
providing businesses with unified visibility across the technology stack to
manage complexity at scale. It brings applications, infrastructure, data,
models, and security into one place, using AI to detect and resolve issues
before they impact customers. Trusted globally by Fortune 500 companies and
high-growth AI leaders, Datadog enables businesses to move faster with clarity
and confidence.
Forward-Looking Statements
This press release and the earnings call referencing this press release contain
“forward-looking” statements, as that term is defined under the federal
securities laws, including but not limited to statements regarding Datadog’s
strategy, product and platform capabilities, the growth in and ability to
capitalize on long-term market opportunities including the pace and scope of
cloud migration, digital transformation and AI deployment, gross margins,
operating margins including with respect to sales and marketing, research and
development expenses, net interest and other income, cash taxes, capital
expenditures and capitalized software, and Datadog’s future financial
performance, including its outlook for the fourth quarter and the full year 2026
and related notes and assumptions. These forward-looking statements are based on
Datadog’s current assumptions, expectations and beliefs and are subject to
substantial risks, uncertainties, assumptions and changes in circumstances that
may cause Datadog’s actual results, performance or achievements to differ
materially from those expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to
(1) our recent rapid growth may not be indicative of our future growth; (2) our
history of operating losses; (3) our limited operating history; (4) our
dependence on existing customers purchasing additional subscriptions and
products from us and renewing their subscriptions; (5) our ability to attract
new customers; (6) our ability to effectively develop and expand our sales and
marketing capabilities; (7) risk of a security breach; (8) risk of interruptions
or performance problems associated with our products and platform capabilities;
(9) our ability to adapt and respond to rapidly changing technology or customer
needs; (10) the competitive markets in which we participate; (11) risks
associated with successfully managing our growth; (12) risks associated with
changing laws, regulations, and contractual obligations related to data privacy
and security and (13) general market, political, economic, and business
conditions including concerns about trade policies, tariffs, reduced economic
growth and associated decreases in information technology spending. These risks
and uncertainties are more fully described in our filings with the Securities
and Exchange Commission (SEC), including in the section entitled “Risk Factors”
in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed
with the SEC on August 6, 2026. Additional information will be made available in
our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2026 and other filings and reports that we may file from time to
time with the SEC. Moreover, we operate in a very competitive and rapidly
changing environment. New risks emerge from time to time. It is not possible for
our management to predict all risks, nor can we assess the impact of all factors
on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any
forward-looking statements we may make. In light of these risks, uncertainties
and assumptions, we cannot guarantee future results, levels of activity,
performance, achievements, or events and circumstances reflected in the forward-
looking statements will occur. Forward-looking statements represent our beliefs
and assumptions only as of the date of this press release. We disclaim any
obligation to update forward-looking statements.
About Non-GAAP Financial Measures
Datadog discloses the following non-GAAP financial measures in this release and
the earnings call referencing this press release: non-GAAP gross profit, non-
GAAP gross margin, non-GAAP operating expenses (research and development, sales
and marketing and general and administrative), non-GAAP operating income (loss),
non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income
(loss) per diluted share, non-GAAP net income (loss) per basic share, free cash
flow and free cash flow margin. Datadog uses each of these non-GAAP financial
measures internally to understand and compare operating results across
accounting periods, for internal budgeting and forecasting purposes, for short-
and long-term operating plans, and to evaluate Datadog’s financial performance.
Datadog believes they are useful to investors, as a supplement to GAAP measures,
in evaluating its operational performance, as further discussed below. Datadog’s
non-GAAP financial measures may not provide information that is directly
comparable to that provided by other companies in its industry, as other
companies in its industry may calculate non-GAAP financial results differently,
particularly related to non-recurring and unusual items. In addition, there are
limitations in using non-GAAP financial measures because the non-GAAP financial
measures are not prepared in accordance with GAAP and may be different from non-
GAAP financial measures used by other companies and exclude expenses that may
have a material impact on Datadog’s reported financial results.
Non-GAAP financial measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP. A
reconciliation of the historical non-GAAP financial measures to their most
directly comparable GAAP measures has been provided in the financial statement
tables included below in this press release.
Datadog defines non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses (research and development, sales and marketing and general and
administrative), non-GAAP operating income (loss), non-GAAP operating margin and
non-GAAP net income (loss) as the respective GAAP balances, adjusted for, as
applicable: (1) stock-based compensation expense; (2) the amortization of
acquired intangibles; (3) employer payroll taxes on employee stock transactions;
(4) M&A transaction costs; (5) amortization of issuance costs; and (6) an
assumed provision for income taxes based on our long-term projected tax rate.
Non-GAAP
financial measures prior to April 1, 2025 have not been adjusted for M&A
transaction costs, as such costs were not material to our results of operations
in such prior periods. Our estimated long-term projected tax rate is subject to
change for a variety of reasons, including the rapidly evolving global tax
environment, significant changes in Datadog's geographic earnings mix, or other
changes to our strategy or business operations. We will re-evaluate our long-
term projected tax rate as appropriate. Datadog defines free cash flow as net
cash provided by operating activities, minus capital expenditures and minus
capitalized software development costs, if any. Investors are encouraged to
review the reconciliation of these historical non-GAAP financial measures to
their most directly comparable GAAP financial measures.
Management believes these non-GAAP financial measures are useful to investors
and others in assessing Datadog’s operating performance due to the following
factors:
Stock-based compensation. Datadog utilizes stock-based compensation to attract
and retain employees. It is principally aimed at aligning their interests with
those of its stockholders and at long-term retention, rather than to address
operational performance for any particular period. As a result, stock-based
compensation expenses vary for reasons that are generally unrelated to financial
and operational performance in any particular period.
Amortization of acquired intangibles. Datadog views amortization of acquired
intangible assets as items arising from pre-acquisition activities determined at
the time of an acquisition. While these intangible assets are evaluated for
impairment regularly, amortization of the cost of acquired intangibles is an
expense that is not typically affected by operations during any particular
period.
Employer payroll taxes on employee stock transactions. Datadog excludes employer
payroll tax expense on equity incentive plans as these expenses are tied to the
exercise or vesting of underlying equity awards and the price of Datadog’s
common stock at the time of vesting or exercise. As a result, these taxes may
vary in any particular period independent of the financial and operating
performance of Datadog’s business.
M&A transaction costs . Datadog views acquisition-related expenses, such as
transaction costs, as costs that are not necessarily reflective of operational
performance during a period. In particular, Datadog believes the consideration
of measures that exclude such expenses can assist in the comparison of
operational performance in different periods which may or may not include such
expenses.
Amortization of issuance costs. In June 2020 and December 2024, Datadog issued
$747.5 million of 0.125% convertible senior notes due 2025 and $1.0 billion of
0% convertible senior notes due 2029, respectively. Debt issuance costs, which
reduce the carrying value of the convertible debt instrument, are amortized as
interest expense over the term. The expense for the amortization of debt
issuance costs is a non-cash item, and we believe the exclusion of this interest
expense will provide for a more useful comparison of our operational performance
in different periods.
Additionally, Datadog’s management believes that the non-GAAP financial measure
free cash flow is meaningful to investors because it is a measure of liquidity
that provides useful information in understanding
and evaluating the strength of our liquidity and future ability to generate cash
that can be used for strategic opportunities or investing in our business. Free
cash flow represents net cash provided by operating activities, reduced by
capital expenditures and capitalized software development costs, if any. The
reduction of capital expenditures and amounts capitalized for software
development facilitates comparisons of Datadog's liquidity on a period-to-period
basis and excludes items that management does not consider to be indicative of
our liquidity.
Operating Metrics
Datadog’s number of customers with ARR of $100,000 or more is based on the ARR
of each customer, as of the last month of the quarter.
We define the number of customers as the number of accounts with a unique
account identifier for which we have an active subscription in the period
indicated. Users of our free trials or tier are not included in our customer
count. A single organization with multiple divisions, segments or subsidiaries
is generally counted as a single customer. However, in some cases where they
have separate billing terms, we may count separate divisions, segments or
subsidiaries as multiple customers.
We define ARR as the annualized revenue run-rate of subscription agreements from
all customers at a point in time. We calculate ARR by taking the monthly
recurring revenue, or MRR, and multiplying it by 12. MRR for each month is
calculated by aggregating, for all customers during that month, monthly revenue
from committed contractual amounts, additional usage, usage from subscriptions
for a committed contractual amount of usage that is delivered as used, and
monthly subscriptions. ARR and MRR should be viewed independently of revenue,
and do not represent our revenue under GAAP on a monthly or annualized basis, as
they are operating metrics that can be impacted by contract start and end dates
and renewal rates. ARR and MRR are not intended to be replacements or forecasts
of revenue.
Datadog, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data; unaudited)
Three Nine
Months Months
Ended Ended
Septemb… Septem…
2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Reven… $ 1,197,0… $ 885,651 $ 3,324,… $ 2,473,9…
Cost
of 237,167 176,457 686,508 500,063
reven…
Gross 959,923 709,194 2,638,… 1,973,9…
profit
Opera…
expen…
Resea…
and 491,570 401,982 1,404,… 1,130,5…
devel…
Sales
and 303,298 238,729 894,640 692,046
marke…
Gener…
and 90,349 74,292 251,498 205,059
admin…
Total
opera… 885,217 715,003 2,550,… 2,027,6…
expen…
Opera…
income 74,706 -5,809 87,488 -53,729
(loss)
Other
incom…
Inter… -3,235 -2,421 -9,609 -8,459
expen…
Inter…
income
and 53,108 43,897 157,363 135,739
other
incom…
net
Other
incom… 49,873 41,476 147,754 127,280
net
Income
before
provi… 124,579 35,667 235,242 73,551
for
income
taxes
Provi…
for 6,263 1,782 19,794 12,377
income
taxes
Net $ 118,316 $ 33,885 $ 215,448 $ 61,174
income
Net
income
per $ 0.33 $ 0.10 $ 0.61 $ 0.18
share
-
basic
Net
income
per $ 0.32 $ 0.10 $ 0.59 $ 0.18
share
-
dilut…
Weigh…
avera…
shares
used
in
calcu…
net
income
per
share:
Basic 358,617 348,645 356,067 346,012
Dilut… 375,014 362,001 371,363 361,905
(1) Includes
stock-based
compensation
expense as follows:
──────────────────────────────────────────────────────────────────────────────
Cost of revenue $ 9,514 $ 8,038 $ 27,329 $ 21,472
Research and 146,376 124,288 401,729 342,468
development
Sales and marketing 49,226 41,463 138,622 113,030
General and 32,065 26,769 86,594 68,315
administrative
Total $ 237,181 $ 200,558 $ 654,274 $ 545,285
(2) Includes
amortization of
acquired
intangibles as
follows:
──────────────────────────────────────────────────────────────────────────────
Cost of revenue $ 2,056 $ 1,451 $ 4,648 $ 3,863
Sales and 366 277 1,085 668
marketing
Total $ 2,422 $ 1,728 $ 5,733 $ 4,531
(3) Includes employer
payroll taxes on
employee stock
transactions as follows:
──────────────────────────────────────────────────────────────────────────────
Cost of revenue $ 270 $ 169 $ 850 $ 520
Research and development 13,522 8,177 46,009 29,578
Sales and marketing 2,626 1,480 8,153 4,409
General and 2,443 1,061 8,488 6,010
administrative
Total $ 18,861 $ 10,887 $ 63,500 $ 40,517
(4) Includes M&A transaction
costs as
follows:
──────────────────────────────────────────────────────────────────────────────
General and administrative $ 1,119 $ — $ 3,823 $ 1,373
Total $ 1,119 $ — $ 3,823 $ 1,373
(5) Includes amortization of
issuance
costs as follows:
──────────────────────────────────────────────────────────────────────────────
Interest expense $ 1,050 $ 1,046 $ 3,146 $ 4,556
Total $ 1,050 $ 1,046 $ 3,146 $ 4,556
Datadog, Inc.
Condensed Consolidated Balance Sheets
(In thousands; unaudited)
ASSETS September December
CURRENT ASSETS: 30,2026 31,2025
──────────────────────────────────────────────────────────────────────────────
Cash and cash $ 881,230 $ 401,305
equivalents
Marketable 4,352,357 4,073,531
securities
Accounts
receivable, net
of allowance
for credit
losses of
$29,260 and 793,977 741,262
$19,292
as of September
30, 2026 and
December
31, 2025,
respectively
Deferred
contract costs, 94,735 76,022
current
Prepaid
expenses and 108,995 90,160
other current
assets
Total current 6,231,294 5,382,280
assets
Property and 438,173 338,093
equipment, net
Operating lease 229,256 214,674
assets
Goodwill 706,644 530,568
Intangible 19,736 14,968
assets, net
Deferred
contract costs, 157,958 126,708
non-current
Other assets 55,967 36,553
TOTAL ASSETS $ 7,839,028 $ 6,643,844
LIABILITIES AND
STOCKHOLDERS'
EQUITY
CURRENT
LIABILITIES:
Accounts $ 266,417 $ 148,791
payable
Accrued
expenses and 228,610 209,595
other current
liabilities
Operating lease
liabilities, 46,177 39,369
current
Deferred
revenue, 1,235,133 1,193,646
current
Total current 1,776,337 1,591,401
liabilities
Operating lease
liabilities, 274,462 256,187
non-current
Convertible
senior notes, 986,595 983,449
net,
non-current
Deferred
revenue, 65,081 68,711
non-current
Other 20,741 11,890
liabilities
Total 3,123,216 2,911,638
liabilities
STOCKHOLDERS'
EQUITY:
Common stock 3 3
Additional 4,383,737 3,579,010
paid-in capital
Accumulated
other
comprehensive -21,165 15,404
(loss)
income
Retained 353,237 137,789
earnings
Total
stockholders’ 4,715,812 3,732,206
equity
TOTAL
LIABILITIES AND $ 7,839,028 $ 6,643,844
STOCKHOLDERS'
EQUITY
Datadog, Inc.
Condensed Consolidated Statements of Cash Flow
(In thousands; unaudited)
Three Nine
CASH Months Months
FLOWS Ended Ended
FROM Septe… Septem…
OPER… 30, 30,
ACTI… 2026 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net $ 118,316 $ 33,885 $ 215,4… $ 61,174
inco…
Adju…
to
reco…
net
inco…
to
net
cash
prov…
by
oper…
acti…
Depr…
and 20,790 15,048 58,202 39,125
amor…
Accr…
of
disc… -12,743 -10,8… -37,1… -32,152
on
mark…
secu…
Amor…
of 1,050 1,046 3,146 4,556
issu…
costs
Amor…
of
defe… 23,827 17,231 66,229 48,061
cont…
costs
Stoc…
comp…
net 237,181 200,5… 654,2… 545,285
of
amou…
capi…
Non-…
lease 9,749 9,060 28,339 26,450
expe…
Allo…
for
cred…
loss… 8,510 3,967 19,104 12,382
on
acco…
rece…
Loss
on
disp…
of 1,226 1,314 2,894 2,146
prop…
and
equi…
Chan…
in
oper…
asse…
and
liab…
Acco…
rece… 24,858 50,559 -70,9… 38,887
net
Defe…
cont… -44,141 -32,7… -116,… -78,538
costs
Prep…
expe…
and -2,737 -13,1… -17,9… -12,036
other
curr…
asse…
Other -4,551 -162 -7,028 -3,200
asse…
Acco… -50,416 -61,3… 104,7… 24,299
paya…
Accr…
expe…
and -3,633 30,010 -535 32,408
other
liab…
Defe… -37,335 6,984 37,792 14,219
reve…
Net
cash
prov… 289,951 251,4… 940,4… 723,066
by
oper…
acti…
CASH
FLOWS
FROM
INVE…
ACTI…
Purc…
of -787,4… -795,… -3,22… -2,517…
mark…
secu…
Matu…
of 984,455 631,1… 2,629… 1,884,…
mark…
secu…
Proc…
from
sale -3 -11 323,0… 13,125
of
mark…
secu…
Purc…
of
prop… -10,872 -16,7… -32,1… -40,686
and
equi…
Capi…
soft… -28,445 -20,7… -89,8… -58,684
deve…
costs
Cash
paid
for
acqu…
of -3,299 -192 -115,… -117,2…
busi…
net
of
cash
acqu…
Net
cash
prov…
by 154,371 -202,… -510,… -836,6…
(used
in)
inve…
acti…
CASH
FLOWS
FROM
FINA…
ACTI…
Proc…
from
exer… 2,368 1,271 14,833 4,629
of
stock
opti…
Proc…
for
issu…
of
comm…
stock — — 39,067 28,578
under
the
empl…
stock
purc…
plan
Proc…
from
issu…
of
2029
Conv… — — — -190
Seni…
Note…
net
of
issu…
costs
Repa…
of
2025 — — — -635,5…
Conv…
Seni…
Notes
Net
cash
prov…
by 2,368 1,271 53,900 -602,5…
(used
in)
fina…
acti…
Effe…
of
exch…
rate
chan… -417 982 -4,115 9,709
on
cash
and
cash
equi…
NET
INCR…
(DEC…
IN 446,273 51,572 479,9… -706,3…
CASH
AND
CASH
EQUI…
CASH
AND
CASH 434,957 489,0… 401,3… 1,246,…
EQUI…
of
peri…
CASH
AND
CASH $ 881,230 $ 540,6… $ 881,2… $ 540,602
EQUI…
of
peri…
Datadog, Inc.
Reconciliation from GAAP to Non-GAAP Results
(In thousands; unaudited)
Rec…
of Three Nine
gro… Mont… Mont…
pro… Ended Ended
and Sept… Sept…
gro… 30, 30,
mar… 2026 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
GAAP
gro… $ 959,… $ 709,1… $ 2,638… $ 1,97…
pro…
Plu…
Sto… 9,514 8,038 27,329 21,4…
com…
exp…
Plu…
Amo…
of 2,056 1,451 4,648 3,863
acq…
int…
Plu…
Emp…
pay…
tax… 270 169 850 520
on
emp…
sto…
tra…
Non…
gro… $ 971,… $ 718,8… $ 2,671… $ 1,99…
pro…
GAAP
gro… 80% 80% 79% 80%
mar…
Non…
gro… 81% 81% 80% 81%
mar…
Rec…
of
ope…
exp…
GAAP
res… $ 491,… $ 401,9… $ 1,404… $ 1,13…
and
dev…
Les…
Sto… -146… -124,… -401,… -342…
com…
exp…
Les…
Emp…
pay…
tax… -13,… -8,177 -46,0… -29,…
on
emp…
sto…
tra…
Non…
res… $ 331,… $ 269,5… $ 957,0… $ 758,…
and
dev…
GAAP
sal… $ 303,… $ 238,7… $ 894,6… $ 692,…
and
mar…
Les…
Sto… -49,… -41,4… -138,… -113…
com…
exp…
Les…
Amo…
of -366 -277 -1,085 -668
acq…
int…
Les…
Emp…
pay…
tax… -2,6… -1,480 -8,153 -4,4…
on
emp…
sto…
tra…
Non…
sal… $ 251,… $ 195,5… $ 746,7… $ 573,…
and
mar…
GAAP
gen… $ 90,3… $ 74,292 $ 251,4… $ 205,…
and
adm…
Les…
Sto… -32,… -26,7… -86,5… -68,…
com…
exp…
Les…
Emp…
pay…
tax… -2,4… -1,061 -8,488 -6,0…
on
emp…
sto…
tra…
Les…
M&A -1,1… — -3,823 -1,3…
tra…
cos…
Non…
gen… $ 54,7… $ 46,462 $ 152,5… $ 129,…
and
adm…
Rec…
of
ope…
(lo…
inc…
and
ope…
mar…
GAAP
ope… $ 74,7… $ -5,809 $ 87,488 $ -53,…
inc…
(lo…
Plu…
Sto… 237,… 200,5… 654,2… 545,…
com…
exp…
Plu…
Amo…
of 2,422 1,728 5,733 4,531
acq…
int…
Plu…
Emp…
pay…
tax… 18,8… 10,887 63,500 40,5…
on
emp…
sto…
tra…
Plu…
M&A 1,119 — 3,823 1,373
tra…
cos…
Non…
ope… $ 334,… $ 207,3… $ 814,8… $ 537,…
inc…
GAAP
ope… 6% (1)% 3% (2)%
mar…
Non…
ope… 28% 23% 25% 22%
mar…
Datadog, Inc.
Reconciliation from GAAP to Non-GAAP Results
(In thousands, except per share data; unaudited)
Three Nine
Mont… Months
Rec… Ended Ended
of Sept… Septe…
net 30, 30,
inc… 2026 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
GAAP
net $ 118,… $ 33,8… $ 215,… $ 61,174
inc…
Plu…
Sto… 237,… 200,… 654,… 545,2…
com…
exp…
Plu…
Amo…
of 2,422 1,728 5,733 4,531
acq…
int…
Plu…
Emp…
pay…
tax… 18,8… 10,8… 63,5… 40,517
on
emp…
sto…
tra…
Plu…
M&A 1,119 — 3,823 1,373
tra…
cos…
Plu…
Amo…
of 1,050 1,046 3,146 4,556
iss…
cos…
Non…
net
inc…
bef… $ 378,… $ 248,… $ 945,… $ 657,4…
non…
tax
adj…
Inc…
tax
eff… 74,6… 50,6… 183,… 128,2…
and
adj…
Non…
net
inc…
aft… $ 304,… $ 197,… $ 762,… $ 529,1…
non…
tax
adj…
Net
inc…
per
sha…
bef… $ 1.06 $ 0.71 $ 2.66 $ 1.90
non…
tax
adj…
-
bas…
Net
inc…
per
sha…
bef… $ 1.01 $ 0.69 $ 2.55 $ 1.82
non…
tax
adj…
-
dil…
Net
inc…
per
sha…
aft… $ 0.85 $ 0.57 $ 2.14 $ 1.53
non…
tax
adj…
-
bas…
Net
inc…
per
sha…
aft… $ 0.81 $ 0.55 $ 2.05 $ 1.46
non…
tax
adj…
-
dil…
Sha…
used
in
non…
net
inc…
per
sha…
cal…
Bas… 358,… 348,… 356,… 346,0…
Dil… 375,… 362,… 371,… 361,9…
1) Non-GAAP financial information for the periods shown are adjusted for an
assumed provision for income taxes based on our long-term projected tax rate of
21%. Due to the differences in the tax treatment of items excluded from non-GAAP
earnings, our estimated tax rate on non-GAAP income may differ from our GAAP tax
rate and from our actual tax liabilities.
Datadog, Inc.
Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow
(In thousands; unaudited)
Three Nine
Mont… Months
Ended Ended
Sept… Septe…
30, 30,
2026 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net
cash
pro… $ 289,… $ 251,… $ 940,… $ 723,0…
by
ope…
act…
Les…
Pur…
of -10,… -16,… -32,… -40,6…
pro…
and
equ…
Les…
Cap…
sof… -28,… -20,… -89,… -58,6…
dev…
cos…
Free
cash $ 250,… $ 213,… $ 818,… $ 623,6…
flow
Free
cash 21% 24% 25% 25%
flow
mar…
Contact Information
AJ Ljubich
Datadog Investor Relations
IR@datadoghq.com
Sabrina Morse
Datadog Public Relations
Press@datadoghq.com
Datadog is a registered trademark of Datadog, Inc.
All product and company names herein may be trademarks of their registered
owners.