0001628280-26-008819
SEC filingRevenue grew 28% YoY to $3.43B, driven by existing customer expansion, while gross margin contracted 1 point to 80%.
Datadog describes itself as "the AI-powered observability and security platform for cloud applications." Its SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, user experience monitoring, cloud security, service management, and other capabilities to provide unified, real-time observability and security for customers' entire technology stacks. The platform is used by organizations of all sizes and across a wide range of industries to enable digital transformation and cloud migration.
The Business section does not disclose any reporting segments. Datadog operates as a single platform business.
Datadog's platform is modular and includes a range of products that can be used individually or as a unified solution. Key products include Infrastructure Monitoring, Application Performance Monitoring (APM), Log Management, Observability Pipelines, Synthetics, Real User Monitoring (RUM), Product Analytics, Continuous Profiler, Database Monitoring, Data Observability (including Data Streams Monitoring and Data Jobs Monitoring), LLM Observability, Error Tracking, Network Monitoring (Cloud Network Monitoring and Network Device Monitoring), Incident Response, Workflow Automation and App Builder, Event Management, Bits AI SRE, Cloud Cost Management, Cloud Security, Code Security, Cloud SIEM, Threat Management (Workload Protection and App & API Protection), Sensitive Data Scanner, and CI Visibility. The platform is supported by more than 1,000 integrations.
Datadog employs a land-and-expand business model centered around products that are easy to adopt with a short time to value. The sales team is segmented into four revenue-generating areas: an enterprise sales team, a high velocity inside sales team, a customer success team, and a partner team. These teams are split regionally across the Americas, APAC, and EMEA. As of December 31, 2025, Datadog had approximately 32,700 customers in over 160 countries. No customer concentration was disclosed.
The worldwide monitoring and analytics market is highly competitive. Datadog competes with diversified technology companies and systems management vendors including IBM, Microsoft, and SolarWinds; with APM vendors including Cisco, New Relic, and Dynatrace; with log management vendors including Cisco and Elastic; and with native cloud solutions from AWS, Azure, and GCP. Additionally, Datadog competes with home-grown and open-source technologies. Many competitors have greater financial, technical, and other resources.
Datadog's growth strategies include: expanding its customer base by acquiring new customers; expanding within its existing customer base through broader deployments, new use cases, and new product adoption; expanding its technology leadership through continued investment and new products; and expanding its customer base internationally.
As of December 31, 2025, Datadog had approximately 8,100 employees operating across 35 countries. Approximately 44% of full-time employees were located outside the United States, with 34% of those in France. The sales and marketing organization had approximately 3,600 employees, and the research and development organization had approximately 3,900 employees. Datadog considers its relations with its employees to be good.
For fiscal year 2025, Datadog reported revenue of $3.43 billion, a 28% increase from $2.68 billion in fiscal 2024. Growth was driven 75% by existing customer expansion and 25% by new customer acquisition. Gross profit rose to $2.74 billion, but gross margin contracted 1 percentage point to 80%, primarily due to higher third-party cloud infrastructure costs.
Operating income swung to a loss of $44.4 million from a profit of $54.3 million in the prior year, as operating expenses grew faster than revenue. Research and development expense increased 34% to $1.55 billion, driven by higher headcount and cloud infrastructure investments. Sales and marketing expense rose 26% to $956.4 million, reflecting increased personnel costs and promotional activities. General and administrative expense grew 36% to $279.7 million, largely due to headcount growth and higher professional services fees. Net income decreased to $107.7 million from $183.7 million, impacted by the operating loss and a $21.7 million increase in other income, net, primarily from higher interest income.
The MD&A does not report segment-level financials. However, key operational metrics indicate strong platform adoption: customers with ARR of $100K+ grew to 4,310 (90% of ARR), up from 3,610 (88% of ARR). Customers with ARR of $1M+ increased to 603 from 462. The trailing 12-month dollar-based net retention rate was approximately 120%, up from high-110%'s, driven by increased usage from existing customers. Product adoption expanded, with 84% of customers using two or more products (vs. 83%), 55% using four or more (vs. 50%), and 9% using ten or more (vs. 5%). International revenue remained at 29% of total revenue.
Management's outlook emphasizes continued investment in innovation, sales and marketing, and international expansion, particularly in EMEA and APAC. The company expects R&D and sales and marketing expenses to increase in absolute dollars. No specific quantitative guidance for future periods is provided in the MD&A. The company believes its existing cash, marketable securities ($4.1 billion), and operating cash flow are sufficient for the next 12 months and beyond. Key strategic priorities include acquiring new customers, expanding within the existing base through land-and-expand, sustaining technology leadership, and expanding internationally.
As of December 31, 2025, Datadog held $401M in cash and cash equivalents and $4.07B in marketable securities, providing ample liquidity. Shareholders' equity stood at $3.73B. Total debt (convertible senior notes) was $983M, representing the net carrying amount of the 2029 Notes after issuance cost amortization.
The Company has $1.4B in non-cancelable purchase commitments for cloud hosting and other software services, due primarily over the next five years. Additionally, operating lease commitments total $375M, with $246M in leases not yet commenced. Remaining performance obligations (RPO) were $3.46B, expected to be recognized substantially within 24 months.
In 2025, Datadog repaid $636M of its 2025 Convertible Senior Notes, with no new debt issued. Capital expenditures totaled $135M ($49.6M property and equipment plus $85.8M capitalized software), representing 3.95% of revenue. No share repurchases or dividends were disclosed. Stock-based compensation increased to $774M.
The Company operates as a single reportable segment. Revenue by geography: North America contributed $2.43B (71%) and International $994M (29%). United States alone accounted for $2.32B (68%). No other country exceeded 10%.
Datadog faces risks from global economic uncertainty, including trade wars, tariffs, inflation, and geopolitical conflicts (Ukraine, Middle East). These conditions may reduce enterprise IT spending, lengthen sales cycles, and disrupt key industry events. The company notes elevated interest rates dampening growth and potential volatility from trade policy changes. International revenue (29% of total) exposes it to currency fluctuations and local economic conditions.
The April 2025 source code breach via compromised employee credentials underscores material cybersecurity risk. The company warns that future attacks (ransomware, social engineering, AI-enhanced) could result in data loss, legal liability, and reputational harm. Dependence on third-party cloud infrastructure (AWS, GCP, Azure) creates single points of failure; outages (e.g., March 2023 widespread outage) could lead to service credits and customer churn.
Regulatory risks are expanding: EU AI Act (effective Aug 2024) imposes stringent requirements on AI use; data privacy laws (GDPR, CCPA, CPRA) and cross-border transfer restrictions (EU-US Data Privacy Framework) demand ongoing compliance investments. Anti-corruption laws (FCPA, UK Bribery Act) and export controls for encryption technologies add complexity, especially as international sales grow. The company also faces potential tax law changes (OECD Pillar Two, US tax reform) affecting effective tax rates.
Competition is intense from established vendors (IBM, Microsoft, Cisco) and native cloud monitoring tools. Pricing pressure from lower-cost alternatives and consolidation in the industry could erode market share. The company’s AI-native cohort (largest customer contributed ~7pp revenue growth in Q4 2025) presents concentration risk; such customers may rapidly scale usage then optimize or cancel. Rapid technological change, especially in AI, requires significant investment to maintain relevance.
Datadog has a limited history of profitability and expects continued investment in R&D, sales, and infrastructure. As of Dec 31, 2025, it had $340.2M federal and $474.2M state NOL carryforwards, which begin expiring in 2028 and may be limited by ownership changes. The dual-class structure (Class B holders with 43% voting power) concentrates control and could deter potential acquirers. The 0.00% convertible notes due 2029 ($1.2B principal) add leverage; conversion or capped call transactions may impact stock price and dilute equity.
Datadog's operating cash flow (CFO) of $1.1 billion in 2025 significantly exceeded net income of $250.6 million, reflecting strong cash generation from operations. The primary driver was a $1.1 billion increase in deferred revenue, partially offset by working capital outflows. Capital expenditures (capex) of $168.5 million represented a moderate 15% of CFO, yielding a robust free cash flow (FCF) of $931.5 million. The company did not return capital to shareholders via buybacks or dividends. Investing cash flow was negative $1.3 billion, driven largely by net purchases of marketable securities. Financing cash flow was negative $0.4 billion, primarily due to the repayment of convertible senior notes. Overall, cash flow quality is high, with CFO comfortably covering capex and no reliance on external financing for operations.