0001628280-26-032328
SEC filingRevenue grew 32% YoY to $1.01B, driven by existing customer expansion, with net income more than doubling to $52.6M.
For the three months ended March 31, 2026, Datadog reported revenue of $1,006.4 million, a 32% increase from $761.6 million in the prior-year period. Approximately 75% of the revenue growth came from existing customers, reflecting strong land-and-expand dynamics, while 25% came from new customer acquisitions. Gross margin remained flat at 79%, as revenue growth proportionally matched increases in third-party cloud infrastructure costs.
Operating income improved significantly to $7.3 million from a loss of $12.4 million in Q1 2025, driven by revenue growth outpacing operating expense increases. Research and development expense grew 28% to $435.3 million, but declined as a percentage of revenue from 45% to 43%. Sales and marketing expense rose 31% to $279.8 million, remaining flat at 28% of revenue. General and administrative expense increased 23% to $74.8 million, dropping from 8% to 7% of revenue. Net income more than doubled to $52.6 million from $24.6 million, supported by higher other income, net ($51.6 million vs. $44.2 million), primarily due to favorable foreign currency fluctuations.
Datadog operates as a single reporting segment, with all revenue derived from subscription software sales. The company's performance is driven by customer expansion metrics: customers with annual run-rate revenue (ARR) of $100,000 or more grew to 4,550 (representing 90% of ARR) from 3,770 (88% of ARR) a year ago. The trailing 12-month dollar-based net retention rate improved to the low-120%'s from the high-110%'s, indicating accelerating usage growth from existing customers. Product adoption also deepened, with 85% of customers using two or more products (up from 83%), 56% using four or more (up from 51%), and 11% using ten or more (up from 6%). International revenue accounted for 28% of total revenue, down from 30% in the prior year, as North America grew faster.
Management highlighted continued investment in sales and marketing, R&D, and international expansion (particularly in EMEA and APAC) to drive long-term growth. The company expects research and development, sales and marketing, and general and administrative expenses to increase in absolute dollars as the business scales. No specific forward guidance was provided in the MD&A section. The company believes its existing cash, cash equivalents ($426.4 million), marketable securities ($4.3 billion), and operating cash flow are sufficient to meet cash requirements for at least the next 12 months. Key strategic priorities include sustaining innovation, expanding the platform with new products, and deepening customer relationships through the land-and-expand model.
As of March 31, 2026, Datadog had $426.4M in cash and cash equivalents and $4,332.3M in marketable securities, totaling $4,758.6M in liquid assets. Total assets were $6,952.0M, with shareholders' equity of $3,988.2M. The company carries $984.5M in convertible senior notes (2029 Notes), net of issuance costs, classified as non-current. Deferred revenue totaled $1,282.1M, while remaining performance obligations stood at $3,484.4M, indicating strong committed future revenue.
Operating lease commitments are the primary contractual obligations. Commenced operating leases have total future payments of $381.8M, with $44.3M due within one year, $111.3M in 1-3 years, and $226.2M beyond 3 years. Additionally, $221.6M of future payments relate to operating leases not yet commenced, with a weighted-average lease term of 9.1 years. No other material purchase commitments were disclosed.
Datadog did not engage in share buybacks or pay dividends during the quarter. Capital expenditures totaled $45.5M (4.5% of revenue), comprising $11.4M in property and equipment and $34.2M in capitalized software development costs. There was no new debt issuance or repayment; the net change in convertible notes carrying amount was a $1.0M increase from amortization of issuance costs. The company continues to hold a significant cash position, providing flexibility for investments.
The notes disclose revenue by geography: North America contributed $723.9M (72%) and International $282.5M (28%) for the three months ended March 31, 2026. The U.S. alone generated $692.7M. No further segment breakdown (e.g., by product line) is provided in the notes.