Datadog, Inc.

Previous wording

As of June 30, 2026, we had $435.0 million in cash and cash equivalents and $4.6 billion in marketable securities. We generated revenue of $1.1 billion and $826.8 million in the three months ended June 30, 2026 and 2025, respectively, representing year-over-year growth of 36%. For the six months ended June 30, 2026 and 2025, our revenue was $2.1 billion and $1.6 billion, respectively, representing year-over-year growth of 34%. Substantially all of our revenue is from subscription software sales. While we have continued to make significant expenditures and investments, including in personnel-related costs, sales and marketing, infrastructure and operations, we generated net income of $44.6 million and $2.6 million for the three months ended June 30, 2026 and 2025, respectively, and $97.1 million and $27.3 million for the six months ended June 30, 2026 and 2025, respectively. Our operating cash flow was $650.5 million and $471.6 million for the six months ended June 30, 2026 and 2025, respectively. Our free cash flow was $567.8 million and $409.7 million for the six months ended June 30, 2026 and 2025, respectively. See the section titled “—Liquidity and Capital Resources—Non-GAAP Free Cash Flow” below.

Current wording

As of September 30, 2026, we had $881.2 million in cash and cash equivalents and $4.4 billion in marketable securities. We generated revenue of $1.2 billion and $885.7 million in the three months ended September 30, 2026 and 2025, respectively, representing year-over-year growth of 35%. For the nine months ended September 30, 2026 and 2025, our revenue was $3.3 billion and $2.5 billion, respectively, representing year-over-year growth of 34%. Substantially all of our revenue is from subscription software sales. While we have continued to make significant expenditures and investments, including in personnel-related costs, sales and marketing, infrastructure and operations, we generated net income of $118.3 million and $33.9 million for the three months ended September 30, 2026 and 2025, respectively, and $215.4 million and $61.2 million for the nine months ended September 30, 2026 and 2025, respectively. Our operating cash flow was $940.4 million and $723.1 million for the nine months ended September 30, 2026 and 2025, respectively. Our free cash flow was $818.4 million and $623.7 million for the nine months ended September 30, 2026 and 2025, respectively. See the section titled “—Liquidity and Capital Resources—Non-GAAP Free Cash Flow” below.

Previous wording

We believe there is substantial opportunity to continue to grow our customer base. We intend to drive new customer acquisition by continuing to invest significantly in sales and marketing to engage our prospective customers, increase brand awareness and drive adoption of our platform and products. We also plan to continue to invest in building brand awareness within the development and operations communities. As of June 30, 2026, we had approximately 33,400 customers spanning organizations of a broad range of sizes and industries, compared to approximately 31,400 as of June 30, 2025. Our ability to attract new customers will depend on a number of factors, including the effectiveness and pricing of our products, offerings of our competitors and the effectiveness of our marketing efforts.

Current wording

We believe there is substantial opportunity to continue to grow our customer base. We intend to drive new customer acquisition by continuing to invest significantly in sales and marketing to engage our prospective customers, increase brand awareness and drive adoption of our platform and products. We also plan to continue to invest in building brand awareness within the development and operations communities. As of September 30, 2026, we had approximately 33,500 customers spanning organizations of a broad range of sizes and industries, compared to approximately 32,000 as of September 30, 2025. Our ability to attract new customers will depend on a number of factors, including the effectiveness and pricing of our products, offerings of our competitors and the effectiveness of our marketing efforts.

Previous wording

Our base of customers represents a significant opportunity for further sales expansion. As of June 30, 2026, we had approximately 4,720 customers with annual run-rate revenue, or ARR, of $100,000 or more, representing 91% of our ARR, up from 3,850 customers as of June 30, 2025, representing 89% of our ARR. We monitor our number of customers with ARR of $100,000 or more, and believe it is useful to investors, as an indicator of our ability to grow the number of customers that are exceeding this ARR threshold. We define ARR as the annual run-rate revenue of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly run-rate 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.

Current wording

Our base of customers represents a significant opportunity for further sales expansion. As of September 30, 2026, we had approximately 4,860 customers with annual run-rate revenue, or ARR, of $100,000 or more, representing 91% of our ARR, up from 4,060 customers as of September 30, 2025, representing 89% of our ARR. We monitor our number of customers with ARR of $100,000 or more, and believe it is useful to investors, as an indicator of our ability to grow the number of customers that are exceeding this ARR threshold. We define ARR as the annual run-rate revenue of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly run-rate 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.

Previous wording

A further indication of the propensity of our customer relationships to expand over time is our dollar-based net retention rate, which compares our ARR from the same set of customers in one period, relative to the year-ago period. As of June 30, 2026, our trailing 12-month dollar-based net retention rate was in the low-120%'s. As of June 30, 2025, our trailing 12-month dollar-based net retention rate was about 120%. The increase in our trailing 12-month dollar-based net retention rate was attributable to increased usage growth from existing customers. However, we saw a reduction in usage from our largest customer starting in the third quarter of 2026. We calculate dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end, or the Prior Period ARR. We then calculate the ARR from these same customers as of the current period-end, or the Current Period ARR. Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the point-in-time dollar-based net retention rate. We then calculate the weighted average of the trailing 12-month point-in-time dollar-based net retention rates, to arrive at the trailing 12-month dollar-based net retention rate.

Current wording

A further indication of the propensity of our customer relationships to expand over time is our dollar-based net retention rate, which compares our ARR from the same set of customers in one period, relative to the year-ago period. As of September 30, 2026, our trailing 12-month dollar-based net retention rate was in the low-120%'s. As of September 30, 2025, our trailing 12-month dollar-based net retention rate was about 120%. The increase in our trailing 12-month dollar-based net retention rate was attributable to increased usage growth from existing customers. We saw a reduction in usage from our largest customer in the third quarter of 2026. We calculate dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end, or the Prior Period ARR. We then calculate the ARR from these same customers as of the current period-end, or the Current Period ARR. Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the point-in-time dollar-based net retention rate. We then calculate the weighted average of the trailing 12-month point-in-time dollar-based net retention rates, to arrive at the trailing 12-month dollar-based net retention rate.

Previous wording

Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain our competitive advantage. We believe that we have built a highly differentiated platform that will position us to further extend the adoption of our platform and products. Datadog is frequently deployed across a customer’s entire infrastructure, making it ubiquitous. Datadog is a daily part of the lives of developers, operations engineers and business leaders. We employ a land-and-expand business model centered around offering products that are easy to adopt and have a very short time to value. Our efficient go-to-market model enables us to prioritize significant investment in innovation. We have demonstrated the success of our platform approach, through expansion beyond our initial infrastructure monitoring solution to include over 20 products. Approximately 85% of our customers were using two or more products as of June 30, 2026, up from approximately 83% a year earlier. Additionally, as of June 30, 2026, approximately 58% of our customers were using four or more products, up from approximately 52% a year earlier, approximately 37% of our customers were using six or more products, up from 29% a year earlier, approximately 22% of our customers were using eight or more products, up from 14% a year earlier; and approximately 13% of our customers were using ten or more products, up from 7% a year earlier. We believe these metrics indicate strong expansion of product adoption across our platform.

Current wording

Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain our competitive advantage. We believe that we have built a highly differentiated platform that will position us to further extend the adoption of our platform and products. Datadog is frequently deployed across a customer’s entire infrastructure, making it ubiquitous. Datadog is a daily part of the lives of developers, operations engineers and business leaders. We employ a land-and-expand business model centered around offering products that are easy to adopt and have a very short time to value. Our efficient go-to-market model enables us to prioritize significant investment in innovation. We have demonstrated the success of our platform approach, through expansion beyond our initial infrastructure monitoring solution to include over 20 products. Approximately 86% of our customers were using two or more products as of September 30, 2026, up from approximately 84% a year earlier. Additionally, as of September 30, 2026, approximately 61% of our customers were using four or more products, up from approximately 54% a year earlier, approximately 41% of our customers were using six or more products, up from 31% a year earlier, approximately 26% of our customers were using eight or more products, up from 16% a year earlier; and approximately 16% of our customers were using ten or more products, up from 8% a year earlier. We believe these metrics indicate strong expansion of product adoption across our platform.

Previous wording

We believe there is a significant opportunity to expand usage of our platform outside of North America. Revenue, as determined based on the billing address of our customers, from regions outside of North America was approximately 27% and 29% of our total revenue for the six months ended June 30, 2026 and 2025, respectively. In addition, we have made and plan to continue to make significant investments to expand geographically, particularly in EMEA and APAC. Although these investments may adversely affect our operating results in the near term, we believe that they will contribute to our long-term growth. Beyond North America, we now have sales presence internationally, primarily in Amsterdam, Dublin, London, Paris, Seoul, Singapore, Sydney, and Tokyo.

Current wording

We believe there is a significant opportunity to expand usage of our platform outside of North America. Revenue, as determined based on the billing address of our customers, from regions outside of North America was approximately 27% and 29% of our total revenue for the nine months ended September 30, 2026 and 2025, respectively. In addition, we have made and plan to continue to make significant investments to expand geographically, particularly in EMEA and APAC. Although these investments may adversely affect our operating results in the near term, we believe that they will contribute to our long-term growth. Beyond North America, we now have sales presence internationally, primarily in Amsterdam, Dublin, London, Paris, Seoul, Singapore, Sydney, and Tokyo.

Previous wording

Revenue increased by $294.7 million, or 36%, for thethree months ended June 30, 2026 compared to thethree months ended June 30, 2025. Approximately 70% of the increase in revenue was attributable to growth from existing customers, and the remaining 30% was attributable to growth from new customers. We saw a reduction in usage from our largest customer starting in the third quarter of 2026, which may cause a deceleration in revenue growth.

Current wording

Revenue increased by $311.4 million, or 35%, for thethree months ended September 30, 2026 compared to thethree months ended September 30, 2025. Approximately 70% of the increase in revenue was attributable to growth from existing customers, and the remaining 30% was attributable to growth from new customers. We saw a reduction in usage from our largest customer in the third quarter of 2026, which may cause a deceleration in revenue growth.

Previous wording

Cost of revenue increased by $74.1 million, or 45%, for thethree months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily due to an increase of $64.1 million in third-party cloud infrastructure hosting and software costs and an increase of $5.2 million in personnel costs including allocated overhead costs as a result of increased headcount.

Current wording

Cost of revenue increased by $60.7 million, or 34%, for thethree months ended September 30, 2026 compared to the three months ended September 30, 2025. This increase was primarily due to an increase of $52.1 million in third-party cloud infrastructure hosting and software costs and an increase of $3.9 million in personnel costs including allocated overhead costs as a result of increased headcount.

Previous wording

Our gross margin decreased for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily as a result of increased spend with our third-party cloud infrastructure provider costs.

Current wording

Our gross margin remained flat for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily as a result of revenue growing in proportion to the growth of our third-party cloud infrastructure provider costs.

Previous wording

Research and development expense increased by $90.5 million, or 23%, for thethree months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily due to an increase of $62.5 million in personnel costs including allocated overhead costs for our engineering, product and design teams as a result of increased headcount and an increase of $28.2 million in cloud infrastructure and software-related investments.

Current wording

Research and development expense increased by $89.6 million, or 22%, for thethree months ended September 30, 2026 compared to the three months ended September 30, 2025. This increase was primarily due to an increase of $58.8 million in personnel costs including allocated overhead costs for our engineering, product and design teams as a result of increased headcount and an increase of $30.8 million in cloud infrastructure and software-related investments.

Previous wording

Sales and marketing expense increased by $72.5 million, or 30%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily due to an increase of $56.6 million in personnel costs including allocated overhead costs for our sales and marketing organization as a result of increased headcount and increased variable compensation for our sales personnel and an increase of $12.0 million in advertising, sales, marketing and promotional activities.

Current wording

Sales and marketing expense increased by $64.6 million, or 27%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This increase was primarily due to an increase of $53.9 million in personnel costs including allocated overhead costs for our sales and marketing organization as a result of increased headcount and increased variable compensation for our sales personnel and an increase of $8.5 million in advertising, sales, marketing and promotional activities.

Previous wording

Other income, net increased by $12.1 million, or 14%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily driven by an increase of$11.3 million in other income mainly due to fluctuations related to foreign currency exchange rates.

Current wording

Other income, net increased by $8.4 million, or 20%, for thethree months ended September 30, 2026 compared to the three months ended September 30, 2025. This increase was primarily driven by an increase of$7.1 million in interest income, mainly due to income earned from investments in marketable securities.

Previous wording

Revenue increased by $539.6 million, or 34%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Approximately 75% of the increase in revenue was attributable to growth from existing customers, and the remaining 25% was attributable to growth from new customers. We saw a reduction in usage from our largest customer starting in the third quarter of 2026, which may cause a deceleration in revenue growth.

Current wording

Revenue increased by $851.0 million, or 34%, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Approximately 70% of the increase in revenue was attributable to growth from existing customers, and the remaining 30% was attributable to growth from new customers. We saw a reduction in usage from our largest customer in the third quarter of 2026, which may cause a deceleration in revenue growth.

Previous wording

Cost of revenue increased by $125.7 million, or 39%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to an increase of$106.0 million in third-party cloud infrastructure hosting and software costs and an increase of$9.5 million in personnel costs including allocated overhead costs as a result of increased headcount.

Current wording

Cost of revenue increased by $186.4 million, or 37%, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This increase was primarily due to an increase of$158.1 million in third-party cloud infrastructure hosting and software costs and an increase of$13.5 million in personnel costs including allocated overhead costs as a result of increased headcount.

Previous wording

Our gross margin decreased for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily as a result of increased spend with our third-party cloud infrastructure provider costs.

Current wording

Our gross margin decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily as a result of increased spend with our third-party cloud infrastructure provider costs.

Previous wording

Research and development expense increased by $184.7 million, or 25%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to an increase of$132.8 million in personnel costs including allocated overhead costs for our engineering, product and design teams as a result of increased headcount and an increase of$49.2 million in cloud infrastructure and software-related investments.

Current wording

Research and development expense increased by $274.3 million, or 24%, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This increase was primarily due to an increase of$191.6 million in personnel costs including allocated overhead costs for our engineering, product and design teams as a result of increased headcount and an increase of$80.0 million in cloud infrastructure and software-related investments.

Previous wording

Sales and marketing expense increased by $138.0 million, or 30%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to an increase of $110.3 million in personnel costs including allocated overhead costs for our sales and marketing organization as a result of increased headcount and increased variable compensation for our sales personnel and an increase of $23.1 million in advertising, sales, marketing and promotional activities.

Current wording

Sales and marketing expense increased by $202.6 million, or 29%, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This increase was primarily due to an increase of $164.2 million in personnel costs including allocated overhead costs for our sales and marketing organization as a result of increased headcount and increased variable compensation for our sales personnel and an increase of $30.3 million in advertising, sales, marketing and promotional activities.

Previous wording

General and administrative expense increased by $30.4 million, or 23%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily due to an increase of$24.4 million in personnel costs including allocated overhead costs as a result of increased headcount.

Current wording

General and administrative expense increased by $46.4 million, or 23%, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This increase was primarily due to an increase of$37.8 million in personnel costs including allocated overhead costs as a result of increased headcount and an increase of$6.7 million in bad debt expense, partially offset by a decrease of$4.5 million in legal costs.

Previous wording

Our largest source of operating cash is cash collection from sales of subscriptions to our customers. Our primary uses of cash from operating activities are for personnel expenses, hosting expenses, facility expenses, and marketing expenses. We generated positive cash flows from operations during the six months ended June 30, 2026 and 2025. When assessing sources of liquidity, we also include cash and cash equivalents of $435.0 million and marketable securities of $4.6 billion as of June 30, 2026. We believe that our existing cash and cash equivalents, marketable securities and cash flow from operations will be sufficient to support our cash requirements for the next 12 months and beyond.

Current wording

Our largest source of operating cash is cash collection from sales of subscriptions to our customers. Our primary uses of cash from operating activities are for personnel expenses, hosting expenses, facility expenses, and marketing expenses. We generated positive cash flows from operations during the nine months ended September 30, 2026 and 2025. When assessing sources of liquidity, we also include cash and cash equivalents of $881.2 million and marketable securities of $4.4 billion as of September 30, 2026. We believe that our existing cash and cash equivalents, marketable securities and cash flow from operations will be sufficient to support our cash requirements for the next 12 months and beyond.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2026 increased by$178.9 million compared to the six months ended June 30, 2025, primarily driven by an increase in net income of $69.8 million, an increase in non-cash charges of $97.0 million, an increase in accounts payable of $69.5 million, andan increase in deferred revenue of$67.9 million. The increase in non-cash charges related primarily to an increase of $72.4 million in stock-based compensation as we continued to increase headcount to support the growth of the business. The increase in cash provided by operating activities was partially offset by an increase in accounts receivable of $84.1 million and an increase in deferred contract costs of $26.2 million.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2026 increased by$217.4 million compared to the nine months ended September 30, 2025, primarily driven by an increase in net income of $154.3 million, an increase in non-cash charges of $149.2 million, an increase in accounts payable of $80.4 million, andan increase in deferred revenue of$23.6 million. The increase in non-cash charges related primarily to an increase of $109.0 million in stock-based compensation as we continued to increase headcount to support the growth of the business. The increase in cash provided by operating activities was partially offset by an increase in accounts receivable of $109.8 million, an increase in deferred contract costs of $37.7 million, and a decrease in accrued expenses and other liabilities of $32.9 million.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2026 increased by $30.2 million compared to the six months ended June 30, 2025, primarily driven by an increase in purchases of marketable securities of $715.7 million and an increase in capitalized software development costs of $23.5 million. This increase in cash used in investing activities was partially offset by proceeds from the maturities of marketable securities of $391.6 million and proceeds from the sale of marketable securities of $310.0 million.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2026 decreased by $326.3 million compared to the nine months ended September 30, 2025, primarily driven by an increase in proceeds from the maturities of marketable securities of $744.9 million and an increase in proceeds from the sale of marketable securities of $310.0 million. This decrease in cash used in investing activities was partially offset by an increase in purchases of marketable securities of $707.6 million and an increase in capitalized software development costs of $31.2 million.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2026 increased $655.3 million compared to the six months ended June 30, 2025, primarily due to the absence in the current period of $635.5 million in repayments of the 2025 convertible senior notes that occurred during the six months ended June 30, 2025.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2026 increased $656.4 million compared to the nine months ended September 30, 2025, primarily due to the absence in the current period of $635.5 million in repayments of the 2025 convertible senior notes that occurred during the nine months ended September 30, 2025. The increase was also due to a $10.5 million increase in proceeds from the issuance of common stock under the employee stock purchase plan and a $10.2 million increase in proceeds from the exercise of stock options.