Datadog(DDOG) - 2024 Q3 - Quarterly Report

Revenue Growth - Revenue for Q3 2024 was $690.0 million, a 26% YoY increase from$ 547.5 million in Q3 2023[107] - Revenue for the nine months ended September 30, 2024 was $1,946.5 million, a 27% YoY increase from$ 1,538.7 million in the same period of 2023[107] - Revenue increased by $142.5 million, or 26%, for the three months ended September 30, 2024 compared to the same period in 2023, with 75% from existing customers and 25% from new customers[139] - Revenue increased by$ 407.8 million, or 27%, in the nine months ended September 30, 2024 compared to the same period in 2023, with 75% from existing customers and 25% from new customers[146] Net Income and Profitability - Net income for Q3 2024 was $51.7 million, compared to$ 22.6 million in Q3 2023[107] - Net income for the nine months ended September 30, 2024 was $138.2 million, compared to a net loss of$ 5.4 million in the same period of 2023[107] - Operating income improved to $20.3 million in Q3 2024 from a loss of$ 4.2 million in Q3 2023[133] - Net income for Q3 2024 was $51.7 million, compared to$ 22.6 million in Q3 2023[133] Cash Flow and Liquidity - Operating cash flow for the nine months ended September 30, 2024 was $605.4 million, up from$ 439.7 million in the same period of 2023[107] - Free cash flow for the nine months ended September 30, 2024 was $534.1 million, up from$ 396.3 million in the same period of 2023[107] - Net cash provided by operating activities increased by $165.6 million in the nine months ended September 30, 2024 compared to the same period in 2023, driven by higher non-cash charges and accrued expenses[160] - Free cash flow increased to$ 534.1 million in the nine months ended September 30, 2024 compared to $396.3 million in the same period in 2023, driven by higher operating cash flow[164] - Company had$ 332.5 million in cash equivalents and $2.9 billion in marketable securities as of September 30, 2024[169] Customer Metrics - The company had 29,200 customers as of September 30, 2024, up from 26,800 as of September 30, 2023[110] - 3,490 customers had ARR of$ 100,000 or more as of September 30, 2024, representing 88% of ARR, up from 3,130 customers representing 86% of ARR as of September 30, 2023[112] - Trailing 12-month dollar-based net retention rate was in the mid-110%'s as of September 30, 2024, down from the high-110%'s as of September 30, 2023[113] - 83% of customers were using more than one product as of September 30, 2024, up from 82% a year earlier[116] Cost and Expense Analysis - Cost of revenue increased by $34.4 million, or 33%, primarily due to$ 28.6 million in third-party cloud infrastructure hosting and software costs and $4.8 million in personnel costs[140] - Gross margin decreased by 1% due to increased spend with third-party cloud infrastructure providers[141] - Research and development expense increased by$ 51.6 million, or 21%, driven by $38.4 million in personnel costs and$ 12.8 million in cloud infrastructure-related investments[142] - Sales and marketing expense increased by $30.9 million, or 20%, primarily due to$ 30.3 million in personnel costs and increased variable compensation[143] - General and administrative expenses increased to $52.4 million in Q3 2024 from$ 51.4 million in Q3 2023[133] - General and administrative expense increased by $1.1 million, or 2%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to increased personnel costs[144] - Cost of revenue increased by$ 66.3 million, or 22%, in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to higher cloud infrastructure and personnel costs[148] - Gross margin increased by 1% to 81% in the nine months ended September 30, 2024 compared to the same period in 2023, driven by revenue growth exceeding cloud infrastructure costs[149] - Research and development expense increased by $127.2 million, or 18%, in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to higher personnel and cloud infrastructure costs[150] - Sales and marketing expense increased by$ 99.4 million, or 22%, in the nine months ended September 30, 2024 compared to the same period in 2023, driven by higher personnel and advertising costs[152] Other Income and Expenses - Interest income and other income, net increased to $37.4 million in Q3 2024 from$ 29.8 million in Q3 2023[133] - Other income, net increased by $7.3 million, or 26%, for the three months ended September 30, 2024 compared to the same period in 2023, driven by higher interest income from marketable securities[145] - Other income, net increased by$ 41.0 million, or 64%, in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to higher interest income from marketable securities[154] - Stock-based compensation expense totaled $142.2 million in Q3 2024, up from$ 123.1 million in Q3 2023[134] Financial Instruments and Risk Management - Company issued $747.5 million aggregate principal amount of the 2025 Notes on June 2, 2020[170] - Fair value of the 2025 Notes is influenced by interest rate risk, market risk, and Class A common stock price fluctuations[170] - All company sales are denominated in U.S. dollars, minimizing foreign currency risk[171] - Operating expenses are denominated in local currencies, primarily in the U.S., France, Ireland, and the U.K.[171] - A hypothetical 10% change in the U.S. dollar's relative value would not materially affect operating results[171] - A hypothetical 10% change in interest rates would not materially impact the company's financial statements[169]