Datadog(DDOG) - 2024 Q3 - Quarterly Results

Financial & Business Highlights Datadog reported strong Q3 2024 financial performance with significant revenue growth and robust cash flow, alongside continued customer expansion and key product advancements Third Quarter 2024 Financial Highlights Datadog reported strong financial results for the third quarter of 2024, with revenue reaching $690 million, a 26% year-over-year increase Q3 2024 Financial Performance Summary | Metric | Value | Growth (YoY) | | :--- | :--- | :--- | | Revenue | $690 million | 26% | | GAAP Operating Income | $20 million | - | | GAAP Operating Margin | 3% | - | | Non-GAAP Operating Income | $173 million | - | | Non-GAAP Operating Margin | 25% | - | | GAAP Net Income per Diluted Share | $0.14 | - | | Non-GAAP Net Income per Diluted Share | $0.46 | - | | Operating Cash Flow | $229 million | - | | Free Cash Flow | $204 million | - | - As of September 30, 2024, the company's cash, cash equivalents, and marketable securities totaled $3.2 billion[3] Third Quarter & Recent Business Highlights Datadog demonstrated continued customer growth, particularly among high-value clients, with a 12% year-over-year increase in customers generating $100,000 or more in Annualized Recurring Revenue (ARR) - The number of customers with an ARR of $100,000 or more grew by 12% year-over-year, from approximately 3,130 to 3,490[1][3] - Datadog was named a Leader in the 2024 Gartner Magic Quadrant for both Observability Platforms and Digital Experience Monitoring[2][4][6] - The company announced the General Availability of Datadog Monitoring for Oracle Cloud Infrastructure, expanding its multi-cloud support[1][5] - The State of Cloud Security 2024 report was released, highlighting the ongoing risk of long-lived credentials in cloud environments[5] Financial Outlook Datadog projects strong financial performance for Q4 and full year 2024, with revenue expected to reach up to $713 million and $2.66 billion respectively Fourth Quarter and Full Year 2024 Outlook Datadog projects Q4 revenue between $709 million and $713 million, with full-year revenue anticipated to be between $2.656 billion and $2.660 billion, alongside non-GAAP net income per share guidance Q4 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Revenue | $709 million - $713 million | | Non-GAAP Operating Income | $163 million - $167 million | | Non-GAAP Net Income per Share | $0.42 - $0.44 | Full Year 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Revenue | $2.656 billion - $2.660 billion | | Non-GAAP Operating Income | $658 million - $662 million | | Non-GAAP Net Income per Share | $1.75 - $1.77 | - The company has not reconciled its non-GAAP outlook to the most comparable GAAP measures due to uncertainty regarding items like stock-based compensation[9] Financial Statements This section presents Datadog's consolidated statements of operations, balance sheets, and cash flows, along with reconciliations of GAAP to non-GAAP financial measures Condensed Consolidated Statements of Operations For the third quarter of 2024, Datadog's revenue grew 26% YoY to $690.0 million, shifting from a GAAP operating loss to a GAAP operating income of $20.3 million Q3 Statement of Operations Highlights (in thousands) | Metric | Q3 2024 | Q3 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $690,016 | $547,536 | +26.0% | | Gross Profit | $552,260 | $444,217 | +24.3% | | Operating Income (Loss) | $20,278 | $(4,230) | N/A | | Net Income | $51,697 | $22,630 | +128.5% | | Diluted EPS | $0.14 | $0.06 | +133.3% | Nine Months Ended Sep 30 Statement of Operations (in thousands) | Metric | 2024 | 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $1,946,548 | $1,538,710 | +26.5% | | Operating Income (Loss) | $44,892 | $(61,206) | N/A | | Net Income (Loss) | $138,152 | $(5,425) | N/A | Condensed Consolidated Balance Sheets As of September 30, 2024, Datadog's balance sheet reflects a strong financial position, with total assets growing to $4.63 billion and cash, cash equivalents, and marketable securities increasing to $3.20 billion Balance Sheet Summary (in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $337,418 | $330,339 | | Marketable securities | $2,861,536 | $2,252,559 | | Total Assets | $4,631,471 | $3,936,072 | | Total Liabilities | $2,002,326 | $1,910,718 | | Total Stockholders' Equity | $2,629,145 | $2,025,354 | Condensed Consolidated Statements of Cash Flows In Q3 2024, Datadog generated $228.7 million in cash from operating activities, a significant increase from Q3 2023, resulting in a free cash flow of $203.6 million Cash Flow Summary - Three Months Ended Sep 30 (in thousands) | Metric | 2024 | 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $228,681 | $152,783 | +49.7% | | Free cash flow | $203,604 | $138,189 | +47.3% | Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Metric | 2024 | 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $605,375 | $439,728 | +37.7% | | Free cash flow | $534,131 | $396,258 | +34.8% | Reconciliation of GAAP to Non-GAAP Financial Measures This section details the adjustments from GAAP to non-GAAP metrics, showing non-GAAP operating income of $173.0 million and non-GAAP net income of $165.7 million for Q3 2024 Q3 2024 Reconciliation of GAAP to Non-GAAP Operating Income (in thousands) | Description | Amount | | :--- | :--- | | GAAP operating income | $20,278 | | Plus: Stock-based compensation expense | $142,190 | | Plus: Amortization of acquired intangibles | $1,438 | | Plus: Employer payroll taxes on employee stock transactions | $9,115 | | Non-GAAP operating income | $173,021 | Q3 2024 Reconciliation of GAAP to Non-GAAP Net Income (in thousands) | Description | Amount | | :--- | :--- | | GAAP net income | $51,697 | | Plus: Non-GAAP adjustments (Stock comp, amortization, etc.) | $153,655 | | Less: Income tax effects and adjustments | $(39,617) | | Non-GAAP net income | $165,735 | Supplementary Information This section provides definitions for Datadog's non-GAAP financial measures and key operating metrics, clarifying their calculation and purpose About Non-GAAP Financial Measures Datadog uses non-GAAP financial measures to supplement its GAAP results, excluding certain non-cash or non-recurring expenses for evaluating operational performance - Datadog discloses non-GAAP measures to provide a supplement to GAAP results for evaluating operational performance[15] - Key adjustments from GAAP to non-GAAP include stock-based compensation, amortization of acquired intangibles, employer payroll taxes on employee stock transactions, and amortization of issuance costs[17] - Free cash flow is defined as net cash provided by operating activities, minus capital expenditures and capitalized software development costs[18][23] Operating Metrics The company defines key operating metrics to provide clarity on business performance, including customer count and Annualized Recurring Revenue (ARR) - A customer is defined as an account with a unique identifier and an active subscription; free trial users are not included[25] - ARR is defined as the annualized revenue run-rate of subscription agreements, calculated by multiplying MRR by 12[26]