Financial Data and Key Metrics Changes - Q4 revenue was $953 million, an increase of 29% year-over-year and above the high end of guidance [7][27] - Free cash flow was $291 million, with a free cash flow margin of 31% [8][30] - Gross profit for Q4 was $776 million, with a gross margin percentage of 81.4% [29] - Billings were $1.21 billion, up 34% year-over-year [29] - Remaining performance obligations (RPO) was $3.46 billion, up 52% year-over-year [29] Business Line Data and Key Metrics Changes - Infrastructure Monitoring contributes over $1.6 billion in ARR [10] - Log Management is now over $1 billion in ARR [10] - APM and DEM products also crossed $1 billion in ARR, with core APM product growth in the mid-30s% year-over-year [10] - 84% of customers used two or more products, up from 83% a year ago [8] - 55% of customers used four or more products, up from 50% a year ago [8] Market Data and Key Metrics Changes - 48% of the Fortune 500 are Datadog customers, indicating strong market penetration [9] - The median ARR for Fortune 500 customers is still less than $500,000, suggesting significant growth potential [9] - Approximately 650 AI-native customers are using Datadog, with 19 customers spending $1 million or more annually [28] Company Strategy and Development Direction - The company continues to focus on digital transformation and cloud migration as long-term growth drivers [25] - Plans to integrate AI into the Datadog platform to enhance customer value and outcomes [25] - The company aims to expand its platform to address end-to-end customer needs across software development, production, data stack, user experience, and security [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing momentum of cloud migration and the acceleration of revenue growth [5] - The company anticipates continued strong adoption among AI-native customers, with growth significantly outpacing the rest of the business [27] - Management expects revenues for Q1 2026 to be in the range of $951 million to $961 million, representing 25%-26% year-over-year growth [31] Other Important Information - The company released over 400 new features and capabilities in 2025 [11] - Significant growth in AI-related products, with over 5,500 customers using Datadog AI integrations [15] - The company launched Data Observability for end-to-end visibility across the data lifecycle [16] Q&A Session Summary Question: Observability's Future in the Context of AI - Management believes that the rise of AI will increase the complexity of systems, necessitating enhanced observability tools [39][40] Question: Evolution of UI and Workflows with AI - Management acknowledged that there will be an evolution in UI and workflows to accommodate both human and agentic SREs [41][42] Question: AI Customer Concentration and Growth - Management noted that the AI cohort is diversified, with significant growth among various customers [62][81] Question: Competition and Market Dynamics - Management stated that competition remains stable, with no significant changes in market dynamics due to the rise of LLMs [68][69] Question: CapEx Trends and Future Revenue - Management indicated that while CapEx trends are significant, it is challenging to directly correlate them to LLM observability revenue [75] Question: Diversifying AI Customer Base - Management emphasized that the company is not reliant on a few customers and is seeing growth across a broad range of AI customers [78][81]

Financial Data and Key Metrics Changes - Q4 revenue was $953 million, an increase of 29% year-over-year and above the high end of guidance [5][26] - Free cash flow was $291 million, with a free cash flow margin of 31% [6][30] - Gross profit for Q4 was $776 million, with a gross margin percentage of 81.4% [28] - Billings were $1.21 billion, up 34% year-over-year [28] Business Line Data and Key Metrics Changes - Infrastructure Monitoring contributes over $1.6 billion in ARR, Log Management is now over $1 billion in ARR, and APM products also crossed $1 billion in ARR [9] - 84% of customers used two or more products, up from 83% a year ago, and 55% used four or more products, up from 50% [6] - The number of customers with an ARR of $100,000 or more increased to about 4,310, up from about 3,610 a year ago [6] Market Data and Key Metrics Changes - 48% of the Fortune 500 are Datadog customers, indicating strong penetration in large enterprises [7] - The median ARR for Fortune 500 customers is still less than $500,000, suggesting significant growth opportunities [8] Company Strategy and Development Direction - The company continues to focus on digital transformation and cloud migration as long-term growth drivers [24] - There is a strong emphasis on integrating AI into the Datadog platform to enhance customer value and outcomes [24] - The company aims to expand its platform to address end-to-end customer needs across software development, production, data stack, user experience, and security [24] Management's Comments on Operating Environment and Future Outlook - Management noted broad-based positive trends in demand driven by cloud migration and high growth within AI-native customer groups [4][5] - The company expects continued strong growth dynamics and is optimistic about the adoption of AI innovations by customers [25] - The outlook for Q1 2026 revenue is projected to be in the range of $951 million to $961 million, representing 25%-26% year-over-year growth [31] Other Important Information - The company released over 400 new features and capabilities in 2025, focusing on AI and observability [10][12] - The MCP server is seeing explosive growth, indicating strong customer interest in AI-driven solutions [11] Q&A Session Summary Question: Observability in the context of advancements in AI - Management believes that the increase in applications and complexity will drive demand for observability tools, as developers will need to ensure systems work correctly in production [36][38] Question: AI-native customer growth and spending - The company has seen strong growth among AI-native customers, with 19 customers spending over $1 million annually [27][46] Question: Competition and market dynamics - Management noted that competition remains stable, with no significant changes in market dynamics despite the rise of LLMs [68][70] Question: Future CapEx trends and LLM observability - Management indicated that while it is difficult to directly map CapEx to LLM observability, the overall increase in complexity will benefit the business [74][76] Question: Diversification of AI customer concentration - The company is not focused on a few large customers and expects to see more diversification within the AI cohort [78][80]