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]

Financial Data and Key Metrics Changes - Revenue for Q2 was $827 million, representing a 28% year-over-year increase and exceeding the high end of guidance [8][28] - Free cash flow was $165 million, with a free cash flow margin of 20% [9][34] - Gross profit was $669 million, resulting in a gross margin of 80.9%, compared to 80.3% in the previous quarter [32][34] - Operating income was $164 million, with an operating margin of 20%, down from 22% in the previous quarter [33][34] Business Line Data and Key Metrics Changes - The number of customers increased to approximately 31,400, up from about 28,700 a year ago [8] - 83% of customers used two or more products, and 52% used four or more products, indicating strong platform adoption [10] - The security suite generated over $100 million in ARR, growing at a mid-forties percent year-over-year rate [11] Market Data and Key Metrics Changes - AI native customers contributed about 11% of Q2 revenues, up from 8% in the previous quarter [28] - The twelve-month trailing net retention percentage was about 120, higher than the high 110s from the last quarter [29] Company Strategy and Development Direction - The company continues to focus on digital transformation and cloud migration as long-term growth drivers [23] - There is a strong emphasis on AI integration into the platform, with new AI products launched to enhance observability and incident response [26][27] - The company aims to improve standardized adoption of security products across large enterprises [55] Management's Comments on Operating Environment and Future Outlook - Management views the demand environment as solid, with low churn and stable gross revenue retention in the mid to high 90s [8] - The company is optimistic about the growth opportunities presented by AI, with expectations of broader adoption across various industries [24][25] - Management acknowledges potential volatility in revenue growth from AI native customers but remains confident in long-term growth [52] Other Important Information - The company held its DASH user conference, announcing over 125 new products and features [12] - The company ended the quarter with $3.9 billion in cash, cash equivalents, and marketable securities [34] Q&A Session Summary Question: AI contribution and market opportunity - Management discussed the layers of AI opportunity, emphasizing the need for observability in applications that are increasingly non-deterministic [41][44] Question: Sales capacity and productivity - Management confirmed successful ramping of sales capacity and productivity, with evidence of new logo production and pipeline growth [47] Question: Guidance and potential volatility - Management indicated that current growth metrics do not show volatility yet, but they remain cautious due to potential future fluctuations [52] Question: Security product adoption - Management expressed satisfaction with the current adoption of security products but acknowledged the need for broader enterprise-wide adoption [55] Question: Trends in customer demographics - Management noted stable growth in enterprise customers, with gradual improvements in SMB usage [59] Question: FlexLogs progress - Management confirmed that all major deals with enterprise customers now involve FlexLogs, which is resonating well with customers [95]