Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $886 million, representing a 28% year-over-year increase and exceeding the high end of guidance [7][22] - Free cash flow was $214 million, with a free cash flow margin of 24% [8][27] - Gross profit was $719 million, resulting in a gross margin of 81.2%, slightly up from 80.9% in the previous quarter [25][26] - Operating income was $207 million, yielding a 23% operating margin, an increase from 20% in the previous quarter [26] Business Line Data and Key Metrics Changes - The number of customers increased to approximately 32,000, up from about 29,200 a year ago [7] - The number of customers with an ARR of $100,000 or more rose to about 4,060, up from approximately 3,490 a year ago [7] - 84% of customers were using two or more products, up from 83% a year ago, indicating increased platform adoption [8] Market Data and Key Metrics Changes - Year-over-year revenue growth from AI-native customers, excluding the largest customer, accelerated in Q3 [24] - AI-native customers represented 12% of total revenue, up from 11% in the previous quarter [24] - The company saw strong revenue growth from both new and existing customers across various industries [22][23] Company Strategy and Development Direction - The company is focused on capitalizing on the ongoing trends of cloud migration and digital transformation as long-term growth drivers [20][21] - There is a strong emphasis on developing AI observability products to address the complexities associated with AI technologies [20][21] - The company is expanding its sales capacity and enhancing its go-to-market strategies to target larger and more sophisticated customers [20][23] Management's Comments on Operating Environment and Future Outlook - Management noted a positive demand environment, with no significant acceleration in cloud migration but a stable backdrop for growth [39] - The company is optimistic about the future, particularly regarding AI adoption and its impact on revenue growth [20][74] - Management expressed confidence in the sustainability of growth trends, particularly in digital transformation and cloud migration [99] Other Important Information - The company has been recognized as a leader in the 2025 Gartner Magic Quadrant for Digital Experience Monitoring for the second consecutive year [9] - The Security Suite of products experienced mid-50% year-over-year growth, up from mid-40% in the previous quarter [10] Q&A Session Summary Question: GPU monetization versus CPU monetization - Management indicated that while products for GPU monitoring are being introduced, they do not yet generate significant revenue [34] Question: Trends in enterprise growth - Management attributed improved performance to a positive demand environment, increased sales capacity, and successful product development [39][40] Question: Nature of AI-native customers - The AI-native customer base is diverse, including model vendors and companies across various AI applications [48] Question: Expansion of contract with largest AI-native customer - Management explained that higher commitments typically lead to better pricing, resulting in improved economics for customers [52][54] Question: Acceleration in security growth - Management noted that investments in channel partnerships and product maturity have contributed to the growth in the security business [56] Question: Impact of AI advancements on the on-call product - Management highlighted that AI advancements enhance the value proposition of the on-call product by enabling more proactive incident management [61] Question: Duration of non-AI cohort acceleration - Management expressed confidence in the mid to long-term sustainability of growth driven by digital transformation and cloud migration [99]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $886 million, representing a 28% year-over-year increase and exceeding the high end of guidance [5][19] - Free cash flow was $214 million, with a free cash flow margin of 24% [6][24] - Gross profit was $719 million, resulting in a gross margin of 81.2%, slightly up from 80.9% in the previous quarter [24][25] Business Line Data and Key Metrics Changes - The number of customers increased to approximately 32,000, up from about 29,200 a year ago [5] - 4,060 customers had an ARR of $100,000 or more, up from 3,490 a year ago, contributing about 89% of total ARR [5][6] - Security ARR growth was in the mid-50% year-over-year, up from mid-40% in the previous quarter [9] Market Data and Key Metrics Changes - The company saw strong revenue growth from both AI-native and non-AI customers, with non-AI existing customer usage growth being the highest in 12 quarters [4][21] - AI-native customers represented 12% of total revenue in Q3, up from 11% in the previous quarter [22] Company Strategy and Development Direction - The company is focused on digital transformation and cloud migration as long-term growth drivers, with significant investments in AI observability products [18][19] - The strategy includes expanding product offerings and enhancing customer engagement through new go-to-market motions [15][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand environment, noting broad-based positive trends in cloud migration and digital transformation [4][18] - The company anticipates continued growth in AI adoption and plans to leverage this for future revenue opportunities [19][45] Other Important Information - The company supports over 1,000 integrations, allowing customers to correlate disparate data sources for deeper analysis [12] - The company has been recognized as a leader in the 2025 Gartner Magic Quadrant for digital experience monitoring [8] Q&A Session Summary Question: GPU monetization versus CPU monetization - Management indicated that while products for GPU monitoring are being developed, they do not yet generate significant revenue [29] Question: Enterprise trends in non-AI cohort - Management attributed improved performance to a positive demand environment, increased sales capacity, and successful product development [30][31] Question: Nature of AI-native customers - The AI-native customer base is diverse, including model builders and various applications, indicating broad adoption across the sector [34] Question: Expansion of contract with largest AI-native customer - Management clarified that higher commitments typically lead to better pricing, resulting in improved economics for customers [36] Question: Acceleration in security growth - The growth in security is attributed to product maturity, channel investments, and effective go-to-market strategies [38] Question: Impact of AI advancements on OnCall product - Management emphasized that AI advancements enhance the value proposition of the OnCall product by enabling end-to-end incident resolution [40] Question: Duration of non-AI cohort acceleration - Management expressed confidence in the mid to long-term sustainability of growth driven by digital transformation and cloud migration [55]

Core Insights - Datadog has been recognized as a Leader in the 2025 Gartner Magic Quadrant for Digital Experience Monitoring (DEM) for the second consecutive year, highlighting its strong execution capabilities and comprehensive vision in the market [2][3]. Company Overview - Datadog is a monitoring and security platform for cloud applications, providing a unified solution that integrates various capabilities such as infrastructure monitoring, application performance monitoring, log management, user experience monitoring, and cloud security [13]. Product Offerings - The DEM suite from Datadog includes Synthetic Monitoring and Testing, Real User Monitoring (RUM), Product Analytics, Session Replay, and Error Tracking, which collectively offer a single source of truth for frontend monitoring data [3]. - The introduction of RUM Without Limits enhances flexibility and value for Real User Monitoring, allowing teams to gain high-fidelity insights and manage costs effectively [3]. Customer Impact - Customers like Ibnsina Pharma and Booksy have reported significant improvements in understanding user activity and measuring the business impact of changes through Datadog's solutions [4].