DDOG

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How DDOG rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the fiscal years ended December 31, 2025 and 2024, and year-to-year comparisons between fiscal 2025 and fiscal 2024.
A discussion of our financial condition and results of operations for the fiscal year ended December 31, 2023 and year-to-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on February 20, 2025.
Overview Datadog is the AI-powered observability and security platform for cloud applications.
Our SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, user experience monitoring, cloud security, service management, and many other capabilities to provide unified, real-time observability and security for our customers’ entire technology stack.
As of December 31, 2025, we had $401.3 million in cash and cash equivalents and $4,073.5 million in marketable securities.
We have grown rapidly in recent periods, with revenues for the fiscal years ended December 31, 2025, 2024 and 2023 of $3,427.2 million, $2,684.3 million, and $2,128.4 million, respectively, representing year-over-year growth of 28% from the fiscal year ended December 31, 2024 to the fiscal year ended December 31, 2025 and 26% from the fiscal year ended December 31, 2023 to the fiscal year ended December 31, 2024.
We have continued to make significant expenditures and investments, including in personnel-related costs, sales and marketing, infrastructure and operations, and have generated net income of $107.7 million, $183.7 million and $48.6 million for the fiscal years ended December 31, 2025, 2024 and 2023, respectively.
Our operating cash flow was $1,050.1 million, $870.6 million and $660.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Our free cash flow was $914.7 million, $775.1 million and $597.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.
For example, macroeconomic events including changes in trade policies, such as trade wars, tariffs or other trade restrictions or the threat of such actions, fluctuating inflation and interest rates, and the conflicts in Ukraine and the Middle East have led to economic uncertainty.
As of December 31, 2025, we had approximately 32,700 customers spanning organizations of a broad range of sizes and industries, compared to approximately 30,000 as of December 31, 2024.
As of December 31, 2025, we had approximately 4,310 customers with annual run-rate revenue, or ARR, of $100,000 or more, representing 90% of our ARR, up from 3,610 as of December 31, 2024, representing 88% of our ARR.
As of December 31, 2025, we had approximately 603 customers with annual run-rate revenue, or ARR, of $1.0 million or more, up from 462 as of December 31, 2024.
As of December 31, 2025, our trailing 12-month dollar-based net retention rate was about 120%.
Approximately 84% of our customers were using two or more products as of December 31, 2025, consistent with approximately 83% a year earlier.
Additionally, as of December 31, 2025, approximately 55% of our customers were using four or more products, up from approximately 50% a year earlier; approximately 33% of our customers were using six or more products, up from approximately 26% a year earlier; approximately 18% of our customers were using eight or more products, up from approximately 13% a year earlier; and approximately 9% of our customers were using ten or more products, up from 5% a year earlier.
Revenue, as determined based on the billing address of our customers, from regions outside of North America was approximately 29% of our total revenue for each of the years ended December 31, 2025 and 2024.
Usage is measured on a per-unit basis, with the unit of measure differing for each product, based on the unit that, in working with customers and design partners, best indicates the value we deliver, In the case of subscriptions for committed contractual amounts of usage, revenue is recognized ratably over the term of the subscription agreement, generally beginning on the date that our platform is made available to a customer.
Results of Operations The following table sets forth our consolidated statements of operations data for the periods indicated: Year Ended December 31, 2025 2024 2023 (in thousands) Revenue $ 3,427,158 $ 2,684,275 $ 2,128,359 Cost of revenue (1)(2)(3) 686,957 515,531 409,908 Gross profit 2,740,201 2,168,744 1,718,451 Operating expenses: Research and development (1)(3) 1,548,451 1,152,703 962,447 Sales and marketing (1)(2)(3) 956,423 756,605 609,276 General and administrative (1)(3)(4) 279,700 205,152 180,192 Total operating expenses 2,784,574 2,114,460 1,751,915 Operating (loss) income (44,373) 54,284 (33,464) Other income: Interest expense (5) (11,059) (7,068) (6,302) Interest income and other income, net 182,453 156,724 100,001 Other income, net 171,394 149,656 93,699 Income before provision for income taxes 127,021 203,940 60,235 Provision for income taxes 19,280 20,194 11,667 Net income $ 107,741 $ 183,746 $ 48,568 ____________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Cost of revenue $ 29,729 $ 26,221 $ 17,578 Research and development 469,526 363,301 313,096 Sales and marketing 156,472 122,079 101,937 General and administrative 94,944 58,735 49,689 Total $ 750,671 $ 570,336 $ 482,300 ____________________ (2) Includes amortization of acquired intangibles expense as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Cost of revenue $ 5,428 $ 5,642 $ 8,041 Sales and marketing 945 825 825 Total $ 6,373 $ 6,467 $ 8,866 _____________________ (3) Includes employer payroll taxes on employee stock transactions as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Cost of revenue $ 695 $ 446 $ 364 Research and development 40,183 31,134 21,449 Sales and marketing 5,923 4,694 5,917 General and administrative 6,998 6,852 4,811 Total $ 53,799 $ 43,126 $ 32,541 ___________________ (4) Includes M&A transaction costs as follows: Year Ended December 31, 2025 2024 2023 (in thousands) General and administrative $ 1,574 $ — $ — ____________________ (5) Includes amortization of issuance costs as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Interest expense $ 5,602 $ 3,761 $ 3,388 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Year Ended December 31, 2025 2024 2023 (as a percentage of total revenue (1) ) Revenue 100 % 100 % 100 % Cost of revenue 20 19 19 Gross profit 80 81 81 Operating expenses: Research and development 45 43 45 Sales and marketing 28 28 29 General and administrative 8 8 8 Total operating expenses 81 79 82 Operating (loss) income (1) 2 (2) Other income: Interest expense — — — Interest income and other income, net 5 6 5 Other income, net 5 6 4 Income before provision for income taxes 4 8 3 Provision for income taxes 1 1 1 Net income 3 % 7 % 2 % _____________________ (1) Certain items may not total due to rounding.
Comparison of the Years Ended December 31, 2025 and 2024 Revenue Year Ended December 31, 2025 2024 Change % Change Revenue $ 3,427,158 $ 2,684,275 $ 742,883 28 % Revenue increased by $742.9 million or 28%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Cost of Revenue and Gross Margin Year Ended December 31, 2025 2024 Change % Change (dollars in thousands) Cost of revenue $ 686,957 $ 515,531 $ 171,426 33 % Gross margin 80 % 81 % Cost of revenue increased by $171.4 million, or 33%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
This increase was primarily due to an increase of $149.8 million in third-party cloud infrastructure hosting and software costs and an increase of $18.2 million in personnel costs including allocated overhead costs as a result of increased headcount.
Our gross margin decreased by 1% for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily as the result of increased in third-party cloud infrastructure provider costs.
Research and Development Year Ended December 31, 2025 2024 Change % Change (dollars in thousands) Research and development $ 1,548,451 $ 1,152,703 $ 395,748 34 % Percentage of revenue 45 % 43 % Research and development expense increased by $395.7 million, or 34%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
This increase was primarily due to an increase of $324.4 million in personnel costs including allocated overhead costs for our engineering, product and design teams as a result of increased headcount and an increase of $60.0 million in cloud infrastructure-related investments.
Sales and Marketing Year Ended December 31, 2025 2024 Change % Change (dollars in thousands) Sales and marketing $ 956,423 $ 756,605 $ 199,818 26 % Percentage of revenue 28 % 28 % Sales and marketing expense increased by $199.8 million, or 26%, for the year ended December 31, 2025 compared to the year ended December 31, 2024 .
This increase was primarily due to an increase of $165.4 million in personnel costs including allocated overhead costs for our sales and marketing organization as a result of increased headcount and increased variable compensation for our sales personnel and an increase of $26.3 million in advertising, sales, marketing and promotional activities.
General and Administrative Year Ended December 31, 2025 2024 Change % Change (dollars in thousands) General and administrative $ 279,700 $ 205,152 $ 74,548 36 % Percentage of revenue 8 % 8 % General and administrative expense increased by $74.5 million, or 36%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
This increase was primarily due to an increase of $58.2 million in personnel costs and other related costs as a result of increased headcount, and an increase of $10.4 million in legal and other professional services expenses.
Other Income, Net Year Ended December 31, 2025 2024 Change % Change (dollars in thousands) Other income, net $ 171,394 $ 149,656 $ 21,738 15 % Percentage of revenue 5 % 6 % Other income, net increased by $21.7 million, or 15% for the year ended December 31, 2025 compared to the year ended December 31, 2024.
This increase was primarily driven by an increase of $39.1 million in interest income, mainly due to income earned from investments in marketable securities, offset by $14.0 million due to fluctuations related to foreign currency exchange rates.
We have generated positive cash flows from operations during the years ended December 31, 2025, 2024, and 2023.
When assessing sources of liquidity, we also include cash and cash equivalents of $0.4 billion and marketable securities of $4.1 billion as of December 31, 2025.
Non-cancelable purchase commitments for business operations and operating lease obligations total $1.4 billion and $375.2 million, respectively, as of December 31, 2025, due primarily over the next five years.
In December 2024, we issued $1.0 billion aggregate principal amount of the 2029 Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.
The principal and future interest payments related to our 2029 Notes are $1.0 billion.
We may from time to time seek to retire or purchase the 2029 Notes, through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise.
Cash Flows The following table shows a summary of our cash flows for the periods presented: Year Ended December 31, 2025 2024 (in thousands) Cash provided by operating activities $ 1,050,135 $ 870,603 Cash used in investing activities (1,334,480) (736,840) Cash (used in) provided by financing activities (572,483) 787,083 Operating Activities Net cash provided by operating activities for the year ended December 31, 2025 increased $179.5 million compared to the year ended December 31, 2024, primarily driven by an increase in non-cash charges of $215.4 million, an increase in deferred revenue of $75.7 million, and a increase in accrued expenses and other liabilities of $54.5 million.
The increase in non-cash charges related primarily to an increase of $180.3 million in stock-based compensation as we continued to increase headcount to support the growth of the business.
The increase in cash provided by operating activities was partially offset by an increase in accounts receivable of $52.9 million and an increase in deferred contract costs of $50.8 million.

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Gone since FY2024

This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the fiscal years ended December 31, 2024 and 2023, and year-to-year comparisons between fiscal 2024 and fiscal 2023.
A discussion of our financial condition and results of operations for the fiscal year ended December 31, 2022 and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 24, 2023.
Overview Datadog is the observability and security platform for cloud applications.
Our SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, user experience monitoring, cloud security, and many other capabilities to provide unified, real-time observability and security for our customers’ entire technology stack.
As of December 31, 2024, we had $1,247.0 million in cash and cash equivalents and $2,942.1 million in marketable securities.
We have grown rapidly in recent periods, with revenues for the fiscal years ended December 31, 2024, 2023 and 2022 of $2,684.3 million, $2,128.4 million, and $1,675.1 million, respectively, representing year-over-year growth of 26% from the fiscal year ended December 31, 2023 to the fiscal year ended December 31, 2024 and 27% from the fiscal year ended December 31, 2022 to the fiscal year ended December 31, 2023.
We have continued to make significant expenditures and investments, including in personnel-related costs, sales and marketing, infrastructure and operations, and have incurred net income (losses) of $183.7 million, $48.6 million and $(50.2) million for the fiscal years ended December 31, 2024, 2023 and 2022, respectively.
Our operating cash flow was $870.6 million, $660.0 million and $418.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Our free cash flow was $775.1 million, $597.5 million and $353.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.
For example, macroeconomic events including fluctuating inflation and interest rates, the Russian invasion of Ukraine, and the conflicts in the Middle East have led to economic uncertainty.
Convertible Senior Notes In December 2024, we completed a private offering of $1.0 billion aggregate principal amount of the 2029 Notes.
The total proceeds from the 2029 Notes offering were approximately $979.1 million, net of $20.9 million of debt issuance costs.
We used a portion of the net proceeds from the offering (i) to pay the $100.9 million cost of the privately negotiated capped call transactions relating to the 2029 Notes, or the Capped Calls and (ii) to repurchase for $196.8 million in privately negotiated transactions approximately $112.0 million in aggregate principal amount of the 2025 Notes, including accrued and unpaid interest.
Refer to Note 8, Convertible Senior Notes , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
As of December 31, 2024, we had approximately 30,000 customers spanning organizations of a broad range of sizes and industries, compared to approximately 27,300 as of December 31, 2023.
As of December 31, 2024, we had approximately 3,610 customers with annual run-rate revenue, or ARR, of $100,000 or more, representing 88% of our ARR, up from 3,190 as of December 31, 2023, representing 86% of our ARR.
As of December 31, 2024, we had approximately 462 customers with annual run-rate revenue, or ARR, of $1.0 million or more, up from 396 as of December 31, 2023.
As of December 31, 2023, our trailing 12-month dollar-based net retention rate was mid-110%'s.
As of each of the years ended December 31, 2024 and 2023, approximately 83% of our customers were using more than one product.
Additionally, as of December 31, 2024, approximately 50% of our customers were using more than four products, up from approximately 47% a year earlier, and approximately 26% of our customers were using more than six products, up from approximately 22% a year earlier.
Revenue, as determined based on the billing address of our customers, from regions outside of North America was approximately 30% of our total revenue for each of the years ended December 31, 2024 and 2023.
Usage is measured primarily by the number of hosts or by the volume of data indexed.
A host is generally defined as a server, either in the cloud or on-premise.
Our infrastructure monitoring, APM and network performance monitoring products are priced per host, our logs product is priced primarily per log events indexed and secondarily by events ingested.
Customers also have the option to purchase additional products, such as additional container or serverless monitoring, custom metrics packages, anomaly detection, synthetic monitoring and app analytics.
In the case of subscriptions for committed contractual amounts of usage, revenue is recognized ratably over the term of the subscription agreement, generally beginning on the date that our platform is made available to a customer.
Results of Operations The following table sets forth our consolidated statements of operations data for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands) Revenue $ 2,684,275 $ 2,128,359 $ 1,675,100 Cost of revenue (1)(2)(3) 515,531 409,908 346,743 Gross profit 2,168,744 1,718,451 1,328,357 Operating expenses: Research and development (1)(3) 1,152,703 962,447 752,351 Sales and marketing (1)(2)(3) 756,605 609,276 495,288 General and administrative (1)(3) 205,152 180,192 139,413 Total operating expenses 2,114,460 1,751,915 1,387,052 Operating income (loss) 54,284 (33,464) (58,695) Other income: Interest expense (4) (7,068) (6,302) (16,535) Interest income and other income, net 156,724 100,001 37,160 Other income, net 149,656 93,699 20,625 Income (loss) before provision for income taxes 203,940 60,235 (38,070) Provision for income taxes 20,194 11,667 12,090 Net income (loss) $ 183,746 $ 48,568 $ (50,160) ____________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 26,221 $ 17,578 $ 10,827 Research and development 363,301 313,096 237,120 Sales and marketing 122,079 101,937 76,735 General and administrative 58,735 49,689 38,472 Total $ 570,336 $ 482,300 $ 363,154 ____________________ (2) Includes amortization of acquired intangibles expense as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 5,642 $ 8,041 $ 6,750 Sales and marketing 825 825 825 Total $ 6,467 $ 8,866 $ 7,575 _____________________ (3) Includes employer payroll taxes on employee stock transactions as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 446 $ 364 $ 266 Research and development 31,134 21,449 10,384 Sales and marketing 4,694 5,917 2,766 General and administrative 6,852 4,811 830 Total $ 43,126 $ 32,541 $ 14,246 ____________________ (4) Includes amortization of issuance costs as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Interest expense $ 3,761 $ 3,388 $ 3,369 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Year Ended December 31, 2024 2023 2022 (as a percentage of total revenue (1) ) Revenue 100 % 100 % 100 % Cost of revenue 19 19 21 Gross profit 81 81 79 Operating expenses: Research and development 43 45 45 Sales and marketing 28 29 30 General and administrative 8 8 8 Total operating expenses 79 82 83 Operating income (loss) 2 (2) (4) Other income: Interest expense — — (1) Interest income and other income, net 6 5 2 Other income, net 6 4 1 Income (loss) before provision for income taxes 8 3 (2) Provision for income taxes 1 1 1 Net income (loss) 7 % 2 % (3) % _____________________ (1) Certain items may not total due to rounding.
Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, 2024 2023 Change % Change Revenue $ 2,684,275 $ 2,128,359 $ 555,916 26 % Revenue increased by $555.9 million or 26%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Cost of Revenue and Gross Margin Year Ended December 31, 2024 2023 Change % Change (dollars in thousands) Cost of revenue $ 515,531 $ 409,908 $ 105,623 26 % Gross margin 81 % 81 % Cost of revenue increased by $105.6 million, or 26%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This increase was primarily due to an increase of $78.5 million in third-party cloud infrastructure hosting and software costs and an increase of $19.3 million in personnel costs and other related costs as a result of increased headcount.
Our gross margin remained flat for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily as the result of revenue growing in proportion to the growth of third-party cloud infrastructure provider costs.
Research and Development Year Ended December 31, 2024 2023 Change % Change (dollars in thousands) Research and development $ 1,152,703 $ 962,447 $ 190,256 20 % Percentage of revenue 43 % 45 % Research and development expense increased by $190.3 million, or 20%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This increase was primarily due to an increase of $158.9 million in personnel costs including allocated overhead costs for our engineering, product and design teams as a result of increased headcount and an increase of $30.4 million in cloud infrastructure-related investments.
Sales and Marketing Year Ended December 31, 2024 2023 Change % Change (dollars in thousands) Sales and marketing $ 756,605 $ 609,276 $ 147,329 24 % Percentage of revenue 28 % 29 % Sales and marketing expense increased by $147.3 million, or 24%, for the year ended December 31, 2024 compared to the year ended December 31, 2023 .
This increase was primarily due to an increase of $115.2 million in personnel costs including allocated overhead costs for our sales and marketing organization as a result of increased headcount and increased variable compensation for our sales personnel and an increase of $27.9 million in advertising, sales, marketing and promotional activities.
General and Administrative Year Ended December 31, 2024 2023 Change % Change (dollars in thousands) General and administrative $ 205,152 $ 180,192 $ 24,960 14 % Percentage of revenue 8 % 8 % General and administrative expense increased by $25.0 million, or 14%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This increase was primarily due to an increase of $24.3 million in personnel costs and other related costs as a result of increased headcount.
Other Income, Net Year Ended December 31, 2024 2023 Change % Change (dollars in thousands) Other income, net $ 149,656 $ 93,699 $ 55,957 60 % Percentage of revenue 6 % 4 % Other income, net increased by $56.0 million, or 60% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This increase was primarily driven by an increase of $51.9 million in interest income, mainly due to income earned from investments in marketable securities.
We have generated positive cash flows from operations during the years ended December 31, 2024, 2023, and 2022.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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