Datadog DDOG · USD

RevenueGeographical InformationRevenue by location is determined by the billing address of the customer. The following table sets forth revenue by geographic area (in thousands):Year Ended December 31,202520242023North America (1)$2,433,083 $1,874,321 $1,487,319 International994,075 809,954 641,040 Total$3,427,158 $2,684,275 $2,128,359 1)Includes revenue from the United States of $2,320.3 million, $1,785.5 million, and $1,411.0 million for the years ended December 31, 2025, 2024, and 2023, respectively.Other than the United States, no other individual country accounted for 10% or more of total revenue for the years ended December 31, 2025, 2024, or 2023. Accounts ReceivableAs of December 31, 2025 and 2024, unbilled accounts receivable of approximately $127.0 million and $77.0 million, respectively, was included in accounts receivable on the Company’s consolidated balance sheets.During the years ended December 31, 2025 and 2024, the Company charged $14.1 million and $9.3 million, respectively, of accounts receivable deemed uncollectible against the allowance for credit losses.Deferred Revenue and Remaining Performance ObligationsRevenue recognized during the years ended December 31, 2025, 2024 and 2023 which was included in the deferred revenue balances at the beginning of each respective period, was $953.1 million, $759.7 million, and $525.5 million.As of December 31, 2025, and 2024, the aggregate transaction price allocated to remaining performance obligations was $3,461.2 million and $2,273.1 million, respectively. There is uncertainty in the timing of revenues associated with the Company’s drawdown contracts, as future revenue can often vary significantly from past revenue. However, the Company expects to recognize substantially all of the remaining performance obligations over the next 24 months.Deferred Contract CostsDeferred contract costs on the Company’s consolidated balance sheets were $202.7 million and $142.7 million as of December 31, 2025 and 2024, respectively. Amortization expense was $66.8 million, $52.0 million and $39.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Commitments and ContingenciesThe Company enters into non-cancelable purchase commitments and operating leases in the normal course of business. 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 5 years. Purchase commitments for business operations are primarily related to cloud hosting and other software-based services.The Company also issued long-term debt to finance the business. The principal payments related to the 2029 Notes are $1.0 billion.401(k) Plan—The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. The Company is responsible for administrative costs of the 401(k) plan and makes matching contributions to the 401(k) plan. For the years ended December 31, 2025, 2024, and 2023, the Company incurred expense of $9.3 million, $8.5 million, and $6.3 million for matching contributions, respectively.Legal Matters—The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings will have a material adverse effect on its financial position or results of operations.Indemnification—The Company enters into indemnification provisions under some agreements with other parties in the ordinary course of business, including business partners, investors, contractors, customers, and the Company’s officers, directors and certain employees. The Company has agreed to indemnify and defend the indemnified party claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claim because of the Company’s activities or non-compliance with certain representations and warranties made by the Company. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, losses recorded in the Company’s consolidated statements of operations in connection with the indemnification provisions have not been material.

Income TaxesIncome Taxes—For financial reporting purposes, income before income taxes, includes the following components (in thousands):Year Ended December 31,202520242023Domestic$88,617 $178,694 $42,811 Foreign38,404 25,246 17,424 Income before income taxes$127,021 $203,940 $60,235 Total income taxes allocated to operations for the years ended December 31, 2025, 2024 and 2023 were as follows (in thousands):2025CurrentDeferredTotalFederal$(2,938)$— $(2,938)State408 — 408 Foreign23,050 (1,240)21,810 Total$20,520 $(1,240)$19,280 2024CurrentDeferredTotalFederal$4,690 $— $4,690 State3,321 — 3,321 Foreign14,586 (2,403)12,183 Total$22,597 $(2,403)$20,194 2023CurrentDeferredTotalFederal$(261)$— $(261)State2,551 — 2,551 Foreign10,262 (885)9,377 Total$12,552 $(885)$11,667 Tax Rate Reconciliation—Income tax expense was $19.3 million for the year ended December 31, 2025, and differed from the amount computed by applying the U.S. federal statutory income tax rate of 21% to pretax income from operations. The reconciliation of these amounts is presented in the table below, which has been prepared in accordance with the disclosure guidance of ASU 2023-09 (in thousands):Year Ended December 31,2025AmountPercentU.S. Federal Statutory Tax Rate$26,674 21.00 %State and Local Income Taxes, Net of Federal Income Tax Effect(1)323 0.25 %Foreign Tax EffectsBrazil Income tax from withholding10,077 7.93 %Other3,092 2.43 %Effect of Cross-Border Tax LawsGlobal intangible low-taxed income (GILTI)2,131 1.68 %Other1,010 0.80 %Tax CreditsU.S. R&D tax credits(24,537)(19.32)%U.S. Foreign tax credits(19,019)(14.97)%Changes in Valuation Allowances66,813 52.60 %Nontaxable or Nondeductible itemsSection 162(m) adjustment16,680 13.13 %Share-based compensation Other non-deductible share-based payments4,802 3.78 % Non-US share-based payment disallowance30,902 24.33 % Deductible share based-payments(100,215)(78.90)%Meals and entertainment3,182 2.51 %Other 593 0.47 %Other Adjustments(3,228)(2.54)%Effective Tax Rate$19,280 15.18 %(1)MN & TX state taxes contribute to the majority (greater than 50 percent) of the tax effect in this category for 2025The following table is a reconciliation of the U.S.

LeasesThe Company has entered into various non-cancelable operating leases for its facilities expiring through 2036. Certain lease agreements contain an option for the Company to renew a lease for a term of up to three years or an option to terminate a lease early within one year. The Company considers these options, which may be elected at the Company’s sole discretion, in determining the lease term on a lease-by-lease basis.Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.Rent expense for the years ended December 31, 2025, 2024 and 2023 was $68.2 million, $49.5 million, and $43.5 million, respectively.Sub-lease income is recorded as a credit to rent expense. The Company recorded an immaterial amount of sub-lease income for the years ended December 31, 2025, 2024 and 2023.The components of lease cost recognized within the Company’s consolidated statements of operations were as follows (in thousands):Year Ended December 31,202520242023Operating lease cost (1)$54,607 $42,855 $34,670 Short-term lease cost13,591 6,624 8,797 _____________________1)Includes non-cash lease expense of $35.5 million, $27.3 million, and $26.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows (in thousands):Year Ended December 31,202520242023Cash paid for amounts included in measurement of lease liabilities$33,818 $18,538 $13,273 Operating lease assets obtained in exchange for new lease liabilities75,254 75,177 61,594 Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):Amount2026$57,189 202758,543 202849,567 202946,516 203046,964 Thereafter116,461 Total lease payments$375,240 Less: imputed interest(79,684)Present value of lease liabilities$295,556 As of December 31, 2025, the Company had various operating leases that had not yet commenced, which are excluded from the table above. The operating leases will commence between fiscal years 2026 and 2027 with total undiscounted future payments of $245.6 million and a weighted-average lease term of 9.1 years. Weighted average remaining lease term and discount rate for the Company’s operating leases are as follows:December 31,20252024Weighted average remaining lease term (years)6.96.8Weighted average discount rate6.61%6.

Acquisitions, Intangible Assets and Goodwill2025 AcquisitionsDuring the year ended December 31, 2025, the Company entered into three purchase agreements for acquisitions of businesses, each of which was accounted for as a business combination in accordance with ASC 805, Business Combinations. The Company does not consider the acquisitions to be material, individually or in aggregate. The total purchase price in aggregate of $178.4 million consisted of $109.3 million in cash payments, net of cash acquired, $16.1 million of deferred acquisition holdback payments and the issuance of 770,044 restricted shares of Class A common stock. The total purchase price was allocated to intangible assets in the amount of $17.6 million and goodwill in the amount of $163.1 million based on the respective estimated fair values. The purchase price allocations are preliminary. The Company continues to collect information with regard to its estimates and assumptions, including potential liabilities and contingencies. The Company will record adjustments to the fair value of the assets acquired, liabilities assumed and goodwill within the 12 month measurement period, if necessary. The resulting goodwill from the agreements is not deductible for income tax purposes. Pro forma results of operations from the acquisitions have not been presented because they were not material to the consolidated results of operations.2024 AcquisitionsDuring the year ended December 31, 2024, the Company entered into one purchase agreement for an acquisition of a business, which was accounted for as a business combination in accordance with ASC 805, Business Combinations. The Company does not consider this acquisition to be material. The total purchase price was allocated to intangible assets in the amount of $0.7 million and goodwill in the amount of $10.2 million based on the respective estimated fair values. The resulting goodwill from the agreements is not deductible for income tax purposes. Pro forma results of operations from the acquisition have not been presented because they were not material to the consolidated results of operations.2023 AcquisitionsDuring the year ended December 31, 2023, the Company entered into three purchase agreements for acquisitions of businesses, each of which were accounted for as business combinations in accordance with ASC 805, Business Combinations. The Company does not consider these acquisitions to be material, individually or in aggregate.

We utilize various processes and tools to assess, identify, and manage risks from cybersecurity threats. In the development of our products and features, our security teams work with our engineering and product teams to identify, assess, and agree upon mitigation or remediation measures with respect to product development. On an ongoing basis, we encourage an environment of openness in which our engineering and product teams, led by our security teams, proactively identify, manage and discuss actual or perceived cybersecurity risks. These teams also use automated and manual processes to identify and track risks from cybersecurity threats. The identified risks are triaged, prioritized for remediation, and reported by the security teams to various levels of our senior management, as appropriate. We also deploy technical safeguards that are designed to protect our platform and systems from cybersecurity threats, including firewalls, intrusion prevention, and detection systems. We have established an incident response plan that addresses our response to cybersecurity incidents, and we require periodic training for our employees on cybersecurity threats. In addition, we maintain cybersecurity insurance, however, the costs related to cybersecurity threats or disruptions may not be fully insured. In addition, we maintain third-party vendor management standards that are used to evaluate cybersecurity risks associated with our third-party service providers, and we assess information technology and software vendors to determine their security posture and maturity. All vendors that process our data or access our systems go through a security and privacy review before they are engaged that is targeted to the services to be provided and the systems and data involved. Based on the information provided by the vendor and depending on the nature of the services provided, our vendor management process may involve security questionnaires and contractual obligations such as audit rights and breach reporting. We also periodically perform various types of security audits and assessments, including penetration tests, via internal and external parties. In addition, certain Datadog products are subject to specific compliance requirements and standards, including, as applicable, ISO 27001, SOC 2, PCI, and FedRAMP (Moderate), and are tested and evaluated by third-party auditors against those applicable compliance requirements and standards.

Net Income Per ShareBasic and diluted net income per common share is presented in conformity with the two-class method required for participating securities. Immediately prior to the consummation of the Company’s IPO in September 2019, all outstanding shares of convertible preferred stock and common stock were converted into shares of Class B common stock. As a result, Class A and Class B common stock are the only outstanding equity in the Company.Basic and diluted net income per share is computed using the weighted-average number of shares of common stock outstanding during the period. The undistributed earnings are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Further, as the conversion of Class B common stock is assumed in the computation of the diluted net income per share of Class A common stock, the undistributed earnings are equal to net income for that computation.The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data):Year Ended December 31,202520242023Class AClass BClass AClass BClass AClass BBasic net income per share:Numerator:Net income$99,843 $7,898 $169,503 $14,243 $44,684 $3,884 Denominator:Weighted average shares used in calculating net income per share, basic321,848 25,461 310,113 26,059 298,116 25,918 Basic net income per share$0.31 $0.31 $0.55 $0.55 $0.15 $0.

Stockholders’ EquityClass A and Class B Common StockThe Company has two classes of common stock, Class A and Class B. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder and are automatically converted to Class A common stock upon sale or transfer, subject to certain limited exceptions.During the year ended December 31, 2025, 2,223,914 shares of Class B common stock were converted into Class A common stock.As of December 31, 2025, the Company had authorized 2,000,000,000 shares of Class A common stock and 310,000,000 shares of Class B common stock, each at a par value per share of $0.00001, of which 328,117,781 shares of Class A common stock and 24,408,190 shares of Class B common stock were issued and outstanding.As of December 31, 2025 and 2024, the Company had reserved shares of common stock for future issuance as follows:December 31,20252024Options, RSUs and PSUs outstanding20,174,662 20,759,819 Shares available for future grants92,889,210 84,272,083 Shares subject to the employee stock purchase plan23,194,449 20,342,607 Total shares of common stock reserved for future issuance136,258,321 125,374,509 Equity Incentive PlansThe Company has two equity incentive plans, the 2012 Equity Incentive Plan (the “2012 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”). In connection with the Company's initial public offering (“the IPO”), the Company ceased granting awards under the 2012 Plan, and all shares that remained available for issuance under the 2012 Plan at that time were transferred to the 2019 Plan. Additionally, as of December 31, 2025, there were 3,460,167 shares of Class A common stock issuable upon conversion of Class B common stock underlying options outstanding under the 2012 Plan. Under the 2019 Plan, the Board and any other committee or subcommittee of the Board may grant stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), and performance stock units (“PSUs”) and other awards, each equity award valued or based on the Company’s Class A common stock, to employees, directors, consultants, and advisors of the Company.