Summary
Datadog closed fiscal 2024 with fourth quarter revenue of $737.73 million, up 25.1% from the prior-year quarter. Gross profit rose 22.4% to $593.55 million. Gross margin slipped to 80.5%, down 1.8 percentage points. GAAP operating income fell 66.1% to $9.39 million, and operating margin narrowed to 1.3%, down 3.4 percentage points. GAAP net income was $45.59 million, down 15.6%. On a non-GAAP basis, operating income was $179 million and operating margin was 24%. Non-GAAP net income per diluted share was $0.49. Operating cash flow was $265.23 million, up 20.4%. Free cash flow, a non-GAAP measure, was $241 million. Capital expenditures were $7.76 million, down 25.3%.
For the full fiscal year, revenue reached $2.68 billion, up 26.1%. Gross profit was $2.17 billion, up 26.2%. Gross margin was 80.8%, flat with a 0.1 percentage point increase. GAAP operating income was $54.28 million, up 262.2% and swung to a profit. Operating margin was 2.0%, up 3.6 percentage points. GAAP net income was $183.75 million, up 278.3%. Diluted EPS was $0.52, up 271.4%. Operating cash flow was $870.60 million, up 31.9%. Capital expenditures were $34.72 million, up 25.9%. Free cash flow was $775 million. Non-GAAP operating income was $674 million, with a 25% operating margin. Non-GAAP net income per diluted share was $1.82. Deferred revenue, current portion, was $961.85 million, up 25.6%. Remaining performance obligations were $2.27 billion, up 23.6%. About 75% of the revenue increase came from existing customers, and 25% came from new customers.
Customer metrics showed expansion. Datadog ended 2024 with 462 customers at $1 million or more in ARR, up 17% from 396 a year earlier. It had about 3,610 customers at $100,000 or more in ARR, up 13% from 3,190. Total customers were about 30,000, compared with about 27,300 at the end of 2023. The trailing 12-month dollar-based net retention rate was in the high-110%'s, up from the mid-110%'s. The company attributed the increase to higher usage growth from existing customers. Product adoption also widened. About 83% of customers used more than one product. About 50% used more than four products, up from 47%, and about 26% used more than six products, up from 22%. The company launched On-Call for general availability. It introduced a new Cloud SIEM approach, expanded Database Monitoring to MongoDB, and launched Kubernetes Active Remediation. It also issued $1 billion of 0% convertible senior notes due 2029.
Guidance points to steady growth. For the first quarter of 2025, Datadog expects revenue between $737 million and $741 million. Non-GAAP operating income is guided to $162 million to $166 million. Non-GAAP net income per share is expected between $0.41 and $0.43, based on approximately 366 million weighted average diluted shares. For the full fiscal year 2025, revenue guidance is $3.175 billion to $3.195 billion. Non-GAAP operating income is guided to $655 million to $675 million. Non-GAAP net income per share is expected between $1.65 and $1.70, based on approximately 369 million weighted average diluted shares. The company has not reconciled these non-GAAP expectations to GAAP because of uncertainty around items such as stock-based compensation and employer payroll taxes on equity incentive plans.
Risks remain. The company cites macroeconomic uncertainty, including fluctuating inflation and interest rates, the Russian invasion of Ukraine, and conflicts in the Middle East. Those conditions can slow information technology spending. Datadog also lists its recent rapid growth as not necessarily indicative of future growth. It has a history of operating losses and a limited operating history. The business depends on existing customers buying more subscriptions and renewing. It must attract new customers and expand sales and marketing. Other risks include security breaches, interruptions or performance problems, rapid technology changes, competitive markets, and managing growth. Gross margin pressure comes from third-party cloud infrastructure costs. The company had $1.4 billion in non-cancelable purchase commitments and $365.6 million in operating lease obligations as of December 31, 2024.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $737.7M | $690.0M | +6.9% | $589.6M | +25.1% |
| Gross profit | $593.5M | $552.3M | +7.5% | $484.8M | +22.4% |
| Gross margin | 80.5% | 80.0% | +0.4 pp | 82.2% | -1.8 pp |
| Research & development | $316.3M | $291.8M | +8.4% | $253.3M | +24.9% |
| Sales & marketing | $207.9M | $187.8M | +10.7% | $160.0M | +30.0% |
| General & administrative | $59.9M | $52.4M | +14.3% | $43.8M | +36.6% |
| Total operating expenses | $584.2M | $532.0M | +9.8% | $457.1M | +27.8% |
| Operating income (loss) | $9.4M | $20.3M | -53.7% | $27.7M | -66.1% |
| Operating margin | 1.3% | 2.9% | -1.7 pp | 4.7% | -3.4 pp |
| Net income (loss) | $45.6M | $51.7M | -11.8% | $54.0M | -15.6% |
| Net margin | 6.2% | 7.5% | -1.3 pp | 9.2% | -3.0 pp |
| Diluted EPS | $0.13 | $0.14 | -$0.01 | $0.15 | -$0.02 |
| Customers | 30,000 | — | — | 27,300 | +9.9% |
| Net retention rate | 110.0% | 110.0% | ±0.0 pp | 110.0% | ±0.0 pp |
Risks
Datadog states its recent rapid growth may not be indicative of future growth and expects its revenue growth rate to decline as the business matures. In FY2024 Q4, operating income fell 66.1% to $9.39 million and gross margin declined 1.8 percentage points to 80.5% versus the prior-year quarter.
Future success depends on existing customers renewing and expanding subscriptions, but terms are primarily monthly or annual. The AI-native cohort represented approximately five percentage points of year-over-year revenue growth for the quarter ended December 31, 2024, and customers in this cohort have rapidly increased usage and may optimize it, causing revenue volatility.
In December 2024, Datadog issued $1.0 billion aggregate principal amount of 2029 Notes. Based on Class A common stock prices during the quarter ended December 31, 2024, holders of the 2025 Notes are entitled to convert during the first quarter of 2025, which could require cash settlement and reduce liquidity or net working capital.
Unfavorable economic conditions and reductions in IT spending could limit growth. Management notes fluctuating inflation and interest rates, the war in Ukraine, and Middle East conflicts have created economic uncertainty, and customers may slow spending on information technology.
Datadog incorporates AI into products and must invest heavily, but competitors may more successfully incorporate AI and achieve higher market acceptance. The EU AI Act took effect in August 2024 and imposes significant monetary fines, adding regulatory and compliance risk to AI development.
The observability market is intensely competitive, with larger competitors and pricing pressure. An increasing number of sales through cloud provider marketplaces could reduce direct customer relationships and profit margins on those sales.
Sales to large enterprise customers involve longer sales cycles, more complex requirements, and substantial upfront costs. Datadog ended FY2024 with approximately 3,610 customers with ARR of $100,000 or more and 462 customers with ARR of $1.0 million or more, increasing exposure to these sales dynamics.
Datadog must attract and retain highly qualified personnel, especially engineers experienced in SaaS, artificial intelligence, and machine learning, and experienced sales professionals. Competition for these employees is intense and failure to hire or retain them could harm future growth.
SaaS KPIs
All quarters →Total Customers
Free Cash Flow
Non-GAAP Operating Margin
Free Cash Flow Margin
Customers Using More Than One Product
Non-GAAP Gross Margin
Customers Using More Than Four Products
Customers Using More Than Six Products
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from Datadog, Inc.'s SEC filings for Q4 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.