Summary
Datadog ended fiscal 2025 with fourth quarter revenue of $953.19 million, up 29.2% from the prior-year quarter. Gross profit reached $766.30 million, up 29.1%, while gross margin was 80.4%, flat from the prior-year quarter. GAAP operating income was $9.36 million, flat from a year earlier, and operating margin was 1.0%, down from the prior-year quarter. Net income came to $46.57 million, up 2.1%. The customer base showed continued expansion: 603 customers spent $1 million or more in ARR, up from 462 a year ago, and about 4,310 customers spent $100,000 or more in ARR, up from 3,610. Datadog launched several products for general availability in the quarter, including Bits AI SRE Agent, Storage Management, Feature Flags, and Data Observability. On a non-GAAP basis, fourth quarter operating income was $230 million, with a 24% operating margin, and non-GAAP net income per diluted share was $0.59.
For fiscal 2025, revenue was $3.43 billion, up 27.7% from fiscal 2024. Gross profit was $2.74 billion, up 26.3%, but gross margin declined to 80.0%. The company reported a GAAP operating loss of $44.37 million, compared with operating income in fiscal 2024, and operating margin was negative 1.3%, down from the prior year. Net income was $107.74 million, down 41.4%, and diluted EPS was $0.31, down 40.4%. Operating cash flow for the full year was $1.05 billion, up 20.6%, and free cash flow was $915 million. Capital expenditures were $49.58 million, up 42.8%. For fiscal 2025, non-GAAP operating income was $768 million, with a 22% operating margin, and non-GAAP net income per diluted share was $2.05.
For the first quarter of 2026, Datadog guided non-GAAP operating income to between $195 million and $205 million and non-GAAP net income per share to between $0.49 and $0.51. For the full fiscal year 2026, guidance calls for non-GAAP operating income between $840 million and $880 million and non-GAAP net income per share between $2.08 and $2.16. The company also gave a revenue outlook for both the first quarter and the full fiscal year. It did not reconcile these non-GAAP outlook figures to GAAP because of uncertainty around stock-based compensation and employer payroll taxes on equity incentive plans.
Backlog and deferred revenue pointed to strong demand. Deferred revenue was $1.19 billion, up 24.1% from the prior-year quarter, and remaining performance obligations were $3.46 billion, up 52.3%. Capital expenditures were $8.89 million in the fourth quarter, up 14.6%. Operating cash flow for the quarter was $327.07 million, up 23.3%, and free cash flow was $291 million.
Management highlighted risks tied to macroeconomic uncertainty, trade policies, tariffs, reduced information technology spending, competition, security breaches, and the need to keep existing customers expanding their subscriptions. The annual report also points to the company's recent rapid growth, its history of operating losses, its limited operating history, the ability to attract new customers, and sales and marketing execution. Datadog depends on existing customers purchasing additional subscriptions and renewing their subscriptions. Heavy investment in research and development and sales and marketing keeps GAAP operating margins thin even as non-GAAP profitability stays positive.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $953.2M | $885.7M | +7.6% | $737.7M | +29.2% |
| Gross profit | $766.3M | $709.2M | +8.1% | $593.5M | +29.1% |
| Gross margin | 80.4% | 80.1% | +0.3 pp | 80.5% | -0.1 pp |
| Research & development | $417.9M | $402.0M | +4.0% | $316.3M | +32.1% |
| Sales & marketing | $264.4M | $238.7M | +10.7% | $207.9M | +27.1% |
| General & administrative | $74.6M | $74.3M | +0.5% | $59.9M | +24.6% |
| Total operating expenses | $756.9M | $715.0M | +5.9% | $584.2M | +29.6% |
| Operating income (loss) | $9.4M | -$5.8M | +261.1% | $9.4M | -0.4% |
| Operating margin | 1.0% | -0.7% | +1.6 pp | 1.3% | -0.3 pp |
| Net income (loss) | $46.6M | $33.9M | +37.4% | $45.6M | +2.1% |
| Net margin | 4.9% | 3.8% | +1.1 pp | 6.2% | -1.3 pp |
| Diluted EPS | $0.13 | $0.10 | +$0.03 | $0.13 | ±$0.00 |
| Customers | 32,700 | — | — | 30,000 | +9.0% |
| Net retention rate | 120.0% | 120.0% | ±0.0 pp | 110.0% | +10.0 pp |
Risks
Risk factor states larger customers in the AI-native cohort, including the largest customer, represented approximately seven percentage points of year-over-year revenue growth for the quarter ended December 31, 2025, and these customers may rapidly optimize usage or fail to renew, causing revenue volatility.
The company disclosed that in April 2025 an unauthorized third party accessed a number of Datadog source code repositories through compromised employee account credentials, and such access may increase vulnerability to later attacks via source code exploitation.
Datadog incorporates AI into products and faces rapidly evolving competition where rivals may more successfully incorporate AI and achieve higher market acceptance; EU AI Act and other AI regulations impose compliance costs and potential penalties.
Risk factors and MD&A highlight economic uncertainty from trade policy changes, tariffs, inflation, interest rates, and conflicts in Ukraine and the Middle East, which could cause customers to slow information technology spending and disrupt industry events used to generate sales.
MD&A states gross margin decreased by 1% for the year ended December 31, 2025 compared to 2024 due to higher third-party cloud infrastructure costs; the reported figures show FY2025 year-to-date gross margin of 80.0%, down 0.8 pp from prior-year YTD.
FY2025 year-to-date operating income swung to a loss of $44.4 million from income of $54.3 million in FY2024 year-to-date, and net income was down 41.4% to $107.7 million; the risk factor states Datadog may not sustain profitability as it expects costs and expenses to increase.
Targeting enterprise customers involves longer sales cycles, more complex requirements, substantial upfront sales costs, and less predictability; large enterprises often begin with limited deployments without guaranteeing broad rollout.
Competition is intense for engineers experienced in AI and machine learning and for sales professionals, and visa restrictions or equity award volatility could impair hiring and retention; the company depends on key executives including Olivier Pomel, Alexis Lê-Quôc, and David Obstler.
Stringent and changing data privacy and security laws, including EU GDPR, UK GDPR, NIS2, DORA, and cross-border transfer restrictions, increase compliance costs and could require additional data processing capabilities in Europe or elsewhere.
The $1.0 billion 2029 Notes have a conditional conversion feature that could require cash settlement or reclassification as a current liability, and the capped call counterparties pose counterparty risk that may affect dilution and liquidity.
SaaS KPIs
All quarters →Total Customers
Free Cash Flow
Non-GAAP Operating Margin
Free Cash Flow Margin
Customers with ARR of $100,000 or more
Customers with ARR of $1 million or more
Summary, forecast, risks and KPIs are extracted from Datadog, Inc.'s SEC filings for Q4 FY2025 (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.