Datadog Announces Third Quarter 2026 Financial Results

Quarterly GAAP operating results turned profitable, while stock-based compensation and operating expenses increased year over year.

Rhea-AI Summary

Datadog (NASDAQ:DDOG) reported third-quarter 2026 revenue of $1.20 billion, up year over year, alongside higher earnings and operating cash flow. Revenue grew 35% for the quarter ended September 30. GAAP operating income reached $74.706 million, versus a $5.809 million loss a year earlier; diluted earnings rose to $0.32 from $0.10. Operating cash flow was $289.951 million, and free cash flow was $251 million.

Customers with at least $100,000 in annualized subscription revenue reached about 4,860, up 20%. Cash, cash equivalents and marketable securities totaled $5.2 billion. Datadog expects fourth-quarter revenue of $1.19 billion–$1.20 billion and full-year revenue of $4.515 billion–$4.525 billion, with full-year non-GAAP diluted earnings of $2.73–$2.75 per share. Quarterly stock-based compensation rose to $237.181 million from $200.558 million. Scout 1.0, its first specialized model, is in preview and powers Bits Investigation.

19 points · 0 major

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Positive

• Moderate pointThird-quarter revenue grew 35% year over year to $1.20 billion.
• Moderate pointThird-quarter GAAP operating income reached $74.706 million, versus a $5.809 million loss a year earlier.
• Moderate pointThird-quarter GAAP net income rose to $118.316 million from $33.885 million a year earlier.
• Moderate pointThird-quarter operating cash flow increased to $289.951 million from $251.470 million a year earlier.
• Moderate point$100,000-plus annualized subscription revenue customers reached about 4,860, up 20% from about 4,060 a year earlier.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Fourth-quarter revenue guidance is $1.19 billion–$1.20 billion.

13 minor points

• Minor pointThird-quarter diluted GAAP earnings increased to $0.32 per share from $0.10 a year earlier.
• Minor pointThird-quarter free cash flow totaled $251 million.
• Minor pointCash, cash equivalents and marketable securities totaled $5.2 billion at September 30, 2026.
• Minor pointNine-month revenue increased to $3,324.970 million from $2,473.964 million a year earlier.
• Minor pointNine-month GAAP operating income reached $87.488 million, versus a $53.729 million loss a year earlier.
• Minor pointNine-month GAAP net income increased to $215.448 million from $61.174 million a year earlier.
• Minor pointNine-month diluted GAAP earnings rose to $0.59 per share from $0.18 a year earlier.
• Minor pointNine-month operating cash flow increased to $940.446 million from $723.066 million a year earlier.
• Minor point. Forward-looking: it has not happened yet and may not happen.Fourth-quarter non-GAAP operating income guidance is $280 million–$290 million.
• Minor point. Forward-looking: it has not happened yet and may not happen.Fourth-quarter non-GAAP earnings guidance is $0.69–$0.71 per share, assuming approximately 379 million weighted average diluted shares.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year revenue guidance is $4.515 billion–$4.525 billion.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year non-GAAP operating income guidance is $1.095 billion–$1.105 billion.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year non-GAAP earnings guidance is $2.73–$2.75 per share, assuming approximately 375 million weighted average diluted shares.

Negative

• Minor pointThird-quarter operating expenses rose to $885.217 million from $715.003 million a year earlier.
• Minor pointNine-month operating expenses rose to $2,550.974 million from $2,027.630 million a year earlier.
• Minor pointThird-quarter cost of revenue increased to $237.167 million from $176.457 million a year earlier.
• Minor pointNine-month cost of revenue increased to $686.508 million from $500.063 million a year earlier.
• Minor pointThird-quarter interest expense rose to $3.235 million from $2.421 million a year earlier.

2 minor points

• Minor pointNine-month interest expense rose to $9.609 million from $8.459 million a year earlier.
• Minor pointConvertible senior notes, net totaled $986.595 million at September 30, versus $983.449 million at December 31, 2025.

News Explained

Datadog forecasts non-GAAP operating income of $280 million–$290 million for Q4 and $1.095 billion–$1.105 billion for full-year 2026; it did not reconcile those forecasts to GAAP, citing uncertain stock-compensation and employee payroll-tax items that could materially affect GAAP results.

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Market move: DDOG -17.92% vs previous close. 3Q26 earnings report

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Key Figures

Revenue: $1.20 billion Non-GAAP operating income: $334 million Non-GAAP diluted EPS: $0.81 per share +5 more

Revenue

$1.20 billion

Q3 2026; up 35% year-over-year

Non-GAAP operating income

$334 million

Q3 2026; 28% non-GAAP operating margin

Non-GAAP diluted EPS

$0.81 per share

Q3 2026

Operating cash flow

$290 million

Q3 2026

Free cash flow

$251 million

Q3 2026

Revenue outlook

$1.19 billion–$1.20 billion

Q4 2026 guidance

Revenue outlook

$4.515 billion–$4.525 billion

Full-year 2026 guidance

Non-GAAP operating income outlook

$1.095 billion–$1.105 billion

Full-year 2026 guidance

Previous Earnings Reports

2 past events · Latest: Aug 06

Same Type 2 events

1. Aug 06

   Q2 earnings

   24h Move

   -19.0%

   Reported 36% revenue growth and positive operating cash flow; the recorded price reaction was negative.

2. Nov 06

   Q3 earnings

   24h Move

   +23.1%

   Reported 28% revenue growth and positive free cash flow; the recorded price reaction was positive.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

gaap, non-gaap, convertible senior notes, stock-based compensation

4 terms

gaap financial

"GAAP operating income was $75 million"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

View in glossary

non-gaap financial

"Non-GAAP operating income was $334 million"

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

View in glossary

convertible senior notes financial

"Convertible senior notes, net, non-current"

Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.

stock-based compensation financial

"Includes stock-based compensation expense as follows"

Stock-based compensation is when a company pays employees, directors or consultants with shares or the right to buy shares instead of or in addition to cash. It matters to investors because issuing stock or options spreads ownership thinner (like cutting a pie into more slices), which can reduce each existing share’s claim on profits and can also change reported earnings; investors watch it to assess true cost of running the business and how management is incentivized.

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Third quarter revenue grew 35% year-over-year to $1.20 billion

Robust growth of larger customers, with about 4,860 $100k+ ARR customers, up from about 4,060 a year ago

Launched Scout 1.0, Datadog's first specialized model, now powering Bits Investigation

NEW YORK, Nov. 04, 2026 (GLOBE NEWSWIRE) -- Datadog, Inc. (NASDAQ:DDOG), the leading AI-powered observability and security platform, today announced financial results for its third quarter ended September 30, 2026.

"Datadog delivered a strong third quarter, with 35% year-over-year revenue growth, $290 million in operating cash flow, and $251 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog. "We are seeing strong adoption across our platform as customers scale their digital operations and use of AI."

Pomel added, "We are innovating rapidly, including developing specialized AI models through our AI Research team, to help customers manage growing complexity and move towards autonomous operations."

Third Quarter 2026 Financial Highlights:

• Revenue was $1.20 billion, an increase of 35% year-over-year.
• GAAP operating income was $75 million; GAAP operating margin was 6%.
• Non-GAAP operating income was $334 million; non-GAAP operating margin was 28%.
• GAAP net income per diluted share was $0.32; non-GAAP net income per diluted share was $0.81.
• Operating cash flow was $290 million, with free cash flow of $251 million.
• Cash, cash equivalents, and marketable securities were $5.2 billion as of September 30, 2026.

Third Quarter & Recent Business Highlights:

• As of September 30, 2026, we had about 4,860 customers with ARR of $100,000 or more, an increase of 20% from about 4,060 as of September 30, 2025.
• Earned a Leader designation in the 2026 Forrester Wave for AIOps Platforms, for the second consecutive year. Datadog received the highest scores possible in eleven criteria including Innovation, Roadmap, and AI Governance.
• Introduced Scout 1.0, Datadog AI Research team's first specialized model for investigating production issues. Scout (in Preview) now powers Bits Investigation and achieves frontier-model performance at a fraction of the inference cost—enabling more frequent, earlier investigations that reduce on-call burden and accelerate incident response.
• Recognized as the "Company to Beat" for observability platforms in Gartner’s 2026 AI Vendor Race report, which assessed competitive positioning and market influence across the observability landscape.

Fourth Quarter and Full Year 2026 Outlook:

Based on information as of today, November 4, 2026, Datadog is providing the following guidance:

• Fourth Quarter 2026 Outlook:
  • Revenue between $1.19 billion and $1.20 billion.
  • Non-GAAP operating income between $280 million and $290 million.
  • Non-GAAP net income per share between $0.69 and $0.71, assuming approximately 379 million weighted average diluted shares outstanding.
• Full Year 2026 Outlook:
  • Revenue between $4.515 billion and $4.525 billion.
  • Non-GAAP operating income between $1.095 billion and $1.105 billion.
  • Non-GAAP net income per share between $2.73 and $2.75, assuming approximately 375 million weighted average diluted shares outstanding.

Datadog has not reconciled its expectations as to non-GAAP operating income, or as to non-GAAP net income per share, to their most directly comparable GAAP measure as a result of uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation and employer payroll taxes on equity incentive plans. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to Datadog’s results computed in accordance with GAAP.

Conference Call Details:

• What: Datadog financial results for the third quarter of 2026 and outlook for the fourth quarter and the full year 2026
• When: November 4, 2026 at 8:00 A.M. Eastern Time (5:00 A.M. Pacific Time)
• Dial in: To access the call in the U.S., please register here. Callers are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.
• Webcast: https://investors.datadoghq.com (live and replay)
• Replay: A replay of the call will be archived on the investor relations website
  

About Datadog

Datadog is the leading observability and security platform for the AI era, providing businesses with unified visibility across the technology stack to manage complexity at scale. It brings applications, infrastructure, data, models, and security into one place, using AI to detect and resolve issues before they impact customers. Trusted globally by Fortune 500 companies and high-growth AI leaders, Datadog enables businesses to move faster with clarity and confidence.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the federal securities laws, including but not limited to statements regarding Datadog’s strategy, product and platform capabilities, the growth in and ability to capitalize on long-term market opportunities including the pace and scope of cloud migration, digital transformation and AI deployment, gross margins, operating margins including with respect to sales and marketing, research and development expenses, net interest and other income, cash taxes, capital expenditures and capitalized software, and Datadog’s future financial performance, including its outlook for the fourth quarter and the full year 2026 and related notes and assumptions. These forward-looking statements are based on Datadog’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause Datadog’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to (1) our recent rapid growth may not be indicative of our future growth; (2) our history of operating losses; (3) our limited operating history; (4) our dependence on existing customers purchasing additional subscriptions and products from us and renewing their subscriptions; (5) our ability to attract new customers; (6) our ability to effectively develop and expand our sales and marketing capabilities; (7) risk of a security breach; (8) risk of interruptions or performance problems associated with our products and platform capabilities; (9) our ability to adapt and respond to rapidly changing technology or customer needs; (10) the competitive markets in which we participate; (11) risks associated with successfully managing our growth; (12) risks associated with changing laws, regulations, and contractual obligations related to data privacy and security and (13) general market, political, economic, and business conditions including concerns about trade policies, tariffs, reduced economic growth and associated decreases in information technology spending. These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission (SEC), including in the section entitled “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed with the SEC on August 6, 2026. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 and other filings and reports that we may file from time to time with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements.

About Non-GAAP Financial Measures

Datadog discloses the following non-GAAP financial measures in this release and the earnings call referencing this press release: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, non-GAAP net income (loss) per basic share, free cash flow and free cash flow margin. Datadog uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Datadog’s financial performance. Datadog believes they are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. Datadog’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Datadog’s reported financial results.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Datadog defines non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (research and development, sales and marketing and general and administrative), non-GAAP operating income (loss), non-GAAP operating margin and non-GAAP net income (loss) as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense; (2) the amortization of acquired intangibles; (3) employer payroll taxes on employee stock transactions; (4) M&A transaction costs; (5) amortization of issuance costs; and (6) an assumed provision for income taxes based on our long-term projected tax rate. Non-GAAP financial measures prior to April 1, 2025 have not been adjusted for M&A transaction costs, as such costs were not material to our results of operations in such prior periods. Our estimated long-term projected tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in Datadog's geographic earnings mix, or other changes to our strategy or business operations. We will re-evaluate our long-term projected tax rate as appropriate. Datadog defines free cash flow as net cash provided by operating activities, minus capital expenditures and minus capitalized software development costs, if any. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing Datadog’s operating performance due to the following factors:

Stock-based compensation. Datadog utilizes stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Amortization of acquired intangibles. Datadog views amortization of acquired intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of acquired intangibles is an expense that is not typically affected by operations during any particular period.

Employer payroll taxes on employee stock transactions. Datadog excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of Datadog’s common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of Datadog’s business.

M&A transaction costs. Datadog views acquisition-related expenses, such as transaction costs, as costs that are not necessarily reflective of operational performance during a period. In particular, Datadog believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.

Amortization of issuance costs. In June 2020 and December 2024, Datadog issued $747.5 million of 0.125% convertible senior notes due 2025 and $1.0 billion of 0% convertible senior notes due 2029, respectively. Debt issuance costs, which reduce the carrying value of the convertible debt instrument, are amortized as interest expense over the term. The expense for the amortization of debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.

Additionally, Datadog’s management believes that the non-GAAP financial measure free cash flow is meaningful to investors because it is a measure of liquidity that provides useful information in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business. Free cash flow represents net cash provided by operating activities, reduced by capital expenditures and capitalized software development costs, if any. The reduction of capital expenditures and amounts capitalized for software development facilitates comparisons of Datadog's liquidity on a period-to-period basis and excludes items that management does not consider to be indicative of our liquidity.

Operating Metrics

Datadog’s number of customers with ARR of $100,000 or more is based on the ARR of each customer, as of the last month of the quarter.

We define the number of customers as the number of accounts with a unique account identifier for which we have an active subscription in the period indicated. Users of our free trials or tier are not included in our customer count. A single organization with multiple divisions, segments or subsidiaries is generally counted as a single customer. However, in some cases where they have separate billing terms, we may count separate divisions, segments or subsidiaries as multiple customers.

We define ARR as the annualized revenue run-rate of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly recurring revenue, or MRR, and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts, additional usage, usage from subscriptions for a committed contractual amount of usage that is delivered as used, and monthly subscriptions. ARR and MRR should be viewed independently of revenue, and do not represent our revenue under GAAP on a monthly or annualized basis, as they are operating metrics that can be impacted by contract start and end dates and renewal rates. ARR and MRR are not intended to be replacements or forecasts of revenue.

Datadog, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share data; unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
			2026				2025				2026				2025
Revenue		$	1,197,090			$	885,651			$	3,324,970			$	2,473,964
Cost of revenue (1)(2)(3)			237,167				176,457				686,508				500,063
Gross profit			959,923				709,194				2,638,462				1,973,901
Operating expenses:
Research and development (1)(3)			491,570				401,982				1,404,836				1,130,525
Sales and marketing (1)(2)(3)			303,298				238,729				894,640				692,046
General and administrative (1)(3)(4)			90,349				74,292				251,498				205,059
Total operating expenses			885,217				715,003				2,550,974				2,027,630
Operating income (loss)			74,706				(5,809	)			87,488				(53,729	)
Other income:
Interest expense (5)			(3,235	)			(2,421	)			(9,609	)			(8,459	)
Interest income and other income, net			53,108				43,897				157,363				135,739
Other income, net			49,873				41,476				147,754				127,280
Income before provision for income taxes			124,579				35,667				235,242				73,551
Provision for income taxes			6,263				1,782				19,794				12,377
Net income		$	118,316			$	33,885			$	215,448			$	61,174
Net income per share - basic		$	0.33			$	0.10			$	0.61			$	0.18
Net income per share - diluted		$	0.32			$	0.10			$	0.59			$	0.18
Weighted average shares used in calculating net income per share:
Basic			358,617				348,645				356,067				346,012
Diluted			375,014				362,001				371,363				361,905

(1) Includes stock-based compensation expense as follows:
Cost of revenue		$	9,514		$	8,038		$	27,329		$	21,472
Research and development			146,376			124,288			401,729			342,468
Sales and marketing			49,226			41,463			138,622			113,030
General and administrative			32,065			26,769			86,594			68,315
Total		$	237,181		$	200,558		$	654,274		$	545,285

(2) Includes amortization of acquired intangibles as follows:
Cost of revenue		$	2,056		$	1,451		$	4,648		$	3,863
Sales and marketing			366			277			1,085			668
Total		$	2,422		$	1,728		$	5,733		$	4,531

(3) Includes employer payroll taxes on employee stock transactions as follows:
Cost of revenue		$	270		$	169		$	850		$	520
Research and development			13,522			8,177			46,009			29,578
Sales and marketing			2,626			1,480			8,153			4,409
General and administrative			2,443			1,061			8,488			6,010
Total		$	18,861		$	10,887		$	63,500		$	40,517

(4) Includes M&A transaction costs as follows:
General and administrative		$	1,119		$	—		$	3,823		$	1,373
Total		$	1,119		$	—		$	3,823		$	1,373

(5) Includes amortization of issuance costs as follows:
Interest expense		$	1,050		$	1,046		$	3,146		$	4,556
Total		$	1,050		$	1,046		$	3,146		$	4,556

Datadog, Inc. Condensed Consolidated Balance Sheets (In thousands; unaudited)
		September 30, 2026				December 31, 2025
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	881,230			$	401,305
Marketable securities			4,352,357				4,073,531
Accounts receivable, net of allowance for credit losses of $29,260 and $19,292 as of September 30, 2026 and December 31, 2025, respectively			793,977				741,262
Deferred contract costs, current			94,735				76,022
Prepaid expenses and other current assets			108,995				90,160
Total current assets			6,231,294				5,382,280
Property and equipment, net			438,173				338,093
Operating lease assets			229,256				214,674
Goodwill			706,644				530,568
Intangible assets, net			19,736				14,968
Deferred contract costs, non-current			157,958				126,708
Other assets			55,967				36,553
TOTAL ASSETS		$	7,839,028			$	6,643,844
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	266,417			$	148,791
Accrued expenses and other current liabilities			228,610				209,595
Operating lease liabilities, current			46,177				39,369
Deferred revenue, current			1,235,133				1,193,646
Total current liabilities			1,776,337				1,591,401
Operating lease liabilities, non-current			274,462				256,187
Convertible senior notes, net, non-current			986,595				983,449
Deferred revenue, non-current			65,081				68,711
Other liabilities			20,741				11,890
Total liabilities			3,123,216				2,911,638
STOCKHOLDERS' EQUITY:
Common stock			3				3
Additional paid-in capital			4,383,737				3,579,010
Accumulated other comprehensive (loss) income			(21,165	)			15,404
Retained earnings			353,237				137,789
Total stockholders’ equity			4,715,812				3,732,206
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	7,839,028			$	6,643,844

Datadog, Inc. Condensed Consolidated Statements of Cash Flow (In thousands; unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
			2026				2025				2026				2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	118,316			$	33,885			$	215,448			$	61,174
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			20,790				15,048				58,202				39,125
Accretion of discounts on marketable securities			(12,743	)			(10,855	)			(37,103	)			(32,152	)
Amortization of issuance costs			1,050				1,046				3,146				4,556
Amortization of deferred contract costs			23,827				17,231				66,229				48,061
Stock-based compensation, net of amounts capitalized			237,181				200,558				654,274				545,285
Non-cash lease expense			9,749				9,060				28,339				26,450
Allowance for credit losses on accounts receivable			8,510				3,967				19,104				12,382
Loss on disposal of property and equipment			1,226				1,314				2,894				2,146
Changes in operating assets and liabilities:
Accounts receivable, net			24,858				50,559				(70,917	)			38,887
Deferred contract costs			(44,141	)			(32,718	)			(116,191	)			(78,538	)
Prepaid expenses and other current assets			(2,737	)			(13,116	)			(17,912	)			(12,036	)
Other assets			(4,551	)			(162	)			(7,028	)			(3,200	)
Accounts payable			(50,416	)			(61,341	)			104,704				24,299
Accrued expenses and other liabilities			(3,633	)			30,010				(535	)			32,408
Deferred revenue			(37,335	)			6,984				37,792				14,219
Net cash provided by operating activities			289,951				251,470				940,446				723,066
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities			(787,465	)			(795,593	)			(3,224,925	)			(2,517,372	)
Maturities of marketable securities			984,455				631,163				2,629,158				1,884,273
Proceeds from sale of marketable securities			(3	)			(11	)			323,086				13,125
Purchases of property and equipment			(10,872	)			(16,786	)			(32,119	)			(40,686	)
Capitalized software development costs			(28,445	)			(20,732	)			(89,897	)			(58,684	)
Cash paid for acquisition of businesses; net of cash acquired			(3,299	)			(192	)			(115,609	)			(117,282	)
Net cash provided by (used in) investing activities			154,371				(202,151	)			(510,306	)			(836,626	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options			2,368				1,271				14,833				4,629
Proceeds for issuance of common stock under the employee stock purchase plan			—				—				39,067				28,578
Proceeds from issuance of 2029 Convertible Senior Notes, net of issuance costs			—				—				—				(190	)
Repayments of 2025 Convertible Senior Notes			—				—				—				(635,547	)
Net cash provided by (used in) financing activities			2,368				1,271				53,900				(602,530	)
Effect of exchange rate changes on cash and cash equivalents			(417	)			982				(4,115	)			9,709
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			446,273				51,572				479,925				(706,381	)
CASH AND CASH EQUIVALENTS—Beginning of period			434,957				489,030				401,305				1,246,983
CASH AND CASH EQUIVALENTS—End of period		$	881,230			$	540,602			$	881,230			$	540,602

Datadog, Inc. Reconciliation from GAAP to Non-GAAP Results (In thousands; unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
			2026				2025				2026				2025
Reconciliation of gross profit and gross margin
GAAP gross profit		$	959,923			$	709,194			$	2,638,462			$	1,973,901
Plus: Stock-based compensation expense			9,514				8,038				27,329				21,472
Plus: Amortization of acquired intangibles			2,056				1,451				4,648				3,863
Plus: Employer payroll taxes on employee stock transactions			270				169				850				520
Non-GAAP gross profit		$	971,763			$	718,852			$	2,671,289			$	1,999,756
GAAP gross margin			80	%			80	%			79	%			80	%
Non-GAAP gross margin			81	%			81	%			80	%			81	%
Reconciliation of operating expenses
GAAP research and development		$	491,570			$	401,982			$	1,404,836			$	1,130,525
Less: Stock-based compensation expense			(146,376	)			(124,288	)			(401,729	)			(342,468	)
Less: Employer payroll taxes on employee stock transactions			(13,522	)			(8,177	)			(46,009	)			(29,578	)
Non-GAAP research and development		$	331,672			$	269,517			$	957,098			$	758,479
GAAP sales and marketing		$	303,298			$	238,729			$	894,640			$	692,046
Less: Stock-based compensation expense			(49,226	)			(41,463	)			(138,622	)			(113,030	)
Less: Amortization of acquired intangibles			(366	)			(277	)			(1,085	)			(668	)
Less: Employer payroll taxes on employee stock transactions			(2,626	)			(1,480	)			(8,153	)			(4,409	)
Non-GAAP sales and marketing		$	251,080			$	195,509			$	746,780			$	573,939
GAAP general and administrative		$	90,349			$	74,292			$	251,498			$	205,059
Less: Stock-based compensation expense			(32,065	)			(26,769	)			(86,594	)			(68,315	)
Less: Employer payroll taxes on employee stock transactions			(2,443	)			(1,061	)			(8,488	)			(6,010	)
Less: M&A transaction costs			(1,119	)			—				(3,823	)			(1,373	)
Non-GAAP general and administrative		$	54,722			$	46,462			$	152,593			$	129,361
Reconciliation of operating (loss) income and operating margin
GAAP operating income (loss)		$	74,706			$	(5,809	)		$	87,488			$	(53,729	)
Plus: Stock-based compensation expense			237,181				200,558				654,274				545,285
Plus: Amortization of acquired intangibles			2,422				1,728				5,733				4,531
Plus: Employer payroll taxes on employee stock transactions			18,861				10,887				63,500				40,517
Plus: M&A transaction costs			1,119				—				3,823				1,373
Non-GAAP operating income		$	334,289			$	207,364			$	814,818			$	537,977
GAAP operating margin			6	%		(1) %					3	%		(2) %
Non-GAAP operating margin			28	%			23	%			25	%			22	%

Datadog, Inc. Reconciliation from GAAP to Non-GAAP Results (In thousands, except per share data; unaudited)
		Three Months Ended September 30,						Nine Months Ended September 30,
		2026			2025			2026			2025
Reconciliation of net income
GAAP net income		$	118,316		$	33,885		$	215,448		$	61,174
Plus: Stock-based compensation expense			237,181			200,558			654,274			545,285
Plus: Amortization of acquired intangibles			2,422			1,728			5,733			4,531
Plus: Employer payroll taxes on employee stock transactions			18,861			10,887			63,500			40,517
Plus: M&A transaction costs			1,119			—			3,823			1,373
Plus: Amortization of issuance costs			1,050			1,046			3,146			4,556
Non-GAAP net income before non-GAAP tax adjustments		$	378,949		$	248,104		$	945,924		$	657,436
Income tax effects and adjustments (1)			74,632			50,694			183,006			128,284
Non-GAAP net income after non-GAAP tax adjustments		$	304,317		$	197,410		$	762,918		$	529,152
Net income per share before non-GAAP tax adjustments - basic		$	1.06		$	0.71		$	2.66		$	1.90
Net income per share before non-GAAP tax adjustments - diluted		$	1.01		$	0.69		$	2.55		$	1.82
Net income per share after non-GAAP tax adjustments - basic		$	0.85		$	0.57		$	2.14		$	1.53
Net income per share after non-GAAP tax adjustments - diluted		$	0.81		$	0.55		$	2.05		$	1.46
Shares used in non-GAAP net income per share calculations:
Basic			358,617			348,645			356,067			346,012
Diluted			375,014			362,001			371,363			361,905

1)

Non-GAAP financial information for the periods shown are adjusted for an assumed provision for income taxes based on our long-term projected tax rate of 21%. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

Datadog, Inc. Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow (In thousands; unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
			2026				2025				2026				2025
Net cash provided by operating activities		$	289,951			$	251,470			$	940,446			$	723,066
Less: Purchases of property and equipment			(10,872	)			(16,786	)			(32,119	)			(40,686	)
Less: Capitalized software development costs			(28,445	)			(20,732	)			(89,897	)			(58,684	)
Free cash flow		$	250,634			$	213,952			$	818,430			$	623,696
Free cash flow margin			21	%			24	%			25	%			25	%

Contact Information
AJ Ljubich
Datadog Investor Relations
IR@datadoghq.com

Sabrina Morse
Datadog Public Relations
Press@datadoghq.com

Datadog is a registered trademark of Datadog, Inc.
All product and company names herein may be trademarks of their registered owners.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

How did Datadog perform in the third quarter of 2026?

Datadog generated $1.20 billion in revenue, up 35% year over year, and GAAP diluted earnings of $0.32 per share. GAAP operating income was $74.706 million, compared with a $5.809 million loss a year earlier.

What is Datadog's full-year 2026 outlook?

Datadog expects $4.515 billion–$4.525 billion in revenue, non-GAAP operating income of $1.095 billion–$1.105 billion and non-GAAP earnings of $2.73–$2.75 per share. The earnings outlook assumes approximately 375 million weighted average diluted shares outstanding.

Why does Datadog not provide a GAAP reconciliation for its 2026 earnings guidance?

Datadog says uncertainty and potential variability in adjustments prevent a reconciliation without unreasonable effort. These adjustments include stock-based compensation and employer payroll taxes on equity incentive plans, which could materially affect GAAP results.

How does Datadog calculate ARR for its large-customer count?

Datadog calculates annual recurring revenue, or ARR, by multiplying monthly recurring revenue by 12. Monthly recurring revenue includes committed contractual amounts and specified usage and subscription revenue. ARR is an operating metric, not GAAP revenue or a revenue forecast; free-trial and free-tier users are excluded from customer counts.