Datadog Announces Third Quarter 2022 Financial Results
Third quarter revenue grew 61% year-over-year to $437 million
Strong growth of larger customers, with about 2,600 $100k+ ARR customers, up from about 1,800 a year ago
Announced 18 new products and features at Dash
NEW YORK, Nov. 3, 2022 /PRNewswire/ — Datadog, Inc. (NASDAQ:DDOG), the monitoring and security platform for cloud applications, today announced financial results for its third quarter ended September 30, 2022.
“We are pleased with our third quarter results, with 61% year-over-year revenue growth, strong adoption of our products and robust opportunities with new customers,” said Olivier Pomel, co-founder and CEO of Datadog.
Pomel added, “We recently held our 2022 Dash conference, and announced 18 new products and features across our platform, for a variety of observability, security, and developer experience use cases. We are innovating rapidly to help our customers to manage the exponentially rising complexity of their cloud systems.”
Third Quarter 2022 Financial Highlights:
- Revenue was $436.5 million, an increase of 61% year-over-year.
- GAAP operating loss was $(31.3) million; GAAP operating margin was (7)%.
- Non-GAAP operating income was $74.8 million; non-GAAP operating margin was 17%.
- GAAP net loss per diluted share was $(0.08); non-GAAP net income per diluted share was $0.23.
- Operating cash flow was $83.6 million, with free cash flow of $67.1 million.
- Cash, cash equivalents, restricted cash, and marketable securities were $1.8 billion as of September 30, 2022.
Third Quarter & Recent Business Highlights:
- As of September 30, 2022, we had about 2,600 customers with ARR of $100,000 or more, an increase of 44% from about 1,800 as of September 30, 2021.
- Released the fourth edition of the Container Report, which analyzes usage data from more than 1.5 billion containers run by tens of thousands of Datadog customers to understand the state of the container ecosystem.
- Announced the general availability of Datadog Continuous Testing, a new product that helps developers and quality engineers quickly create, manage and run end-to-end tests for their web applications.
- Announced the general availability of Cloud Cost Management, which shows an organization’s cloud spend in the context of their observability data. This allows engineering and FinOps teams to automatically attribute spend to applications, services and teams, track any changes in spend, understand why those changes occurred and include costs as a key performance indicator of application health.
- Achieved PCI (Payment Card Industry) compliance for its Log Management and Application Performance Management (APM) products.
- Announced the general availability of Cloud Security Management. This product brings together capabilities from Cloud Security Posture Management (CSPM), Cloud Workload Security (CWS), alerting, incident management and reporting in a single platform to enable DevOps and Security teams to identify misconfigurations, detect threats and secure cloud-native applications.
- Announced the launch of its Datadog Certification Program. The program builds on the Datadog Learning Center to help developers further uplevel their observability skills.
- Achieved Amazon Web Services (AWS) Security, Networking and Retail competencies. In total, Datadog has now received nine competencies—the most of any integrated observability company supporting AWS to date.
- Extended Monitoring for Microsoft SQL and Microsoft Azure Database Platforms. With this expanded support, engineers and database administrators can quickly pinpoint and address database performance issues such as costly and slow queries, incorrect indexes in SQL server or Azure databases and bottlenecks in their applications.
Fourth Quarter and Full Year 2022 Outlook:
Based on information as of today, November 3, 2022, Datadog is providing the following guidance:
- Fourth Quarter 2022 Outlook:
- Revenue between $445 million and $449 million.
- Non-GAAP operating income between $56 million and $60 million.
- Non-GAAP net income per share between $0.18 and $0.20, assuming approximately 347 million weighted average diluted shares outstanding.
- Full Year 2022 Outlook:
- Revenue between $1.650 billion and $1.654 billion.
- Non-GAAP operating income between $300 million and $304 million.
- Non-GAAP net income per share between $0.90 and $0.92, assuming approximately 346 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 2022 and outlook for the fourth quarter and the full year 2022
- When: November 3, 2022 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
Datadog is the monitoring and security platform for cloud applications. Our SaaS platform integrates and automates infrastructure monitoring, application performance monitoring and log management to provide unified, real-time observability of our customers’ entire technology stack. Datadog is used by organizations of all sizes and across a wide range of industries to enable digital transformation and cloud migration, drive collaboration among development, operations, security and business teams, accelerate time to market for applications, reduce time to problem resolution, secure applications and infrastructure, understand user behavior and track key business metrics.
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 benefits and expected closing of acquisitions, growth in and ability to capitalize on long-term market opportunities including the pace and scope of cloud migration and digital transformation, gross margins and operating margins including with respect to sales and marketing, research and development expenses, investments and capital expenditures as well as the impact of increased office activity and marketing, and Datadog’s future financial performance, including its outlook for the fourth quarter and fiscal year 2022. 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 business depends on our 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) general market, political, economic, and business conditions including concerns about reduced economic growth and associated decreases in information technology spending; and (13) the impact that the ongoing COVID-19 pandemic and any related economic downturn could have on our or our customers’ businesses, financial condition and results of operations. 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 Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 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, and free cash flow. 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…