Condensed Consolidated Statements of Cash Flow(In thousands; unaudited) Three Months EndedMarch 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $24,642 $42,631 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,255 12,895 Accretion of discounts on marketable securities (10,370) (14,126)Amortization of issuance costs 1,819 850 Amortization of deferred contract costs 14,853 11,844 Stock-based compensation, net of amounts capitalized 164,265 135,033 Non-cash lease expense 8,389 6,810 Allowance for credit losses on accounts receivable 4,520 2,732 (Gain) loss on disposal of property and equipment (145) 43 Changes in operating assets and liabilities: Accounts receivable, net 104,227 55,490 Deferred contract costs (21,519) (12,636)Prepaid expenses and other current assets (10,263) (14,075)Other assets (1,217) 2,614 Accounts payable (10,712) (17,122)Accrued expenses and other liabilities 5,648 (7,433)Deferred revenue (13,851) 6,720 Net cash provided by operating activities 271,541 212,270 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities (970,302) (637,351)Maturities of marketable securities 555,938 401,666 Proceeds from sale of marketable securities (76) — Purchases of property and equipment (8,748) (14,158)Capitalized software development costs (18,402) (11,365)Cash paid for acquisition of businesses; net of cash acquired (1,818) — Net cash used in investing activities (443,408) (261,208)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 1,673 2,191 Repayments of 2025 Convertible Senior Notes (20) — Net cash provided by financing activities 1,653 2,191 Effect of exchange rate changes on cash and cash equivalents 3,085 (1,374) NET DECREASE IN CASH AND CASH EQUIVALENTS (167,129) (48,121)CASH AND CASH EQUIVALENTS—Beginning of period 1,246,983 330,339 CASH AND CASH EQUIVALENTS—End of period $1,079,854 $282,218 Datadog, Inc.
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 and digital transformation, gross margins and operating margins including with respect to third-party cloud infrastructure hosting costs, sales and marketing, research and development expenses, net interest and other income, cash taxes, investments and capital expenditures, and Datadog’s future financial performance, including its outlook for the second quarter and the full year 2025 and related notes and assumptions.
Reconciliation from GAAP to Non-GAAP Results(In thousands, except per share data; unaudited) Three Months EndedMarch 31, 2025 2024 Reconciliation of gross profit and gross margin GAAP gross profit $603,925 $501,155 Plus: Stock-based compensation expense 6,651 5,527 Plus: Amortization of acquired intangibles 894 2,027 Plus: Employer payroll taxes on employee stock transactions 186 192 Non-GAAP gross profit $611,656 $508,901 GAAP gross margin 79% 82%Non-GAAP gross margin 80% 83% Reconciliation of operating expenses GAAP research and development $341,061 $269,988 Less: Stock-based compensation expense (105,735) (88,413)Less: Employer payroll taxes on employee stock transactions (9,582) (10,819)Non-GAAP research and development $225,744 $170,756 GAAP sales and marketing $214,291 $173,881 Less: Stock-based compensation expense (34,125) (28,531)Less: Amortization of acquired intangibles (203) (205)Less: Employer payroll taxes on employee stock transactions (1,570) (2,153)Non-GAAP sales and marketing $178,393 $142,992 GAAP general and administrative $60,993 $45,290 Less: Stock-based compensation expense (17,754) (12,562)Less: Employer payroll taxes on employee stock transactions (2,225) (2,057)Non-GAAP general and administrative $41,014 $30,671 Reconciliation of operating (loss) income and operating margin GAAP operating (loss) income $(12,420) $11,996 Plus: Stock-based compensation expense 164,265 135,033 Plus: Amortization of acquired intangibles 1,097 2,232 Plus: Employer payroll taxes on employee stock transactions 13,563 15,221 Non-GAAP operating income $166,505 $164,482 GAAP operating margin (2)% 2%Non-GAAP operating margin 22% 27% Datadog, Inc.
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