Datadog Announces First Quarter Results
First quarter revenue grew 51% year-over-year to
Strong growth of larger customers, with 1,437 $100k+ ARR customers, up from 960 a year ago
Closed on acquisitions of Sqreen and Timber
Named a Leader in the 2021 Gartner Magic Quadrant for Application Performance Monitoring
“We are pleased with our strong first quarter results, an excellent start to the year that demonstrated continued high growth at scale,” said
Pomel added, “Businesses are planning for a post-pandemic world. Digital transformation projects are being prioritized, as the need to be digital-first and agile is more prominent than ever. We believe we are in a strong position to benefit from this trend as the most complete and cloud-native end-to-end observability platform.”
First Quarter 2021 Financial Highlights:
- Revenue was
$198.5 million , an increase of 51% year-over-year. - GAAP operating loss was
$(12.8) million ; GAAP operating margin was (6)%. - Non-GAAP operating income was
$19.6 million ; non-GAAP operating margin was 10%. - GAAP net loss per diluted share was
$(0.04) ; non-GAAP net income per diluted share was$0.06 . - Operating cash flow was
$51.7 million , with free cash flow of$44.5 million . - Cash, cash equivalents, restricted cash, and marketable securities were
$1.6 billion as ofMarch 31, 2021 .
- As of
March 31, 2021 , we had 1,437 customers with ARR of$100,000 or more, an increase of 50% from 960 as ofMarch 31, 2020 . - Completed acquisition of Sqreen on
April 12 , a SaaS-based security platform that enables enterprises to detect, block and respond to application security exploits. The closing of this deal will bolsterDatadog's existing Application Performance Monitoring (APM) functionality and move the company closer to providing customers with a robust, full-stack security solution for the cloud age. - Network Performance Monitoring (NPM) for Windows became generally available.
Datadog is the first company to offer monitoring of live traffic between Windows Server hosts. Now, customers have visibility into all of their network traffic across operating systems in NPM, while maintaining extremely low overhead. - Surpassed 450 out-of-the-box supported integrations. We released integrations with AWS CloudWatch Metrics Stream, Red Hat Gluster Storage, Azure App Services extension, Juniper, SonarQube, and
VoltDB , among others. Our broad and deep set of integrations enable customers to gain visibility and insights into their existing IT stacks without the need for manual instrumentation and with quick time-to-value. In addition to continually adding new integrations, we are continuously refining and improving all existing integrations. - Delivered additional product innovations, including Logs Outliers powered by Watchdog Insights; new detection rules for Security Monitoring for Okta, Kubernetes, and Azure; Core Web Vitals for Browser Tests; a new user interface for Log Explorer; enhanced AWS serverless tracing; and the ability to monitor .NET runtime metrics.
- Recognized as a Leader in Gartner's 2021 Magic Quadrant for APM, which positions vendors according to their ability to execute and the completeness of their vision.
Datadog was one of just four vendors recognized as a "Leader" in this year's report.
Second Quarter and Full Year 2021 Outlook:
Based on information as of today,
- Second Quarter 2021 Outlook:
- Revenue between
$211 million and$213 million . - Non-GAAP operating income between
$9 million and$11 million . - Non-GAAP net income per share between
$0.03 and$0.04 , assuming approximately 344 million weighted average diluted shares outstanding.
- Revenue between
- Full Year 2021 Outlook:
- Revenue between
$880 million and$890 million . - Non-GAAP operating income between
$45 million and$55 million . - Non-GAAP net income per share between
$0.13 and$0.16 , assuming approximately 345 million weighted average shares outstanding.
- Revenue between
Conference Call Details:
- What: Datadog financial results for the first quarter of 2021 and outlook for the second quarter and the full year of 2021
- When: May 6, 2021 at
5:00 P.M. Eastern Time (2:00 P.M. Pacific Time ) - Dial in: To access the call in the
U.S. , please dial (800) 697-5978, and for international callers, please dial (630) 691-2750. Callers may provide confirmation number 8901366 to access the call more quickly, and 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
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 the impact of the COVID-19 pandemic on digital transformation and cloud migration trends and the ability of
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; 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
About Non-GAAP Financial Measures
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.
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.
Amortization of issuance costs. In
Additionally, Datadog’s management believes that the non-GAAP financial measure free cash flow is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures and the capitalization of software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations.
Operating Metrics
Datadog’s number of customers with ARR of
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. 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 is defined as the revenue run-rate of subscription agreements from all customers for the last month of the period, including committed amounts and any additional usage. ARR and MRR should be viewed independently of revenue as they are operating metrics and are not intended to be replacements or forecasts of revenue.
Condensed Consolidated Statements of Operations
(In thousands, except per share data; unaudited)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
Revenue | $ | 198,549 | $ | 131,248 | |||
Cost of revenue (1)(2)(3) | 46,666 | 26,479 | |||||
Gross profit | 151,883 | 104,769 | |||||
Operating expenses: | |||||||
Research and development (1)(3) | 79,266 | 40,824 | |||||
Sales and marketing (1)(3) | 64,353 | 45,215 | |||||
General and administrative (1)(3) | 21,094 | 14,952 | |||||
Total operating expenses | 164,713 | 100,991 | |||||
Operating (loss) income | (12,830 | ) | 3,778 | ||||
Other income: | |||||||
Interest expense (4) | (5,472 | ) | (707 | ) | |||
Interest income and other income, net | 5,773 | 3,603 | |||||
Other income, net | 301 | 2,896 | |||||
(Loss) income before provision for income taxes | (12,529 | ) | 6,674 | ||||
Provision for income taxes | (539 | ) | (195 | ) | |||
Net (loss) income | $ | (13,068 | ) | $ | 6,479 | ||
Net (loss) income per share - basic | $ | (0.04 | ) | $ | 0.02 | ||
Net (loss) income per share - diluted | $ | (0.04 | ) | $ | 0.02 | ||
Weighted average shares used in calculating net (loss) income per share: | |||||||
Basic | 306,034 | 295,455 | |||||
Diluted | 306,034 | 327,801 |
(1) Includes stock-based compensation expense as follows: | |||||||
Cost of revenue | $ | 701 | $ | 231 | |||
Research and development | 16,069 | 5,847 | |||||
Sales and marketing | 7,010 | 3,074 | |||||
General and administrative | 5,081 | 2,908 | |||||
Total | $ | 28,861 | $ | 12,060 |
(2) Includes amortization of acquired intangibles as follows: | |||||||
Cost of revenue | $ | 355 | $ | 247 | |||
Total | $ | 355 | $ | 247 |
(3) Includes employer payroll taxes on employee stock transactions as follows: | |||||||
Cost of revenue | $ | 95 | $ | — | |||
Research and development | 1,771 | 37 | |||||
Sales and marketing | 1,179 | 151 | |||||
General and administrative | 124 | 58 | |||||
Total | $ | 3,169 | $ | 246 |
(4) Includes amortization of issuance costs as follows: | |||||||
Interest expense | $ | 835 | $ | — | |||
Total | $ | 835 | $ | — |
Condensed Consolidated Balance Sheets
(In thousands; unaudited)
2021 |
2020 |
||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 369,706 | $ | 224,927 | |||
Marketable securities | 1,178,190 | 1,292,532 | |||||
Accounts receivable, net of allowance for credit losses of |
154,111 | 163,359 | |||||
Deferred contract costs, current | 15,446 | 13,638 | |||||
Prepaid expenses and other current assets | 29,404 | 23,624 | |||||
Total current assets | 1,746,857 | 1,718,080 | |||||
Property and equipment, net | 52,805 | 47,197 | |||||
Operating lease assets | 53,117 | 57,829 | |||||
48,479 | 17,609 | ||||||
Intangible assets, net | 3,414 | 2,069 | |||||
Deferred contract costs, non-current | 27,874 | 26,750 | |||||
Restricted cash | 3,613 | 3,784 | |||||
Other assets | 15,915 | 16,967 | |||||
TOTAL ASSETS | $ | 1,952,074 | $ | 1,890,285 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 12,065 | $ | 21,342 | |||
Accrued expenses and other current liabilities | 68,476 | 55,351 | |||||
Operating lease liabilities, current | 16,626 | 16,326 | |||||
Deferred revenue, current | 223,647 | 204,825 | |||||
Total current liabilities | 320,814 | 297,844 | |||||
Operating lease liabilities, non-current | 46,620 | 51,433 | |||||
Convertible senior notes, net | 732,968 | 575,864 | |||||
Deferred revenue, non-current | 5,628 | 3,450 | |||||
Other liabilities | 4,714 | 4,262 | |||||
Total liabilities | 1,110,744 | 932,853 | |||||
STOCKHOLDERS' EQUITY | |||||||
Common stock | 3 | 3 | |||||
Additional paid-in capital | 985,004 | 1,103,305 | |||||
Accumulated other comprehensive income | 752 | 2,287 | |||||
Accumulated deficit | (144,429 | ) | (148,163 | ) | |||
Total stockholders’ equity | 841,330 | 957,432 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,952,074 | $ | 1,890,285 |
Condensed Consolidated Statements of Cash Flow
(In thousands; unaudited)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net (loss) income | $ | (13,068 | ) | $ | 6,479 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 4,402 | 3,688 | |||||
Amortization of discounts or premiums on marketable securities | 4,259 | 244 | |||||
Amortization of issuance costs | 835 | — | |||||
Amortization of deferred contract costs | 3,779 | 2,185 | |||||
Stock-based compensation, net of amounts capitalized | 28,861 | 12,060 | |||||
Non-cash lease expense | 4,012 | 3,226 | |||||
Allowance for credit losses on accounts receivable | 25 | 1,073 | |||||
Loss on disposal of property and equipment | 3 | 2 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 9,223 | (7,116 | ) | ||||
Deferred contract costs | (6,711 | ) | (4,619 | ) | |||
Prepaid expenses and other current assets | (5,998 | ) | (1,404 | ) | |||
Other assets | 572 | 919 | |||||
Accounts payable | (9,226 | ) | (1,391 | ) | |||
Accrued expenses and other liabilities | 9,682 | 2,025 | |||||
Deferred revenue | 21,000 | 6,884 | |||||
Net cash provided by operating activities | 51,650 | 24,255 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of marketable securities | (150,331 | ) | (427,482 | ) | |||
Maturities of marketable securities | 253,234 | 2,620 | |||||
Proceeds from sale of marketable securities | 6,497 | — | |||||
Purchases of property and equipment | (998 | ) | (1,526 | ) | |||
Capitalized software development costs | (6,183 | ) | (3,417 | ) | |||
Cash paid for acquisition of businesses; net of cash acquired | (11,509 | ) | — | ||||
Net cash provided by (used in) investing activities | 90,710 | (429,805 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from exercise of stock options | 3,275 | 2,813 | |||||
Proceeds from initial public offering, net of underwriting discounts and commissions and other offering costs | — | (153 | ) | ||||
Employee payroll taxes paid related to net share settlement under the employee stock purchase plan | (245 | ) | — | ||||
Net cash provided by financing activities | 3,030 | 2,660 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (782 | ) | (141 | ) | |||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 144,608 | (403,031 | ) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period | 228,711 | 601,189 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period | $ | 373,319 | $ | 198,158 | |||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONDENSED CONSOLIDATED BALANCE SHEETS TO THE AMOUNTS SHOWN IN THE STATEMENTS OF CASH FLOWS ABOVE: | |||||||
Cash and cash equivalents | 369,706 | 194,350 | |||||
Restricted cash – Including amounts in prepaid expense and other current assets and other assets | 3,613 | 3,808 | |||||
Total cash, cash equivalents and restricted cash | $ | 373,319 | $ | 198,158 |
Reconciliation from GAAP to Non-GAAP Results
(In thousands, except per share data; unaudited)
Three Months Ended |
||||||||
2021 | 2020 | |||||||
Reconciliation of gross profit and gross margin | ||||||||
GAAP gross profit | $ | 151,883 | $ | 104,769 | ||||
Plus: Stock-based compensation expense | 701 | 231 | ||||||
Plus: Amortization of acquired intangibles | 355 | 247 | ||||||
Plus: Employer payroll taxes on employee stock transactions | 95 | — | ||||||
Non-GAAP gross profit | $ | 153,034 | $ | 105,247 | ||||
GAAP gross margin | 76 | % | 80 | % | ||||
Non-GAAP gross margin | 77 | % | 80 | % | ||||
Reconciliation of operating expenses | ||||||||
GAAP research and development | $ | 79,266 | $ | 40,824 | ||||
Less: Stock-based compensation expense | 16,069 | 5,847 | ||||||
Less: Employer payroll taxes on employee stock transactions | 1,771 | 37 | ||||||
Non-GAAP research and development | $ | 61,427 | $ | 34,940 | ||||
GAAP sales and marketing | $ | 64,353 | $ | 45,215 | ||||
Less: Stock-based compensation expense | 7,010 | 3,074 | ||||||
Less: Employer payroll taxes on employee stock transactions | 1,179 | 151 | ||||||
Non-GAAP sales and marketing | $ | 56,164 | $ | 41,990 | ||||
GAAP general and administrative | $ | 21,094 | $ | 14,952 | ||||
Less: Stock-based compensation expense | 5,081 | 2,908 | ||||||
Less: Employer payroll taxes on employee stock transactions | 124 | 58 | ||||||
Non-GAAP general and administrative | $ | 15,889 | $ | 11,986 | ||||
Reconciliation of operating (loss) income and operating margin | ||||||||
GAAP operating (loss) income | $ | (12,830 | ) | $ | 3,778 | |||
Plus: Stock-based compensation expense | 28,861 | 12,060 | ||||||
Plus: Amortization of acquired intangibles | 355 | 247 | ||||||
Plus: Employer payroll taxes on employee stock transactions | 3,169 | 246 | ||||||
Non-GAAP operating income | $ | 19,555 | $ | 16,331 | ||||
GAAP operating margin | (6 | ) | % | 3 | % | |||
Non-GAAP operating margin | 10 | % | 12 | % | ||||
Reconciliation of net (loss) income | ||||||||
GAAP net (loss) income | $ | (13,068 | ) | $ | 6,479 | |||
Plus: Stock-based compensation expense | 28,861 | 12,060 | ||||||
Plus: Amortization of acquired intangibles | 355 | 247 | ||||||
Plus: Employer payroll taxes on employee stock transactions | 3,169 | 246 | ||||||
Plus: Amortization of issuance costs | 835 | — | ||||||
Non-GAAP net income | $ | 20,152 | $ | 19,032 | ||||
Net income per share - basic | $ | 0.07 | $ | 0.06 | ||||
Net income per share - diluted | $ | 0.06 | $ | 0.06 | ||||
Shares used in non-GAAP per share calculations: | ||||||||
Basic | 306,034 | 295,455 | ||||||
Diluted | 342,329 | 327,801 |
Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow
(In thousands; unaudited)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
Net cash provided by operating activities | $ | 51,650 | $ | 24,255 | |||
Less: Purchases of property and equipment | (998 | ) | (1,526 | ) | |||
Less: Capitalized software development costs | (6,183 | ) | (3,417 | ) | |||
Free cash flow | $ | 44,469 | $ | 19,312 |
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Contact InformationYuka Broderick Datadog Investor Relations (866) 329-4466 IR@datadog.comMartin Bergman Datadog Communications (866) 329-4466 Press@datadog.com
Datadog, Inc.