Datadog Announces Second Quarter 2021 Financial Results | #cloudsecurity


Second quarter revenue grew 67% year-over-year to $234 million

Strong growth of larger customers, with 1,610 $100k+ ARR customers, up from 1,015 a year ago

Launched general availability of Cloud Security Posture Management and Cloud Workload Security products

Announced beta of CI Visibility product

NEW YORK, Aug. 05, 2021 (GLOBE NEWSWIRE) — Datadog, Inc. (NASDAQ:DDOG), the monitoring and security platform for cloud applications, today announced financial results for its second quarter ended June 30, 2021.

“We had a strong second quarter, with revenue growth accelerating to 67% year-over-year and 18% quarter-over-quarter. We saw broad-based strength across customer segments and products,” said Olivier Pomel, co-founder and CEO of Datadog. “Our high growth at scale demonstrates that we continue to be a trusted partner in our customers’ digital transformation and cloud migration journeys.”

Pomel added, “We continue to expand the features and functionality of our cloud native end-to-end observability platform. Meanwhile, we are just getting started on our journey to break down silos between DevOps and Security teams with our Cloud Security Platform.”

Second Quarter 2021 Financial Highlights:

  • Revenue was $233.5 million, an increase of 67% year-over-year.

  • GAAP operating loss was $(9.9) million; GAAP operating margin was (4)%.

  • Non-GAAP operating income was $30.9 million; non-GAAP operating margin was 13%.

  • GAAP net loss per diluted share was $(0.03); non-GAAP net income per diluted share was $0.09.

  • Operating cash flow was $51.7 million, with free cash flow of $42.3 million.

  • Cash, cash equivalents, restricted cash, and marketable securities were $1.4 billion as of June 30, 2021.

Second Quarter & Recent Business Highlights:

  • As of June 30, 2021, we had 1,610 customers with ARR of $100,000 or more, an increase of 59% from 1,015 as of June 30, 2020.

  • Announced the launch of the Datadog Cloud Security Platform, adding full-stack security context to Datadog’s deep observability capabilities. This new offering enables organizations to use a single platform to correlate security insights with monitoring data across infrastructure, network and application tiers, providing Security teams with the visibility they need to understand and respond to potential threats faster. The Cloud Security Platform includes Cloud Security Posture Management, Cloud Workload Security, Security Monitoring, and Application Security (in beta), as well as Unified Observability and Security Reporting capabilities.

  • Cloud Security Posture Management (CSPM) and Cloud Workload Security (CWS) became generally available. Cloud Security Posture Management (CSPM) makes it easy to track whether production environments comply with industry standards. Cloud Workload Security (CWS) detects threats to production workloads by monitoring file and process activity across environments to help catch host and infrastructure-based attacks.

  • Announced the beta launch of CI Visibility, a way to bring production level visibility earlier into the development process by shifting left and bringing observability throughout the CI/CD pipeline.

  • Announced support for application monitoring with AWS App Runner, joining Amazon Web Services (AWS) as a Launch Partner for the new fully managed service. This new functionality will help engineering and product teams scale, deploy, and monitor their apps without the burden of managing their own infrastructure.

  • Announced the general availability of Datadog’s AWS Lambda extension. This feature enables engineering teams to send their metrics, traces, and logs securely to Datadog with minimal overhead to their business-critical serverless applications.

  • Announced our integration with the Salesforce platform. This new integration provides Salesforce admins and security teams with the ability to detect and respond to suspicious behavior through visibility into user, platform and API activity.

  • Achieved Amazon Web Services (AWS) Government Competency status. This designation reflects Datadog’s deep experience working with government customers to deliver mission-critical workloads and applications on AWS.

  • Announced availability on the Google Cloud Marketplace. Google Cloud customers can now purchase Datadog with just a few clicks on the Google Cloud Marketplace, allowing them to quickly and easily monitor the health of their applications and infrastructure across their Google Cloud and hybrid cloud environments.

  • Delivered numerous product innovations, including cross-browser testing in Synthetics; support for Android, iOS, and cross-platform frameworks like React Native in mobile RUM; automatic detection of faulty deployments in APM; and anomaly detection in Security Monitoring.

Third Quarter and Full Year 2021 Outlook:

Based on information as of today, August 5, 2021, Datadog is providing the following guidance:

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 second quarter of 2021 and outlook for the third quarter and the full year of 2021

  • When: August 5, 2021 at 8:00 A.M. Eastern Time (5:00 A.M. Pacific Time)

  • Dial in: To access the call in the U.S., please dial (800) 708-4539, and for international callers, please dial (847) 619-6396. Callers may provide confirmation number 50198098 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 Datadog

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.

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 Datadog to benefit from these trends, Datadog’s strategy, partnerships, investments and long-term opportunity, and Datadog’s future financial performance, including its outlook for the third quarter and full year 2021. 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; 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, filed with the SEC on May 7, 2021. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 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 (sales and marketing, research and development, 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 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 (sales and marketing, research and development, 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) non-cash benefit related to tax adjustment; (4) employer payroll taxes on employee stock transactions; and (5) amortization of issuance costs. Datadog defines free cash flow as Net cash provided by operating activities, minus capital expenditures and minus capitalized software development costs. 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.

Non-cash benefit related to tax adjustment. Datadog recorded a contingent payroll tax liability in conjunction with a common stock repurchase transaction in 2016. In 2020, the period of limitations for assessing the contingent Federal payroll tax liability expired and the Company was legally released from being the primary obligor, and recognized a benefit in the consolidated statement of operations. Datadog does not believe this is reflective of on-going results and therefore adjusted for this benefit.

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.

Amortization of issuance costs. In May 2020, Datadog issued $747.5M of convertible senior notes due 2025, which bear interest at an annual fixed rate of 0.125%. 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 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 $100,000 or more and number of customers with ARR of $1 million or more are 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. 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
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Revenue

$

233,549

$

140,012

$

432,098

$

271,260

Cost of revenue (1)(2)(4)

57,098

28,878

103,764

55,357

Gross profit

176,451

111,134

328,334

215,903

Operating expenses:

Research and development (1)(3)(4)

94,779

45,664

174,045

86,488

Sales and marketing (1)(2)(3)(4)

70,412

51,269

134,765

96,484

General and administrative (1)(3)(4)

21,146

13,547

42,240

28,499

Total operating expenses

186,337

110,480

351,050

211,471

Operating (loss) income

(9,886

)

654

(22,716

)

4,432

Other income:

Interest expense (5)

(5,064

)

(4,294

)

(10,536

)

(5,001

)

Interest income and other income, net

5,292

4,466

11,065

8,069

Other income, net

228

172

529

3,068

(Loss) income before benefit from (provision for) income taxes

(9,658

)

826

(22,187

)

7,500

Benefit from (provision for) income taxes

296

(542

)

(243

)

(737

)

Net (loss) income

$

(9,362

)

$

284

$

(22,430

)

$

6,763

Net (loss) income per share – basic

$

(0.03

)

$

0.00

$

(0.07

)

$

0.02

Net (loss) income per share – diluted

$

(0.03

)

$

0.00

$

(0.07

)

$

0.02

Weighted average shares used in calculating net (loss) income per share:

Basic

308,019

299,267

307,032

297,361

Diluted

308,019

330,847

307,032

329,402

(1) Includes stock-based compensation expense as follows:

Cost of revenue

$

829

$

407

$

1,530

$

638

Research and development

21,639

8,703

37,708

14,550

Sales and marketing

6,606

4,541

13,616

7,615

General and administrative

5,441

3,183

10,522

6,091

Total

$

34,515

$

16,834

$

63,376

$

28,894

(2) Includes amortization of acquired intangibles as follows:

Cost of revenue

$

908

$

147

$

1,263

$

394

Sales and marketing

163

163

Total

$

1,071

$

147

$

1,426

$

394

(3) Includes non-cash benefit related to tax adjustment as follows:

Research and development

$

$

(2,729

)

$

$

(2,729

)

Sales and marketing

(449

)

(449

)

General and administrative

(2,383

)

(2,383

)

Total

$

$

(5,561

)

$

$

(5,561

)

(4) Includes employer payroll taxes on employee stock transactions as follows:

Cost of revenue

$

96

$

121

$

191

$

121

Research and development

2,101

1,423

3,872

1,460

Sales and marketing

2,776

1,508

3,955

1,659

General and administrative

194

212

318

270

Total

$

5,167

$

3,264

$

8,336

$

3,510

(5) Includes amortization of issuance costs as follows:

Interest expense

$

837

$

2,484

$

1,672

$

2,484

Total

$

837

$

2,484

$

1,672

$

2,484

Condensed Consolidated Balance Sheets

(In thousands; unaudited)

June 30,
2021

December 31,
2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

247,442

$

224,927

Marketable securities

1,162,717

1,292,532

Accounts receivable, net of allowance for credit losses of $2,267 and $2,468 as of
June 30, 2021 and December 31, 2020, respectively

188,326

163,359

Deferred contract costs, current

17,612

13,638

Prepaid expenses and other current assets

26,289

23,624

Total current assets

1,642,386

1,718,080

Property and equipment, net

60,511

47,197

Operating lease assets

49,233

57,829

Goodwill

258,682

17,609

Intangible assets, net

11,743

2,069

Deferred contract costs, non-current

31,624

26,750

Restricted cash

3,662

3,784

Other assets

18,892

16,967

TOTAL ASSETS

$

2,076,733

$

1,890,285

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

29,257

$

21,342

Accrued expenses and other current liabilities

70,524

55,351

Operating lease liabilities, current

16,626

16,326

Deferred revenue, current

264,650

204,825

Total current liabilities

381,057

297,844

Operating lease liabilities, non-current

42,448

51,433

Convertible senior notes, net

733,805

575,864

Deferred revenue, non-current

1,277

3,450

Other liabilities

5,267

4,262

Total liabilities

1,163,854

932,853

STOCKHOLDERS’ EQUITY

Common stock

3

3

Additional paid-in capital

1,065,835

1,103,305

Accumulated other comprehensive income

832

2,287

Accumulated deficit

(153,791

)

(148,163

)

Total stockholders’ equity

912,879

957,432

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,076,733

$

1,890,285

Condensed Consolidated Statements of Cash Flow

(In thousands; unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

$

(9,362

)

$

284

$

(22,430

)

$

6,763

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

5,463

3,707

9,865

7,395

Amortization of discounts or premiums on marketable securities

3,854

1,216

8,113

1,460

Amortization of issuance costs

837

2,484

1,672

2,484

Amortization of deferred contract costs

4,074

2,442

7,853

4,627

Stock-based compensation, net of amounts capitalized

34,515

16,834

63,376

28,894

Non-cash lease expense

4,049

3,325

8,061

6,551

Allowance for credit losses on accounts receivable

502

928

527

2,001

Loss on disposal of property and equipment

153

6

156

8

Changes in operating assets and liabilities:

Accounts receivable, net

(34,131

)

(16,568

)

(24,908

)

(23,684

)

Deferred contract costs

(9,990

)

(6,618

)

(16,701

)

(11,237

)

Prepaid expenses and other current assets

3,461

(5,077

)

(2,537

)

(6,481

)

Other assets

(1,504

)

(1,834

)

(932

)

(915

)

Accounts payable

16,598

4,083

7,372

2,692

Accrued expenses and other liabilities

(2,374

)

(377

)

7,308

1,648

Deferred revenue

35,578

19,903

56,578

26,787

Net cash provided by operating activities

51,723

24,738

103,373

48,993

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of marketable securities

(340,652

)

(776,031

)

(490,983

)

(1,203,513

)

Maturities of marketable securities

316,972

119,234

570,206

121,854

Proceeds from sale of marketable securities

35,218

41,715

Purchases of property and equipment

(3,229

)

(1,398

)

(4,227

)

(2,924

)

Capitalized software development costs

(6,209

)

(4,737

)

(12,392

)

(8,154

)

Cash paid for acquisition of businesses; net of cash acquired

(188,839

)

(2,363

)

(200,348

)

(2,363

)

Net cash used in investing activities

(186,739

)

(665,295

)

(96,029

)

(1,095,100

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

2,887

4,422

6,162

7,235

Initial public offering costs

(268

)

(421

)

Proceeds for issuance of common stock under the employee stock purchase plan

9,794

7,680

9,794

7,680

Employee payroll taxes paid related to net share settlement under the employee stock purchase plan

(859

)

(245

)

(859

)

Proceeds from issuance of convertible senior notes, net of issuance costs

730,681

730,681

Purchase of capped call related to convertible senior notes

(89,625

)

(89,625

)

Net cash provided by financing activities

12,681

652,031

15,711

654,691

Effect of exchange rate changes on cash, cash equivalents and restricted cash

120

28

(662

)

(113

)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(122,215

)

11,502

22,393

(391,529

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period

373,319

198,158

228,711

601,189

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period

$

251,104

$

209,660

$

251,104

$

209,660

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

$

247,442

$

206,202

$

247,442

$

206,202

Restricted cash – Including amounts in prepaid expense and other current assets and other assets

3,662

3,458

3,662

3,458

Total cash, cash equivalents and restricted cash

$

251,104

$

209,660

$

251,104

$

209,660

Reconciliation from GAAP to Non-GAAP Results
(In thousands, except per share data; unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Reconciliation of gross profit and gross margin

GAAP gross profit

$

176,451

$

111,134

$

328,334

$

215,903

Plus: Stock-based compensation expense

829

407

1,530

638

Plus: Amortization of acquired intangibles

908

147

1,263

394

Plus: Employer payroll taxes on employee stock transactions

96

121

191

121

Non-GAAP gross profit

$

178,284

$

111,809

$

331,318

$

217,056

GAAP gross margin

76

%

79

%

76

%

80

%

Non-GAAP gross margin

76

%

80

%

77

%

80

%

Reconciliation of operating expenses

GAAP research and development

$

94,779

$

45,664

$

174,045

$

86,488

Less: Stock-based compensation expense

(21,639

)

(8,703

)

(37,708

)

(14,550

)

Plus: Non-cash benefit related to tax adjustment

2,729

2,729

Less: Employer payroll taxes on employee stock transactions

(2,101

)

(1,423

)

(3,872

)

(1,460

)

Non-GAAP research and development

$

71,039

$

38,267

$

132,465

$

73,207

GAAP sales and marketing

$

70,412

$

51,269

$

134,765

$

96,484

Less: Stock-based compensation expense

(6,606

)

(4,541

)

(13,616

)

(7,615

)

Less: Amortization of acquired intangibles

(163

)

(163

)

Plus: Non-cash benefit related to tax adjustment

449

449

Less: Employer payroll taxes on employee stock transactions

(2,776

)

(1,508

)

(3,955

)

(1,659

)

Non-GAAP sales and marketing

$

60,867

$

45,669

$

117,031

$

87,659

GAAP general and administrative

$

21,146

$

13,547

$

42,240

$

28,499

Less: Stock-based compensation expense

(5,441

)

(3,183

)

(10,522

)

(6,091

)

Plus: Non-cash benefit related to tax adjustment

2,383

2,383

Less: Employer payroll taxes on employee stock transactions

(194

)

(212

)

(318

)

(270

)

Non-GAAP general and administrative

$

15,511

$

12,535

$

31,400

$

24,521

Reconciliation of operating income and operating margin

GAAP operating (loss) income

$

(9,886

)

$

654

$

(22,716

)

$

4,432

Plus: Stock-based compensation expense

34,515

16,834

63,376

28,894

Plus: Amortization of acquired intangibles

1,071

147

1,426

394

Less: Non-cash benefit related to tax adjustment

(5,561

)

(5,561

)

Plus: Employer payroll taxes on employee stock transactions

5,167

3,264

8,336

3,510

Non-GAAP operating income

$

30,867

$

15,338

$

50,422

$

31,669

GAAP operating margin

(4

)%

0

%

(5

)%

2

%

Non-GAAP operating margin

13

%

11

%

12

%

12

%

Reconciliation of net (loss) income

GAAP net (loss) income

$

(9,362

)

$

284

$

(22,430

)

$

6,763

Plus: Stock-based compensation expense

34,515

16,834

63,376

28,894

Plus: Amortization of acquired intangibles

1,071

147

1,426

394

Less: Non-cash benefit related to tax adjustment

(5,561

)

(5,561

)

Plus: Employer payroll taxes on employee stock transactions

5,167

3,264

8,336

3,510

Plus: Amortization of issuance costs

837

2,484

1,672

2,484

Non-GAAP net income

$

32,228

$

17,452

$

52,380

$

36,484

Net income per share – basic

$

0.10

$

0.06

$

0.17

$

0.12

Net income per share – diluted

$

0.09

$

0.05

$

0.15

$

0.11

Shares used in non-GAAP per share calculations:

Basic

308,019

299,267

307,032

297,361

Diluted

342,307

330,847

342,229

329,402

Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow
(In thousands; unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Net cash provided by operating activities

$

51,723

$

24,738

$

103,373

$

48,993

Less: Purchases of property and equipment

(3,229

)

(1,398

)

(4,227

)

(2,924

)

Less: Capitalized software development costs

(6,209

)

(4,737

)

(12,392

)

(8,154

)

Free cash flow

$

42,285

$

18,603

$

86,754

$

37,915

Datadog is a registered trademark of Datadog, Inc.

All product and company names herein may be trademarks of their registered owners.

CONTACT: Contact Information Yuka Broderick Datadog Investor Relations (866) 329-4466 IR@datadog.com Sharmin Jassal Datadog Communications Press@datadog.com



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