Datadog (DDOG) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $690 million, up 26% year-over-year, with 75% of growth from existing customers and strong expansion among large customers.

• Customer base grew to approximately 29,200, with 3,490 customers generating $100,000+ ARR, accounting for 88% of ARR.

• Free cash flow was $204 million (30% margin), and operating cash flow for the nine months ended September 30, 2024 was $605.4 million.

• Platform adoption increased, with 83% of customers using more than one product and 49% using more than four.

• AI-native customers now represent over 6% of ARR, contributing 4 percentage points to year-over-year growth.

Financial highlights

• Gross profit was $560 million, with a gross margin of 81.1%, down slightly from 82.3% a year ago.

• Q3 GAAP operating income was $20 million (3% margin); non-GAAP operating income was $173 million (25% margin).

• Billings were $689 million, up 14% year-over-year; RPO was $1.82 billion, up 26% year-over-year.

• Cash, cash equivalents, and marketable securities totaled $3.2 billion at quarter end.

• GAAP net income for Q3 2024 was $51.7 million; GAAP net income per diluted share was $0.14; non-GAAP net income per diluted share was $0.46.

Outlook and guidance

• Q4 2024 revenue expected between $709–$713 million, representing 20%–21% year-over-year growth.

• Full-year 2024 revenue guidance is $2.656–$2.660 billion, up 25% year-over-year.

• Non-GAAP operating income for FY24 expected at $658–$662 million (25% margin); EPS $1.75–$1.77.

• Capital expenditures and capitalized software expected at 3%–4% of revenue for FY24.

• Management notes macroeconomic uncertainty and slower usage growth from existing customers may impact future results.