Datadog (DDOG) UBS’s 2025 Global Technology and AI Conference summary

Business performance and market environment

• Achieved a broad-based strong quarter with increased sales capacity, new and larger customer logos, and improved net retention metrics.

• Saw a rebound in SMB segment while maintaining enterprise strength, aided by a more constructive buying environment.

• Modernization of software stacks and migration to the cloud are driving long-term tailwinds, with cloud workload penetration still in early stages.

• Demand for core infrastructure monitoring, APM, and log management products remained parallel across the suite, with digital experience products surpassing $300 million.

• Continued optimism for sustained investment cycles and growth, supported by favorable market trends.

AI native and cloud native customer growth

• AI native cohort now represents 12% of revenues, with over 500 customers, including more than 100 spending over $100,000 and 15 over $1 million.

• Product-market fit is strong due to ease of adoption and platform breadth, enabling pervasive use among fast-growing AI and cloud native companies.

• Usage patterns among AI natives mirror those of traditional enterprises, focusing on metrics, traces, logs, and digital experience.

• Contract structures are typically annual, with growing commitments as customer usage scales, similar to cloud native peers.

• Datadog monetizes production environments, not model training, aligning with customer needs in AI deployment.

Customer retention, competition, and pricing

• Gross retention among large customers remains in the high 90s, with contract renewals and expansions demonstrating strong customer loyalty.

• Customers often use multiple observability platforms, but Datadog's platform coexists and remains integral for many.

• Competition from point solutions and open-source alternatives is acknowledged, but Datadog continues to gain market share, especially in logs and observability.

• Pricing is volume-based, with flexibility and transparency to reduce friction and help clients optimize spend.

• Migration credits and consolidation of point solutions add value and support customer transitions.