Software/ platforms

Datadog announced Q4 and Fiscal Year 2023 Financial Results

Fourth quarter revenue grew 26% year-over-year to $590 million

Strong growth of larger customers, with 396 $1 million+ ARR customers, up from 317 a year ago

Datadog, Inc. (NASDAQ:DDOG), the monitoring and security platform for cloud applications, today announced financial results for its fourth quarter and fiscal year ended December 31, 2023.

“We are pleased with our strong execution in fiscal year 2023, with 27% year-over-year revenue growth, $660 million in operating cash flow, and $598 million in free cash flow,” said Olivier Pomel, co-founder and CEO of Datadog. “During 2023, we delivered over 400 new features and capabilities to help our customers deliver on their cloud migration and digital transformation plans.”

Pomel added, “Looking forward to 2024, we are excited about our plans to deliver more innovation and help our customers with their needs in modern Observability, Cloud Security, Software Delivery, and Cloud Service Management.”

Fourth Quarter 2023 Financial Highlights:

  • Revenue was $589.6 million, an increase of 26% year-over-year.
  • GAAP operating income was $27.7 million; GAAP operating margin was 5%.
  • Non-GAAP operating income was $166.7 million; non-GAAP operating margin was 28%.
  • GAAP net income per diluted share was $0.15; non-GAAP net income per diluted share was $0.44. Non-GAAP net income per diluted share is adjusted for an assumed provision for income taxes based on our long-term projected tax rate of 21%.1
  • Operating cash flow was $220.2 million, with free cash flow of $201.3 million.
  • Cash, cash equivalents, restricted cash, and marketable securities were $2.6 billion as of December 31, 2023.

Fiscal Year 2023 Financial Highlights:

  • Revenue was $2.13 billion, an increase of 27% year-over-year.
  • GAAP operating loss was $(33.5) million; GAAP operating margin was (2)%.
  • Non-GAAP operating income was $490.2 million; non-GAAP operating margin was 23%.
  • GAAP net income per diluted share was $0.14; non-GAAP net income per diluted share was $1.32. Non-GAAP net income per diluted share is adjusted for an assumed provision for income taxes based on our long-term projected tax rate of 21%.1
  • Operating cash flow was $660.0 million, with free cash flow of $597.5 million.

Fourth Quarter & Recent Business Highlights:

  • As of December 31, 2023, we had 396 customers with ARR of $1 million or more, an increase of 25% from 317 as of December 31, 2022. As of December 31, 2023, we had about 3,190 customers with ARR of $100,000 or more, an increase of 15% from 2,780 as of December 31, 2022.
  • Announced that Sara Varni is joining as Chief Marketing Officer. Varni brings more than 15 years of marketing experience centered around enterprise software products, including leadership positions at Attentive, Twilio and Salesforce.
  • Added identity, vulnerability and app-level findings to Security Inbox. This provides engineers with one actionable view to improve security posture, without any additional overhead or friction. With these new features, Datadog shifts cloud security earlier in the software development lifecycle and empowers developers and security teams to address issues proactively.
  • Expanded security and observability support for AWS serverless applications built on AWS Lambda and Step Functions services. The functionality announced at AWS re:Invent helps AWS Lambda and Step Functions users detect security threats, get a high-level overview of how their state machine is performing at a single point in time and monitor services instrumented with OpenTelemetry.
  • Released our The State of Cloud Security 2023 report. Datadog analyzed security posture data from thousands of organizations using AWS, Azure or Google Cloud for the report, focusing particularly on understanding how organizations approach and mitigate common risks that frequently lead to documented public cloud security incidents.
  • Announced an expanded strategic partnership with Google Cloud, which enables Google Cloud customers to proactively observe and secure their cloud-native and hybrid applications within Datadog’s unified platform. As part of the expanded partnership and integrations, Datadog is one of the first AI/ML observability solution partners for Vertex AI, allowing AI Ops teams and developers to monitor, analyze and optimize the performance of their machine learning models in production.
(1)The impact of this change was a reduction in non-GAAP net income per diluted share of $0.11 and $0.32 per diluted share, for the fourth quarter and fiscal year ended December 31, 2023, respectively.  Our non-GAAP net income per diluted share guidance for the fourth quarter 2023 and full year 2023 issued on November 7, 2023 did not reflect an adjustment for an assumed provision for income taxes.

First Quarter and Fiscal Year 2024 Outlook:

Based on information as of today, February 13, 2024, Datadog is providing the following guidance:

  • First Quarter 2024 Outlook:
    • Revenue between $587 million and $591 million.
    • Non-GAAP operating income between $128 million and $132 million.
    • Non-GAAP net income per share between $0.33 and $0.35, assuming approximately 357 million weighted average diluted shares outstanding.
  • Fiscal Year 2024 Outlook:
    • Revenue between $2.555 billion and $2.575 billion.
    • Non-GAAP operating income between $535 million and $555 million.
    • Non-GAAP net income per share between $1.38 and $1.44, assuming approximately 361 million weighted average diluted shares outstanding.

The outlook for non-GAAP net income per diluted share is adjusted for an assumed provision for income taxes  based on our long-term projected tax rate of 21%. Our presentation of non-GAAP net income, including non-GAAP net income guidance, in future periods will reflect an adjustment for an assumed provision for income taxes, as appropriate.

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 fourth quarter and fiscal year 2023 and outlook for the first quarter and the fiscal year 2024
  • When: February 13, 2024 at 8:00 A.M. Eastern Time (5:00 A.M. Pacific Time)
  • Dial in: To access the call in the U.S., please register here. Callers 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

We announced an Investor Day on Thursday, February 15 in New York City starting at 1:00 p.m. ET.

Event Details:

  • What: Datadog 2024 Investor Day
  • When: February 15, 2024 at 1:00 P.M. to 5:00 P.M. Eastern Time
  • In-person attendance: Please contact our team at IR@datadoghq.com for more information.
  • Webcast: https://investors.datadoghq.com (live and replay)
  • Replay: A replay of the event will be archived on the investor relations website

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