Datadog, Inc. Q4 FY2024 earnings call

• Financial performance: Revenue $738M, +25% Y/Y; ~30,000 customers; 88% of ARR from customers with ARR >$100k; free cash flow $241M with 33% margin. • Customer adoption: 83% of customers use 2+ products; 50% use 4+ products, up from 47% Y/Y; 26% use 6+ products, up from 22% Y/Y; 12% use 8+ products, up from 9% Y/Y. • Product innovations: Over 400 new features in 2024; integrations, Kubernetes autoscaling, Oracle Cloud Monitoring, OTel interoperability; AI capabilities like Bits AI and LLM observability; end-to-end APM, data observability, digital experience, log management, cloud security enhancements. • Sales and marketing: Record bookings in Q4; notable deals with major financial, retail, entertainment, health, oil and gas, and security companies.

Revenue for Q4 was $738 million, a 25% year-over-year increase. There were about 30,000 customers, up from ~27,300 a year ago. About 3,610 customers had an ARR of $100,000 or more, generating 88% of ARR. Infrastructure monitoring contributed over $1.25 billion in ARR, log management over $750 million, end-to-end APM over $750 million, and other products over $200 million in ARR.

• Q1 2025: Revenues expected $737M-$741M (21% Y/Y growth); non-GAAP operating income $162M-$166M (22% margin); non-GAAP net income per share $0.41-$0.43. • FY 2025: Revenues expected $3.175B-$3.195B (18%-19% Y/Y growth); non-GAAP operating income $655M-$675M (21% margin); net interest and other income ~$120M; cash taxes ~$30M-$35M; cap ex 4%-5% of revenues.

• Market uncertainties and competition could impact growth. • FX fluctuations may affect financial results. • Volatility in revenue growth due to customer contract renewals and usage optimization trends.

Q: How is the book of business for AI native customers?

A: AI native customers represented ~6% of Q4 ARR, with strong growth; renewals had better terms but some optimization; large fast-growing customers may have in-house observability choices, but core market is broader.

Q: Thoughts on AI inference workloads?

A: Customers use third-party models; LLM observability has adoption, and inference stack operation will develop with diverse AI modalities.

Q: FX impact on revenue and guidance?

A: FX not a major effect; largely USD-based, local billing not significant.

Q: Displacement activity with SIEM and log management M&A?

A: Flex Logs has success, SIEM conversion harder but efforts to migrate, with new functionality to help.