Executive Summary

Q4 2024 beat company guidance: revenue $737.7M (+25% y/y, +7% q/q) and non-GAAP EPS $0.49 vs prior guide of $709–$713M revenue and $0.42–$0.44 EPS; non-GAAP operating income was $179M (24% margin) vs $163–$167M guided .
Bookings and demand signals were strong: first-ever quarter with over $1B bookings; RPO $2.27B (+24% y/y), CRPO mid‑20s; NRR ticked up to high‑110%s; GRR remained mid‑ to high‑90s .
AI natives continue to be a material growth driver: ~6% of Q4 ARR and ~5 pts of Q4 y/y revenue growth (vs ~4 pts in Q3), partly offset by optimization/volume discounts at renewals; enterprise segment led usage growth .
FY25 guide introduces deceleration and investment: revenue $3.175–$3.195B (+18–19% y/y), non‑GAAP op margin ~21% with S&M/R&D growth in the “high‑20s%”; Q1’25 revenue $737–$741M (+21% y/y) and non‑GAAP EPS $0.41–$0.43 .

What Went Well and What Went Wrong

What Went Well
- Record bookings: “first ever quarter with over $1 billion in bookings,” signaling healthy multi‑product demand and pipeline conversion .
- AI contribution and platform adoption: AI‑native customers ~6% of ARR and ~5 pts to y/y growth; 50% of customers use ≥4 products; 462 $1M+ ARR customers (+17% y/y) .
- Cash generation and balance sheet: Q4 OCF $265.2M; FCF $241.0M (33% margin); cash and securities $4.2B; executed $1.0B 0% 2029 converts and repurchased ~15% of 2025 notes, planning full retirement by June 15, 2025 .
What Went Wrong
- Continued optimization/discounting at renewals in AI cohort created some volatility despite strong volume growth, a dynamic management expects to persist .
- Gross margin mixed y/y: non‑GAAP gross margin 81.7–82% vs 83.4% in the year‑ago quarter; GAAP gross margin 80% in Q4 (non‑GAAP 81.7%) .
- FY25 guide embeds slower top‑line growth (18–19%) and lower non‑GAAP op margin (~21%) vs FY24 25% non‑GAAP margin, reflecting stepped‑up S&M and R&D investments and hiring .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$645.3	$690.0	$737.7
GAAP Diluted EPS ($)	$0.12	$0.14	$0.13
Non‑GAAP Diluted EPS ($)	$0.43	$0.46	$0.49
GAAP Operating Margin (%)	2%	3%	1%
Non‑GAAP Operating Margin (%)	24%	25%	24%
Operating Cash Flow ($M)	$164.4	$228.7	$265.2
Free Cash Flow ($M)	$143.8	$203.6	$241.0

Q4 non‑GAAP/GAAP reconciliation highlights: SBC $158.5M; non‑GAAP gross margin ~82% vs GAAP 80%; non‑GAAP op income $179.2M (24% margin) vs GAAP op income $9.4M (1% margin) .

Q4 Actual vs Prior Company Guidance (issued Nov 7, 2024)

Metric	Prior Guidance (Q4’24)	Actual Q4’24	Result
Revenue ($M)	$709–$713	$737.7	Bold beat
Non‑GAAP Operating Income ($M)	$163–$167	$179.2	Bold beat
Non‑GAAP Diluted EPS ($)	$0.42–$0.44	$0.49	Bold beat

KPIs and Customer Metrics

KPI	Q2 2024	Q3 2024	Q4 2024
Customers with ≥$100k ARR (approx)	~3,390	~3,490	~3,610
Customers with ≥$1M ARR	n/a	n/a	462
Total customers (approx)	n/a	n/a	~30,000
Free Cash Flow Margin (%)	22%	30%	33%

Product Pillar ARR (Q4 point‑in‑time)

Pillar	ARR ($)	Note
Infrastructure Monitoring	>$1.25B	Foundational product
Log Management	>$750M	Flex Logs momentum
End‑to‑End APM (incl. core APM, Profiler, DB Monitoring, Synthetics, RUM)	>$750M	Growing multi‑product adoption
Other products (Security, Delivery, CSM, Product Analytics, etc.)	>$200M	Early but expanding

Additional Q4 operating metrics: Billings $908M (+26% y/y); RPO $2.27B (+24% y/y); duration down y/y; NRR high‑110%s; GRR mid‑ to high‑90s .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q1 2025	N/A	$737–$741	New
Non‑GAAP Operating Income ($M)	Q1 2025	N/A	$162–$166	New
Non‑GAAP Diluted EPS ($)	Q1 2025	N/A	$0.41–$0.43; ~366M diluted shares	New
Revenue ($B)	FY 2025	N/A	$3.175–$3.195	New
Non‑GAAP Operating Income ($M)	FY 2025	N/A	$655–$675	New
Non‑GAAP Diluted EPS ($)	FY 2025	N/A	$1.65–$1.70; ~369M diluted shares	New
Net Interest & Other Income ($M)	FY 2025	N/A	~120	New
Non‑GAAP Tax Rate	FY 2025	N/A	21%	New
Capex + Capitalized Software	FY 2025	N/A	4–5% of revenue	New

Note: FY24 actuals for context: revenue $2.684B (+26% y/y), non‑GAAP op margin 25%, FCF $775.1M .

Earnings Call Themes & Trends

Topic	Q2 2024 (prior‑2)	Q3 2024 (prior‑1)	Q4 2024 (current)	Trend
AI/LLM initiatives	LLM Observability GA; broad AI feature launches at DASH	Stable environment; AI native growth noted by CFO last quarter at ~4 pts y/y contribution (referenced in Q4)	AI natives ~6% of ARR; ~5 pts y/y revenue contribution; inference/agent use cases rising; diverse AI stack options emerging	Improving AI impact
Product performance (Logs & SIEM)	Expanded product set; On‑Call announced; security features added	Continued platform breadth; Oracle Cloud monitoring GA	Flex Logs and Cloud SIEM driving wins and displacements; On‑Call GA with strong demand	Accelerating
Go‑to‑market investments	Hiring and product launches	Stable conditions, ramping capacity in H2	S&M headcount ~3,000; R&D ~3,100; quota capacity expansion to drive 2025–26; bookings >$1B	Scaling
Customer mix & retention	n/a	Enterprise strongest; SMB slightly accelerating y/y	Similar pattern; NRR high‑110%s; GRR mid‑ to high‑90s	Stable/positive
Macro/optimization	n/a	Cost‑conscious customers	Optimization/volume discounts at renewals in AI cohort; expect volatility around renewals	Ongoing headwind
Financial framework	n/a	Q4 guide set; FY24 tracking	FY25: 18–19% growth; op margin ~21%; OI&E ~$120M; cash taxes ~1% of revenue; capex+cap SW 4–5%	Investing for growth

Management Commentary

“Fourth quarter revenue grew 25% year-over-year to $738 million… Non-GAAP operating income was $179 million; non-GAAP operating margin was 24%… Non-GAAP net income per diluted share was $0.49” (press release) .
“Our total ARR now exceeds $3 billion… Infrastructure Monitoring contributes over $1.25 billion in ARR… Log Management is now over $750 million in ARR… end‑to‑end APM products together also exceed $750 million in ARR” (CEO) .
“We… executed on our first ever quarter with over $1 billion in bookings” (CEO) .
“AI native customers… represented about 6% of Q4 ARR… contributed about five percentage points of year‑over‑year revenue growth in Q4 versus four points in the last quarter” (CFO) .
“We… issued a five‑year $1 billion convertible note… repurchased approximately 15% of our outstanding 2025 convertible notes… expect to retire [them] on or before June 15, 2025” (CFO) .

Q&A Highlights

AI cohort dynamics: Renewals include higher commits and better terms alongside optimization; quarter‑to‑quarter revenue can be flat/down around renewals but strong y/y; in‑housing observability is rare outside top hyperscale firms and often a cultural rather than economic choice (CEO) .
Bookings vs guidance conservatism: Revenue is usage‑driven and only loosely tied to bookings timing; guidance methodology discounts recent usage trends and does not assume non‑pro‑rata AI acceleration (CEO/CFO) .
Logs/SIEM displacement: Flex Logs seeing strong migrations and savings; Cloud SIEM demand rising; often land in ops/logs first, then expand to SIEM; Datadog has built parity/migration tooling for entrenched SIEM workflows (CEO) .
Go‑to‑market ramp: Expanding sales capacity (channels, geographies, large enterprise motion); impact expected over 1–2 years; S&M and R&D headcount increased materially in 2024 (CEO/CFO) .
Financial guardrails: FY25 non‑GAAP tax rate 21%; OI&E ~$120M; cash taxes ~1% of revenue; capex+capitalized software 4–5% of revenue (CFO) .

Estimates Context

S&P Global (Capital IQ) consensus for Q4 2024 revenue and EPS could not be retrieved due to a data access limit. Values from S&P Global were unavailable at this time. Comparison to company guidance shows clear beats across revenue, non‑GAAP operating income, and non‑GAAP EPS as detailed above .
Implications: Street models likely need to raise near‑term run‑rate given Q4 strength and bookings/RPO, but FY25 estimates may move lower on margin assumptions and growth deceleration embedded in guide (18–19% y/y) .

Key Takeaways for Investors

Q4 print was clean: broad‑based beat vs guidance, strong cash generation, and record bookings; operating leverage maintained on a non‑GAAP basis despite hiring ramp .
AI is a durable tailwind but introduces renewal‑related volatility; AI natives added ~5 pts to Q4 growth and ~6% of ARR, with optimization/discounting at renewals an expected dynamic (watch cohort revenue cadence) .
FY25 guide balances growth and investment: 18–19% revenue growth and ~21% non‑GAAP op margin reflect continued S&M and R&D expansion to monetize Flex Logs, Cloud SIEM, On‑Call, and broader platform opportunities .
Logs/SIEM displacement and multi‑product adoption are key medium‑term drivers (notably Flex Logs TCO wins and SIEM consolidation), potentially offsetting macro optimization headwinds .
Enterprise strength, improving NRR (high‑110%s), and robust RPO underpin demand durability; usage trends remain primary driver of revenue—bookings signal but do not immediately translate .
Balance sheet/liquidity remain strong post $1B convert issuance; plan to retire 2025 notes by June 15, 2025 reduces near‑term refinancing risk .
Stock drivers: magnitude/duration of AI‑cohort growth, pace of logs/SIEM share gains, evidence of usage acceleration vs optimization, and trajectory of FY25 margin delivery vs investment plan .

Other Relevant Q4 Press Releases

December 2024 convertible note offerings (proposed $775M; upsized pricing $870M) preceding final $1.0B 2029 issuance noted in Q4 cash/financing actions .
Product announcements in early December (Cloud SIEM modernization; advanced AI/ML and AWS monitoring capabilities; Flex Logs GA) support the logs/security and AI narratives highlighted on the call .

Citations:

Q4 press release and 8‑K with detailed financials and guidance .
Q4 earnings call transcript for commentary, demand signals, and Q&A .
Q3 2024 press release for prior‑quarter comps and prior Q4 guide .
Q2 2024 press release for trend analysis .

Note on estimates: Consensus values from S&P Global were unavailable due to a data access limit at the time of analysis. Values retrieved from S&P Global were unavailable.

Datadog, Inc. (DDOG)·Q4 2024 Earnings Summary