Datadog Reports 28% Revenue Growth to $885.7 Million in Q3 2025

Datadog, Inc. reported significant financial results for the third quarter of 2025, with revenue reaching $885.7 million, a 28% increase from $690.0 million in the same period last year. For the nine months ending September 30, 2025, the company generated $2.47 billion in revenue, up 27% from $1.95 billion in the prior year. Despite this growth, Datadog experienced a net income decline, reporting $33.9 million for the third quarter compared to $51.7 million in 2024, and $61.2 million for the nine months, down from $138.2 million in the previous year. The decrease in profitability was attributed to increased operating expenses, particularly in research and development, sales and marketing, and general administrative costs.

The company’s operating expenses for the third quarter totaled $715.0 million, up from $532.0 million a year earlier, driven by a 38% increase in research and development costs, which reached $402.0 million. Sales and marketing expenses also rose by 27% to $238.7 million. The increase in expenses reflects Datadog's ongoing investments in personnel and infrastructure to support its growth strategy. The gross margin remained stable at 80%, indicating that revenue growth was matched by proportional increases in costs.

Datadog's customer base expanded to approximately 32,000 as of September 30, 2025, up from 29,200 a year prior. The company reported that about 4,060 customers had an annual run-rate revenue (ARR) of $100,000 or more, representing 89% of its total ARR, an increase from 88% in the previous year. The dollar-based net retention rate improved to approximately 120%, up from the mid-110s a year earlier, indicating strong growth in existing customer accounts.

In terms of strategic developments, Datadog completed three acquisitions during the nine months ended September 30, 2025, totaling approximately $178.4 million, which included cash payments and the issuance of restricted shares. The company continues to focus on expanding its product offerings and enhancing its platform capabilities, with over 84% of customers using two or more products as of the end of the quarter. Geographically, Datadog is also investing in international expansion, with approximately 29% of its revenue coming from regions outside North America.

Looking ahead, Datadog remains optimistic about its growth trajectory, despite potential macroeconomic challenges that could impact IT spending. The company believes its existing cash and cash equivalents of $540.6 million, along with $3.6 billion in marketable securities, will be sufficient to support its operations and strategic initiatives in the coming year. The management plans to continue investing in sales and marketing to drive customer acquisition and expand its market presence.