Datadog Inc (0A3O.L) Q1 2025 Earnings Report

Datadog reported Q1 2025 revenue of $761.6 million, marking a 24.6% year-over-year increase and a 3.2% sequential increase. Gross profit was $603.9 million, yielding a robust gross margin of 79.3%. The company posted an operating loss of $12.4 million, corresponding to an operating margin of -1.63%, as Datadog continues to invest heavily in research and development and go-to-market activities to sustain long-term growth. Net income totaled $24.6 million, with basic EPS of $0.0718 and diluted EPS of $0.0679, reflecting non-cash and one-time items embedded in reported profitability. Despite the near-term margin pressure from ongoing investments, Datadog delivered strong cash generation: net cash provided by operating activities was $271.5 million, and free cash flow stood at $244.4 million. The balance sheet remains exceptionally liquid, with cash and short-term investments totaling approximately $4.45 billion and total assets of $6.01 billion, supporting a net debt position of $0.80 billion. Importantly, the company ended the period with a substantial liquidity cushion and a durable asset base, which provides the flexibility to invest in product development and market expansion while pursuing long-term shareholder value. Valuation in the reported period remains elevated relative to software peers, reflecting Datadog’s leadership in cloud observability and the market’s optimistic growth assumptions. The reported period includes a notable stock-based compensation component (~$164.3 million), which influences cash-based profitability measures and non-GAAP comparability. Absent forward-looking guidance in the supplied data, investors should closely monitor execution on product expansion, customer adoption, and gross margin expansion as operating leverage improves with scale.