Datadog Q4 FY25 earnings call DDOG

Datadog reported a robust Q4 FY25, with revenue of $953 million, up 29% year-over-year, surpassing guidance. This acceleration was driven by broad-based strength across customer sizes, spending bands, and industries. Notably, revenue growth from existing customers, excluding AI-natives, accelerated to 23% year-over-year, up from 20% in Q3. The AI-native customer group continued its strong adoption, with 650 customers and 19 spending $1 million or more annually, significantly outpacing the rest of the business.

The company's platform strategy continues to resonate, evidenced by increasing multi-product adoption. At the end of Q4, 84% of customers used two or more products (up from 83% YoY), 55% used four or more (up from 50% YoY), and 9% used ten or more (up from 6% YoY). Datadog now serves 48% of the Fortune 500, with a median ARR of less than $0.5 million for these customers, indicating significant expansion opportunities. The core pillars of observability—Infrastructure Monitoring, Log Management, and APM/DEM—each crossed $1 billion in ARR, with APM accelerating to mid-30% YoY growth.

Datadog released over 400 new features in 2025, focusing on two AI buckets: 'AI for Datadog' and 'Datadog for AI'. 'AI for Datadog' saw the general availability of Bits AI SRE Agent, with over 2,000 trial and paying customers, and explosive 11-fold growth in MCP server usage in Q4. 'Datadog for AI' includes LLM Observability, used by over 1,000 customers with 10x growth in runs over six months, GPU monitoring, and AI stack security. The platform now boasts over 1,000 integrations, making it easier for customers to ingest diverse data types.

The company saw increasing demand for its Log Management solution, successfully displacing large legacy vendors in nearly 100 deals, generating tens of millions in new revenue in 2025. Flex Logs is nearing $100 million in ARR. New observability products launched include Data Observability, Storage Management, Kubernetes Autoscaling, Product Analytics, and RUM without Limits, enhancing end-to-end visibility and cost optimization for customers.

Datadog is gaining traction in security, displacing existing market-leading solutions with Cloud SIEM in large enterprises. Key launches include Code Security for vulnerability detection, IaC security for Terraform, and the Security Graph for attack path identification. In software delivery, Feature Flags were launched in January to enable confident canary rollouts, and an internal developer portal is being built to streamline development and release cadences.

The quarter featured several significant deals, including an 8-figure annualized land with a leading AI foundational model company, consolidating over five observability tools. Other wins included a nearly 7-figure deal with a European data company consolidating seven tools, an 8-figure expansion with an e-commerce platform standardizing on APM, and a 7-figure expansion with a Fortune 500 food and beverage retailer replacing legacy logging for millions in annual savings. These deals highlight Datadog's ability to drive consolidation, improve productivity, and deliver measurable cost efficiencies for large enterprises.

Management reiterated its long-term confidence in digital transformation and cloud migration as secular growth drivers. The company is excited about 2026, anticipating an inflection in AI usage by customers within their applications and increased adoption of Datadog's AI innovations, such as the Bits AI SRE Agent. The strategy involves continuous platform extension to address customer needs across software development, production, data stack, user experience, and security, while aggressively pursuing AI opportunities.