Datadog, Inc. stock research
FY2025 Q1
Datadog (DDOG) Gross Margin — Quarter Ended Mar 31, 2025
Revenue and gross profit increased compared with both the prior quarter and the same quarter last year, but cost of revenue rose at a faster pace, causing gross margin to weaken. The relationship among the metrics shows that while top-line growth continued, margin compression resulted from cost of revenue growing more rapidly than revenue.
Gross margin takeaway
Quarter ended Mar 31, 2025 · FY2025 Q1
Revenue and gross profit increased compared with both the prior quarter and the same quarter last year, but cost of revenue rose at a faster pace, causing gross margin to weaken. The relationship among the metrics shows that while top-line growth continued, margin compression resulted from cost of revenue growing more rapidly than revenue.
- The strongest observable margin driver is the relative increase in cost of revenue, which grew faster than revenue, narrowing gross margin. The company's filing discusses macroeconomic uncertainties that could affect customer spending, a factor that may influence future cost and revenue trends.
- Compared with the immediately preceding quarter, revenue and gross profit were higher, while gross margin was lower. The same pattern held when compared with the same quarter one year earlier, with revenue and gross profit higher but gross margin lower.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
79.3%
Gross profit
$603.9M
Revenue
$761.6M
Cost of revenue
$157.6M
Quarter-over-quarter change
-1.2 pts
Year-over-year change
-2.7 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Jun 30, 2024 | $645.3M | $521.8M | $123.5M | 80.9% |
| Sep 30, 2024 | $690.0M | $552.3M | $137.8M | 80.0% |
| Dec 31, 2024 | $737.7M | $593.5M | $144.2M | 80.5% |
| Mar 31, 2025 | $761.6M | $603.9M | $157.6M | 79.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Dec 31, 2024
-1.2 pts
Year-over-year change
Mar 31, 2024
-2.7 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the relative increase in cost of revenue, which grew faster than revenue, narrowing gross margin. The company's filing discusses macroeconomic uncertainties that could affect customer spending, a factor that may influence future cost and revenue trends.
Compared with the immediately preceding quarter, revenue and gross profit were higher, while gross margin was lower. The same pattern held when compared with the same quarter one year earlier, with revenue and gross profit higher but gross margin lower.
Monitor the trajectory of cost of revenue relative to revenue, as its faster growth has been the primary factor behind margin compression.