Datadog Inc at KeyBanc Technology Forum Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : All right, so thank you again. I think a lot of people probably are familiar with Datadog, but I'd love to just hear from you. What is Datadog in the sense of what are you guys achieving from business outcome solutions for organizations? But also, maybe more interestingly, what are the exciting secular drivers that we should associate Datadog to longer term?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes, that's excellent. And we didn't talk about AI as another sector driver, but I'm sure that will come up.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes, exactly. So 2Q was, I'd say, an exceptionally strong quarter for you, acceleration on the top line. But I'd love to hear from your perspective what you were pleased with in the quarter and maybe where the upside came from and just a lot of things to talk about on the positive side of things. So I'd love to hear from you what stuck out the most.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes, and I think it could get lost like the forest in the trees with investors. I think it's a massive testament to Datadog and your innovation thought leadership in the space that you have this extensive AI cohort of customers that are the next generation of technology leaders that are using the Datadog platform.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes, so those customers have been a beneficiary, but -- and keep me honest, but they've kind of been using Datadog in the traditional sense that other customers would use it. What's the AI opportunity both to monitor AI applications? And for you, you can break it up, but for you to use AI to deliver a better solution?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes. I thought that was an interesting comment. You said the AI workloads moving into inference is mostly happening in the enterprise customers. And are they doing tracing to understand the latency of the OpenAI calls that they're making?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Understood, okay. And then Bits AI, I mean, I agree that resonated deeply at the conference and customers we talked to. I'd say Bits AI 1.0 maybe didn't get as much adoption, but it was tangible in the room, the 2.0 version. And I don't think the users of the Datadog platform necessarily want to spend. It's not differentiated for them -- interesting work for them to detect and remediate issues. It really resonated when we were talking to customers at DASH. Given that potential value that you're providing, how do we monetize that?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Coming back to the AI native cohort of customers, and you mentioned the optimization we were all too familiar with back in the day, what are your learnings from that prior cohort of optimizations where they -- maybe you were surprised. I'm not sure. But obviously, they had to correct and get profitable. How are you thinking about the learnings from that to make sure, as these companies are scaling, that you're proactively setting yourself up to make sure it's not as much of an optimization potential headwind? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2025 / 5:00PM, DDOG.OQ - Datadog Inc at KeyBanc Technology Forum

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes. And are you -- so Flex Logs seems to be a meaningful way to get customers to control their spend on logs.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes. Has this ended up being a net headwind or a net positive?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes, interesting. Let's talk about security a little bit. We talked about this at dinner last night. And my observation on the call, it seemed like there was a tone change from you and Ali on security. And I said this last night as well, it's like, from a product perspective, I think you're punching above your weight of where your recent milestone was. Great milestone, $100 million, but your product capability, I think, suggests you could do a lot more. So to get to the question, it sounds like you're willing to invest much more in go-to-market, on security at this point. So high level, what's the rationale for why now invest in the go-to-market, and what's the opportunity you see? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2025 / 5:00PM, DDOG.OQ - Datadog Inc at KeyBanc Technology Forum

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes, makes sense. And then, M&A kind of relative to security, but you can make it broader too. But you've had a nice steady cadence of small token M&A. How do you think about that strategy going forward and as it relates to security?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Right, and it's a well-oiled machine, I think, in that process at this point.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : I want to talk about go-to-market a little bit, since that is an area that you're talking about investing. But maybe just on the enterprise side to start, growth has been stable there from a consumption standpoint. And you started downmarket, and you've come up, and you've had a lot of success in recent transactions. This quarter, you called out those $60 million TCV in the enterprise space. And my observation at DASH is a lot more big logos are consolidated. So how do you think about Datadog's penetration from a logo perspective in the enterprise and for the existing customer base, your penetration within that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2025 / 5:00PM, DDOG.OQ - Datadog Inc at KeyBanc Technology Forum

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Should I think of it relatively closely associated with the go-to-market investment priority this year to being enterprise?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes. And a couple of your competitors support self-managed on-prem deployments. Is that a barrier or something that you would potentially address longer term to really drive full consolidation for some enterprises?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Right. We have a couple minutes left. I want to survey the room, see if there's any questions out there. All right, there's one. Unidentified Participant Have you looked at the competitive environment on open source? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2025 / 5:00PM, DDOG.OQ - Datadog Inc at KeyBanc Technology Forum

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : Yes, okay. Maybe last one, David, financial question. Just margins are compressing a little bit because you said you wanted to invest in capturing

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : And two quick ones. As a CFO of a software company whose job it is to create software, how much software in three to five years, pick your timeframe, is written by AI? Question one. Question two, if you see productivity gains from Cursor tools and stuff like that, do you ring the register on those savings or do you just deliver more product?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : And how much code written by AI, best guess?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : All right, we'll come back next year and have a better answer.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : All right, well, let's give a round of applause for David. Thank you so much.

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : David, appreciate it so much.