DDOG · 10-Q · 2026Q2 · Full report

Cloud Infrastructure Cost Pressure

Datadog, Inc. · 2026-08-06 · Importance 75 · Surprise 64

Datadog relies on third-party cloud infrastructure providers to host its software platform and is continuing to invest in platform infrastructure and global customer support. Third-party cloud infrastructure hosting and software costs increased by $64.1 million, or approximately 61%, in the quarter and by $106.0 million, or approximately 53%, in the six-month period. The company attributed lower gross margin primarily to increased spending with its third-party cloud infrastructure provider costs. Datadog also increased cloud infrastructure and software-related investments in research and development by $28.2 million in the quarter and $49.2 million for the six months.

Key facts

• The increase in cost of revenue for the three months ended June 30, 2026 was primarily due to an increase of $64.1 million in third-party cloud infrastructure hosting and software costs and an increase of $5.2 million in personnel costs including allocated overhead. source
• The increase in cost of revenue for the six months ended June 30, 2026 was primarily due to an increase of $106.0 million in third-party cloud infrastructure hosting and software costs and an increase of $9.5 million in personnel costs including allocated overhead. source
• Purchase commitments for business operations are primarily related to cloud hosting and other software-based services. source