DDOG · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

Datadog, Inc. · 2026-08-06 · Importance 64 · Surprise 56 · In source text

Three-month cost of revenue increased 45% to $240.1 million from $166.0 million, exceeding 36% revenue growth. Six-month cost of revenue increased 39% to $449.3 million from $323.6 million. Third-party cloud infrastructure hosting and software costs increased $64.1 million in the quarter and $106.0 million in the first six months, while personnel and allocated overhead costs increased $5.2 million and $9.5 million, respectively. Gross margin declined in both periods primarily because of higher spending with third-party cloud infrastructure providers.

Key facts

• Cost of revenue for the three months ended June 30, 2026 was $240,113 thousand, an increase of $74,135 thousand (45%) versus $165,978 thousand in the prior year period. source
• Cost of revenue for the six months ended June 30, 2026 was $449,341 thousand, an increase of $125,735 thousand (39%) versus $323,606 thousand in the prior year period. source
• Datadog had $240,113 thousand cost of revenue and $881,341 thousand gross profit for the three months ended June 30, 2026. source
• Datadog had $449,341 thousand cost of revenue and $1,678,539 thousand gross profit for the six months ended June 30, 2026. source
• Gross margin decreased for the three and six months ended June 30, 2026 compared to the prior year periods primarily due to increased spend with third-party cloud infrastructure providers. source

Impact estimates