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DDOG - Datadog Inc News Story

$131.87 -6.4  -4.6%

Last Trade - 18/01/22

Sector
Technology
Size
Large Cap
Market Cap £31.56bn
Enterprise Value £31.02bn
Revenue £643.7m
Position in Universe 321st / 7386

Datadog Announces Second Quarter 2021 Financial Results

Thu 5th August, 2021 12:00pm
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Second quarter revenue grew 67% year-over-year to $234 million

Strong growth of larger customers, with 1,610 $100k+ ARR customers, up from
1,015 a year ago

Launched general availability of Cloud Security Posture Management and Cloud
Workload Security products

Announced beta of CI Visibility product

NEW YORK, Aug. 05, 2021 (GLOBE NEWSWIRE) -- Datadog, Inc. (NASDAQ:DDOG), the
monitoring and security platform for cloud applications, today announced
financial results for its second quarter ended June 30, 2021.

"We had a strong second quarter, with revenue growth accelerating to 67%
year-over-year and 18% quarter-over-quarter. We saw broad-based strength
across customer segments and products," said Olivier Pomel, co-founder and CEO
of Datadog. "Our high growth at scale demonstrates that we continue to be a
trusted partner in our customers' digital transformation and cloud migration
journeys."

Pomel added, "We continue to expand the features and functionality of our
cloud native end-to-end observability platform. Meanwhile, we are just getting
started on our journey to break down silos between DevOps and Security teams
with our Cloud Security Platform."

Second Quarter 2021 Financial Highlights:
* Revenue was $233.5 million, an increase of 67% year-over-year.
* GAAP operating loss was $(9.9) million; GAAP operating margin was (4)%.
* Non-GAAP operating income was $30.9 million; non-GAAP operating margin was
13%.
* GAAP net loss per diluted share was $(0.03); non-GAAP net income per diluted
share was $0.09.
* Operating cash flow was $51.7 million, with free cash flow of $42.3 million.
* Cash, cash equivalents, restricted cash, and marketable securities were $1.4
billion as of June 30, 2021.
Second Quarter & Recent Business Highlights:
* As of June 30, 2021, we had 1,610 customers with ARR of $100,000 or more, an
increase of 59% from 1,015 as of June 30, 2020.
* Announced the launch of the Datadog Cloud Security Platform, adding
full-stack security context to Datadog's deep observability capabilities. This
new offering enables organizations to use a single platform to correlate
security insights with monitoring data across infrastructure, network and
application tiers, providing Security teams with the visibility they need to
understand and respond to potential threats faster. The Cloud Security
Platform includes Cloud Security Posture Management, Cloud Workload Security,
Security Monitoring, and Application Security (in beta), as well as Unified
Observability and Security Reporting capabilities.
* Cloud Security Posture Management (CSPM) and Cloud Workload Security (CWS)
became generally available. Cloud Security Posture Management (CSPM) makes it
easy to track whether production environments comply with industry standards.
Cloud Workload Security (CWS) detects threats to production workloads by
monitoring file and process activity across environments to help catch host
and infrastructure-based attacks.
* Announced the beta launch of CI Visibility, a way to bring production level
visibility earlier into the development process by shifting left and bringing
observability throughout the CI/CD pipeline.
* Announced support for application monitoring with AWS App Runner, joining
Amazon Web Services (AWS) as a Launch Partner for the new fully managed
service. This new functionality will help engineering and product teams scale,
deploy, and monitor their apps without the burden of managing their own
infrastructure.
* Announced the general availability of Datadog’s AWS Lambda extension. This
feature enables engineering teams to send their metrics, traces, and logs
securely to Datadog with minimal overhead to their business-critical
serverless applications.
* Announced our integration with the Salesforce platform. This new integration
provides Salesforce admins and security teams with the ability to detect and
respond to suspicious behavior through visibility into user, platform and API
activity.
* Achieved Amazon Web Services (AWS) Government Competency status. This
designation reflects Datadog's deep experience working with government
customers to deliver mission-critical workloads and applications on AWS.
* Announced availability on the Google Cloud Marketplace. Google Cloud
customers can now purchase Datadog with just a few clicks on the Google Cloud
Marketplace, allowing them to quickly and easily monitor the health of their
applications and infrastructure across their Google Cloud and hybrid cloud
environments.
* Delivered numerous product innovations, including cross-browser testing in
Synthetics; support for Android, iOS, and cross-platform frameworks like React
Native in mobile RUM; automatic detection of faulty deployments in APM; and
anomaly detection in Security Monitoring.
Third Quarter and Full Year 2021 Outlook:

Based on information as of today, August 5, 2021, Datadog is providing the
following guidance:
* Third Quarter 2021 Outlook: * Revenue between $246 million and $248 million.
* Non-GAAP operating income between $18 million and $20 million.
* Non-GAAP net income per share between $0.05 and $0.06, assuming
approximately 344 million weighted average diluted shares outstanding.
 
* Full Year 2021 Outlook: * Revenue between $938 million and $944 million.
* Non-GAAP operating income between $87 million and $93 million.
* Non-GAAP net income per share between $0.26 and $0.28, assuming
approximately 344 million weighted average diluted shares outstanding.
Datadog has not reconciled its expectations as to non-GAAP operating income,
or as to non-GAAP net income per share, to their most directly comparable GAAP
measure as a result of uncertainty regarding, and the potential variability
of, reconciling items such as stock-based compensation and employer payroll
taxes on equity incentive plans. Accordingly, reconciliation is not available
without unreasonable effort, although it is important to note that these
factors could be material to Datadog’s results computed in accordance with
GAAP.

Conference Call Details:
* What: Datadog financial results for the second quarter of 2021 and outlook
for the third quarter and the full year of 2021
* When: August 5, 2021 at 8:00 A.M. Eastern Time (5:00 A.M. Pacific Time)
* Dial in: To access the call in the U.S., please dial (800) 708-4539, and
for international callers, please dial (847) 619-6396. Callers may provide
confirmation number 50198098 to access the call more quickly, and are
encouraged to dial into the call 10 to 15 minutes prior to the start to
prevent any delay in joining.
* Webcast: https://investors.datadoghq.com (live and replay)
* Replay: A replay of the call will be archived on the investor relations
website
About Datadog

Datadog is the monitoring and security platform for cloud applications. Our
SaaS platform integrates and automates infrastructure monitoring, application
performance monitoring and log management to provide unified, real-time
observability of our customers’ entire technology stack. Datadog is used by
organizations of all sizes and across a wide range of industries to enable
digital transformation and cloud migration, drive collaboration among
development, operations, security and business teams, accelerate time to
market for applications, reduce time to problem resolution, secure
applications and infrastructure, understand user behavior and track key
business metrics.

Forward-Looking Statements

This press release and the earnings call referencing this press release
contain “forward-looking” statements, as that term is defined under the
federal securities laws, including but not limited to statements regarding the
impact of the COVID-19 pandemic on digital transformation and cloud migration
trends and the ability of Datadog to benefit from these trends, Datadog’s
strategy, partnerships, investments and long-term opportunity, and Datadog’s
future financial performance, including its outlook for the third quarter and
full year 2021. These forward-looking statements are based on Datadog’s
current assumptions, expectations and beliefs and are subject to substantial
risks, uncertainties, assumptions and changes in circumstances that may cause
Datadog’s actual results, performance or achievements to differ materially
from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to
(1) our recent rapid growth may not be indicative of our future growth; (2)
our history of operating losses; (3) our limited operating history; (4) our
business depends on our existing customers purchasing additional subscriptions
and products from us and renewing their subscriptions; (5) our ability to
attract new customers; (6) our ability to effectively develop and expand our
sales and marketing capabilities; (7) risk of a security breach; (8) risk of
interruptions or performance problems associated with our products and
platform capabilities; (9) our ability to adapt and respond to rapidly
changing technology or customer needs; (10) the competitive markets in which
we participate; (11) risks associated with successfully managing our growth;
(12) general market, political, economic, and business conditions; and (13)
the impact that the ongoing COVID-19 pandemic and any related economic
downturn could have on our or our customers’ businesses, financial condition
and results of operations. These risks and uncertainties are more fully
described in our filings with the Securities and Exchange Commission (SEC),
including in the section entitled “Risk Factors” in our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2021, filed with the SEC on May
7, 2021. Additional information will be made available in our Quarterly Report
on Form 10-Q for the quarter ended June 30, 2021 and other filings and reports
that we may file from time to time with the SEC. Moreover, we operate in a
very competitive and rapidly changing environment. New risks emerge from time
to time. It is not possible for our management to predict all risks, nor can
we assess the impact of all factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements we may make.
In light of these risks, uncertainties and assumptions, we cannot guarantee
future results, levels of activity, performance, achievements, or events and
circumstances reflected in the forward-looking statements will occur.
Forward-looking statements represent our beliefs and assumptions only as of
the date of this press release. We disclaim any obligation to update
forward-looking statements.

About Non-GAAP Financial Measures

Datadog discloses the following non-GAAP financial measures in this release
and the earnings call referencing this press release: non-GAAP gross profit,
non-GAAP gross margin, non-GAAP operating expenses (sales and marketing,
research and development, general and administrative), non-GAAP operating
income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP
net income (loss) per diluted share, non-GAAP net income (loss) per basic
share, and free cash flow. Datadog uses each of these non-GAAP financial
measures internally to understand and compare operating results across
accounting periods, for internal budgeting and forecasting purposes, for
short- and long-term operating plans, and to evaluate Datadog’s financial
performance. Datadog believes they are useful to investors, as a supplement to
GAAP measures, in evaluating its operational performance, as further discussed
below. Datadog’s non-GAAP financial measures may not provide information
that is directly comparable to that provided by other companies in its
industry, as other companies in its industry may calculate non-GAAP financial
results differently, particularly related to non-recurring and unusual items.
In addition, there are limitations in using non-GAAP financial measures
because the non-GAAP financial measures are not prepared in accordance with
GAAP and may be different from non-GAAP financial measures used by other
companies and exclude expenses that may have a material impact on Datadog’s
reported financial results.

Non-GAAP financial measures should not be considered in isolation from, or as
a substitute for, financial information prepared in accordance with GAAP. A
reconciliation of the historical non-GAAP financial measures to their most
directly comparable GAAP measures has been provided in the financial statement
tables included below in this press release.

Datadog defines non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating expenses (sales and marketing, research and development, general and
administrative), non-GAAP operating income (loss), non-GAAP operating margin
and non-GAAP net income (loss) as the respective GAAP balances, adjusted for,
as applicable: (1) stock-based compensation expense; (2) the amortization of
acquired intangibles; (3) non-cash benefit related to tax adjustment; (4)
employer payroll taxes on employee stock transactions; and (5) amortization of
issuance costs. Datadog defines free cash flow as Net cash provided by
operating activities, minus capital expenditures and minus capitalized
software development costs. Investors are encouraged to review the
reconciliation of these historical non-GAAP financial measures to their most
directly comparable GAAP financial measures.

Management believes these non-GAAP financial measures are useful to investors
and others in assessing Datadog’s operating performance due to the following
factors:

Stock-based compensation. Datadog utilizes stock-based compensation to
attract and retain employees. It is principally aimed at aligning their
interests with those of its stockholders and at long-term retention, rather
than to address operational performance for any particular period. As a
result, stock-based compensation expenses vary for reasons that are generally
unrelated to financial and operational performance in any particular period.

Amortization of acquired intangibles. Datadog views amortization of acquired
intangible assets as items arising from pre-acquisition activities determined
at the time of an acquisition. While these intangible assets are evaluated for
impairment regularly, amortization of the cost of acquired intangibles is an
expense that is not typically affected by operations during any particular
period.

Non-cash benefit related to tax adjustment. Datadog recorded a contingent
payroll tax liability in conjunction with a common stock repurchase
transaction in 2016. In 2020, the period of limitations for assessing the
contingent Federal payroll tax liability expired and the Company was legally
released from being the primary obligor, and recognized a benefit in the
consolidated statement of operations. Datadog does not believe this is
reflective of on-going results and therefore adjusted for this benefit.

Employer payroll taxes on employee stock transactions. Datadog excludes
employer payroll tax expense on equity incentive plans as these expenses are
tied to the exercise or vesting of underlying equity awards and the price of
Datadog’s common stock at the time of vesting or exercise. As a result,
these taxes may vary in any particular period independent of the financial and
operating performance of Datadog’s business.

Amortization of issuance costs. In May 2020, Datadog issued $747.5M of
convertible senior notes due 2025, which bear interest at an annual fixed rate
of 0.125%. Debt issuance costs, which reduce the carrying value of the
convertible debt instrument, are amortized as interest expense over the term.
The expense for the amortization of debt issuance costs is a non-cash item,
and we believe the exclusion of this interest expense will provide for a more
useful comparison of our operational performance in different periods.

Additionally, Datadog’s management believes that the non-GAAP financial
measure free cash flow is meaningful to investors because management reviews
cash flows generated from operations after taking into consideration capital
expenditures and the capitalization of software development costs due to the
fact that these expenditures are considered to be a necessary component of
ongoing operations.

Operating Metrics

Datadog’s number of customers with ARR of $100,000 or more and number of
customers with ARR of $1 million or more are based on the ARR of each
customer, as of the last month of the quarter.

We define the number of customers as the number of accounts with a unique
account identifier for which we have an active subscription in the period
indicated. A single organization with multiple divisions, segments or
subsidiaries is generally counted as a single customer. However, in some cases
where they have separate billing terms, we may count separate divisions,
segments or subsidiaries as multiple customers.

We define ARR as the annualized revenue run-rate of subscription agreements
from all customers at a point in time. We calculate ARR by taking the monthly
recurring revenue, or MRR, and multiplying it by 12. MRR is defined as the
revenue run-rate of subscription agreements from all customers for the last
month of the period, including committed amounts and any additional usage. ARR
and MRR should be viewed independently of revenue as they are operating
metrics and are not intended to be replacements or forecasts of revenue.

Condensed Consolidated Statements of Operations

(In thousands, except per share data; unaudited)

                                                                             Three Months Ended June 30,                       Six Months Ended June 30,                       
                                                                             2021                       2020                   2021                       2020                 
 Revenue                                                                     $     233,549              $     140,012          $     432,098              $     271,260        
 Cost of revenue ( (1)(2)(4))                                                57,098                     28,878                 103,764                    55,357               
 Gross profit                                                                176,451                    111,134                328,334                    215,903              
 Operating expenses:                                                                                                                                                           
 Research and development ( (1)(3)(4))                                       94,779                     45,664                 174,045                    86,488               
 Sales and marketing ( (1)(2)(3)(4))                                         70,412                     51,269                 134,765                    96,484               
 General and administrative ( (1)(3)(4))                                     21,146                     13,547                 42,240                     28,499               
 Total operating expenses                                                    186,337                    110,480                351,050                    211,471              
 Operating (loss) income                                                     (9,886         )           654                    (22,716        )           4,432                
 Other income:                                                                                                                                                                 
 Interest expense ( (5))                                                     (5,064         )           (4,294         )       (10,536        )           (5,001         )     
 Interest income and other income, net                                       5,292                      4,466                  11,065                     8,069                
 Other income, net                                                           228                        172                    529                        3,068                
 (Loss) income before benefit from (provision for) income taxes              (9,658         )           826                    (22,187        )           7,500                
 Benefit from (provision for) income taxes                                   296                        (542           )       (243           )           (737           )     
 Net (loss) income                                                           $     (9,362   )           $     284              $     (22,430  )           $     6,763          
 Net (loss) income per share - basic                                         $     (0.03    )           $     0.00             $     (0.07    )           $     0.02           
 Net (loss) income per share - diluted                                       $     (0.03    )           $     0.00             $     (0.07    )           $     0.02           
 Weighted average shares used in calculating net (loss) income per share:                                                                                                      
 Basic                                                                       308,019                    299,267                307,032                    297,361              
 Diluted                                                                     308,019                    330,847                307,032                    329,402              



 ((1))Includes stock-based compensation expense as follows:                                                                             
 Cost of revenue                                               $     829          $    407          $     1,530        $     638        
 Research and development                                      21,639             8,703             37,708             14,550           
 Sales and marketing                                           6,606              4,541             13,616             7,615            
 General and administrative                                    5,441              3,183             10,522             6,091            
 Total                                                         $     34,515       $    16,834       $     63,376       $     28,894     



 ((2))Includes amortization of acquired intangibles as follows:                                                          
 Cost of revenue                                                   $  908         $  147       $  1,263       $  394     
 Sales and marketing                                                  163            —            163            —       
 Total                                                             $  1,071       $  147       $  1,426       $  394     



 ((3))Includes non-cash benefit related to tax adjustment as follows:                                                                    
 Research and development                                                $   —         $     (2,729  )    $   —         $     (2,729  )  
 Sales and marketing                                                     —             (449          )    —             (449          )  
 General and administrative                                              —             (2,383        )    —             (2,383        )  
 Total                                                                   $   —         $     (5,561  )    $   —         $     (5,561  )  



 ((4))Includes employer payroll taxes on employee stock transactions as follows:                                                                      
 Cost of revenue                                                                    $    96          $    121         $    191         $    121       
 Research and development                                                           2,101            1,423            3,872            1,460          
 Sales and marketing                                                                2,776            1,508            3,955            1,659          
 General and administrative                                                         194              212              318              270            
 Total                                                                              $    5,167       $    3,264       $    8,336       $    3,510     



 ((5))Includes amortization of issuance costs as follows:                                                            
 Interest expense                                            $  837       $  2,484       $  1,672       $  2,484     
 Total                                                       $  837       $  2,484       $  1,672       $  2,484     



Condensed Consolidated Balance Sheets

(In thousands; unaudited)

                                                                                                                                         June 30, 2021              December 31, 2020          
 ASSETS                                                                                                                                                                                        
 CURRENT ASSETS:                                                                                                                                                                               
 Cash and cash equivalents                                                                                                               $      247,442             $       224,927            
 Marketable securities                                                                                                                   1,162,717                  1,292,532                  
 Accounts receivable, net of allowance for credit losses of $2,267 and $2,468 as of June 30, 2021 and December 31, 2020, respectively    188,326                    163,359                    
 Deferred contract costs, current                                                                                                        17,612                     13,638                     
 Prepaid expenses and other current assets                                                                                               26,289                     23,624                     
 Total current assets                                                                                                                    1,642,386                  1,718,080                  
 Property and equipment, net                                                                                                             60,511                     47,197                     
 Operating lease assets                                                                                                                  49,233                     57,829                     
 Goodwill                                                                                                                                258,682                    17,609                     
 Intangible assets, net                                                                                                                  11,743                     2,069                      
 Deferred contract costs, non-current                                                                                                    31,624                     26,750                     
 Restricted cash                                                                                                                         3,662                      3,784                      
 Other assets                                                                                                                            18,892                     16,967                     
 TOTAL ASSETS                                                                                                                            $      2,076,733           $       1,890,285          
                                                                                                                                                                                               
 LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                          
 CURRENT LIABILITIES:                                                                                                                                                                          
 Accounts payable                                                                                                                        $      29,257              $       21,342             
 Accrued expenses and other current liabilities                                                                                          70,524                     55,351                     
 Operating lease liabilities, current                                                                                                    16,626                     16,326                     
 Deferred revenue, current                                                                                                               264,650                    204,825                    
 Total current liabilities                                                                                                               381,057                    297,844                    
 Operating lease liabilities, non-current                                                                                                42,448                     51,433                     
 Convertible senior notes, net                                                                                                           733,805                    575,864                    
 Deferred revenue, non-current                                                                                                           1,277                      3,450                      
 Other liabilities                                                                                                                       5,267                      4,262                      
 Total liabilities                                                                                                                       1,163,854                  932,853                    
                                                                                                                                                                                               
 STOCKHOLDERS' EQUITY                                                                                                                                                                          
 Common stock                                                                                                                            3                          3                          
 Additional paid-in capital                                                                                                              1,065,835                  1,103,305                  
 Accumulated other comprehensive income                                                                                                  832                        2,287                      
 Accumulated deficit                                                                                                                     (153,791          )        (148,163           )       
 Total stockholders’ equity                                                                                                              912,879                    957,432                    
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                              $      2,076,733           $       1,890,285          
                                                                                                                                                                                               



Condensed Consolidated Statements of Cash Flow

(In thousands; unaudited)

                                                                                                                                                                              Three Months Ended June 30,                         Six Months Ended                                
                                                                                                                                                                                                                                  June 30,                                        
                                                                                                                                                                              2021                        2020                    2021                      2020                  
 CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                                                                                            
 Net (loss) income                                                                                                                                                            $      (9,362   )           $      284              $      (22,430  )         $       6,763         
 Adjustments to reconcile net (loss) income to net cash provided by operating activities:                                                                                                                                                                                         
 Depreciation and amortization                                                                                                                                                5,463                       3,707                   9,865                     7,395                 
 Amortization of discounts or premiums on marketable securities                                                                                                               3,854                       1,216                   8,113                     1,460                 
 Amortization of issuance costs                                                                                                                                               837                         2,484                   1,672                     2,484                 
 Amortization of deferred contract costs                                                                                                                                      4,074                       2,442                   7,853                     4,627                 
 Stock-based compensation, net of amounts capitalized                                                                                                                         34,515                      16,834                  63,376                    28,894                
 Non-cash lease expense                                                                                                                                                       4,049                       3,325                   8,061                     6,551                 
 Allowance for credit losses on accounts receivable                                                                                                                           502                         928                     527                       2,001                 
 Loss on disposal of property and equipment                                                                                                                                   153                         6                       156                       8                     
 Changes in operating assets and liabilities:                                                                                                                                                                                                                                     
 Accounts receivable, net                                                                                                                                                     (34,131         )           (16,568         )       (24,908         )         (23,684          )    
 Deferred contract costs                                                                                                                                                      (9,990          )           (6,618          )       (16,701         )         (11,237          )    
 Prepaid expenses and other current assets                                                                                                                                    3,461                       (5,077          )       (2,537          )         (6,481           )    
 Other assets                                                                                                                                                                 (1,504          )           (1,834          )       (932            )         (915             )    
 Accounts payable                                                                                                                                                             16,598                      4,083                   7,372                     2,692                 
 Accrued expenses and other liabilities                                                                                                                                       (2,374          )           (377            )       7,308                     1,648                 
 Deferred revenue                                                                                                                                                             35,578                      19,903                  56,578                    26,787                
 Net cash provided by operating activities                                                                                                                                    51,723                      24,738                  103,373                   48,993                
 CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                                                                                            
 Purchases of marketable securities                                                                                                                                           (340,652        )           (776,031        )       (490,983        )         (1,203,513       )    
 Maturities of marketable securities                                                                                                                                          316,972                     119,234                 570,206                   121,854               
 Proceeds from sale of marketable securities                                                                                                                                  35,218                      —                       41,715                    —                     
 Purchases of property and equipment                                                                                                                                          (3,229          )           (1,398          )       (4,227          )         (2,924           )    
 Capitalized software development costs                                                                                                                                       (6,209          )           (4,737          )       (12,392         )         (8,154           )    
 Cash paid for acquisition of businesses; net of cash acquired                                                                                                                (188,839        )           (2,363          )       (200,348        )         (2,363           )    
 Net cash used in investing activities                                                                                                                                        (186,739        )           (665,295        )       (96,029         )         (1,095,100       )    
 CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                                                                            
 Proceeds from exercise of stock options                                                                                                                                      2,887                       4,422                   6,162                     7,235                 
 Initial public offering costs                                                                                                                                                —                           (268            )       —                         (421             )    
 Proceeds for issuance of common stock under the employee stock purchase plan                                                                                                 9,794                       7,680                   9,794                     7,680                 
 Employee payroll taxes paid related to net share settlement under the employee stock purchase plan                                                                           —                           (859            )       (245            )         (859             )    
 Proceeds from issuance of convertible senior notes, net of issuance costs                                                                                                    —                           730,681                 —                         730,681               
 Purchase of capped call related to convertible senior notes                                                                                                                  —                           (89,625         )       —                         (89,625          )    
 Net cash provided by financing activities                                                                                                                                    12,681                      652,031                 15,711                    654,691               
                                                                                                                                                                                                                                                                                  
 Effect of exchange rate changes on cash, cash equivalents and restricted cash                                                                                                120                         28                      (662            )         (113             )    
                                                                                                                                                                                                                                                                                  
 NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH                                                                                                        (122,215        )           11,502                  22,393                    (391,529         )    
 CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period                                                                                                               373,319                     198,158                 228,711                   601,189               
 CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period                                                                                                                     $      251,104              $      209,660          $      251,104            $       209,660       
                                                                                                                                                                                                                                                                                  
 RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONDENSED CONSOLIDATED BALANCE SHEETS TO THE AMOUNTS SHOWN IN THE STATEMENTS OF CASH FLOWS ABOVE:                                                                                                        
 Cash and cash equivalents                                                                                                                                                    $      247,442              $      206,202          $      247,442            $       206,202       
 Restricted cash – Including amounts in prepaid expense and other current assets and other assets                                                                             3,662                       3,458                   3,662                     3,458                 
 Total cash, cash equivalents and restricted cash                                                                                                                             $      251,104              $      209,660          $      251,104            $       209,660       



Reconciliation from GAAP to Non-GAAP Results
(In thousands, except per share data; unaudited)

                                                                Three Months Ended June 30,                       Six Months Ended June 30,                       
                                                                2021                       2020                   2021                       2020                 
 Reconciliation of gross profit and gross margin                                                                                                                  
 GAAP gross profit                                              $     176,451              $     111,134          $     328,334              $     215,903        
 Plus: Stock-based compensation expense                         829                        407                    1,530                      638                  
 Plus: Amortization of acquired intangibles                     908                        147                    1,263                      394                  
 Plus: Employer payroll taxes on employee stock transactions    96                         121                    191                        121                  
 Non-GAAP gross profit                                          $     178,284              $     111,809          $     331,318              $     217,056        
 GAAP gross margin                                              76             %           79             %       76             %           80             %     
 Non-GAAP gross margin                                          76             %           80             %       77             %           80             %     
                                                                                                                                                                  
 Reconciliation of operating expenses                                                                                                                             
 GAAP research and development                                  $     94,779               $     45,664           $     174,045              $     86,488         
 Less: Stock-based compensation expense                         (21,639        )           (8,703         )       (37,708        )           (14,550        )     
 Plus: Non-cash benefit related to tax adjustment               —                          2,729                  —                          2,729                
 Less: Employer payroll taxes on employee stock transactions    (2,101         )           (1,423         )       (3,872         )           (1,460         )     
 Non-GAAP research and development                              $     71,039               $     38,267           $     132,465              $     73,207         
                                                                                                                                                                  
 GAAP sales and marketing                                       $     70,412               $     51,269           $     134,765              $     96,484         
 Less: Stock-based compensation expense                         (6,606         )           (4,541         )       (13,616        )           (7,615         )     
 Less: Amortization of acquired intangibles                     (163           )           —                      (163           )           —                    
 Plus: Non-cash benefit related to tax adjustment               —                          449                    —                          449                  
 Less: Employer payroll taxes on employee stock transactions    (2,776         )           (1,508         )       (3,955         )           (1,659         )     
 Non-GAAP sales and marketing                                   $     60,867               $     45,669           $     117,031              $     87,659         
                                                                                                                                                                  
 GAAP general and administrative                                $     21,146               $     13,547           $     42,240               $     28,499         
 Less: Stock-based compensation expense                         (5,441         )           (3,183         )       (10,522        )           (6,091         )     
 Plus: Non-cash benefit related to tax adjustment               —                          2,383                  —                          2,383                
 Less: Employer payroll taxes on employee stock transactions    (194           )           (212           )       (318           )           (270           )     
 Non-GAAP general and administrative                            $     15,511               $     12,535           $     31,400               $     24,521         
                                                                                                                                                                  
 Reconciliation of operating income and operating margin                                                                                                          
 GAAP operating (loss) income                                   $     (9,886   )           $     654              $     (22,716  )           $     4,432          
 Plus: Stock-based compensation expense                         34,515                     16,834                 63,376                     28,894               
 Plus: Amortization of acquired intangibles                     1,071                      147                    1,426                      394                  
 Less: Non-cash benefit related to tax adjustment               —                          (5,561         )       —                          (5,561         )     
 Plus: Employer payroll taxes on employee stock transactions    5,167                      3,264                  8,336                      3,510                
 Non-GAAP operating income                                      $     30,867               $     15,338           $     50,422               $     31,669         
 GAAP operating margin                                          (4             )%          0              %       (5             )%          2              %     
 Non-GAAP operating margin                                      13             %           11             %       12             %           12             %     
                                                                                                                                                                  
 Reconciliation of net (loss) income                                                                                                                              
 GAAP net (loss) income                                         $     (9,362   )           $     284              $     (22,430  )           $     6,763          
 Plus: Stock-based compensation expense                         34,515                     16,834                 63,376                     28,894               
 Plus: Amortization of acquired intangibles                     1,071                      147                    1,426                      394                  
 Less: Non-cash benefit related to tax adjustment               —                          (5,561         )       —                          (5,561         )     
 Plus: Employer payroll taxes on employee stock transactions    5,167                      3,264                  8,336                      3,510                
 Plus: Amortization of issuance costs                           837                        2,484                  1,672                      2,484                
 Non-GAAP net income                                            $     32,228               $     17,452           $     52,380               $     36,484         
 Net income per share - basic                                   $     0.10                 $     0.06             $     0.17                 $     0.12           
 Net income per share - diluted                                 $     0.09                 $     0.05             $     0.15                 $     0.11           
 Shares used in non-GAAP per share calculations:                                                                                                                  
 Basic                                                          308,019                    299,267                307,032                    297,361              
 Diluted                                                        342,307                    330,847                342,229                    329,402              



Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow
(In thousands; unaudited)

                                                 Three Months Ended June 30,                     Six Months Ended June 30,                      
                                                 2021                      2020                  2021                       2020                
 Net cash provided by operating activities       $     51,723              $     24,738          $     103,373              $     48,993        
 Less: Purchases of property and equipment       (3,229        )           (1,398        )       (4,227         )           (2,924        )     
 Less: Capitalized software development costs    (6,209        )           (4,737        )       (12,392        )           (8,154        )     
 Free cash flow                                  $     42,285              $     18,603          $     86,754               $     37,915        



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