NEW
YORK, Dec. 9, 2024 /PRNewswire/ -- Datadog, Inc.
(Nasdaq: DDOG) ("Datadog"), the monitoring and security platform
for cloud applications, today announced the pricing of $870 million aggregate principal amount of 0%
Convertible Senior Notes due 2029 (the "notes") in a private
placement (the "offering") to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"). The
offering size was increased from the previously announced offering
size of $775 million aggregate
principal amount of notes. Datadog also granted the initial
purchasers of the notes an option to purchase, within a 13-day
period beginning on, and including, the date on which the notes are
first issued, up to an additional $130
million aggregate principal amount of notes. The sale of the
notes is expected to close on December 12,
2024, subject to customary closing conditions.
The notes will be general unsecured obligations of Datadog and
will not bear regular interest and the principal amount of the
notes will not accrete. The notes will mature on December 1, 2029, unless earlier converted,
redeemed or repurchased.
Datadog estimates that the net proceeds from the offering will
be approximately $851.6 million (or
approximately $979.0 million if the
initial purchasers exercise their option to purchase additional
notes in full), after deducting the initial purchasers' discount
and commissions and estimated offering expenses payable by
Datadog.
Datadog expects to use a portion of the net proceeds from the
offering to pay the approximately $87.8
million cost of the capped call transactions that it entered
into as described below and to repurchase for cash $112.0 million aggregate principal amount of its
outstanding 0.125% Convertible Senior Notes due 2025 (the "2025
notes") as described below. Datadog expects to use the remaining
net proceeds from the offering for general corporate purposes,
which may include acquisitions or strategic investments in
complementary businesses or technologies, although Datadog does not
currently have any plans for any such acquisitions or investments,
additional repurchases or repayment of the 2025 notes and working
capital, operating expenses and capital expenditures. If the
initial purchasers exercise their option to purchase additional
notes, Datadog expects to use a portion of the net proceeds from
the sale of the additional notes to enter into additional capped
call transactions with the option counterparties as described below
and the remainder for general corporate purposes as described
above.
Before September 1, 2029, holders
will have the right to convert their notes only upon the
satisfaction of specified conditions and during certain periods. On
or after September 1, 2029 until the
close of business on the second scheduled trading day immediately
preceding the maturity date, holders may convert all or any portion
of their notes at any time. Upon conversion, Datadog will pay or
deliver, as the case may be, cash, shares of Datadog's Class A
common stock, par value $0.00001 per
share ("Class A common stock"), or a combination of cash and shares
of Class A common stock, at its election. The conversion rate for
the notes will initially be 4.5955 shares of Class A common stock
per $1,000 principal amount of such
notes (equivalent to an initial conversion price of approximately
$217.60 per share of Class A common
stock). The initial conversion price of the notes represents a
premium of approximately 35% over the last reported sale price of
the Class A common stock on the Nasdaq on December 9, 2024, and will be subject to
customary anti-dilution adjustments. In addition, following certain
corporate events that occur prior to the maturity date of the notes
or if Datadog delivers a notice of redemption in respect of the
notes, Datadog will, in certain circumstances, increase the
conversion rate of the notes for a holder who elects to convert its
notes in connection with such a corporate event or convert its
notes called (or deemed called) for redemption during the related
redemption period, as the case may be.
Datadog may not redeem the notes prior to December 6, 2027. Datadog may redeem for cash all
or any portion of the notes (subject to the partial redemption
limitation described below), at its option, on or after
December 6, 2027, if the last
reported sale price of the Class A common stock has been at least
130% of the conversion price for the notes then in effect for at
least 20 trading days (whether or not consecutive) during any 30
consecutive trading day period (including the last trading day of
such period) ending on, and including, the trading day immediately
preceding the date on which Datadog provides notice of redemption
at a redemption price equal to 100% of the principal amount of the
notes to be redeemed, plus accrued and unpaid special interest to,
but excluding, the redemption date. If Datadog redeems less than
all of the outstanding notes, at least $100
million aggregate principal amount of notes must be
outstanding and not subject to redemption as of the relevant
redemption notice date. No sinking fund is provided for the
notes.
If Datadog undergoes a "fundamental change" (as defined in the
indenture that will govern the notes), then, subject to certain
conditions and limited exceptions, holders of the notes may require
Datadog to repurchase for cash all or any portion of their notes at
a repurchase price equal to 100% of the principal amount of the
notes to be repurchased, plus accrued and unpaid special interest
to, but excluding, the fundamental change repurchase date.
In connection with the pricing of the notes, Datadog entered
into privately negotiated capped call transactions with certain of
the initial purchasers or affiliates thereof and other financial
institutions (the "option counterparties"). The capped call
transactions cover, subject to customary adjustments substantially
similar to those applicable to the notes, the number of shares of
Class A common stock initially underlying the notes. The capped
call transactions are generally expected to reduce the potential
dilution to the Class A common stock upon any conversion of notes
and/or offset any cash payments Datadog is required to make in
excess of the principal amount of converted notes, as the case may
be, with such reduction and/or offset subject to a cap. The cap
price of the capped call transactions relating to the notes will
initially be $322.38, which
represents a premium of 100% over the last reported sale price of
the Class A common stock on the Nasdaq on December 9, 2024, and is subject to certain
adjustments under the terms of the capped call transactions.
In connection with establishing their initial hedges of the
capped call transactions, Datadog expects the option counterparties
or their respective affiliates will enter into various derivative
transactions with respect to the Class A common stock and/or
purchase shares of Class A common stock concurrently with or
shortly after the pricing of the notes, including with, or from,
certain investors in the notes. This activity could increase (or
reduce the size of any decrease in) the market price of the Class A
common stock or the trading price of the notes at that time.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the Class A common
stock and/or purchasing or selling shares of Class A common stock
or other securities of Datadog in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and are likely to do so during any observation period
related to a conversion of notes or, to the extent Datadog
exercises the relevant election under the capped call transactions,
following any repurchase or redemption of the notes). This activity
could also cause or avoid an increase or a decrease in the market
price of the Class A common stock or the trading price of the
notes, which could affect a holder's ability to convert the notes
and, to the extent the activity occurs during any observation
period related to a conversion of notes, it could affect the number
of shares, if any, and value of the consideration that a holder
will receive upon conversion of its notes.
Concurrently with the pricing of the notes in the offering,
Datadog entered into privately negotiated transactions with certain
holders of the 2025 notes to repurchase, for approximately
$196.8 million in cash, $112.0 million aggregate principal amount of its
2025 notes, including accrued and unpaid interest on the 2025
notes, on terms negotiated with each holder (the "note repurchase
transactions"). This press release is not an offer to repurchase
the 2025 notes, and the offering of the notes is not contingent
upon the repurchase of the 2025 notes.
In connection with any note repurchase transaction, Datadog
expects that holders of the 2025 notes who agree to have their 2025
notes repurchased and who have hedged their equity price risk with
respect to such 2025 notes (the "hedged holders") will unwind all
or part of their hedge positions by buying the Class A common stock
and/or entering into or unwinding various derivative transactions
with respect to the Class A common stock or other securities of
Datadog. The amount of the Class A common stock to be purchased by
the hedged holders or in connection with such derivative
transactions may have been substantial in relation to the historic
average daily trading volume of the Class A common stock. This
activity by the hedged holders could increase (or reduce the size
of any decrease in) the market price of the Class A common stock,
including concurrently with the pricing of the notes, and may have
resulted in a higher effective conversion price of the notes.
Additionally, in connection with the issuance of the 2025 notes,
Datadog entered into capped call transactions (the "existing capped
call transactions") with certain financial institutions (the
"existing option counterparties"). In connection with the
note repurchase transactions, Datadog intends to enter into
agreements with the existing option counterparties to terminate a
portion of the existing capped call transactions in a notional
amount corresponding to the number of shares of the Class A common
stock underlying the 2025 notes repurchased (such terminations, the
"unwind transactions"). In connection with any such
terminations of the existing capped call transactions, Datadog
expects such existing option counterparties and/or their respective
affiliates will unwind various derivatives with respect to the
Class A common stock and/or sell shares of the Class A common stock
or other securities of Datadog in the secondary market concurrently
with or shortly after pricing of the notes. This activity
could decrease (or reduce the size of any increase in) the market
price of the Class A common stock at that time and could decrease
(or reduce the size of any increase in) the trading price of the
notes.
Neither the notes, nor any shares of Class A common stock
issuable upon conversion of the notes, if any, have been, or will
be, registered under the Securities Act or any state securities
laws, and unless so registered, may not be offered or sold in
the United States absent
registration or an applicable exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and other applicable securities laws.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation or sale of any securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
About Datadog
Datadog is the observability and security platform for cloud
applications. Our SaaS platform integrates and automates
infrastructure monitoring, application performance monitoring, log
management, user experience monitoring, cloud security and many
other capabilities to provide unified, real-time observability and
security for 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 contains "forward-looking" statements, as
that term is defined under the federal securities laws, including
statements concerning the anticipated completion of the offering,
the capped call transactions, the note repurchase transactions and
any unwind transactions, the anticipated use of proceeds from the
offering, and the potential impact of the foregoing or related
transactions on dilution to holders of the Class A common stock and
the market price of the Class A common stock, the trading price of
the notes or the conversion price of the notes. 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. These risks include, but
are not limited to market risks, trends and conditions. These and
other risks are more fully described in Datadog's filings with the
Securities and Exchange Commission ("SEC"), including in the
section entitled "Risk Factors" in its Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2024 and other filings and reports
that Datadog may file from time to time with the SEC.
Forward-looking statements represent Datadog's beliefs and
assumptions only as of the date of this press release. Datadog
disclaims any obligation to update forward-looking statements.
CONTACT INFORMATION
Yuka Broderick
Datadog Investor Relations
IR@datadoghq.com
Dan Haggerty
Datadog Corporate Communications
press@datadoghq.com
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SOURCE Datadog, Inc.
