NEW
YORK, Dec. 9, 2024 /PRNewswire/ -- Datadog, Inc.
(Nasdaq: DDOG) ("Datadog"), the monitoring and security platform
for cloud applications, today announced that it intends to offer,
subject to market conditions and other factors, $775 million aggregate principal amount of
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"). Datadog
also intends to grant 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
$116.25 million aggregate principal
amount of notes.
The notes will be general unsecured obligations of Datadog, will
accrue interest payable semiannually in arrears and will mature on
December 1, 2029, unless earlier
converted, redeemed or repurchased. 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 interest rate,
initial conversion rate, repurchase or redemption rights and other
terms of the notes will be determined at the time of pricing of the
offering.
Datadog expects to use a portion of the net proceeds from the
offering to pay the cost of the capped call transactions described
below and to repurchase for cash a portion of Datadog's 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.
In connection with the pricing of the notes, Datadog expects to
enter into privately negotiated capped call transactions with one
or more of the initial purchasers or affiliates thereof and/or
other financial institutions (the "option counterparties"). The
capped call transactions will 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.
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.
Additionally, Datadog expects to repurchase for cash a portion
of its 2025 notes in privately negotiated transactions to be
entered into concurrently with the pricing of the notes in the
offering with or through one of the initial purchasers or its
affiliate (the "note repurchase transactions"). The terms of
the note repurchase transactions are anticipated to be individually
negotiated with each holder of the 2025 notes and will depend on
several factors, including the market price of the Class A common
stock and the trading price of the 2025 notes at the time of such
note repurchase transactions. No assurance can be given as to how
much, if any, of the 2025 notes will be repurchased or the terms on
which they will be repurchased. Datadog may also repurchase
additional outstanding 2025 notes following completion of the
offering. 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 any 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 be 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, which could
result in a higher effective conversion price of the notes. Datadog
cannot predict the magnitude of such market activity or the overall
effect it will have on the price of the notes or the Class A common
stock.
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"). To the extent Datadog
effects any note repurchase transactions, it 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. 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 proposed terms and the anticipated
completion, timing and size of the proposed offering of the notes,
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.