Datadog (DDOG)
Information Technology · $63.2B market cap · SEC CIK 0001561550
ahead of 20% of the S&P 500 · #60 of 73 in Information Technology
No earnings date is scheduled in the next few months.
52-week range $98.01 to $300.68. 41% below its 52-week high and 82% above its low.
The case for DDOG
- Revenue up 33.2% on the year.
- Generated $1.0B of free cash flow in FY2025, 29% of revenue.
- Earnings per share up 139.6%.
- Has compounded revenue at 41.5% a year over five years.
- Barely leveraged. Debt is 0.21× equity.
- Gross margin of 80% absorbs cost shocks.
The case against
- Expensive for its growth: 241.2× earnings, where 25%+ a year of growth would justify about 46×.
- Priced at 14.8× sales, which leaves no room for a stumble.
- Return on equity of only 6%.
- Swings harder than the market (beta 1.57).
- Priced at 21× book value. Very little hard asset backing here.
- The price trend is weak (28/100): −6.1% over a year, −31.1% over three months, 41% below its 52-week high.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Information Technology companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 19 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 92 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 37 |
| Momentumhow the price has behaved lately | 28 |
| Stabilityhow violently it moves, what it owes and what it pays you | 37 |
- Each factor except momentum is half fixed thresholds, half rank among the 73 Information Technology companies.
The financials
Revenue growth
Is the business growing? Yes
| Last 12 months | +33.2% |
|---|---|
| Over 5 years | +41.5% a year |
| FY2025 revenue | $3.4B (+28%) |
Free cash flow
Is it generating real cash? Yes, plenty
| FY2025 free cash flow | $1.0B |
|---|---|
| Of revenue | 29% |
| Of profit | 929% |
Profit margins
Is profitability improving? Holding steady
| Gross margin | 80% |
|---|---|
| Operating margin | 2% |
| Net margin, FY24 → FY25 → now | 6.8% → 3.1% → 6.1% |
Debt vs. cash
Is the balance sheet healthy? Yes, little debt
| Cash | $401M |
|---|---|
| Long-term debt | n/a |
| Net cash | n/a |
| Years to repay | n/a |
| Debt / equity | 0.21× |
Valuation
Is the stock price reasonable? No, expensive
| P/E | 241.2× |
|---|---|
| Fair P/E for its growth | 46× |
| P/FCF | 63.2× |
| Forward P/E | 80.2× |
| EV / EBITDA | 644.6× |
At 241.2× earnings it trades well above the 46× that 25%+ a year of growth would justify. At 63.2× free cash flow it trades above that same mark.
The financials, five years deep
Pulled from Datadog's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $3.4B | $2.7B | $2.1B | $1.7B | $1.0B |
| Change on the year | +28% | +26% | +27% | +63% | — |
| Free cash flow | |||||
| Free cash flow | $1.0B | $836M | $632M | $383M | $277M |
| Of revenue | 29% | 31% | 30% | 23% | 27% |
| Profit margins | |||||
| Gross margin | 80.0% | 80.8% | 80.7% | 79.3% | 77.2% |
| Operating margin | −1.3% | 2.0% | −1.6% | −3.5% | −1.9% |
| Net margin | 3.1% | 6.8% | 2.3% | −3.0% | −2.0% |
| Debt vs. cash | |||||
| Cash | $401M | $1.2B | $330M | $339M | $271M |
What Datadog says it does
Overview Datadog is the AI-powered 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, service management, 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. Software applications are transforming how organizations engage with customers and operate their businesses. Companies across all industries are…