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Datadog (DDOG)
NASDAQ:DDOG
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Datadog
(NASDAQ:DDOG)66Neutral
Positive Factors
Financial Performance
Datadog posted solid Q4 results, beating across both top and bottom lines, highlighted by record bookings that exceeded $1B for the first time in a single quarter.
Product Development
Newer offerings such as LLM Observability are creating a halo effect for Datadog.
Negative Factors
Growth Outlook
The FY25 growth guidance came in below expectations, leading to a more cautious outlook on future growth durability.
Datadog (DDOG) vs. S&P 500 (SPY)
Market Cap
$39.58B
Dividend YieldN/A
Average Volume (3M)5.99M
Price to Earnings (P/E)224.8
Beta (1Y)1.60
Revenue Growth26.12%
EPS Growth274.50%
CountryUS
Employees5,200
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)0.51
Shares Outstanding317,257,400
10 Day Avg. Volume5,904,801
30 Day Avg. Volume5,991,261
Financial Highlights & Ratios
PEG Ratio0.82
Price to Book (P/B)N/A
Price to Sales (P/S)14.45
Price to Cash Flow (P/CF)36.60
P/FCF Ratio36.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$161.01Price Target Upside39.45% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering32
Datadog Business Overview & Revenue Model
Company DescriptionDatadog, Inc. is a leading monitoring and security platform for cloud applications, headquartered in New York City. The company operates in the software-as-a-service (SaaS) sector, offering a suite of products that provide comprehensive visibility into the performance of an organization's infrastructure, applications, and logs. Datadog's core services include infrastructure monitoring, application performance monitoring (APM), log management, user experience monitoring, and security monitoring, all integrated into a single unified platform. These tools allow businesses to optimize their operations, enhance security, and improve overall efficiency.
How the Company Makes MoneyDatadog generates revenue through a subscription-based model, where customers pay for access to its cloud-based platform and services. The company's revenue streams are primarily derived from the sale of its software services, which are billed on a monthly or annual basis. Key revenue drivers include the number of hosts or instances a customer monitors, the volume of data ingested, and the specific features and capabilities utilized, such as advanced analytics, real-time alerting, or security functionalities. Datadog also benefits from a usage-based pricing strategy, where costs scale with the level of service consumption, making it attractive for businesses of all sizes. Significant partnerships with major cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) further enhance Datadog's market reach and integration capabilities, contributing to its earnings by facilitating customer adoption and deployment.
Datadog Financial Statement Overview
Summary
Datadog's financial performance is impressive with strong revenue growth, improving profitability, and robust cash flow generation. The balance sheet is solid, with manageable leverage and efficient equity utilization. While operational margins could be improved, the company's growth trajectory and cash management are strong indicators of its financial health and potential for continued success in the software industry.Income Statement
Datadog exhibits strong revenue growth with TTM revenue growing by 26.1% compared to the previous year. The gross profit margin remains robust at 80.8%, and the net profit margin improved significantly to 6.8%. While the EBIT margin is relatively low at 2.0%, indicating higher operational costs, the EBITDA margin of 4.4% suggests improved earnings potential. Overall, the company shows healthy growth and improving profitability.85
Very Positive
Balance Sheet
The company maintains a solid equity position with a debt-to-equity ratio of 0.68, reflecting manageable leverage. The return on equity (ROE) stands at 6.8%, indicating efficient use of equity to generate profits. The equity ratio is 46.9%, signifying a healthy balance between assets and equity. Overall, the balance sheet reflects financial stability with moderate leverage and effective use of equity.78
Positive
Cash Flow
Datadog demonstrates strong cash flow performance with a significant increase in free cash flow of 39.9% year over year. The operating cash flow to net income ratio is high at 4.7, highlighting strong cash generation relative to net income. The free cash flow to net income ratio of 4.6 further emphasizes efficient cash management. Overall, the cash flow statement indicates robust cash generation and liquidity.90
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.68B | 2.13B | 1.68B | 1.03B | 603.47M | Gross Profit |
| 2.17B | 1.72B | 1.33B | 794.54M | 473.27M | EBIT |
| 54.28M | -33.46M | -24.90M | 2.63M | 8.21M | EBITDA |
| 265.94M | 150.21M | 41.10M | 25.57M | 34.11M | Net Income Common Stockholders |
| 183.75M | 48.57M | -50.16M | -20.75M | -24.55M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.19B | 2.58B | 1.88B | 1.55B | 1.52B | Total Assets |
| 5.79B | 3.94B | 3.00B | 2.38B | 1.89B | Total Debt |
| 1.84B | 902.34M | 837.52M | 807.75M | 643.62M | Net Debt |
| 595.20M | 572.00M | 498.54M | 536.77M | 418.70M | Total Liabilities |
| 3.07B | 1.91B | 1.59B | 1.34B | 932.85M | Stockholders Equity |
| 2.71B | 2.03B | 1.41B | 1.04B | 957.43M |
| Cash Flow | Free Cash Flow | |||
| 835.88M | 597.55M | 353.52M | 250.52M | 83.21M | Operating Cash Flow |
| 870.60M | 659.95M | 418.41M | 286.55M | 109.09M | Investing Cash Flow |
| -736.84M | -731.37M | -384.67M | -273.74M | -1.15B | Financing Cash Flow |
| 787.08M | 58.28M | 36.02M | 34.94M | 670.28M |
Datadog Technical Analysis
Negative
115.46
Price Trends
137.96
Negative
137.73
Negative
127.52
Negative
Market Momentum
-7.84
Positive
31.05
Neutral
20.21
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DDOG, the sentiment is Negative. The current price of 115.46 is below the 20-day moving average (MA) of 129.78, below the 50-day MA of 137.96, and below the 200-day MA of 127.52, indicating a bearish trend. The MACD of -7.84 indicates Positive momentum. The RSI at 31.05 is Neutral, neither overbought nor oversold. The STOCH value of 20.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DDOG.
Datadog Risk Analysis
Datadog disclosed 60 risk factors in its most recent earnings report. Datadog reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Datadog Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $29.74B | ― | -2.54% | ― | 30.77% | 79.05% | |
78 Outperform | $96.10B | 770.46 | 4.14% | ― | 31.35% | ― | |
71 Outperform | $186.65B | 132.46 | 14.83% | ― | 22.44% | -18.31% | |
68 Neutral | $17.52B | ― | -1.38% | ― | 7.32% | 88.51% | |
68 Neutral | $14.94B | 1,886.93 | 78.42% | ― | 15.33% | ― | |
66 Neutral | $39.58B | 224.85 | 6.77% | ― | 26.12% | 274.50% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
DDOG
Datadog
115.46
-8.07
-6.53%
NOW
ServiceNow
906.09
165.94
22.42%
TWLO
Twilio
114.78
58.12
102.58%
OKTA
Okta
108.31
1.32
1.23%
ZS
Zscaler
193.82
-12.54
-6.08%
CRWD
CrowdStrike Holdings
390.16
92.60
31.12%
Datadog Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -22.03% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
Datadog's Q4 2024 earnings call highlighted strong revenue growth, significant bookings, and robust product adoption. However, there were concerns about declining operating margins and a plateau in customer usage growth. Despite these challenges, the overall performance and future outlook remain positive.Highlights
Record Revenue and Customer Growth
Datadog reported Q4 2024 revenue of $738 million, a 25% increase year-over-year, exceeding guidance. The customer base grew to approximately 30,000, up from 27,300 a year ago.
Strong ARR Milestones
Total ARR surpassed $3 billion, with infrastructure monitoring contributing over $1.25 billion, and both log management and APM products exceeding $750 million each.
High Free Cash Flow Margin
Generated free cash flow of $241 million, with a free cash flow margin of 33%.
Robust Product Adoption
83% of customers use 2 or more products, 50% use 4 or more, and 12% use 8 or more products, showing strong cross-product adoption.
Significant Bookings Growth
Achieved a new record in bookings with over $1 billion in the quarter.
Expansion in Key Accounts
Secured several 7-figure deals with major companies across various sectors, indicating strong enterprise growth.
R&D Achievements
Released over 400 new features in 2024, including significant advancements in AI, Kubernetes, and OpenTelemetry integrations.
Lowlights
Operating Margin Decline
Q4 operating margin decreased to 24% from 28% a year ago.
Slower Growth in Usage
Usage growth from existing customers was similar to the year-ago quarter, indicating a plateau in customer expansion.
Challenges in Cost Optimization
Faced some customer optimization and volume discounts related to contract renewals, impacting revenue growth.
Company Guidance
During the Q4 2024 earnings call, Datadog provided comprehensive guidance for Q1 and the fiscal year 2025. The company anticipates Q1 revenues to range between $737 million and $741 million, representing a 21% year-over-year growth, with a non-GAAP operating income expected between $162 million to $166 million, implying a 22% operating margin. For the full fiscal year 2025, Datadog projects revenues between $3.175 billion and $3.195 billion, marking an 18% to 19% year-over-year growth. The company expects a non-GAAP operating income of $655 million to $675 million, with an operating margin of 21%. The guidance reflects continued investment in sales and marketing, with operating expenses anticipated to grow in the high 20s percent range year-over-year. Additionally, Datadog's net interest and other income for 2025 is projected to be approximately $120 million, and the non-GAAP tax rate is set at 21%. The guidance indicates a balance between growth investments and financial discipline, with capital expenditures expected to be 4% to 5% of revenues.Datadog Corporate Events
Executive/Board Changes
Datadog Expands Board with New Director Appointment
Neutral
Dec 23, 2024
Datadog, Inc. has announced the expansion of its Board of Directors from eight to nine members, with the appointment of Amit Agarwal as a Class II director effective January 1, 2025. This strategic move does not involve any committee assignment or compensation for Mr. Agarwal, potentially reflecting a strong commitment to governance and operational integrity, as he brings his expertise to the company without direct financial incentives.
Private Placements and Financing
Datadog Raises $1 Billion Through Convertible Notes Offering
Neutral
Dec 12, 2024
Datadog, Inc. successfully completed a private offering of $1 billion in 0.00% Convertible Senior Notes due 2029, which included an additional $130 million from the initial purchasers’ option. The company plans to use the proceeds for general corporate purposes, including potential acquisitions and strategic investments, and has taken measures to manage stock dilution through capped call transactions.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.