Datadog (DDOG) AI Stock Analysis

• Market Cap: $32.38B
• Dividend Yield: N/A
• Average Volume (3M): 5.03M
• Price to Earnings (P/E): 171.2
• Beta (1Y): 1.48
• Revenue Growth: 26.12%
• EPS Growth: 274.50%
• Country: US
• Employees: 6,500
• Sector: Technology
• Sector Strength: 40
• Industry: Software - Application
• EPS (TTM): 0.51
• Shares Outstanding: 317,257,400
• 10 Day Avg. Volume: 3,951,719
• 30 Day Avg. Volume: 5,029,163
• PEG Ratio: 0.62
• Price to Book (P/B): N/A
• Price to Sales (P/S): 13.41
• Price to Cash Flow (P/CF): 33.90
• P/FCF Ratio: 33.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $158.41
• Price Target Upside: 80.15% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 33

Datadog's overall stock score reflects strong financial performance and positive earnings call sentiment, tempered by technical analysis indicating bearish trends and a high P/E ratio suggesting potential overvaluation. The company's robust growth trajectory and cash management are significant positives, but technical and valuation challenges present notable risks.

Positive Factors

Growth Potential

There is upside potential to 2025 revenue guidance with many growth levers available to pull.

Product Development

Datadog's ability to develop new products and scale them is one of its most attractive traits.

Negative Factors

Growth Outlook

The FY25 growth guidance came in below expectations, leading to a more cautious outlook on future growth durability.

Margin Challenges

Management's FY25 outlook suggests 0% incremental margins, contrasting with higher margins in previous years, indicating potential challenges in revenue growth.

Datadog Business Overview & Revenue Model

Company Description

Datadog, 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 Money

Datadog 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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 87.93
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

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 87.93 is below the 20-day moving average (MA) of 102.23, below the 50-day MA of 119.71, and below the 200-day MA of 125.96, indicating a bearish trend. The MACD of -5.16 indicates Negative momentum. The RSI at 36.11 is Neutral, neither overbought nor oversold. The STOCH value of 17.46 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DDOG.

Datadog Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DT	73 Outperform	$13.67B	26.38	21.59%	―	19.81%	139.58%
DDOG	66 Neutral	$32.38B	171.24	7.75%	―	26.12%	274.50%
BL	66 Neutral	$2.77B	19.81	45.56%	―	10.74%	200.08%
SNOW	63 Neutral	$43.61B	―	-31.43%	―	29.21%	-51.47%
GTLB	60 Neutral	$6.97B	―	-0.20%	―	30.93%	99.45%
Sector *	57 Neutral	$18.57B	9.42	-13.42%	2.72%	5.01%	-23.43%
U	53 Neutral	$7.45B	―	-20.84%	―	-17.10%	21.82%

Datadog Corporate Events

Datadog Expands Board with New Director Appointment

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.