Datadog (DDOG) AI Stock Analysis

• Market Cap: $45.96B
• Dividend Yield: N/A
• Average Volume (3M): 5.58M
• Price to Earnings (P/E): 380.8
• Beta (1Y): 1.53
• Revenue Growth: 26.00%
• EPS Growth: -25.64%
• Country: US
• Employees: 6,500
• Sector: Technology
• Sector Strength: 83
• Industry: Software - Application
• EPS (TTM): 0.46
• Shares Outstanding: 323,270,700
• 10 Day Avg. Volume: 4,740,034
• 30 Day Avg. Volume: 5,577,126
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 15.10
• Enterprise Value/Gross Profit: 18.90
• Enterprise Value/Ebitda: 177.35
• 1Y Price Target: $159.12
• Price Target Upside: 16.93% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 37

• Rating: 68 Neutral
• Price Target: $140.00 ▲(2.88% Upside)

Datadog's strong financial performance and positive earnings call sentiment are significant strengths, driven by robust revenue growth and product innovation. However, the high P/E ratio suggests overvaluation, and technical indicators point to potential short-term bearish momentum. Concerns about revenue volatility from AI customers and margin pressures also weigh on the score.

Positive Factors

Earnings

Datadog reported strong Q2 results, including a 5% revenue beat and accelerating year-over-year revenue growth.

Product Growth

New products such as Flex Logs are growing materially above 100% year over year and are likely to become Datadog's 6th product to achieve the $100 Million ARR milestone.

Strategic Positioning

Datadog is positioned at the intersection of enduring secular trends like cloud migration, observability, and Gen-AI adoption, which supports long-term growth.

Negative Factors

Churn Risk

Churn risk into the renewal period warrants attention, though Datadog is positioned to navigate this downside scenario.

Customer Risk

Concerns around less potential spend from Datadog's largest AI-native customer, OpenAI, is weighing on sentiment, as fears of lower spend could become a growth headwind.

Profitability

The bottom line remains lower than 2024, partly due to continued heavy investment in talent.

Datadog Business Overview & Revenue Model

Company Description

Datadog, Inc. is a leading provider of cloud monitoring and analytics solutions, primarily catering to IT and DevOps teams. Founded in 2010 and headquartered in New York City, Datadog offers a comprehensive platform that integrates monitoring, security, and observability across applications, infrastructure, and log management. Its services are designed to support modern cloud environments, enabling organizations to visualize their entire technology stack, troubleshoot performance issues, and enhance operational efficiency.

How the Company Makes Money

Datadog generates revenue primarily through a subscription-based model. Customers pay for access to its suite of monitoring and analytics tools, which are typically charged based on usage metrics such as the number of hosts, containers, or serverless functions monitored. The company offers various pricing tiers and packages that cater to different organizational needs, allowing for scalability as businesses grow. Additionally, Datadog has established partnerships with major cloud providers (like AWS, Microsoft Azure, and Google Cloud) and integrates with a wide range of third-party applications, which enhance its product offerings and drive customer acquisition. This collaborative approach not only broadens its customer base but also creates a network effect, making Datadog's platform increasingly valuable as more users contribute to its ecosystem.

Datadog Financial Statement Overview

Summary

Datadog exhibits strong revenue growth and efficient cash flow management, positioning it well for future expansion. While profitability margins have faced some pressure, the company's improved leverage and stable equity position provide a solid foundation. Continued focus on cost control and profitability will be crucial for sustaining long-term growth.

Income Statement

Datadog has demonstrated consistent revenue growth, with a TTM revenue increase of 6.4%. The gross profit margin remains strong at approximately 80%, indicating efficient cost management. However, the net profit margin has decreased to 4.1% from 6.8% in the previous year, reflecting challenges in maintaining profitability. The EBIT and EBITDA margins have also declined, suggesting increased operational costs or investments.

Balance Sheet

The company's debt-to-equity ratio has improved to 0.40 from 0.68, indicating better leverage management. Return on equity has decreased to 4.3% from 6.8%, which may concern investors seeking high returns. The equity ratio remains stable, reflecting a solid capital structure. Overall, the balance sheet shows a healthy financial position with manageable debt levels.

Cash Flow

Datadog's cash flow performance is robust, with a free cash flow growth rate of 6.7% in the TTM. The operating cash flow to net income ratio is strong at 0.71, indicating efficient cash generation relative to earnings. The free cash flow to net income ratio is nearly 1, showcasing excellent cash conversion. These metrics highlight the company's ability to generate cash and support future growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.02B	2.68B	2.13B	1.68B	1.03B	603.47M
Gross Profit	2.41B	2.17B	1.72B	1.33B	793.94M	473.27M
EBITDA	256.79M	317.99M	150.21M	41.10M	25.57M	34.11M
Net Income	124.58M	183.75M	48.57M	-50.16M	-20.75M	-24.55M
Balance Sheet
Total Assets	5.82B	5.79B	3.94B	3.00B	2.38B	1.89B
Cash, Cash Equivalents and Short-Term Investments	3.91B	4.19B	2.58B	1.88B	1.55B	1.52B
Total Debt	1.26B	1.84B	902.34M	837.52M	807.75M	643.62M
Total Liabilities	2.63B	3.07B	1.91B	1.59B	1.34B	932.85M
Stockholders Equity	3.20B	2.71B	2.03B	1.41B	1.04B	957.43M
Cash Flow
Free Cash Flow	953.05M	835.88M	632.37M	353.52M	250.52M	83.21M
Operating Cash Flow	965.50M	870.60M	659.95M	418.41M	286.55M	109.09M
Investing Cash Flow	-1.05B	-736.84M	-731.37M	-384.67M	-273.74M	-1.15B
Financing Cash Flow	156.86M	787.08M	58.28M	36.02M	34.94M	670.28M

Datadog Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 136.08
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DDOG, the sentiment is Positive. The current price of 136.08 is above the 20-day moving average (MA) of 130.76, below the 50-day MA of 137.19, and above the 200-day MA of 127.78, indicating a neutral trend. The MACD of -0.30 indicates Negative momentum. The RSI at 53.45 is Neutral, neither overbought nor oversold. The STOCH value of 44.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DDOG.

Datadog Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DT	77 Outperform	$15.01B	30.77	20.69%	―	18.70%	214.47%
WDAY	73 Outperform	$61.71B	106.89	6.66%	―	14.21%	-62.56%
DDOG	68 Neutral	$45.96B	380.76	4.45%	―	26.00%	-25.64%
SNOW	68 Neutral	$74.04B	―	-42.45%	―	28.37%	-35.49%
TTD	66 Neutral	$25.39B	62.78	16.36%	―	23.18%	63.48%
HUBS	65 Neutral	$24.47B	7,452.21	-0.65%	―	18.96%	58.78%
Sector *	61 Neutral	$35.52B	8.84	-11.06%	1.87%	8.55%	-8.14%

Datadog Corporate Events

Datadog Stockholders Approve Key Proposals at Annual Meeting

During the Annual Meeting, Datadog‘s stockholders voted on four proposals. These included the election of Titi Cole, Matthew Jacobson, and Julie Richardson as Class III directors until 2028, approval of executive compensation on an advisory basis, ratification of Deloitte & Touche LLP as the independent public accounting firm for 2025, and the amendment of the company’s Certificate of Incorporation to allow officer exculpation under Delaware law.