Datadog (DDOG) AI Stock Analysis

• Market Cap: $44.97B
• Dividend Yield: N/A
• Average Volume (3M): 9.72M
• Price to Earnings (P/E): 371.9
• Beta (1Y): 1.53
• Revenue Growth: 26.00%
• EPS Growth: -25.64%
• Country: US
• Employees: 6,500
• Sector: Technology
• Sector Strength: 94
• Industry: Software - Application
• EPS (TTM): 0.46
• Shares Outstanding: 323,270,700
• 10 Day Avg. Volume: 8,022,241
• 30 Day Avg. Volume: 9,716,279
• 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: 1.01
• Enterprise Value/Revenue: 15.10
• Enterprise Value/Gross Profit: 18.89
• Enterprise Value/Ebitda: 234.04
• 1Y Price Target: $158.48
• Price Target Upside: 27.27% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 37

• Rating: 65 Neutral
• Price Target: $134.00 ▲(7.61% Upside)

Datadog's overall stock score reflects strong financial performance and positive earnings call sentiment, driven by robust revenue growth and customer expansion. However, technical indicators suggest a bearish trend, and the high P/E ratio indicates overvaluation, which could pose risks to investors.

Positive Factors

Market Positioning

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

Product Innovation

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.

Revenue Growth

Datadog's ARR base is expected to exceed $3.5 Billion for the first time, with growth in the Mid-/High-20%'s range.

Negative Factors

Cost Management

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

Customer Churn

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

Customer Dependency

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.

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 presents a strong financial profile with significant revenue growth, solid profitability metrics, and robust cash flow generation. The balance sheet indicates a stable financial position with manageable leverage. While the net profit margin presents an area for potential improvement, the company's overall financial health is sound, supported by strong operational performance and effective cash management.

Income Statement

Datadog demonstrates strong revenue growth with a TTM revenue of $2.83 billion, up from $2.12 billion in 2023, indicating a healthy growth trajectory. The gross profit margin is robust, reflecting efficient cost management. However, the net profit margin is moderate, suggesting room for improvement in profitability. The company's positive EBIT and EBITDA margins indicate operational efficiency. Overall, Datadog's income statement reflects a strong growth trajectory with potential for enhanced profitability.

Balance Sheet

Datadog's balance sheet is solid, with a debt-to-equity ratio well within industry norms, indicating manageable leverage. The equity ratio is healthy, underscoring financial stability. The return on equity is modest but improving, suggesting potential for increased shareholder returns. Overall, Datadog maintains a stable financial position with a balanced approach to debt and equity.

Cash Flow

Datadog shows strong cash flow generation capabilities with a TTM operating cash flow of $929 million, reflecting effective cash management. The free cash flow growth rate is healthy, indicating strong operational cash flow after capital expenditures. The operating cash flow to net income ratio is high, highlighting efficient cash conversion from net income. Overall, Datadog's cash flow statement reflects robust cash flow generation and prudent capital expenditure management.

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	794.54M	473.27M
EBITDA	194.58M	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	597.55M	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: Negative
• Last Price: 124.52
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• 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 124.52 is below the 20-day moving average (MA) of 139.42, below the 50-day MA of 134.95, and below the 200-day MA of 127.40, indicating a bearish trend. The MACD of -2.62 indicates Positive momentum. The RSI at 34.34 is Neutral, neither overbought nor oversold. The STOCH value of 7.97 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	71 Outperform	$14.09B	29.42	20.69%	―	18.70%	214.47%
DDOG	65 Neutral	$44.97B	371.89	4.45%	―	26.00%	-25.64%
BL	64 Neutral	$3.05B	41.23	23.79%	―	7.99%	-28.47%
SNOW	64 Neutral	$64.42B	―	-40.16%	―	27.50%	-49.96%
U	63 Neutral	$16.23B	―	-13.62%	―	-13.74%	48.10%
GTLB	62 Neutral	$6.48B	416.55	2.53%	―	29.31%	―
Sector *	50 Neutral	C$3.52B	0.35	-5.03%	7.64%	17.01%	-2.22%

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.

The most recent analyst rating on (DDOG) stock is a Buy with a $175.00 price target. To see the full list of analyst forecasts on Datadog stock, see the DDOG Stock Forecast page.