DDOG — Datadog, Inc.
Snapshot dated August 31, 2026.
Datadog, Inc. provides a cloud-native monitoring and analytics platform that consolidates data from servers, databases, tools, and services. The company's flagship offerings include infrastructure monitoring, application performance monitoring (APM), log management, and security monitoring, often integrated into a single observability dashboard. These services are primarily delivered via a software-as-a-service model, targeting IT, operations, and development teams within enterprises to troubleshoot performance issues and optimize cloud environments. Datadog operates as a major participant in the observability sector, competing directly with incumbent enterprise software providers and specialized cloud-monitoring firms. Its customer base spans thousands of organizations worldwide, ranging from mid-market firms to large-scale global enterprises across various industries. Recently, the company has expanded its portfolio by integrating generative AI features into its platform to assist developers in automating incident investigation and code analysis.
Fair Value / Share
$56.37
Price on August 31, 2026
$237.07
Upside to fair value
-76.22%
Data by Equibles and SEC filings. Figures are as of August 31, 2026 and are not live.
Earnings Yield
Earnings Yield shows how much profit a company generates relative to its share price. EPS ÷ Stock Price.
Stock Price
$237.07
Market Cap
$87,958,422,610
Net Income (TTM)
$177,584,000
Diluted Shares
371.0 million
EPS (TTM)
$0.48
Earnings Yield
0.2%
AI Analysis
Datadog, Inc. has an Earnings Yield of 0.20%, calculated using an EPS of $0.48 and a stock price of $237.07. This yield sits substantially below the 4-5% annual return typically available from safe, guaranteed alternatives like bonds. Mechanically, this low yield implies that the current market price reflects an anticipation of significant future earnings growth rather than a direct return on existing net income. For this yield to align with the bond-market benchmark, either the share price would need to decrease significantly or the company's annual net income would need to increase proportionally to that gap. This single measure does not capture non-financial factors such as the company's growth rate, market share trajectory, or the competitive intensity of the cloud software sector.
Return on Capital
EBIT ÷ (Net Working Capital + Net Fixed Assets) — how efficiently the business turns capital into profit.
EBIT (TTM)
$16,329,000
Net Working Capital
$3,698,615,000
Net Fixed Assets
$409,634,000
Invested Capital
$4,108,249,000
Return on Capital
0.4%
AI Analysis
Datadog, Inc. generated an EBIT (TTM) of $16.3M against invested capital of $4.1B, which is the sum of its $3.7B in net working capital and $409.6M in net fixed assets. This results in a Return on Capital of 0.40%. This figure sits well below the benchmark of 30% or more that typically indicates highly efficient capital utilization within this framework. A low return on capital in this context suggests that the business is currently in a phase where it requires significant capital investment to support its growth, or it is utilizing a large asset base relative to the profit it currently generates. Future results would improve if the business significantly scales its EBIT without a commensurate increase in the capital required to operate. It is important to note that this measure does not capture future growth potential; businesses in early or heavy reinvestment phases often show lower returns because they are prioritizing expansion over current profitability.
Acquirer's Multiple
Enterprise Value ÷ Operating Earnings — how many years of operating earnings it would take to buy the whole business.
| Company | Operating earnings | Enterprise value | Multiple |
|---|---|---|---|
| DDOGDatadog, Inc. | $16.3M | $88.5B | Above range for acquisition target |
| ESTCElastic N.V. | -$47.6M | $9.9B | — |
Where DDOG sits: Above range for acquisition target — operating earnings are too thin relative to enterprise value for the multiple to carry meaning, and there is no usable peer multiple to compare against either.
What does “above range for acquisition target” mean?Hide the “above range for acquisition target” explanation
The multiple is not shown as a number: DDOG’s trailing operating earnings are so small relative to its enterprise value that dividing one by the other would produce a figure in the hundreds or thousands of x — arithmetically correct, but not a meaningful comparison, since a small change in one quarter’s operating income would swing it wildly without saying anything new about the business. The price here implies a bet on operating profit growing dramatically from a near-zero base, not a price you could sensibly compare to a peer’s multiple. By this measure alone — years of current operating earnings required to buy the whole business — a figure this far outside the meaningful range would flag the company as one an acquirer should not pay this price for, on today’s earnings.
Show the enterprise value bridge for each companyHide the enterprise value bridge
DDOG
Debt $985.5M. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $292.3M of operating lease liabilities as of 2026-06-30 ($248M non-current, $44.2M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
ESTC
Named as a competitor: competes in log management, search, and observability software
Debt $571.2M. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. The company separately reports $24.6M of operating lease liabilities as of 2026-07-31 ($18.9M non-current, $5.7M current). These are excluded from debt because operating lease cost already sits inside operating earnings — counting the liability again as debt would charge the business twice for the same thing.
Operating earnings — DDOG
AI Analysis
Datadog (DDOG) has an enterprise value of $88.5B and operating earnings of $16.3M. Because these operating earnings are so thin relative to its enterprise value, its Acquirer's Multiple is above the range where this measure remains meaningful. In practice, this suggests the company's current enterprise value implies a bet on operating profit growing dramatically from this near-zero base. For competitor ESTC, with an enterprise value of $9.9B, the Acquirer's Multiple cannot be calculated because the company is currently losing money, resulting in negative operating earnings. Regarding the peer comparison, the situation is: Above range for acquisition target — operating earnings are too thin relative to enterprise value for the multiple to carry meaning, and there is no usable peer multiple to compare against either. The Acquirer's Multiple measures how many years of operating earnings are required to pay for the business; this comparison would shift if these companies demonstrated higher operating earnings relative to their enterprise values.
FS-Score
A 10-check read on financial health, across profitability, balance-sheet stability and operating momentum.
FS-Score
7/10
Decent score — worth a deeper look before investing.
Section 1
Current Profitability
3/3
Datadog shows strong current profitability, passing all three checks with positive returns and cash-backed earnings.
- Return on Assets is positive at 1.62%.
- Free Cash Flow to Total Assets is positive at 15.06%.
- Accruals check passed with Cash Flow from Operations 9.75 times higher than Net Income.
This score indicates the company is generating real cash today, and the high accrual ratio suggests that reported earnings are well-supported by actual cash inflows rather than accounting entries.
Return on Assets (ROA > 0)
PassFree Cash Flow to Total Assets (FCFTA > 0)
PassAccruals (CFO / Net Income > 1)
PassSection 2
Stability
2/3
The stability profile is mixed, as improvements in the balance sheet's debt levels and liquidity were offset by an increase in share count.
- Leverage decreased from 0.17 to 0.15, indicating a lower debt burden relative to assets.
- Liquidity improved as the current ratio rose from 2.64 to 3.38.
- Net Dilution failed as annual diluted weighted-average shares rose to 363.5 million from 358.6 million.
While the company has strengthened its immediate ability to meet obligations and reduced debt, the ongoing issuance of new shares continues to dilute existing ownership.
Change in Leverage (↓ or unchanged)
PassChange in Liquidity (↑ Current Ratio)
PassNet Dilution (annual diluted weighted-average shares, this year vs last)
FailSection 3
Recent Operational Improvements
2/4
Recent operational improvements are mixed, with the company becoming more efficient at generating revenue and cash even as profitability margins softened.
- Asset Turnover improved from 0.46 to 0.52, showing more revenue generated per dollar of assets.
- Free Cash Flow to Total Assets increased from 14.45% to 15.06%.
- Return on Assets fell from 3.18% to 1.62%, and Gross Margin compressed from 80.79% to 79.96%.
The business is successfully scaling its revenue and cash generation, but a trend of declining margins would be required to reverse for this score to move higher.
Change in ROA (↑)
FailChange in FCFTA (↑)
PassChange in Gross Margin (↑)
FailChange in Asset Turnover (↑)
PassFramework conclusion
The company earns a total score of 7/10, a result that is solid but mixed. This score is driven by strong current profitability and cash generation, though it is tempered by share dilution and a year-over-year decline in profit margins. A score in this range suggests that while the company is financially stable, its current price may reflect these specific operational trade-offs rather than a simple mispricing.
- The 7/10 score reflects a company with positive cash flow but declining margins.
- Cash generation is a core strength, with Free Cash Flow to Total Assets at 15.06%.
- Asset Turnover improved to 0.52, indicating better utilization of the company's resources.
- Shareholder dilution occurred as the share count rose to 363.5 million.
Intrinsic Value (DCF)
A 10-year discounted cash flow, then the bridge from business value to value per share.
Reported cash flow → unlevered free cash flow
Free Cash Flow (reported)
$1.2B
+ After-Tax Interest Expense
$10.1M
= Unlevered Free Cash Flow
$1.2B
Business value (10-year DCF)
PV of Years 1–10
$10.2B
PV of Terminal Value
$11.2B
= Business Value
$21.5B
Terminal value share
52.35%
Business value → share value
Intrinsic Value (business)
$21.5B
+ Cash & Equivalents
$435M
− Debt
$985.5M
= Shareholders' Value
$20.9B
÷ Diluted Shares
371.0 million
= Fair Value / Share
$56.37
Divided by 371.0 million diluted shares — the weighted-average diluted count from the most recent quarterly income statement, for the quarter ended 2026-06-30.
Risk bucket → discount rate
mid (12%)
Year-1 FCF
$1.2B
Trailing twelve months.
FY2023 $632.4M · FY2024 $835.9M · FY2025 $1B
Growth rate (yrs 1–10)
11%
Terminal growth (after yr 10)
3%
AI Analysis
Datadog's valuation utilizes a 12% discount rate, placing it in the mid-risk bucket due to its strong standing in cloud observability balanced against significant volatility inherent in the technology sector and dependence on sustained high growth. The forecast begins with a fixed $1.2B Year-1 free cash flow and assumes an 11.00% annual growth rate over the next decade, reflecting its historical expansion driven by cloud adoption. Beyond year 10, the model applies a fixed 3% terminal growth rate, which is not specific to Datadog but is a standard parameter used to reflect long-run economic growth. The terminal value accounts for 52.4% of the total business value, highlighting the extent to which the valuation depends on long-term performance expectations. To determine the fair value, the model adds $435M in cash and subtracts $985.5M in debt from the intrinsic business value of $21.5B before dividing by 371.0 million shares. This results in a fair value per share of $56.37. Compared to the current price of $237.07, the calculation yields a margin of safety of -76.22%, indicating the buffer between the estimate and the market price. The valuation is most sensitive to the 11.00% growth rate assumption; changes in the expected rate of cash flow expansion over the next decade would most significantly alter the resulting fair value.
Overall Verdict
How the five signals above stack up together, then the full synthesis.
Earnings Yield
0.2% vs ~4-5% bond-yield benchmark
Return on Capital
0.4% ROC vs ~30% benchmark
Acquirer's Multiple
Above range for acquisition target — operating earnings are too thin relative to enterprise value for the multiple to carry meaning, and there is no usable peer multiple to compare against either.
FS-Score
7/10 — Solid but mixed
Intrinsic Value
-76.22% upside to fair value
The framework analyzes DDOG through two lenses: operational efficiency and pricing. The FS-Score of 7/10 suggests some operational coherence and stability in the underlying business mechanics. However, this is contrasted by the Return on Capital, which measures how effectively the company generates profit from invested resources; at 0.4% versus a 30% benchmark, it sits significantly below the reference point. On the pricing side, the Earnings Yield of 0.2% is well under the 4-5% bond-yield benchmark, and the Intrinsic Value shows a -76.22% margin of safety, indicating a substantial gap between the current market price and the calculated value. Furthermore, the Acquirer's Multiple is above range for an acquisition target because operating earnings are too thin relative to enterprise value, rendering that metric unable to provide a usable result for the company. The tension here lies in the discrepancy between the operational resilience indicated by the FS-Score and the weak capital return and valuation metrics. An improvement in the Return on Capital would most significantly alter this overall picture, as it speaks directly to capital efficiency.
Comments
Notes from readers on DDOG — one each. Comments stay with the company, so they carry across to a later snapshot, and each one shows the date it was written.
Loading comments…