DDOG — Datadog, Inc.
Snapshot dated August 27, 2026.
Datadog, Inc. provides a cloud-native monitoring and analytics platform that serves as a centralized dashboard for information technology operations, security teams, and software developers. The company generates revenue primarily through a subscription-based model, offering products such as Infrastructure Monitoring, Application Performance Monitoring, Log Management, and Security Monitoring. These tools integrate across diverse cloud environments to provide real-time visibility into server health, database performance, and user activity. Datadog operates on a global scale, serving tens of thousands of customers ranging from small startups to large enterprises, with a focus on organizations managing complex, multi-cloud architectures. It functions as a key player in the observability software market, competing against both integrated platform providers and specialized point-solution vendors. Recent strategic developments have focused on expanding its security and cloud-native application protection platform offerings to cover the full development lifecycle.
Fair Value / Share
$56.37
Price on August 27, 2026
$243.30
Margin of Safety
-76.83%
Data by Equibles and SEC filings. Figures are as of August 27, 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
$243.30
Market Cap
$90,269,895,900
Net Income (TTM)
$177,584,000
Diluted Shares
371.0 million
EPS (TTM)
$0.48
Earnings Yield
0.2%
AI Analysis
Datadog currently trades at $243.30 per share with trailing twelve-month earnings per share of $0.48, resulting in an earnings yield of 0.20%. This yield sits significantly below the 4-5% annual return typical of safe, alternative investments like bonds. Because the earnings yield is so low, this figure suggests that the current stock price implies a significant expectation for substantial future growth in net income that is not reflected in today's earnings. For the earnings yield to increase toward the 4-5% benchmark, the company would need to see a material rise in actual earnings or a downward correction in the stock price. This measure does not capture qualitative factors such as future competitive dynamics, technological shifts, or specific operational risks facing the business.
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. produced an EBIT of $16.3M against invested capital of $4.1B, resulting in a return on capital of 0.40%. This figure is calculated by dividing operating profit by the sum of net working capital and net fixed assets, providing a measure of how efficiently the business utilizes its tangible operating capital. Relative to the framework's benchmark where roughly 30% or more indicates efficient capital utilization and 15% to 30% is adequate, this reading falls below the typical range for efficiency. This result suggests that the company is currently capital-intensive, requiring a substantial investment in assets to generate its current level of operating profit. A different result could emerge if the business scales its operating profit while maintaining its current capital base or if industry-specific reinvestment needs—often seen in high-growth software businesses—change over time, as this metric does not account for intangible investments or R&D expenditures that may drive future profit.
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 | $90.8B | Above range for acquisition target |
| ESTCElastic N.V. | -$33.5M | $8.7B | — |
| NETCloudflare, Inc. | -$354.4M | $110.8B | — |
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. It carries no separately reported lease obligations.
ESTC
Named as a competitor: competes in log management, search, and observability software
Debt $570.9M. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. It carries no separately reported lease obligations.
NET
Named as a competitor: competes in edge cloud performance, network monitoring, and security services
Debt $3.3B. This is the company's reported total debt — borrowings due within a year plus long-term borrowings. It carries no separately reported lease obligations.
Operating earnings — DDOG
AI Analysis
Datadog, Inc. (DDOG) has an enterprise value of $90.8B and trailing twelve-month operating earnings of $16.3M. Because these operating earnings are so thin relative to its enterprise value, the Acquirer's Multiple is above the range where this measure remains meaningful; essentially, its price implies a bet on operating profit growing dramatically from a near-zero base. Competitors Elastic N.V. (ESTC) and Cloudflare, Inc. (NET) are both losing money right now, so no positive Acquirer's Multiple can be calculated for either, as there is no positive earnings figure to use as a denominator. The computed comparison for DDOG 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. This comparison would shift if the companies improved their underlying profitability or if shifts in their capital structures meaningfully altered their enterprise values relative to their respective operating incomes.
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
Profitability is currently Strong, with all three core checks passed as the business generates positive returns and significant cash relative to its assets.
- Return on Assets is positive at 1.62%.
- Free Cash Flow to Total Assets is positive at 15.06%.
- Accruals show that Cash Flow from Operations is 9.75 times higher than Net Income, indicating earnings are backed by cash.
This score reflects a business that is currently self-sustaining, and any significant drop in cash generation relative to net income would weaken this result.
Return on Assets (ROA > 0)
PassFree Cash Flow to Total Assets (FCFTA > 0)
PassAccruals (CFO / Net Income > 1)
PassSection 2
Stability
2/3
Stability is Mixed, as improving balance sheet ratios are offset by a rise in the total number of shares outstanding.
- Leverage decreased from 0.17 to 0.15.
- Liquidity improved as the current ratio rose from 2.64 to 3.38.
- Net Dilution failed as annual diluted weighted-average shares increased from 358.6 million to 363.5 million.
While the company is reducing its debt burden and increasing its current assets relative to liabilities, the score is weighed down by the issuance of new shares.
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
Operational improvements are Mixed, with gains in asset efficiency and cash flow offset by slight declines in margins and returns.
- Return on Assets declined year over year from 3.18% to 1.62%.
- Free Cash Flow to Total Assets improved from 14.45% to 15.06%.
- Gross Margin decreased from 80.79% to 79.96%.
- Asset Turnover improved from 0.46 to 0.52.
The business is successfully generating more revenue and cash per dollar of assets, but the downward trend in ROA and Gross Margin prevents a higher score.
Change in ROA (↑)
FailChange in FCFTA (↑)
PassChange in Gross Margin (↑)
FailChange in Asset Turnover (↑)
PassFramework conclusion
With a total score of 7/10, the financial health check is solid but mixed, suggesting that while the company is profitable and liquid, it is experiencing some operational friction and share dilution. This score helps differentiate whether the stock's market price reflects a temporary slowdown in margin growth or a more fundamental deterioration of the balance sheet. The result indicates a generally stable financial position, though it does not capture future growth expectations or specific valuation multiples.
- Return on Assets stands at 1.62%, remaining positive but down from the prior year's 3.18%.
- Asset Turnover improved to 0.52, showing greater revenue efficiency.
- Liquidity is high and rising, with a current ratio of 3.38.
- Diluted weighted-average shares increased to 363.5 million, representing a year-over-year fail for net dilution.
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
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
Growth rate (yrs 1–10)
11%
Terminal growth (after yr 10)
3%
AI Analysis
Datadog is assigned a mid-tier 12% discount rate, reflecting its strong position in cloud observability countered by the volatility inherent in the technology sector. The 11.00% growth rate for the next decade accounts for the company's historical ability to scale cash generation—having grown from $276M to $1B—while tempering expectations to reflect the normalization typically seen as high-growth firms mature. The forecast begins with a fixed Year-1 unlevered free cash flow of $1.2B. Beyond year 10, the model assumes a 3% terminal growth rate, a fixed figure used across all valuations to approximate long-term economic growth. This terminal value contributes 52.4% of the total business value. To derive the fair value per share, the intrinsic value of the business is adjusted for the $435M in cash and $985.5M in debt before being divided by 371.0 million shares. This computation results in a fair value per share of $56.37. Comparing this to the current market price of $243.30 produces a margin of safety of -76.83%. Because over half of the valuation is concentrated in the terminal period, the result is most sensitive to the 3% terminal growth assumption. Any shift in this far-future estimate would exert the greatest influence on the final fair value per share.
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
-76.83% margin of safety
These five checks measure a sharp divergence between operational execution and market valuation. The FS-Score of 7/10 suggests the firm maintains consistent internal processes, yet the Return on Capital of 0.4% relative to a 30% benchmark indicates those operations are currently generating minimal returns on invested capital. On the valuation side, the Earnings Yield of 0.2% significantly trails the 4-5% bond-yield benchmark, and the Intrinsic Value shows a -76.83% margin of safety. The Acquirer's Multiple is unavailable as a comparative metric because the company’s operating earnings are too thin relative to its enterprise value, preventing a meaningful calculation. This data highlights a situation where current price metrics sit well outside historical norms for acquisition targets or yield-generating assets. A shift in the overall picture would require the most significant change from the Return on Capital, as a substantial increase in capital efficiency is necessary to align the company's operating performance with the current valuation.