Datadog, Inc. (NASDAQ: DDOG)

Sector: Technology Industry: Software - Application CIK: 0001561550
Market Cap 41.87 Bn
P/B 12.17
P/E 392.16
P/S 13.04
ROIC (Qtr) -0.92
Div Yield % 0.00
Rev 1y % (Qtr) 28.35
Total Debt (Qtr) 1.28 Bn
Debt/Equity (Qtr) 0.37

About

Datadog, Inc. (DDOG) is a leading company in the observability and security platform industry for cloud applications. The company's main business activities involve providing a software-as-a-service (SaaS) platform that integrates and automates infrastructure monitoring, application performance monitoring, log management, user experience monitoring, cloud security, and various other capabilities. These services aim to provide unified, real-time observability and security for Datadog's customers. Datadog's primary products and services include Infrastructure...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 988.29M provides robust 0.77x coverage of total debt 1.28B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 540.60M provide 15.02x coverage of short-term debt 35.99M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 988.29M provides exceptional 89.02x coverage of interest expenses 11.10M, showing strong debt service capability.
  • Robust free cash flow of 864.67M exceeds capital expenditure of 123.63M by 6.99x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 5.51B provides 4.30x coverage of total debt 1.28B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 988.29M barely covers its investment activities of (945.99M), with a coverage ratio of -1.04, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (945.99M) provide weak support for R&D spending of 1.45B, which is -0.65x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 540.60M provide limited coverage of acquisition spending of (123.76M), which is -4.37x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Short-term investments of 3.60B significantly exceed cash reserves of 540.60M, which is 6.66x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.
  • Operating cash flow of 988.29M provides insufficient coverage of deferred revenue obligations of 1B, which is 0.99x, raising concerns about future service delivery capabilities.

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 7.05 2.65
EV to Cash from Ops. EV/CFO 43.15 13.37
EV to Debt EV to Debt 33.33 57.69
EV to EBIT EV/EBIT 307.95 19.12
EV to EBITDA EV/EBITDA 970.40 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 49.32 14.69
EV to Market Cap EV to Market Cap 1.02 -92.28
EV to Revenue EV/Rev 13.28 4.60
Price to Book Value [P/B] P/B 12.17 4.26
Price to Earnings [P/E] P/E 392.16 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.52
Interest Coverage Int. cover (Qtr) 12.47 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -37.09 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 60.22 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -41.21 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -70.94 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) -35.02 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) -38.58 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) -44.83 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 17.57 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 24.63 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.53 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.41 3.75
Current Ratio Curr Ratio (Qtr) 3.66 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.37 0.17
Interest Cover Ratio Int Coverage (Qtr) 12.47 -52.32
Times Interest Earned Times Interest Earned (Qtr) 12.47 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.10 -100.06
EBIT Margin % EBIT Margin % (Qtr) 4.31 -164.24
EBT Margin % EBT Margin % (Qtr) 3.97 -116.94
Gross Margin % Gross Margin % (Qtr) 79.90 58.20
Net Profit Margin % Net Margin % (Qtr) 3.30 -121.65