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Datadog
(NASDAQ:DDOG)
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Rating:69Neutral
Price Target:
$295.00
▲(32.29% Upside)
Action:Downgraded
Date:08/07/26
DDOG’s score is primarily supported by strong financial quality—especially high margins and standout, growing free cash flow—plus a generally positive earnings update and solid forward operating-margin guidance. Offsetting that, valuation is extremely stretched (very high P/E) and the technical setup is weak with the stock trading below key short-term moving averages; near-term risk is also elevated by the largest-customer usage reduction embedded in guidance.
Positive Factors
Strong cash generation
Datadog’s large and consistently growing free cash flow demonstrates strong cash conversion from its subscription model and provides funding for product development, sales investment, and strategic flexibility. This supports resilience and sustained execution over the next several quarters.
Negative Factors
Largest-customer usage reduction
Although the largest customer renewed, its lower usage creates a direct headwind to near-term revenue and shows that consumption-based revenue can vary materially within major accounts. This may temporarily reduce growth and complicate forecasting over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Datadog’s large and consistently growing free cash flow demonstrates strong cash conversion from its subscription model and provides funding for product development, sales investment, and strategic flexibility. This supports resilience and sustained execution over the next several quarters.
Read all positive factors
Datadog Key Performance Indicators (KPIs)
Any
Customers Over $100k
Shows the number of customers generating over $100,000 in annual revenue, reflecting the company's ability to attract and retain high-value clients.
Shows the number of customers generating over $100,000 in annual revenue, reflecting the company's ability to attract and retain high-value clients.
Data provided by:
The Fly
The FlyDatadog (DDOG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$92.08B
Dividend YieldN/A
Average Volume (3M)3.02M
Price to Earnings (P/E)549.3
Beta (1Y)1.41
Revenue Growth31.52%
EPS Growth37.42%
CountryUS
Employees8,100
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.50
Shares Outstanding334,904,600
10 Day Avg. Volume2,760,647
30 Day Avg. Volume3,018,772
Financial Highlights & Ratios
PEG Ratio-10.05
Price to Book (P/B)12.65
Price to Sales (P/S)13.78
P/FCF Ratio47.20
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue23.42
Enterprise Value/Gross Profit29.45
Enterprise Value/Ebitda309.71
Forecast
1Y Price Target
$297.13Price Target Upside33.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering34
EPS Forecast (FY)2.54
Revenue Forecast (FY)$4.48B
Datadog Business Overview & Revenue Model
Company Description
Datadog, Inc. offers a comprehensive cloud-based monitoring and analytics solution, serving the needs of developers, IT operations personnel, and business stakeholders across North America and internationally. This Software-as-a-Service (SaaS) off...
How the Company Makes Money
Datadog makes money primarily by selling subscription access to its SaaS platform. Customers pay recurring fees to use Datadog’s products (modules) such as infrastructure monitoring, application performance monitoring (APM), log management, distri...
Datadog Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Positive
The call presents a predominantly positive operational and financial picture: strong 36% YoY revenue growth, record sequential revenue added, robust cash generation, meaningful product and AI innovation, expanding customer monetization (more customers using multiple products and rising $100K+ customers), and strong bookings and retention metrics. Near-term conservatism in guidance is driven largely by a usage reduction at one very large customer and modest gross margin pressure from investments and event costs. Management emphasized accelerating demand across the broader customer base and derisked guidance to reflect the single‑customer variability.Positive Updates
Strong Revenue Growth and Beat
Revenue of $1.12B in Q2, up 36% year-over-year and above the high end of guidance.
Negative Updates
Largest Customer Usage Reduction and Guidance Impact
A longtime, very large customer renewed but showed a usage reduction beginning in Q3; management fully derisked guidance for this reduction. Q3 revenue guide implies 28%–29% YoY growth (vs Q2 actual +36%), reflecting the impact of this customer’s reduced usage.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Revenue Growth and Beat
Revenue of $1.12B in Q2, up 36% year-over-year and above the high end of guidance.
Read all positive updates
Company Guidance
Datadog guided Q3 revenue of $1.135–$1.145 billion (up ~28–29% year‑over‑year), non‑GAAP operating income of $260–$270 million (implying a 23–24% operating margin) and non‑GAAP EPS of $0.63–$0.65 on ~378 million diluted shares; for fiscal 2026 it expects revenue of $4.45–$4.47 billion (≈30% growth), non‑GAAP operating income of $1.01–$1.03 billion (≈23% margin) and non‑GAAP EPS of $2.50–$2.54 on ~376 million diluted shares. Management said the guide is conservative, incorporates a usage reduction from its largest customer, and assumes net interest & other income of about $180 million, cash taxes of $30–$40 million, a 21% non‑GAAP tax rate going forward, and CapEx plus capitalized software of roughly 4–5% of revenue.Datadog Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
90
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.97B | 3.43B | 2.68B | 2.13B | 1.68B | 1.03B |
| Gross Profit | 3.15B | 2.74B | 2.17B | 1.72B | 1.33B | 794.54M |
| EBITDA | 299.93M | 193.84M | 265.94M | 111.00M | 13.09M | 25.57M |
| Net Income | 177.58M | 107.74M | 183.75M | 48.57M | -50.16M | -20.75M |
Balance Sheet | ||||||
| Total Assets | 7.55B | 6.64B | 5.79B | 3.94B | 3.00B | 2.38B |
| Cash, Cash Equivalents and Short-Term Investments | 4.99B | 4.47B | 4.19B | 2.58B | 1.88B | 1.55B |
| Total Debt | 1.28B | 1.54B | 1.84B | 902.34M | 837.52M | 807.75M |
| Total Liabilities | 3.18B | 2.91B | 3.07B | 1.91B | 1.59B | 1.34B |
| Stockholders Equity | 4.37B | 3.73B | 2.71B | 2.03B | 1.41B | 1.04B |
Cash Flow | ||||||
| Free Cash Flow | 1.15B | 1.00B | 835.88M | 632.37M | 353.52M | 250.52M |
| Operating Cash Flow | 1.23B | 1.05B | 870.60M | 659.95M | 418.41M | 286.55M |
| Investing Cash Flow | -1.36B | -1.33B | -736.84M | -731.37M | -384.67M | -273.74M |
| Financing Cash Flow | 82.85M | -572.48M | 787.08M | 58.28M | 36.02M | 34.94M |
Datadog Technical Analysis
Positive
222.99
Price Trends
248.07
Positive
248.92
Positive
193.55
Positive
Market Momentum
4.50
Positive
55.34
Neutral
34.47
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 222.99 is below the 20-day moving average (MA) of 271.31, below the 50-day MA of 248.07, and above the 200-day MA of 193.55, indicating a bullish trend. The MACD of 4.50 indicates Positive momentum. The RSI at 55.34 is Neutral, neither overbought nor oversold. The STOCH value of 34.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DDOG.
Datadog Risk Analysis
Datadog disclosed 59 risk factors in its most recent earnings report. Datadog reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Datadog Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $154.62B | 95.11 | 13.77% | ― | 22.19% | 0.19% | |
79 Outperform | $10.47B | 27.34 | 35.31% | ― | 16.18% | ― | |
78 Outperform | $1.33B | 8.36 | 70.79% | ― | 2.30% | ― | |
76 Outperform | $18.39B | 127.39 | 5.72% | 4.32% | 17.94% | -69.28% | |
75 Outperform | $9.16B | -175.81 | -5.51% | ― | 22.99% | -1190.91% | |
69 Neutral | $92.08B | 549.26 | 4.57% | ― | 31.52% | 37.42% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.