Datadog, Inc. (DDOG)

Price—Loading quote

AI: Overvalued

Price checkThe current price assumes exceptional growth for years, leaving little room for setbacks.

At the August 14 close of $255.46, Datadog’s quoted market value was $91.73 billion. Subtracting roughly $4.0 billion of cash and securities after convertible debt gives an estimated business value of $87.7 billion. That equals about 19.7 times management’s $4.46 billion revenue forecast and 101 times forecast adjusted earnings, which exclude stock compensation and other costs. Annualizing first-half free cash flow—cash left after operating and investment spending—still produces a demanding multiple near 77. These figures support an Overvalued verdict.

Big pictureFast growth and rising cash are real, but reported profits remain thin.

Revenue expanded from $603 million in 2020 to $3.43 billion in 2025, about 42% annually, then grew 36% year over year in 2026’s second quarter. First-half operating cash flow reached $650 million, while company-defined free cash flow totaled $568 million. However, second-quarter operating income under standard accounting rules was only $5 million. Nearly all $52 million of pretax income came from $50 million of interest and other income. Usage-sensitive billing also creates cyclicality: management expects its largest customer to reduce usage beginning in the third quarter.

Business strengthA strong cash cushion offsets debt, while employee shares steadily dilute owners.

June balances included $4.99 billion of cash and marketable securities against $986 million of convertible notes. Current assets were 3.2 times current liabilities, providing substantial downside protection. The second-quarter gross margin was 78.6%, and customers generating at least $100,000 of annualized recurring revenue increased 23%. The counterweight is stock compensation: $220 million, or 19.6% of quarterly revenue. Average diluted shares rose 3.4% year over year to 371 million. The supplied filing history shows no dividends or repurchase spending to offset this dilution.

What could change the storyGrowth must stay high while share costs fall to justify today’s valuation.

The strongest bull case is sustained expansion from artificial-intelligence workloads and broader platform adoption: second-quarter revenue grew 36%, large-customer counts rose 23%, and full-year guidance implies about 30% growth. The bear case is already visible in third-quarter guidance, which implies growth slowing to roughly 28%–29%, alongside the largest customer’s expected usage reduction. As an inference, today’s valuation becomes easier to defend if growth remains above 25% for several years, reported operating margins expand materially, and stock compensation falls below 15% of revenue. Growth below 20% or continuing dilution would weaken the story.

$255.46 price considered

AI: News

Second-quarter beat, sharp selloffResults beat forecasts, but slowing guidance and one large customer’s pullback exposed the demanding valuation.

On August 6, Datadog reported $1.121 billion of revenue, up 36%, and $279 million of free cash flow. It raised full-year revenue guidance to $4.45–$4.47 billion. However, management flagged lower usage from its largest customer beginning in the third quarter, whose guidance implies growth slowing to 28%–29%. Shares fell 19.5% before trading opened while broader indexes moved only slightly. That divergence supports, but does not prove, attribution to company-specific growth and valuation concerns.

First-quarter forecast resetDatadog raised its yearly forecast, prompting a dramatic upward repricing of expected growth.

On May 7, first-quarter revenue reached $1.006 billion, up 32%, while free cash flow was $289 million. Customers generating at least $100,000 of annualized recurring revenue increased 21% to about 4,550. Management raised its 2026 revenue forecast to $4.30–$4.34 billion from $4.06–$4.10 billion. Shares rose approximately 31% in premarket trading. The timing and size of that move were consistent with a major expectations reset, although price timing alone cannot establish the results as its sole cause.

Revenue

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Net income

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Free cash flow

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Total cash / debt

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017
Revenue	$3.43B	$2.68B	$2.13B	$1.68B	$1.03B	$603.5M	$362.8M	$198.1M	$100.8M
Gross profit	$2.74B	$2.17B	$1.72B	$1.33B	$794.5M	$473.3M	$273.8M	$151.5M	$77.3M
Research & development	$1.55B	$1.15B	$962.4M	$752.4M	$419.8M	$210.6M	$111.4M	$55.2M	$24.7M
Operating expenses	$2.78B	$2.11B	$1.75B	$1.39B	$813.7M	$487.0M	$294.0M	$162.6M	$80.3M
Operating income	−$44.4M	$54.3M	−$33.5M	−$58.7M	−$19.2M	−$13.8M	−$20.1M	−$11.0M	−$3.0M
EBITDAderived	$4.8M	$102.8M	$2.1M	−$31.7M	−$656,000	$727,000	−$8.5M	−$5.5M	−$756,000
Net income	$107.7M	$183.7M	$48.6M	−$50.2M	−$20.7M	−$24.5M	−$16.7M	−$10.8M	−$2.6M
Basic EPSper diluted share	$0.31	$0.55	$0.15	-$0.16	-$0.07	-$0.08	-$0.12	-$0.15	-$0.04
Diluted EPSper diluted share	$0.31	$0.52	$0.14	-$0.16	-$0.07	-$0.08	-$0.12	-$0.15	-$0.04

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)843$1.45B disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 25, 2026Form 4 · 10b5-1	Agarwal AmitDirector	SellClass A Common Stock · indirect	515	$223.23	$115.0K	1.6K
Jun 25, 2026Form 4 · 10b5-1	Agarwal AmitDirector	SellClass A Common Stock · indirect	3.9K	$222.16	$867.1K	2.2K
Jun 25, 2026Form 4 · 10b5-1	Agarwal AmitDirector	SellClass A Common Stock · indirect	3.9K	$221.19	$872.8K	6.1K
Jun 25, 2026Form 4 · 10b5-1	Agarwal AmitDirector	SellClass A Common Stock · indirect	5.4K	$220.28	$1.20M	10.0K
Jun 25, 2026Form 4 · 10b5-1	Agarwal AmitDirector	SellClass A Common Stock · indirect	2.3K	$219.25	$499.2K	15.4K

Review ownership filings at SEC.gov ↗

Datadog, Inc. (DDOG)

Financial charts

Financial statements

Insider buys & sells