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1. Company Snapshot

1.a. Company Description

Datadog, Inc.provides monitoring and analytics platform for developers, information technology operations teams, and business users in the cloud in North America and internationally.The company's SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, and security monitoring to provide real-time observability of its customers technology stack.


Its platform also provides user experience monitoring, network performance monitoring, cloud security, developer-focused observability, and incident management, as well as a range of shared features, such as dashboards, analytics, collaboration tools, and alerting capabilities.The company was incorporated in 2010 and is headquartered in New York, New York.

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1.b. Last Insights on DDOG

Datadog's recent performance was driven by stellar Q3 2025 earnings, with revenue surging 28% year-over-year to $886 million, and EPS of $0.55 per share beating estimates. The company's strong growth was fueled by an expanding AI customer base, with approximately 32,000 customers, and a free cash flow margin of 24%. Robust demand for its observability and cloud security solutions, particularly in AI-driven sectors, contributed to the positive results. (Source: Datadog Inc (DDOG) Q3 2025 Earnings Call Highlights)

1.c. Company Highlights

2. Datadog's Q3 Earnings: Strong Revenue Growth and Expanding Customer Base

Datadog reported revenue of $886 million for Q3, representing a 28% year-over-year increase and a 7% quarter-over-quarter growth. The company's operating income was $207 million, resulting in a 23% operating margin. Earnings per share (EPS) came in at $0.55, beating estimates of $0.4576. The company's free cash flow was $214 million, with a free cash flow margin of 24%. Billings were $893 million, up 30% year-over-year, and remaining performance obligations (RPO) were $2.79 billion, up 53% year-over-year.

Publication Date: Nov -07

📋 Highlights
  • Revenue & Billing Growth:: Q3 revenue $886M (+28% YoY), billings $893M (+30% YoY), with RPO $2.79B (+53% YoY).
  • Customer Expansion:: 32,000 total customers (+3,000 YoY) and 4,060 ARR $100k+ customers (+570 YoY), driving 89% of ARR.
  • Free Cash Flow Strength:: $214M FCF with 24% margin, supported by 80% stable gross margin and 23% operating margin.
  • Non-AI Business Momentum:: Sequential usage growth for non-AI customers highest in 12 quarters, with 120% trailing 12-month net revenue retention.

Customer Adoption and Growth

The company ended Q3 with 32,000 customers, up from 29,200 a year ago, and 4,060 customers with an annualized revenue run rate (ARR) of $100,000 or more, up from 3,490 a year ago. These customers generated 89% of ARR. The company saw broad-based positive trends in demand, with strength in cloud migration and digital transformation. New logo bookings and usage growth of existing customers were strong, with a notable inflection in year-over-year revenue growth across non-AI customers.

Product Adoption and Innovation

Datadog continues to deliver on its AI roadmap, with high customer interest in Bits AI agents and over 5,000 customers sending AI data to one or more of its AI integrations. The company now supports over 1,000 integrations, which is unparalleled in its space. Digital experience products, including RUM, synthetics, and product analytics, exceeded $300 million in ARR. Security ARR growth was in the mid-50s year-over-year, driven by the adoption of Cloud SIEM and other security products.

Valuation and Outlook

With a P/E Ratio of 623.11 and a P/S Ratio of 20.72, Datadog's valuation suggests that the market has high expectations for the company's future growth. Analysts estimate next year's revenue growth at 19.6%. The company's guidance for Q4 takes into account the holiday season and day-by-day patterns, with expected revenue of $912-$916 million, up 24% year-over-year. For fiscal year 2025, revenue is expected to be $3.386-$3.390 billion, up 26% year-over-year.

Operational Efficiency

The company's gross margin has remained stable, around 80%, due to its focus on efficiency and cost of sales. Datadog's sales productivity has improved, with a growing percentage of salespeople hitting quota. The company has made changes to its comp plans to focus salespeople on newer customers and long-term growth.

3. NewsRoom

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Contrast Security and Datadog Partner to Deliver Verified Application Runtime Threat Detection in Datadog Cloud SIEM

Dec -04

Source: businesswire.com

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Datadog: Multiproduct Sales And AI Deals Underpin Strong Growth (Upgrade)

Dec -03

Source: seekingalpha.com

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Datadog Announces Expanded Collaboration Agreement, Highlights New Capabilities with AWS Across AI, Observability and Security at AWS re:Invent

Dec -03

Source: newsfilecorp.com

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Datadog, Inc. (DDOG) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

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Is DataDog an Undervalued Stock?

Dec -02

Source: fool.com

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Datadog Launches Bits AI SRE Agent to Resolve Incidents Faster

Dec -02

Source: newsfilecorp.com

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MongoDB (MDB) Surges on Strong Q3 Performance and Upbeat Guidance

Dec -02

Source: gurufocus.com

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Flywl Announces Cloud Observability Enabled by Datadog

Dec -01

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (24.50%)

6. Segments

Information Technology (IT) Infrastructure

Expected Growth: 24.5%

Driven by increasing demand for cloud-based monitoring and analytics solutions, Datadog's IT infrastructure segment is expected to grow at a CAGR of 24.5%. Fundamental drivers include rising adoption of cloud-native technologies, expanding customer base, and continuous innovation in its platform offerings.

7. Detailed Products

Infrastructure Monitoring

Datadog's Infrastructure Monitoring product provides real-time monitoring and analytics for cloud and on-premises infrastructure, including servers, databases, and applications.

Application Performance Monitoring (APM)

Datadog's APM product provides detailed performance metrics and tracing for applications, including error tracking, code profiling, and service level objectives.

Log Management

Datadog's Log Management product provides a centralized platform for collecting, storing, and analyzing log data from applications and infrastructure.

Synthetic Testing

Datadog's Synthetic Testing product provides automated testing and monitoring of applications and APIs, including API testing, browser testing, and mobile testing.

Real User Monitoring (RUM)

Datadog's RUM product provides detailed insights into real-time user experiences, including page performance, error tracking, and user journey analysis.

Security Monitoring

Datadog's Security Monitoring product provides real-time threat detection and security analytics, including anomaly detection, vulnerability management, and compliance monitoring.

Cloud Cost Management

Datadog's Cloud Cost Management product provides detailed insights into cloud costs, including cost allocation, rightsizing, and reserved instance management.

8. Datadog, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Datadog's unique approach to monitoring and analytics, combining metrics, logs, and traces into a single platform, makes it difficult for customers to switch to substitute products. The company's strong integration with various cloud services and its ability to provide a unified view of an organization's digital infrastructure further reduce the threat of substitutes.

Bargaining Power Of Customers

While Datadog's customers are large enterprises with significant negotiating power, the company's subscription-based model and the high switching costs associated with its platform reduce the bargaining power of customers. Additionally, Datadog's strong brand reputation and customer loyalty also mitigate the bargaining power of customers.

Bargaining Power Of Suppliers

Datadog relies on various cloud services, such as AWS, Azure, and Google Cloud, for its infrastructure. However, the company has established strong relationships with these suppliers, and its large scale and growth prospects give it significant negotiating power. Furthermore, the suppliers are highly dependent on Datadog's business, which reduces their bargaining power.

Threat Of New Entrants

The threat of new entrants is moderate, as the market for monitoring and analytics is growing rapidly, and new companies are entering the space. However, Datadog's strong brand reputation, its comprehensive platform, and its large customer base create significant barriers to entry for new companies.

Intensity Of Rivalry

The competition in the monitoring and analytics market is intense, with established players like New Relic, Splunk, and Elastic, as well as newer entrants. The market is growing rapidly, and companies are competing aggressively for market share. Datadog's strong brand reputation and its comprehensive platform help it to compete effectively, but the intensity of rivalry remains high.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.43%
Debt Cost 4.33%
Equity Weight 59.57%
Equity Cost 9.72%
WACC 7.54%
Leverage 67.87%

11. Quality Control: Datadog, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
ANSYS

A-Score: 5.3/10

Value: 0.7

Growth: 6.3

Quality: 8.5

Yield: 0.0

Momentum: 6.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Autodesk

A-Score: 5.1/10

Value: 0.5

Growth: 7.3

Quality: 8.1

Yield: 0.0

Momentum: 6.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Coinbase

A-Score: 4.5/10

Value: 1.0

Growth: 6.9

Quality: 8.8

Yield: 0.0

Momentum: 8.5

Volatility: 1.7

1-Year Total Return ->

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Stock-Card
Datadog

A-Score: 4.4/10

Value: 0.0

Growth: 9.7

Quality: 5.7

Yield: 0.0

Momentum: 7.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
HubSpot

A-Score: 4.1/10

Value: 2.5

Growth: 8.8

Quality: 5.7

Yield: 0.0

Momentum: 2.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
MicroStrategy

A-Score: 3.9/10

Value: 5.3

Growth: 0.6

Quality: 7.7

Yield: 0.0

Momentum: 8.0

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

153.0$

Current Price

153$

Potential

-0.00%

Expected Cash-Flows