DDOG
Datadog, Inc.
Technology · Software - Application · United States · Stock
Score Breakdown
Scored for Aggressive Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The composite score of 27.1/100 reflects strong revenue growth rewarded by the model, offset by sharp declines in net income and EPS that penalized growth quality.
- Profitability metrics — including a negative operating margin of -1.3% and a net margin of only 3.1% — contributed a low profitability score that weighed heavily on the overall result.
- The absence of any dividend payment and the theme factor contributing zero points further constrained the total score, leaving momentum as the second-highest contributing factor.
Why Not Higher
- Despite strong revenue growth, the 41.4% decline in net income and negative operating margin in FY2025 signal that the company has not yet translated top-line expansion into consistent bottom-line profitability.
- Zero scores on both the dividend and theme factors, combined with a low profitability score, created a significant drag that the growth and momentum factors could not fully offset.
Data Confidence
7 / 10
High — most data fields present
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew 27.7% from FY2024 to FY2025 (from $2,684,275,000 to $3,427,158,000), but net income fell 41.4% over the same period (from $183,746,000 to $107,741,000), and diluted EPS declined 40.4% from FY2024 to FY2025 (from $0.52 to $0.31).
The model rewarded the strong top-line expansion but penalized the sharp contraction in bottom-line profitability, producing a mid-range score that reflects the mixed nature of growth quality.
In FY2025, Datadog posted a net margin of 3.1%, an operating margin of -1.3%, and a return on assets of 1.6%.
The negative operating margin in FY2025 signals that core operations were not yet covering all costs, and the thin net margin and modest return on assets left little room for the model to reward profitability, resulting in a low score.
Filing evidence currently available does not support a more specific explanation for this factor.
Revenue rose consecutively across the last four quarters from $826,760,000 in 2025Q2 to $1,006,426,000 in 2026Q1. Net income also improved steadily from $2,647,000 in 2025Q2 to $52,574,000 in 2026Q1. Operating income turned positive in 2025Q4 at $9,356,000 after losses in 2025Q2 and 2025Q3, though it dipped slightly to $7,327,000 in 2026Q1.
The model rewarded the consistent upward trajectory in both revenue and net income, as well as the inflection of operating income into positive territory, while the slight operating income pullback in 2026Q1 tempered the score modestly.
Datadog does not currently pay a dividend; this is a genuine characteristic of the company, not a data limitation.
Because the model rewards income generation through dividends, a confirmed non-payer receives the minimum score on this factor.
Datadog is assigned to the Enterprise AI Software macro theme.
Although the company carries an Enterprise AI Software theme assignment, this designation did not translate into a positive score under the model's current methodology for this factor.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Datadog delivered strong top-line growth of 27.7% in FY2025, with revenue rising to $3,427,158,000, but bottom-line results deteriorated sharply as net income fell 41.4% and diluted EPS dropped 40.4% over the same period. Profitability remains thin, with a net margin of just 3.1% and a negative operating margin of -1.3% in FY2025, indicating that core operations are not yet fully covering costs. On a more encouraging note, recent quarterly momentum shows consistent revenue and net income improvement, and operating income turned positive in 2025Q4, suggesting an early inflection toward operational profitability. The company carries a Very High risk rating and an overall score of 27.1/100, reflecting the tension between its growth trajectory and its current profitability challenges.
Plain English
Datadog is growing its sales fast, but it's spending so much that profits are shrinking — though the most recent quarters show things are slowly starting to improve on the bottom line.
Bull Case vs. Bear Case
Bull Case
- Revenue has grown consistently, rising 27.7% year-over-year in FY2025 and continuing to climb each quarter from $826,760,000 in 2025Q2 to $1,006,426,000 in 2026Q1, demonstrating durable top-line momentum.
- Net income improved steadily across the last four quarters, from $2,647,000 in 2025Q2 to $52,574,000 in 2026Q1, signaling a meaningful improvement in bottom-line results.
- Operating income turned positive in 2025Q4 at $9,356,000 after consecutive losses in 2025Q2 and 2025Q3, representing an important inflection point toward operational profitability.
Bear Case
- Net income fell 41.4% from FY2024 to FY2025 and diluted EPS dropped 40.4% over the same period, meaning profitability deteriorated sharply even as revenues grew strongly.
- The operating margin in FY2025 was -1.3%, indicating that core operations were not covering all costs, and the net margin of just 3.1% leaves very little financial cushion.
- Datadog pays no dividend and the Enterprise AI Software theme assignment did not translate into a positive model score, limiting the factors that could support a higher overall rating.
What Could Change the Picture
Bullish Triggers
- A sustained expansion of operating margins beyond the early positive readings seen in 2025Q4 and 2026Q1 would suggest the business is scaling efficiently and moving toward durable profitability.
- Continued acceleration of quarterly revenue growth beyond the current trajectory from $826,760,000 to $1,006,426,000 over four quarters would reinforce confidence in long-term top-line strength.
Bearish Triggers
- If operating income, which dipped slightly from $9,356,000 in 2025Q4 to $7,327,000 in 2026Q1, reverses back into negative territory, it would undermine the nascent profitability inflection story.
- A further decline in net margin below the already thin 3.1% recorded in FY2025 would signal that cost pressures are outpacing revenue growth and worsen the profitability outlook.
Risk Profile
Very High RiskThe Very High risk rating reflects a combination of thin and negative operating margins alongside a financial health factor that could not be substantiated with detailed public filing evidence. While quarterly momentum shows improvement, the operating income dip from $9,356,000 in 2025Q4 to $7,327,000 in 2026Q1 illustrates that the path to consistent profitability remains uncertain.
Key Catalysts to Watch
The inflection of operating income into positive territory in 2025Q4 at $9,356,000, following losses in prior quarters, represents a potential early catalyst for improved profitability if the trend is sustained.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.