Stock Analysis on Net

Datadog Inc. (NASDAQ:DDOG)

$24.99

Common-Size Income Statement
Quarterly Data

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Datadog Inc., common-size consolidated income statement (quarterly data)

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3 months ended: Sep 30, 2025 Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Revenue
Cost of revenue
Gross profit
Research and development
Sales and marketing
General and administrative
Operating expenses
Operating income (loss)
Interest expense
Interest income and other income, net
Other income (loss), net
Income (loss) before (provision for) benefit from income taxes
(Provision for) benefit from income taxes
Net income (loss)

Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).


Gross Profit and Cost of Revenue
The gross profit margin, expressed as a percentage of revenue, generally remained robust, fluctuating around 75% to 82% throughout the observed periods. Notably, it reached its lowest levels in late 2020 and early 2021 before recovering steadily and peaking above 82% in late 2023. Correspondingly, the cost of revenue as a percentage of revenue ranged mostly between 17% and 24%, with a gradual decline observed in late 2023, indicating improved cost efficiency in generating revenue during that period.
Operating Expenses
Operating expenses, encompassing research and development (R&D), sales and marketing, and general and administrative costs, showed some variability across the quarters. R&D expenses generally increased from around 31% of revenue in early 2020 to levels exceeding 45% in the late 2020s. However, there was a modest reduction in R&D spending as a percentage of revenue starting early 2023. Sales and marketing expenses tended to decrease gradually over time, sliding from mid-30% figures in 2020 to closer to the high 20% range by 2025, reflecting improved efficiency or strategic shifts. General and administrative expenses stayed relatively stable, mostly within the 7% to 11% range, with a slight downward trend observed from late 2020 onward.
Operating Income (Loss)
The operating income margin showed substantial volatility over the quarters. Early periods exhibited small positive margins, followed by consistent operating losses during much of 2020 and 2022. Notably, some recovery occurred in late 2021 and throughout 2023, with operating income returning to positive territory, reaching up to about 4.7% in late 2023. However, this improvement was not fully sustained into 2024 and 2025, with margins fluctuating close to zero or negative slightly in several quarters.
Net Income and Pre-Tax Income
Net income trends mirrored operating income to a significant extent but were generally more negative during loss-making periods due to tax and other expenses. There were marked net losses throughout most of 2020 and 2022, reflecting operational challenges. A recovery began in late 2021 and became more pronounced in 2023, with net income reaching positive margins above 9% in late 2023. Despite some decline afterward, net income remained positive or near breakeven through early to mid-2024 with some quarters showing renewed weakness toward 2025.
Other Income and Expenses
Interest expense as a percentage of revenue decreased steadily over time, from a high near 8% in late 2020 to below 1% by 2024, indicating reduced borrowing costs or debt levels. Interest income and other income net of expenses showed an increasing trend, rising from under 3% early in the timeline to over 6% by early 2025. Other income, net remained a small but positive contributor throughout the periods analyzed, increasing notably during the later years.
Income Taxes
Tax provision relative to revenue was generally small but showed some variability, fluctuating between modest benefits and small provisions. The largest tax provision periods coincided with quarters of net losses. There was no consistent trend indicating a significant tax burden or benefit over time.
Overall Observations
The data indicates a company experiencing operational challenges during the early periods, particularly in 2020 and 2022, reflected in losses and high operating expenses as a percentage of revenue. However, efficiency improvements became apparent from late 2021 onward, with gross margins strengthening and operating expenses becoming relatively more contained. Interest expense reductions and rising other income contributed positively to profitability. Net income improved considerably starting in late 2021 through 2023 but showed some volatility and signs of potential softness in some quarters of 2024 and 2025. Continuous monitoring of operating expense management and sustaining gross margin improvements appear crucial for maintaining profitability going forward.