Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Economic Profit
Datadog Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The analysis of the financial data over the five-year period reveals several key trends and insights regarding profitability, cost efficiency, capital investment, and economic value creation.
- Net Operating Profit After Taxes (NOPAT)
-
The NOPAT demonstrates a general upward trajectory throughout the period, increasing from 56,642 thousand US dollars in 2020 to 278,126 thousand US dollars in 2024. Notably, there is a significant jump between 2020 and 2021, where NOPAT nearly triples. However, the year 2022 shows a decline to 111,620 thousand US dollars before resuming a strong upward trend in the next two years.
- Cost of Capital
-
The cost of capital remains relatively stable around 16%, fluctuating slightly between 16.22% in 2020 and 15.86% in 2024. This consistency suggests limited changes in the company’s risk profile or market conditions affecting its capital costs over the period.
- Invested Capital
-
Invested capital shows a steady and substantial increase year over year, beginning at 516,941 thousand US dollars in 2020 and nearly quintupling to 2,616,203 thousand US dollars in 2024. This indicates significant investments in company assets or growth-oriented expenditures during the period.
- Economic Profit
-
Economic profit, calculated as the difference between NOPAT and the capital charge (cost of capital multiplied by invested capital), exhibits a volatile and primarily negative pattern. It is negative in 2020 (-27,206 thousand US dollars) and again sharply negative in 2022 (-95,049 thousand US dollars). Despite an improvement to a positive value of 3,841 thousand US dollars in 2021, economic profit returns to negative territory in the subsequent years, reaching a low of -136,791 thousand US dollars in 2024. This trend suggests that the returns generated by the company on its invested capital have been insufficient to exceed the cost of that capital, highlighting concerns about value creation efficiency despite growing operating profits and invested capital.
In conclusion, the company has demonstrated growth in operating profitability and has significantly increased its invested capital over the five-year period. However, the persistently negative and volatile economic profit indicates that the company’s capital investments have not consistently generated returns above its cost of capital, potentially signaling a need to reassess investment effectiveness and operational efficiency to enhance value creation.
Net Operating Profit after Taxes (NOPAT)
Datadog Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income (loss).
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income (loss).
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income (Loss)
- The net income showed a substantial shift over the five-year period. Initially, the company experienced losses in 2020, 2021, and 2022, with the loss deepening significantly in 2022 to -50,160 thousand US dollars. However, a marked turnaround occurred in 2023, when net income became positive, reaching 48,568 thousand US dollars. This positive trajectory continued into 2024 with a substantial increase to 183,746 thousand US dollars, indicating strong profitability growth.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT displays a consistent upward trend throughout the years analyzed. Starting at 56,642 thousand US dollars in 2020, it nearly tripled in 2021 to 159,659 thousand US dollars. Although there was a slight decline in 2022 to 111,620 thousand US dollars, the metric rebounded significantly in 2023 and 2024, reaching 215,965 and 278,126 thousand US dollars, respectively. This steady increase suggests improved operating efficiency and profitability after tax expenses over the observed period.
- Overall Financial Performance
- The data reveals that the company transitioned from operating losses toward significant profitability, as evidenced by both net income and NOPAT figures. Despite the net income volatility in the initial years, the sustained growth in NOPAT indicates underlying operational strength. The large positive net income in the last two reported periods complements this, reflecting improved financial management, higher revenues, or better cost control leading to enhanced shareholder value.
Cash Operating Taxes
Datadog Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The financial data reveals significant fluctuations in both income taxes allocated to operations and cash operating taxes over the five-year period. The data indicates evolving patterns that may reflect changes in the company's tax planning, profitability, or operational performance.
- Income Taxes Allocated to Operations
- This item shows a general upward trend from 2020 through 2024. Starting at 2,325 thousand US dollars in 2020, the amount remained almost flat in 2021 with a negligible decline. However, there was a marked increase in 2022, more than doubling to 12,090 thousand US dollars. Following a slight decrease in 2023 to 11,667 thousand US dollars, the figure surged again in 2024, reaching 20,194 thousand US dollars, the highest level recorded in the period under review. This pattern suggests increasing taxable income or changes in tax allocation policies leading to higher operational income tax expenses.
- Cash Operating Taxes
- The cash operating taxes reveal a more volatile pattern compared to income taxes allocated to operations. Beginning at 4,965 thousand US dollars in 2020, the figure dropped significantly to 2,982 thousand US dollars in 2021. It then rebounded sharply in 2022 to 9,682 thousand US dollars. Notably, there was a drastic decline into negative territory for both 2023 (-5,834 thousand US dollars) and 2024 (-5,321 thousand US dollars). These negative values may indicate tax refunds, credits, or adjustments rather than traditional tax outflows, pointing to potential changes in tax payments, deferrals, or rebates during the latter years.
Overall, the increase in income taxes allocated to operations contrasts with the increasingly negative cash operating taxes in the most recent years. This divergence may suggest complexities in the timing of tax obligations and cash tax payments or reflect strategic tax management efforts impacting the cash flow related to taxes. The volatility observed in cash operating taxes warrants closer examination to understand underlying causes such as tax authority adjustments, changes in effective tax rates, or alterations in the company's tax position.
Invested Capital
Datadog Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of marketable securities.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit a consistent upward trajectory over the five-year period. Starting at 643,623 thousand USD in 2020, the figure increased to 807,745 thousand USD in 2021, representing a significant rise. The upward trend persisted through 2022 and 2023, reaching 902,337 thousand USD. A pronounced surge is observed in 2024, with the debt more than doubling to 1,842,180 thousand USD. This sharp increase in the final year suggests a substantial increase in leverage or financing activities.
- Stockholders’ Equity
- Stockholders' equity has demonstrated strong growth throughout the period. Beginning at 957,432 thousand USD in 2020, equity increased steadily each year, reaching 1,041,203 thousand USD in 2021, and then expanding more rapidly to 1,410,505 thousand USD in 2022. The growth accelerated further in subsequent years, climbing to 2,025,354 thousand USD in 2023 and 2,714,363 thousand USD in 2024. This consistent increase indicates a strengthening capital base and retained earnings growth.
- Invested Capital
- Invested capital, the sum reflecting the total funds invested by shareholders and debt holders, follows an increasing trend similar to equity and debt metrics. Starting at 516,941 thousand USD in 2020, it rose sharply to 958,101 thousand USD in 2021. This upward momentum sustained through 2022 and 2023, with figures of 1,276,252 thousand USD and 1,475,035 thousand USD, respectively. By 2024, invested capital experienced a marked increase, reaching 2,616,203 thousand USD. This growth aligns with the increases in both equity and debt, suggesting expanded operational investment or asset acquisition.
Cost of Capital
Datadog Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible senior notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible senior notes. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Datadog Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrates significant volatility across the periods. Beginning with a negative value of -27,206 thousand US dollars in 2020, it improved to a positive 3,841 thousand US dollars in 2021. However, it declined sharply in 2022 to -95,049 thousand US dollars, followed by a partial recovery in 2023 with a loss reduced to -24,462 thousand US dollars. In 2024, economic profit again deteriorated substantially to -136,791 thousand US dollars. Overall, the trend suggests inconsistent profitability with intermittent positive economic profit only in 2021.
- Invested Capital
- Invested capital exhibits a consistent and substantial upward trend throughout the entire period. Starting at 516,941 thousand US dollars in 2020, it nearly doubled to 958,101 thousand US dollars in 2021. This growth continued steadily over the subsequent years, reaching 1,276,252 thousand US dollars in 2022, 1,475,035 thousand US dollars in 2023, and culminating at 2,616,203 thousand US dollars in 2024. This upward trajectory indicates ongoing capital investment and expansion efforts.
- Economic Spread Ratio
- The economic spread ratio aligns closely with the fluctuations in economic profit, reflecting mostly negative values. It starts at -5.26% in 2020, improves slightly to a marginal positive 0.4% in 2021, then declines to -7.45% in 2022. The ratio improves somewhat in 2023 to -1.66%, before worsening again to -5.23% in 2024. These variations indicate challenges in generating returns above the cost of capital in most years, except for the slight positive spread in 2021.
Economic Profit Margin
Datadog Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reflects notable fluctuations and growth trends over the analyzed period. The adjusted revenue demonstrates a consistent upward trajectory, indicating expansion in the company's sales or service income. Starting from approximately $673 million in 2020, adjusted revenue more than quadrupled by 2024, reaching nearly $2.9 billion. This strong revenue growth year over year suggests increased market presence and successful business operations.
In contrast, the economic profit values display considerable volatility and persistent negative outcomes except in 2021. The company experienced an economic profit loss of around $27.2 million in 2020, improved to a positive figure of about $3.8 million in 2021, then sharply declined back into negative territory in subsequent years, with the largest loss recorded in 2024 at approximately $136.8 million. Such fluctuations imply challenges in managing costs and generating returns above the cost of capital despite rising revenues.
The economic profit margin, expressed as a percentage of adjusted revenue, mirrors the trend observed in economic profit. Margins were negative in 2020 at -4.04%, turned slightly positive in 2021 at 0.32%, and then reverted to negative levels from 2022 onwards, reaching -4.75% by 2024. This pattern highlights that profitability relative to revenue has been inconsistent and generally unfavorable, particularly in the latter years.
Overall, while revenue growth exhibits a strong positive trend, the company has faced ongoing difficulties in converting that revenue into sustained economic profit. This indicates potential areas for improving operational efficiency, cost control, or pricing strategies to enhance long-term profitability and economic value creation.