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.
Economic Profit
Datadog Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 257,877 – 20.60% × 2,198,274 = -194,938
An analysis of the financial performance between 2021 and 2025 reveals that the entity consistently failed to generate positive economic profit, indicating that the returns on invested capital did not exceed the cost of that capital during the period. While operating profits showed growth, the expansion of the capital base outweighed these gains, resulting in persistent value destruction from an economic perspective.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a volatile yet generally upward trajectory until 2024. Following a decline in 2022 to 111,620 thousand USD, profits grew significantly to peak at 278,126 thousand USD in 2024. A slight contraction occurred in 2025, with NOPAT settling at 257,877 thousand USD. Despite this growth, the operational earnings remained insufficient to cover the implied capital charge.
- Invested Capital and Cost of Capital
- The cost of capital remained remarkably stable throughout the five-year period, fluctuating minimally between 20.19% and 20.73%. Conversely, invested capital grew aggressively, rising from 958,101 thousand USD in 2021 to a peak of 2,616,203 thousand USD in 2024. A reduction in invested capital to 2,198,274 thousand USD was observed in 2025, suggesting a potential realignment of assets or a repayment of capital.
- Economic Profit Trends
- Economic profit remained negative throughout the entire duration, with a notable deepening of the deficit over time. The economic loss increased from 38,437 thousand USD in 2021 to a maximum deficit of 250,044 thousand USD in 2024. This peak deficit correlates directly with the surge in invested capital during that year, as the cost of financing the expanded capital base far exceeded the incremental increase in NOPAT. The loss narrowed slightly to 194,938 thousand USD in 2025, corresponding with the reduction in total invested capital.
The data suggests a systemic gap between the company's operational efficiency and its cost of financing. The inability to achieve a positive economic profit, despite increasing NOPAT, highlights that the capital intensity of the growth strategy has not yet yielded returns sufficient to satisfy the required rate of return.
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Net Operating Profit after Taxes (NOPAT)
Datadog Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 295,556 × 6.61% = 19,536
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 30,595 × 21.00% = 6,425
7 Addition of after taxes interest expense to net income (loss).
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 194,424 × 21.00% = 40,829
9 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) exhibited a fluctuating pattern over the five-year period. While net income experienced significant volatility, including losses in 2021 and 2022, NOPAT demonstrated a more consistent, albeit uneven, positive performance.
- Overall Trend
- NOPAT decreased from US$159,659 thousand in 2021 to US$111,620 thousand in 2022, representing a decline of approximately 30.2%. However, a substantial recovery was observed in 2023, with NOPAT increasing to US$215,965 thousand. This upward momentum continued into 2024, reaching US$278,126 thousand, before experiencing a moderate decrease to US$257,877 thousand in 2025.
- Year-over-Year Changes
- The largest year-over-year increase in NOPAT occurred between 2022 and 2023, with a growth of 93.5%. The increase from 2023 to 2024 was approximately 28.8%, indicating continued improvement, though at a slower rate. The decrease from 2024 to 2025 was approximately 7.3%, suggesting a potential stabilization or slight downturn in operational profitability.
- Relationship to Net Income
- A notable divergence exists between NOPAT and net income. While net income reported losses in 2021 and 2022, NOPAT remained positive during these periods. This suggests that non-operating factors, such as interest expense or other financial costs, significantly impacted the bottom line. The substantial increase in net income from 2022 to 2023 and 2024 was accompanied by corresponding increases in NOPAT, indicating a strengthening of core operational performance. However, the decline in net income in 2025 was not mirrored by a proportional decrease in NOPAT, suggesting that the factors affecting net income in that year were primarily non-operational.
In summary, NOPAT demonstrates a generally positive trend with significant growth between 2022 and 2024, followed by a modest decline in the most recent year. The consistent positive NOPAT values, even during periods of net loss, highlight the underlying operational profitability of the business.
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Cash Operating Taxes
Datadog Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 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).
The reported income taxes allocated to operations demonstrate a generally increasing trend over the five-year period. However, cash operating taxes exhibit a significantly different pattern, characterized by substantial fluctuations and ultimately moving into negative territory.
- Income Taxes Allocated to Operations
- Income taxes allocated to operations increased from US$2,323 thousand in 2021 to US$12,090 thousand in 2022, representing a substantial rise. This was followed by a slight decrease to US$11,667 thousand in 2023. Further growth is observed in 2024, reaching US$20,194 thousand, before settling at US$19,280 thousand in 2025. The overall trend indicates a consistent increase in reported income tax obligations related to operations, despite a minor dip in 2023.
- Cash Operating Taxes
- Cash operating taxes began at US$2,982 thousand in 2021 and decreased to US$9,682 thousand in 2022. A dramatic shift occurred in 2023, with cash operating taxes reported as negative US$5,834 thousand. This negative value persisted in 2024, reaching negative US$5,321 thousand, and further declined to negative US$13,884 thousand in 2025. This indicates a significant outflow reversal, potentially due to tax refunds, carryforwards utilized, or changes in tax regulations impacting cash flows.
The divergence between income taxes allocated to operations and cash operating taxes is noteworthy. While reported income tax obligations are increasing, the actual cash outflow for taxes is decreasing and eventually becomes a cash inflow. This discrepancy warrants further investigation to understand the underlying drivers, such as the utilization of net operating loss carryforwards, research and development tax credits, or other tax planning strategies. The increasing negative values for cash operating taxes in the later years suggest a growing impact from these factors.
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Invested Capital
Datadog Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 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).
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.
The invested capital of the company demonstrates a generally increasing trend over the observed period, though with notable fluctuations. Total reported debt & leases and stockholders’ equity both contribute to this figure, and their individual trajectories influence the overall invested capital.
- Invested Capital Trend
- Invested capital increased from US$958.101 million in 2021 to US$1,276.252 million in 2022, representing a growth of approximately 33.3%. Further growth was observed in 2023, reaching US$1,475.035 million. A significant increase occurred in 2024, with invested capital rising to US$2,616.203 million. However, in 2025, invested capital decreased to US$2,198.274 million.
- Debt & Leases
- Total reported debt & leases exhibited an initial increase from US$807.745 million in 2021 to US$837.521 million in 2022. This trend continued in 2023, reaching US$902.337 million. A substantial increase was then recorded in 2024, with debt & leases reaching US$1,842.180 million. A decrease was observed in 2025, with the figure falling to US$1,279.005 million.
- Stockholders’ Equity
- Stockholders’ equity showed consistent growth throughout the period. It increased from US$1,041.203 million in 2021 to US$1,410.505 million in 2022, and further to US$2,025.354 million in 2023. This growth continued in 2024, reaching US$2,714.363 million, and again in 2025, reaching US$3,732.206 million.
The substantial increase in invested capital in 2024 appears to be driven primarily by a significant rise in total reported debt & leases. The subsequent decrease in invested capital in 2025 is attributable to a reduction in debt & leases, despite continued growth in stockholders’ equity. Stockholders’ equity consistently contributed a larger portion of the invested capital base than debt & leases throughout the period, and this difference widened in the later years.
- Composition of Invested Capital
- In 2021, debt & leases represented approximately 84.3% of invested capital, while stockholders’ equity accounted for 10.9%. By 2025, the proportion shifted considerably, with debt & leases representing approximately 58.3% of invested capital and stockholders’ equity accounting for 17.0%.
These trends suggest a changing capital structure, with a greater reliance on equity financing in the later years of the observed period, despite a significant debt-fueled expansion in 2024.
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Cost of Capital
Datadog Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,936,715) | 42,936,715) | ÷ | 44,232,271) | = | 0.97 | 0.97 | × | 21.18% | = | 20.56% | ||
| Convertible senior notes3 | 1,000,000) | 1,000,000) | ÷ | 44,232,271) | = | 0.02 | 0.02 | × | 0.43% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 295,556) | 295,556) | ÷ | 44,232,271) | = | 0.01 | 0.01 | × | 6.61% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 44,232,271) | 1.00 | 20.60% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 43,270,529) | 43,270,529) | ÷ | 45,485,904) | = | 0.95 | 0.95 | × | 21.18% | = | 20.14% | ||
| Convertible senior notes3 | 1,986,500) | 1,986,500) | ÷ | 45,485,904) | = | 0.04 | 0.04 | × | 0.49% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 228,875) | 228,875) | ÷ | 45,485,904) | = | 0.01 | 0.01 | × | 6.69% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 45,485,904) | 1.00 | 20.19% | ||||||||||
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 | 42,981,016) | 42,981,016) | ÷ | 44,191,318) | = | 0.97 | 0.97 | × | 21.18% | = | 20.60% | ||
| Convertible senior notes3 | 1,050,200) | 1,050,200) | ÷ | 44,191,318) | = | 0.02 | 0.02 | × | 5.97% × (1 – 21.00%) | = | 0.11% | ||
| Operating lease liability4 | 160,102) | 160,102) | ÷ | 44,191,318) | = | 0.00 | 0.00 | × | 6.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 44,191,318) | 1.00 | 20.73% | ||||||||||
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 | 24,526,196) | 24,526,196) | ÷ | 25,444,270) | = | 0.96 | 0.96 | × | 21.18% | = | 20.41% | ||
| Convertible senior notes3 | 819,400) | 819,400) | ÷ | 25,444,270) | = | 0.03 | 0.03 | × | 5.97% × (1 – 21.00%) | = | 0.15% | ||
| Operating lease liability4 | 98,674) | 98,674) | ÷ | 25,444,270) | = | 0.00 | 0.00 | × | 5.12% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 25,444,270) | 1.00 | 20.58% | ||||||||||
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 | 50,668,165) | 50,668,165) | ÷ | 52,251,928) | = | 0.97 | 0.97 | × | 21.18% | = | 20.53% | ||
| Convertible senior notes3 | 1,511,500) | 1,511,500) | ÷ | 52,251,928) | = | 0.03 | 0.03 | × | 5.97% × (1 – 21.00%) | = | 0.14% | ||
| Operating lease liability4 | 72,263) | 72,263) | ÷ | 52,251,928) | = | 0.00 | 0.00 | × | 4.55% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 52,251,928) | 1.00 | 20.68% | ||||||||||
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 »
Economic Spread Ratio
Datadog Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | (194,938) | (250,044) | (89,745) | (151,030) | (38,437) | |
| Invested capital2 | 2,198,274) | 2,616,203) | 1,475,035) | 1,276,252) | 958,101) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -8.87% | -9.56% | -6.08% | -11.83% | -4.01% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | 0.60% | 0.24% | 1.02% | 3.89% | 5.71% | |
| Adobe Inc. | 13.08% | 0.80% | 0.97% | 6.46% | 8.84% | |
| AppLovin Corp. | 28.27% | 0.55% | -20.58% | -26.78% | -30.15% | |
| Cadence Design Systems Inc. | -1.28% | -2.88% | 7.17% | 6.58% | 6.80% | |
| International Business Machines Corp. | -0.73% | -7.57% | -3.53% | -11.28% | -6.14% | |
| Intuit Inc. | -2.92% | -6.59% | -8.64% | -7.53% | 0.10% | |
| Microsoft Corp. | 5.58% | 7.47% | 10.51% | 18.50% | 27.54% | |
| Oracle Corp. | -8.07% | -7.92% | -8.73% | -7.70% | 0.51% | |
| Palantir Technologies Inc. | 41.58% | -12.34% | -9.06% | -32.80% | -40.26% | |
| Palo Alto Networks Inc. | -3.85% | 5.34% | 11.47% | 3.50% | -5.19% | |
| Salesforce Inc. | -12.51% | -14.32% | -17.76% | -14.64% | -12.49% | |
| ServiceNow Inc. | 2.67% | 5.94% | 5.24% | 0.73% | 1.95% | |
| Synopsys Inc. | -12.43% | -8.18% | -7.48% | -0.88% | -6.91% | |
| Workday Inc. | -11.67% | -13.07% | -19.29% | -14.12% | -19.37% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -194,938 ÷ 2,198,274 = -8.87%
4 Click competitor name to see calculations.
The financial performance from 2021 through 2025 reflects a persistent state of economic value destruction, characterized by negative economic profit and a consistently negative economic spread ratio across all observed periods.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period, indicating that returns were insufficient to cover the cost of capital. Losses expanded from -38,437 thousand US$ in 2021 to a peak deficit of -250,044 thousand US$ in 2024. While intermittent recoveries were noted in 2023 and 2025, the overall trajectory indicates a volatile and ongoing failure to generate economic value.
- Invested Capital Dynamics
- Invested capital showed a general upward trend between 2021 and 2024, rising from 958,101 thousand US$ to 2,616,203 thousand US$. This growth suggests a significant increase in capital deployment during this interval. However, a contraction occurred in 2025, with invested capital decreasing to 2,198,274 thousand US$.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative for the entirety of the period, confirming that the return on invested capital consistently failed to exceed the cost of capital. The ratio reached its lowest point of -11.83% in 2022. Despite fluctuations—including a relative improvement to -6.08% in 2023—the ratio ended the period at -8.87% in 2025, signifying a sustained inability to reach an economic break-even threshold.
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Economic Profit Margin
Datadog Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | (194,938) | (250,044) | (89,745) | (151,030) | (38,437) | |
| Revenue | 3,427,158) | 2,684,275) | 2,128,359) | 1,675,100) | 1,028,784) | |
| Add: Increase (decrease) in deferred revenue | 277,811) | 197,601) | 230,977) | 170,087) | 177,606) | |
| Adjusted revenue | 3,704,969) | 2,881,876) | 2,359,336) | 1,845,187) | 1,206,390) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -5.26% | -8.68% | -3.80% | -8.19% | -3.19% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | 0.39% | 0.13% | 0.52% | 1.87% | 2.93% | |
| Adobe Inc. | 11.83% | 0.90% | 1.21% | 7.53% | 11.02% | |
| AppLovin Corp. | 29.05% | 0.54% | -28.17% | -50.15% | -60.37% | |
| Cadence Design Systems Inc. | -1.93% | -4.41% | 7.14% | 6.57% | 6.90% | |
| International Business Machines Corp. | -1.30% | -13.38% | -6.28% | -19.53% | -11.67% | |
| Intuit Inc. | -3.77% | -10.13% | -14.15% | -14.50% | 0.13% | |
| Microsoft Corp. | 8.33% | 10.44% | 11.97% | 17.73% | 22.86% | |
| Oracle Corp. | -16.18% | -15.08% | -16.89% | -14.14% | 1.01% | |
| Palantir Technologies Inc. | 21.54% | -10.70% | -4.86% | -55.03% | -66.31% | |
| Palo Alto Networks Inc. | -4.56% | 5.67% | 11.39% | 4.08% | -6.99% | |
| Salesforce Inc. | -27.01% | -33.09% | -44.91% | -40.63% | -28.65% | |
| ServiceNow Inc. | 2.94% | 4.89% | 4.22% | 0.59% | 1.69% | |
| Synopsys Inc. | -72.52% | -13.71% | -10.55% | -1.24% | -10.99% | |
| Workday Inc. | -12.39% | -14.55% | -23.67% | -19.14% | -25.28% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × -194,938 ÷ 3,704,969 = -5.26%
3 Click competitor name to see calculations.
The financial performance from 2021 to 2025 is characterized by a distinct divergence between consistent revenue expansion and persistent negative economic value creation. While the scale of operations increased significantly, the organization failed to generate returns exceeding its cost of capital throughout the analyzed period.
- Economic Profit Trends
- Economic profit remained negative across all five years, indicating a consistent failure to achieve positive economic value added. The deficit exhibited significant volatility, widening from -38,437 thousand USD in 2021 to a peak deficit of -250,044 thousand USD in 2024, before moderating to -194,938 thousand USD by 2025.
- Adjusted Revenue Growth
- A strong and uninterrupted upward trajectory in adjusted revenue is observed, increasing from 1,206,390 thousand USD in 2021 to 3,704,969 thousand USD in 2025. This represents substantial top-line growth, demonstrating a successful increase in market scale.
- Economic Profit Margin Analysis
- The economic profit margin remained negative, fluctuating between a high of -3.19% in 2021 and a low of -8.68% in 2024. A cyclical pattern of deterioration and partial recovery is evident, with margins dropping in 2022 and 2024, and improving slightly in 2023 and 2025. The inability of the margin to trend toward zero despite massive revenue growth suggests that the cost of capital and associated economic charges have scaled in tandem with or faster than the operating gains.
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