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 – 20.57% × 2,198,274 = -194,289
An analysis of the economic profit from 2021 to 2025 reveals a consistent failure to generate value above the cost of capital. Throughout the entire period, the economic profit remained negative, indicating that the returns on invested capital were insufficient to cover the company's cost of funding.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a volatile but generally upward trajectory until 2024. After a decline in 2022 to 111.6 million, profits recovered and peaked at 278.1 million in 2024, before experiencing a slight contraction to 257.9 million in 2025.
- Invested Capital and Capital Efficiency
- Invested capital grew significantly from 958.1 million in 2021 to a peak of 2.6 billion in 2024. This aggressive expansion of the capital base outpaced the growth in operating profits, which exacerbated the economic loss during that period. A reduction in invested capital to 2.2 billion was observed in 2025.
- Cost of Capital
- The cost of capital remained remarkably stable over the five-year horizon, fluctuating minimally between a high of 20.70% in 2023 and a low of 20.16% in 2024. This stability suggests that the negative economic profit was driven by operational performance and capital allocation rather than shifts in the cost of funding.
- Economic Profit Trends
- The negative trend in economic profit intensified as the invested capital base expanded. The most significant value destruction occurred in 2024, with an economic loss of 249.3 million. While the loss narrowed to 194.3 million in 2025, the company has yet to reach a break-even point where NOPAT exceeds the capital charge.
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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$3,732.206 million.
The substantial increase in invested capital in 2024 appears to be driven primarily by a significant rise in total reported debt & leases. The subsequent decrease in invested capital in 2025 is attributable to a reduction in debt & leases, despite continued growth in stockholders’ equity. Stockholders’ equity consistently contributed a larger portion of the invested capital base than debt & leases throughout the period, and this difference widened in the later years.
- Composition of Invested Capital
- In 2021, debt & leases represented approximately 84.3% of invested capital, while stockholders’ equity accounted for 10.9%. By 2025, the proportion shifted considerably, with debt & leases representing approximately 58.3% of invested capital and stockholders’ equity accounting for 17.0%.
These trends suggest a changing capital structure, with a greater reliance on equity financing in the later years of the observed period, despite a significant debt-fueled expansion in 2024.
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Cost of Capital
Datadog Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,936,715) | 42,936,715) | ÷ | 44,232,271) | = | 0.97 | 0.97 | × | 21.15% | = | 20.53% | ||
| Convertible senior notes3 | 1,000,000) | 1,000,000) | ÷ | 44,232,271) | = | 0.02 | 0.02 | × | 0.43% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 295,556) | 295,556) | ÷ | 44,232,271) | = | 0.01 | 0.01 | × | 6.61% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 44,232,271) | 1.00 | 20.57% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 21.15% | = | 20.12% | ||
| 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 | 20.16% | ||||||||||
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 | × | 21.15% | = | 20.57% | ||
| 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 | 20.70% | ||||||||||
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 | × | 21.15% | = | 20.38% | ||
| 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 | 20.55% | ||||||||||
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 | × | 21.15% | = | 20.51% | ||
| 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 | 20.65% | ||||||||||
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 | (194,289) | (249,288) | (89,309) | (150,656) | (38,154) | |
| Invested capital2 | 2,198,274) | 2,616,203) | 1,475,035) | 1,276,252) | 958,101) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -8.84% | -9.53% | -6.05% | -11.80% | -3.98% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | 1.46% | 1.13% | 1.92% | 4.78% | 6.61% | |
| Adobe Inc. | 13.11% | 0.83% | 1.00% | 6.49% | 8.87% | |
| AppLovin Corp. | 28.42% | 0.70% | -20.45% | -26.69% | -30.02% | |
| Cadence Design Systems Inc. | -1.28% | -2.88% | 7.17% | 6.58% | 6.80% | |
| International Business Machines Corp. | -0.75% | -7.59% | -3.55% | -11.30% | -6.16% | |
| Intuit Inc. | -2.91% | -6.59% | -8.64% | -7.53% | 0.10% | |
| Microsoft Corp. | 5.59% | 7.48% | 10.52% | 18.51% | 27.55% | |
| Oracle Corp. | -8.03% | -7.89% | -8.69% | -7.67% | 0.54% | |
| Palantir Technologies Inc. | 41.65% | -12.27% | -8.99% | -32.73% | -40.19% | |
| Palo Alto Networks Inc. | -3.84% | 5.35% | 11.48% | 3.51% | -5.19% | |
| Salesforce Inc. | -12.48% | -14.29% | -17.73% | -14.61% | -12.46% | |
| ServiceNow Inc. | 2.67% | 5.94% | 5.24% | 0.73% | 1.95% | |
| Synopsys Inc. | -12.42% | -8.17% | -7.47% | -0.87% | -6.90% | |
| Workday Inc. | -11.63% | -13.04% | -19.26% | -14.09% | -19.34% | |
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 × -194,289 ÷ 2,198,274 = -8.84%
4 Click competitor name to see calculations.
The financial performance from 2021 to 2025 indicates a consistent failure to generate positive economic value, characterized by negative economic profit and a persistently negative economic spread ratio throughout the analyzed period.
- Economic Profit Trends
- Economic profit remained negative for five consecutive years, signaling that the entity did not generate returns sufficient to cover its cost of capital. The deficit expanded from -38,154 thousand USD in 2021 to a peak loss of -249,288 thousand USD in 2024. Although there were temporary improvements in 2023 and 2025, the values remained deeply negative, indicating a sustained period of economic value destruction.
- Invested Capital Dynamics
- Invested capital showed a strong upward trajectory from 2021 to 2024, increasing from 958,101 thousand USD to 2,616,203 thousand USD. This growth represents a significant expansion of the capital base. However, a reversal occurred in 2025, with invested capital decreasing to 2,198,274 thousand USD.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative across the entire timeframe, confirming that the return on invested capital consistently trailed the cost of capital. The ratio experienced significant volatility, dropping from -3.98% in 2021 to a low of -11.80% in 2022. Despite a recovery to -6.05% in 2023, the ratio declined again to -9.53% in 2024 and closed at -8.84% in 2025, illustrating an inability to stabilize or move toward a positive spread.
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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 | (194,289) | (249,288) | (89,309) | (150,656) | (38,154) | |
| 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 | -5.24% | -8.65% | -3.79% | -8.16% | -3.16% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | 0.94% | 0.64% | 0.99% | 2.30% | 3.39% | |
| Adobe Inc. | 11.86% | 0.94% | 1.25% | 7.56% | 11.05% | |
| AppLovin Corp. | 29.21% | 0.68% | -27.99% | -49.97% | -60.11% | |
| Cadence Design Systems Inc. | -1.92% | -4.41% | 7.14% | 6.57% | 6.90% | |
| International Business Machines Corp. | -1.33% | -13.42% | -6.31% | -19.56% | -11.71% | |
| Intuit Inc. | -3.77% | -10.13% | -14.15% | -14.49% | 0.13% | |
| Microsoft Corp. | 8.34% | 10.45% | 11.98% | 17.74% | 22.86% | |
| Oracle Corp. | -16.10% | -15.00% | -16.81% | -14.08% | 1.07% | |
| Palantir Technologies Inc. | 21.57% | -10.64% | -4.83% | -54.91% | -66.20% | |
| Palo Alto Networks Inc. | -4.55% | 5.68% | 11.39% | 4.09% | -6.98% | |
| Salesforce Inc. | -26.94% | -33.02% | -44.83% | -40.55% | -28.58% | |
| ServiceNow Inc. | 2.94% | 4.89% | 4.21% | 0.59% | 1.68% | |
| Synopsys Inc. | -72.47% | -13.69% | -10.54% | -1.23% | -10.97% | |
| Workday Inc. | -12.36% | -14.52% | -23.63% | -19.10% | -25.24% | |
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 × -194,289 ÷ 3,704,969 = -5.24%
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 is characterized by a significant divergence between aggressive revenue expansion and the inability to achieve positive economic value added. While top-line growth has been consistent and substantial, the company has remained in a state of economic loss throughout the entire period, indicating that the returns generated are insufficient to cover the cost of the capital employed.
- Adjusted Revenue Trends
- A strong and continuous upward trend is observed in adjusted revenue, which grew from 1,206,390 thousand US$ in 2021 to 3,704,969 thousand US$ by 2025. This represents a consistent scaling of operations and market penetration over the five-year period.
- Economic Profit Performance
- Economic profit has remained negative across all reported years, signifying a persistent failure to create economic value. The deficit widened significantly from 38,154 thousand US$ in 2021 to a peak loss of 249,288 thousand US$ in 2024, before slightly recovering to 194,289 thousand US$ in 2025. The volatility in these figures suggests that the costs associated with capital and growth have frequently outpaced the operational gains.
- Economic Profit Margin Analysis
- The economic profit margin reflects a volatile and negative trend. The margin deteriorated from -3.16% in 2021 to -8.16% in 2022, showed a temporary improvement to -3.79% in 2023, and reached its lowest point of -8.65% in 2024. By 2025, the margin improved to -5.24%. This fluctuation indicates that the company has struggled to optimize the relationship between its capital expenditures and its revenue generation, with 2024 marking the period of lowest economic efficiency relative to its size.
Overall, the data reveals a growth-centric strategy where revenue scaling has not yet translated into economic profitability. The persistent negative economic profit margin suggests that the capital invested in the business is not yielding a return that exceeds the required cost of capital, despite the rapid increase in adjusted revenue.
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