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 – 20.66% × 2,198,274 = -196,354
The analysis of economic profit from 2021 to 2025 reveals a consistent state of value destruction, as the company failed to generate a positive economic profit in any of the observed years. While operating profits grew over the period, they remained insufficient to cover the high cost of capital applied to the expanding base of invested capital.
- Net Operating Profit After Taxes (NOPAT) Performance
- NOPAT demonstrated a general upward trend between 2021 and 2024, increasing from US$ 159.6 million to a peak of US$ 278.1 million. A temporary decline was noted in 2022, followed by a strong recovery in 2023 and 2024. By 2025, NOPAT experienced a slight contraction to US$ 257.9 million, suggesting a deceleration in operating profit growth.
- Capital Investment and Cost of Capital
- Invested capital expanded significantly, growing from US$ 958.1 million in 2021 to a peak of US$ 2.62 billion in 2024, before decreasing to US$ 2.20 billion in 2025. The cost of capital remained highly stable throughout the period, hovering consistently around the 20% to 21% range, which indicates a high hurdle rate for achieving economic value addition.
- Economic Profit Dynamics
- Economic profit remained negative throughout the five-year duration, reflecting a persistent gap between NOPAT and the capital charge. The deficit widened most sharply in 2024, reaching -US$ 251.7 million; this coincides with the period of highest invested capital, where the increase in the capital base outpaced the growth in operating profits. The narrowing of the economic loss to -US$ 196.4 million in 2025 is primarily attributable to the reduction in invested capital rather than an increase in operating efficiency.
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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$3,732.206 million.
The substantial increase in invested capital in 2024 appears to be driven primarily by a significant rise in total reported debt & leases. The subsequent decrease in invested capital in 2025 is attributable to a reduction in debt & leases, despite continued growth in stockholders’ equity. Stockholders’ equity consistently contributed a larger portion of the invested capital base than debt & leases throughout the period, and this difference widened in the later years.
- Composition of Invested Capital
- In 2021, debt & leases represented approximately 84.3% of invested capital, while stockholders’ equity accounted for 10.9%. By 2025, the proportion shifted considerably, with debt & leases representing approximately 58.3% of invested capital and stockholders’ equity accounting for 17.0%.
These trends suggest a changing capital structure, with a greater reliance on equity financing in the later years of the observed period, despite a significant debt-fueled expansion in 2024.
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Cost of Capital
Datadog Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,936,715) | 42,936,715) | ÷ | 44,232,271) | = | 0.97 | 0.97 | × | 21.24% | = | 20.62% | ||
| Convertible senior notes3 | 1,000,000) | 1,000,000) | ÷ | 44,232,271) | = | 0.02 | 0.02 | × | 0.43% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 295,556) | 295,556) | ÷ | 44,232,271) | = | 0.01 | 0.01 | × | 6.61% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 44,232,271) | 1.00 | 20.66% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 21.24% | = | 20.21% | ||
| 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 | 20.25% | ||||||||||
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 | × | 21.24% | = | 20.66% | ||
| 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 | 20.79% | ||||||||||
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 | × | 21.24% | = | 20.48% | ||
| 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 | 20.64% | ||||||||||
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 | × | 21.24% | = | 20.60% | ||
| 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 | 20.74% | ||||||||||
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 | (196,354) | (251,696) | (90,697) | (151,846) | (39,053) | |
| Invested capital2 | 2,198,274) | 2,616,203) | 1,475,035) | 1,276,252) | 958,101) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -8.93% | -9.62% | -6.15% | -11.90% | -4.08% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | 0.54% | 0.17% | 0.95% | 3.83% | 5.64% | |
| Adobe Inc. | 13.02% | 0.73% | 0.90% | 6.40% | 8.78% | |
| AppLovin Corp. | 28.19% | 0.47% | -20.65% | -26.83% | -30.22% | |
| Cadence Design Systems Inc. | -1.35% | -2.94% | 7.11% | 6.52% | 6.73% | |
| CrowdStrike Holdings Inc. | -13.40% | -8.47% | -4.73% | -8.02% | -10.28% | |
| International Business Machines Corp. | -0.78% | -7.62% | -3.57% | -11.32% | -6.18% | |
| Intuit Inc. | -5.31% | -8.98% | -11.02% | -9.87% | -2.34% | |
| Microsoft Corp. | 6.00% | 7.88% | 10.93% | 18.91% | 27.95% | |
| Oracle Corp. | -7.24% | -7.13% | -7.96% | -7.01% | 1.19% | |
| Palantir Technologies Inc. | 41.51% | -12.41% | -9.13% | -32.87% | -40.33% | |
| Palo Alto Networks Inc. | -4.13% | 5.06% | 11.20% | 3.25% | -5.45% | |
| Salesforce Inc. | -12.57% | -14.38% | -17.82% | -14.70% | -12.56% | |
| ServiceNow Inc. | 2.61% | 5.88% | 5.18% | 0.67% | 1.89% | |
| Synopsys Inc. | -12.48% | -8.24% | -7.54% | -0.94% | -6.97% | |
| Workday Inc. | -11.73% | -13.13% | -19.36% | -14.19% | -19.44% | |
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 × -196,354 ÷ 2,198,274 = -8.93%
4 Click competitor name to see calculations.
The financial performance from 2021 through 2025 demonstrates a persistent failure to generate positive economic value, characterized by consistently negative economic profit and negative economic spread ratios throughout the entire period.
- Economic Profit Trends
- Economic profit remained negative for all five years, indicating that the returns on operations were insufficient to cover the cost of capital. The deficit grew from -39.05 million USD in 2021 to -151.85 million USD in 2022, showing a slight recovery to -90.70 million USD in 2023, before reaching a period low of -251.70 million USD in 2024 and ending at -196.35 million USD in 2025.
- Invested Capital Dynamics
- A significant upward trend in invested capital was observed between 2021 and 2024, increasing from 958.10 million USD to a peak of 2.62 billion USD. This suggests a period of aggressive capital deployment. In 2025, a reversal occurred, with invested capital declining to 2.20 billion USD.
- Economic Spread Ratio Interpretation
- The economic spread ratio stayed negative across the analysis window, confirming that the company operated below its cost of capital. The ratio experienced high volatility, dropping sharply to -11.90% in 2022 and recovering to -6.15% in 2023. The subsequent years saw the ratio fluctuate between -9.62% in 2024 and -8.93% in 2025, indicating a sustained gap between the actual return on invested capital and the required rate of return.
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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 | (196,354) | (251,696) | (90,697) | (151,846) | (39,053) | |
| 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 | -5.30% | -8.73% | -3.84% | -8.23% | -3.24% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | 0.35% | 0.10% | 0.49% | 1.84% | 2.89% | |
| Adobe Inc. | 11.78% | 0.83% | 1.13% | 7.45% | 10.94% | |
| AppLovin Corp. | 28.97% | 0.46% | -28.27% | -50.24% | -60.51% | |
| Cadence Design Systems Inc. | -2.02% | -4.51% | 7.08% | 6.50% | 6.84% | |
| CrowdStrike Holdings Inc. | -22.05% | -13.28% | -6.35% | -12.56% | -21.36% | |
| International Business Machines Corp. | -1.38% | -13.47% | -6.36% | -19.60% | -11.75% | |
| Intuit Inc. | -6.87% | -13.81% | -18.05% | -18.99% | -2.97% | |
| Microsoft Corp. | 8.95% | 11.02% | 12.45% | 18.12% | 23.20% | |
| Oracle Corp. | -14.52% | -13.56% | -15.40% | -12.87% | 2.35% | |
| Palantir Technologies Inc. | 21.50% | -10.76% | -4.90% | -55.15% | -66.43% | |
| Palo Alto Networks Inc. | -4.90% | 5.38% | 11.12% | 3.78% | -7.33% | |
| Salesforce Inc. | -27.15% | -33.24% | -45.06% | -40.81% | -28.80% | |
| ServiceNow Inc. | 2.88% | 4.84% | 4.17% | 0.54% | 1.63% | |
| Synopsys Inc. | -72.84% | -13.81% | -10.64% | -1.33% | -11.09% | |
| Workday Inc. | -12.46% | -14.62% | -23.74% | -19.23% | -25.36% | |
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 × -196,354 ÷ 3,704,969 = -5.30%
3 Click competitor name to see calculations.
The financial performance from 2021 to 2025 is characterized by a persistent failure to generate positive economic value despite aggressive revenue expansion. While the organization has successfully scaled its top-line figures, the economic profit has remained negative throughout the entire period, indicating that the returns on invested capital have not surpassed the associated cost of capital.
- Revenue Growth Trends
- Adjusted revenue demonstrates a consistent upward trajectory, increasing from 1,206,390 thousand USD in 2021 to 3,704,969 thousand USD by 2025. This steady growth indicates a strong expansion of market scale and operational reach over the five-year period.
- Economic Profit Analysis
- Economic profit has remained negative and exhibited significant volatility. The deficit widened from -39,053 thousand USD in 2021 to a peak loss of -251,696 thousand USD in 2024, before moderating to -196,354 thousand USD in 2025. This pattern suggests that the costs of capital and investment have consistently outweighed the operating profits generated.
- Economic Profit Margin Performance
- The economic profit margin has fluctuated without achieving a positive trend, reflecting an inability to translate revenue growth into economic value. The margin reached its lowest point of -8.73% in 2024, mirroring the peak in economic losses. While marginal improvements were observed in 2023 (-3.84%) and 2025 (-5.30%), the overall trend reveals a persistent gap between actual returns and the required cost of capital.
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