Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Current Ratio since 2019
- Price to Book Value (P/BV) since 2019
- Analysis of Revenues
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Long-term Activity Ratios (Summary)
Datadog Inc., long-term (investment) activity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
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).
An examination of long-term activity ratios reveals several noteworthy trends between 2021 and 2025. Generally, the company demonstrates a declining efficiency in utilizing both fixed assets and total assets to generate revenue, while equity turnover exhibits more moderate fluctuations.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio consistently decreased over the five-year period, moving from 13.69 in 2021 to 10.14 in 2025. This indicates a diminishing ability to generate sales revenue from its net fixed assets. The rate of decline appears to be accelerating in the later years of the observed period.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- Similar to the standard net fixed asset turnover, this ratio also exhibits a downward trend, declining from 7.54 in 2021 to 6.20 in 2025. The inclusion of operating lease obligations and right-of-use assets does not alter the overall trend of decreasing efficiency. The magnitude of the decline is relatively consistent year-over-year.
- Total Asset Turnover
- The total asset turnover ratio experienced an initial increase from 0.43 in 2021 to 0.56 in 2022, but subsequently declined to 0.46 by 2024 before a slight recovery to 0.52 in 2025. This suggests an initial improvement in utilizing all assets to generate revenue, followed by a period of reduced efficiency, and a minor rebound in the most recent year. The fluctuations are less pronounced than those observed in the fixed asset turnover ratios.
- Equity Turnover
- The equity turnover ratio showed an increase from 0.99 in 2021 to 1.19 in 2022, followed by a decrease to 0.99 in 2024, and a further decline to 0.92 in 2025. This indicates a varying relationship between revenue generated and the amount of equity invested. The ratio’s movement is less directional than the asset turnover ratios, suggesting a more stable relationship between sales and equity.
In summary, the observed trends suggest a gradual decrease in the efficiency with which the company utilizes its assets to generate revenue, particularly its net fixed assets. While equity turnover shows some fluctuation, it does not demonstrate the consistent downward trend seen in the asset turnover ratios.
Net Fixed Asset Turnover
Datadog Inc., net fixed asset turnover 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) | ||||||
| Revenue | ||||||
| Property and equipment, net | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| 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. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Software & Services | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Net fixed asset turnover = Revenue ÷ Property and equipment, net
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio demonstrates a consistent downward trend over the five-year period. While revenue has increased substantially, the growth in property and equipment, net, has outpaced it, resulting in declining efficiency in generating revenue from fixed assets.
- Net Fixed Asset Turnover
- In 2021, the net fixed asset turnover ratio was 13.69. This indicates that for every dollar invested in net fixed assets, the company generated $13.69 in revenue.
- The ratio decreased to 13.36 in 2022, representing a slight decline in efficiency. This coincided with a significant increase in property and equipment, net.
- The downward trend continued in 2023, with the ratio falling to 12.38. The rate of decline accelerated as the investment in fixed assets continued to grow.
- In 2024, the ratio further decreased to 11.83, indicating a continued reduction in the revenue generated per dollar of net fixed assets.
- By 2025, the net fixed asset turnover ratio reached 10.14, the lowest value in the observed period. This suggests a substantial decrease in the efficiency with which fixed assets are utilized to generate revenue.
The consistent decline in the net fixed asset turnover ratio, despite increasing revenue, warrants further investigation. Potential factors contributing to this trend could include significant investments in new, not-yet-fully-utilized assets, a shift in business strategy requiring more capital-intensive operations, or inefficiencies in asset management. The increasing investment in property and equipment, net, suggests a growth strategy, but the declining turnover ratio indicates that the returns on these investments, relative to the asset base, are diminishing.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Datadog Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Property and equipment, net | ||||||
| Operating lease assets | ||||||
| Property and equipment, net (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| 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. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Software & Services | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenue ÷ Property and equipment, net (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
The analysis reveals a consistent, though decelerating, growth in revenue alongside a corresponding increase in net fixed assets over the five-year period. However, the net fixed asset turnover ratio, which measures the efficiency with which a company uses its fixed assets to generate revenue, demonstrates a declining trend.
- Revenue Trend
- Revenue experienced substantial growth from US$1,028,784 thousand in 2021 to US$3,427,158 thousand in 2025. The growth rate, while positive throughout the period, appears to slow down incrementally each year. Revenue increased by approximately 63% from 2021 to 2022, 27% from 2022 to 2023, 26% from 2023 to 2024, and 27% from 2024 to 2025.
- Net Fixed Asset Trend
- Net fixed assets, inclusive of operating leases and right-of-use assets, increased consistently from US$136,507 thousand in 2021 to US$552,767 thousand in 2025. This indicates ongoing investment in property, equipment, and related lease obligations. The rate of increase in net fixed assets also appears to be slowing, though less dramatically than revenue growth.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio decreased steadily from 7.54 in 2021 to 6.20 in 2025. This suggests that the company is becoming less efficient in generating revenue from its fixed asset base. While revenue is increasing, it is not increasing at the same rate as the investment in fixed assets. The decline from 7.54 to 7.87 in 2022 represents an anomaly, a slight increase before resuming the downward trend. The largest single-year decrease occurred between 2023 and 2024, falling from 7.13 to 6.72.
The observed decline in the net fixed asset turnover ratio warrants further investigation. Potential contributing factors could include increased investment in assets that have not yet reached full productive capacity, a shift in business strategy requiring more capital-intensive operations, or a less efficient utilization of existing fixed assets. Continued monitoring of this ratio is recommended to assess the long-term implications for profitability and operational efficiency.
Total Asset Turnover
Datadog Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| 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. | ||||||
| Total Asset Turnover, Sector | ||||||
| Software & Services | ||||||
| Total Asset Turnover, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Total asset turnover = Revenue ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The total asset turnover ratio exhibits fluctuations over the five-year period. Initially, an increasing trend is observed, followed by a decline and subsequent stabilization. This suggests evolving efficiency in utilizing assets to generate revenue.
- Total Asset Turnover Trend
- The ratio increased from 0.43 in 2021 to 0.56 in 2022, indicating improved asset utilization. This suggests the company became more efficient in generating revenue from its asset base during this period.
- A slight decrease to 0.54 was noted in 2023, potentially due to increased investment in assets that had not yet fully translated into revenue gains, or a slower revenue growth rate relative to asset growth.
- The ratio experienced a more pronounced decline in 2024, falling to 0.46. This could indicate a significant increase in assets without a corresponding increase in revenue, or a decrease in revenue. Further investigation into the drivers of asset growth and revenue performance during this year would be warranted.
- In 2025, the ratio partially recovered to 0.52, suggesting a stabilization of asset utilization. While not reaching the peak of 2022, this indicates a potential reversal of the downward trend observed in 2024.
The fluctuations in the total asset turnover ratio suggest a dynamic relationship between asset investment and revenue generation. The company’s ability to consistently improve this ratio is crucial for maximizing profitability and demonstrating efficient resource allocation. The decline in 2024 warrants further scrutiny to understand the underlying causes and assess the sustainability of the subsequent partial recovery.
Equity Turnover
Datadog Inc., equity turnover 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) | ||||||
| Revenue | ||||||
| Stockholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| 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. | ||||||
| Equity Turnover, Sector | ||||||
| Software & Services | ||||||
| Equity Turnover, Industry | ||||||
| Information Technology | ||||||
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 2025 Calculation
Equity turnover = Revenue ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The equity turnover ratio exhibits a fluctuating pattern over the five-year period. Initial increases are followed by stabilization and a subsequent decline.
- Overall Trend
- The equity turnover ratio initially increased from 0.99 in 2021 to 1.19 in 2022, indicating a more efficient utilization of equity to generate revenue. However, this upward momentum was not sustained. The ratio decreased to 1.05 in 2023 and then stabilized at 0.99 in 2024 before declining further to 0.92 in 2025.
- Revenue Growth vs. Equity Turnover
- Revenue demonstrated consistent growth throughout the period, increasing from US$1,028,784 thousand in 2021 to US$3,427,158 thousand in 2025. Despite this revenue growth, the equity turnover ratio did not consistently rise. The ratio’s decline in the later years suggests that the growth in stockholders’ equity outpaced the growth in revenue, leading to a less efficient use of equity.
- Stockholders’ Equity Impact
- Stockholders’ equity increased steadily from US$1,041,203 thousand in 2021 to US$3,732,206 thousand in 2025. The increasing equity base, coupled with a stabilization and eventual decrease in the equity turnover ratio, suggests that the company is retaining more earnings or issuing more equity relative to its revenue generation. This could be due to investments in long-term projects or a shift in capital structure.
The observed decline in equity turnover in the final year warrants further investigation to determine the underlying causes and potential implications for future profitability and efficiency.