Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2019
- Operating Profit Margin since 2019
- Current Ratio since 2019
- Debt to Equity since 2019
- Price to Earnings (P/E) since 2019
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Profitability Ratios (Summary)
Datadog Inc., profitability ratios
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).
- Gross Profit Margin
- The gross profit margin displayed a generally positive trend over the analyzed period, starting at 78.43% in 2020 and increasing steadily to 80.79% by 2024. This upward movement indicates an improvement in the company's ability to retain profit from sales after accounting for the cost of goods sold, reflecting either enhanced pricing power, cost controls, or a favorable product mix.
- Operating Profit Margin
- The operating profit margin experienced fluctuations with a predominantly negative outlook in the initial years, moving from -2.28% in 2020 to -3.5% in 2022. However, from 2022 onwards, a recovery trend is observed, reaching positive territory at 2.02% in 2024. This turnaround suggests improved operational efficiency or reduced operating expenses relative to revenue.
- Net Profit Margin
- Similar to operating margin patterns, the net profit margin was negative in the early years, starting at -4.07% in 2020 and improving to -2.99% in 2022. A significant shift occurred thereafter, with the margin turning positive and rising to 6.85% by 2024. This progression indicates enhanced overall profitability, potentially driven by better cost management, increased revenue, or non-operating income impacts.
- Return on Equity (ROE)
- The return on equity followed a trajectory consistent with profit margin developments, showing negative returns from -2.56% in 2020 to -3.56% in 2022, then turning positive and advancing to 6.77% by 2024. This reflects the company transitioning towards generating positive returns on shareholder investments in the latter years, highlighting improved financial performance and equity utilization.
- Return on Assets (ROA)
- The return on assets also mirrored the overall profitability improvement, beginning with negative values from -1.3% in 2020 to -1.67% in 2022, followed by a positive increase to 3.18% by 2024. This suggests a growing efficiency of asset use in generating profits, indicating enhanced asset management and operational effectiveness over time.
Return on Sales
Return on Investment
Gross Profit Margin
Datadog Inc., gross 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) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| 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 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenue
- The revenue figures show a consistent upward trend over the five-year period. Starting from 603,466 thousand US dollars in 2020, revenue more than quadrupled to reach 2,684,275 thousand US dollars by the end of 2024. This indicates robust growth and increased sales or service volume annually.
- Gross Profit
- Gross profit also experienced substantial growth alongside revenue, increasing from 473,269 thousand US dollars in 2020 to 2,168,744 thousand US dollars in 2024. The steady increase suggests effective cost management relative to revenue growth, allowing the company to expand its gross earnings significantly.
- Gross Profit Margin
- The gross profit margin has remained relatively stable and generally trending slightly upwards. Starting at 78.43% in 2020, it slightly decreased to 77.23% in 2021 but subsequently rose to 80.79% by 2024. This improvement in margin indicates that the company not only grew in scale but also enhanced its efficiency or pricing power, improving profitability per unit of revenue.
- Overall Insights
- The data reflects strong and consistent growth in both revenue and gross profit over the five years analyzed. Increasing gross profit margins indicate improved operational efficiency or favorable cost structures. The company appears to be effectively scaling its business while maintaining or improving profitability metrics at the gross profit level.
Operating Profit Margin
Datadog Inc., operating 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) | ||||||
| Operating income (loss) | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| 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. | ||||||
| Operating Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 2024 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several key trends over the five-year period from 2020 to 2024. Revenue has shown a consistent and substantial increase each year, growing from approximately $603 million in 2020 to over $2.68 billion by the end of 2024. This steady upward trajectory indicates strong top-line growth and expanding market presence or demand.
Operating income (loss) figures indicate a different pattern. There were operating losses throughout the first four years, reaching the highest loss in 2022 with approximately $58.7 million. Although the loss decreased notably in 2023 to about $33.5 million, the year 2024 marked a significant positive turnaround with an operating income of roughly $54.3 million. This shift from negative to positive operating income suggests improved operational efficiency or cost control measures that began to materialize significantly in the final year.
The operating profit margin follows a trend consistent with the operating income results. Margins were negative from 2020 through 2023, fluctuating between -1.86% and -3.5%, with the worst margin observed in 2022. In 2024, the margin shifted to a positive 2.02%, representing not only a recovery but also the company achieving profitability at the operating level. This improvement in margin, alongside growing revenue, indicates a strengthening financial position and greater operational leverage.
- Revenue Growth
- Consistent year-over-year increase, nearly quadrupling from 2020 to 2024.
- Operating Income (Loss)
- Losses incurred from 2020 to 2023, peaking in 2022; positive operating income realized in 2024.
- Operating Profit Margin
- Negative throughout the initial four years, with the worst margin in 2022; margin turned positive in 2024, indicating operational profitability.
Overall, the data highlights a company experiencing rapid revenue growth, initially accompanied by operating losses, but ultimately achieving operating profitability and improved margins by the end of the analyzed period. This signifies effective cost management or structural improvements alongside expanding sales volume.
Net Profit Margin
Datadog Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| 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. | ||||||
| Net Profit Margin, Sector | ||||||
| Software & Services | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 2024 Calculation
Net profit margin = 100 × Net income (loss) ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals significant developments in profitability, revenue growth, and profit margins over the five-year period.
- Net Income (Loss)
- The net income figures indicate a pronounced shift from losses to profits. Initially, substantial net losses were recorded, with -24,547 thousand USD in 2020 and -20,745 thousand USD in 2021. The loss deepened in 2022, reaching -50,160 thousand USD. However, the company transitioned to profitability in 2023 with a net income of 48,568 thousand USD, followed by a substantial increase to 183,746 thousand USD in 2024. This recovery suggests improved operational efficiency or market conditions leading to enhanced profitability.
- Revenue
- Revenue experienced robust growth throughout the period. Starting at 603,466 thousand USD in 2020, it nearly doubled by 2021 to 1,028,784 thousand USD and continued to rise significantly to 1,675,100 thousand USD in 2022. This upward trend persisted with revenues reaching 2,128,359 thousand USD in 2023 and further expanding to 2,684,275 thousand USD in 2024. The consistent upward trajectory indicates strong business expansion and possibly increased market demand or successful strategic initiatives.
- Net Profit Margin
- Profit margins mirrored the net income trend closely. The company posted negative profit margins in the first three years: -4.07% in 2020, improving to -2.02% in 2021 but worsening to -2.99% in 2022. This trend reversed in 2023 when the margin turned positive at 2.28%, followed by a marked improvement to 6.85% in 2024. The rising net profit margin in the latter years underscores enhanced profitability contributions relative to revenue, reflecting better cost management or higher-margin revenue streams.
Overall, the data depicts a period of initial financial struggle with losses and negative margins, followed by a sharp turnaround resulting in significant profits and strong revenue growth. The company’s ability to improve both absolute profitability and profitability ratios after a period of losses suggests effective strategic adjustments and operational improvements.
Return on Equity (ROE)
Datadog Inc., ROE 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) | ||||||
| Net income (loss) | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| 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. | ||||||
| ROE, Sector | ||||||
| Software & Services | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
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 2024 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss)
- The net income figures reveal a significant fluctuation over the five-year period. The company experienced losses from 2020 through 2022, with the loss deepening from approximately -24.5 million in 2020 to a peak loss of about -50.2 million in 2022. A notable turnaround occurred in 2023, with the company reporting a positive net income of approximately 48.6 million, which then further increased substantially to around 183.7 million in 2024. This indicates a strong recovery and a marked improvement in profitability in the latter two years.
- Stockholders’ Equity
- Stockholders’ equity consistently increased each year, starting from approximately 957 million in 2020 and rising steadily to over 2.7 billion by 2024. The growth trend in equity is robust, reflecting either retained earnings accumulation or capital inflows. The company’s equity nearly tripled over the analyzed period, suggesting solid financial strengthening.
- Return on Equity (ROE)
- The ROE values demonstrate a closely aligned pattern with the net income trends. Initially, ROE was negative, starting at -2.56% in 2020 and worsening slightly to -3.56% in 2022. This corresponds to the losses reported during those years. In 2023, ROE turned positive to 2.4%, indicating a return to profitability, and increased further to 6.77% in 2024. While still moderate, this positive trend in ROE underscores improved efficiency in generating returns from shareholders' equity.
- Overall Trend and Insights
- The financial data highlight a company that struggled with profitability in the early years but achieved a significant turnaround starting in 2023. The consistent increase in stockholders’ equity combined with the positive shift in net income and ROE in the final two years reflects enhanced operational performance and financial health. The trajectory suggests successful strategic initiatives or market conditions favoring improved earnings generation. However, the ROE still indicates room for improvement in translating equity into profits at a higher rate.
Return on Assets (ROA)
Datadog Inc., ROA 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) | ||||||
| Net income (loss) | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| 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. | ||||||
| ROA, Sector | ||||||
| Software & Services | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
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 2024 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The company’s financial performance demonstrates notable fluctuations over the analyzed periods, with a marked improvement in profitability in the most recent years. Net income experienced a decline from a loss of approximately $24.5 million in 2020 to a larger loss of around $50.2 million in 2022, followed by a significant reversal to positive income of $48.6 million in 2023 and further growth to $183.7 million in 2024. This suggests a considerable turnaround in operational efficiency or revenue growth leading to profitability.
Total assets show a consistent and robust upward trend, expanding from $1.89 billion in 2020 to $5.79 billion in 2024, indicating substantial growth and likely investments in assets over the period. This growth in asset base supports the company’s expanding scale and capacity.
The return on assets (ROA) follows the trajectory observed in net income, starting with negative returns, which deepened from -1.3% in 2020 to -1.67% in 2022. However, there is a positive shift to 1.23% in 2023 and a significant increase to 3.18% in 2024. This improvement reflects enhanced asset utilization and profitability, confirming the financial turnaround indicated by the net income figures.
- Net Income Trend
- Losses deepened initially but reversed sharply to achieve significant profits by 2023 and 2024.
- Total Assets Growth
- Steady and strong increase indicating expansion and greater asset base over five years.
- Return on Assets (ROA)
- Negative returns in early years turned positive with strong improvement, evidencing better profit generation from assets.
Overall, the financial data reflects a company undergoing significant growth and operational improvement, culminating in positive profitability and stronger returns on its investments by the latest period analyzed.