Datadog Inc. (NASDAQ:DDOG)

Receivables turnover

The receivables turnover ratio started at 3.69 in March 2020 and showed a generally increasing trend over the subsequent quarters. It increased to 4.35 by June 2020, fluctuating moderately thereafter. From 2022 to 2025, the ratio exhibited more pronounced fluctuations between approximately 4.18 and 5.78. The highest turnover occurred in December 2024 at 5.78, indicating more efficient collection of receivables over time with some variability.

Payables turnover

The payables turnover ratio displayed significant volatility across periods. After an initial ratio of 6.1 in March 2020, it spiked to 12.46 in June 2020, then dropped back to 6.1 in the following quarter. From 2021 onward, the ratio experienced sharp fluctuations, reaching a notable peak of 14.77 in December 2022. Subsequently, the ratio trended lower with several ups and downs, dropping to the low 3 to 5 range in 2024 and early 2025. This volatility suggests inconsistent payment timing to suppliers with periods of rapid payables turnover alternating with slower payment intervals.

Working capital turnover

The working capital turnover ratio generally increased over time, beginning at 0.42 in March 2020 and gradually rising to a peak of 1.33 in June 2024. The upward trend was consistent through most periods until a decline back to 0.88 by March 2025. This pattern indicates improving efficiency in using working capital to generate revenue until mid-2024, followed by a reduction in turnover efficiency in the trailing quarters.

Average receivable collection period

The average receivable collection period showed a decreasing trend over the entire span. Starting at 99 days in March 2020, the collection period oscillated but largely trended downward to a low of 63 days by March 2025. This represents an improvement in receivables management and faster conversion of receivables into cash, despite intermittent short-term fluctuations.

Average payables payment period

The average payables payment period exhibited considerable fluctuation with some distinct cycles. Initially high at 60 days in March 2020, it dropped to 29 days by June 2020, rose sharply to 61 days by September 2020, and then experienced alternating declines and rises. Notably, the period peaked twice at 78 days in December 2022 and December 2023, with other high values such as 96 days in September 2024. These peaks indicate intervals where the company extended payment terms significantly, while in other quarters the payment period was substantially shorter. Overall, the pattern reflects variable supplier payment behavior with no clear long-term trend but evident variability in liquidity management practices.

The revenue demonstrates a consistent upward trajectory throughout the observed periods, indicating strong and sustained growth. Starting from 131,248 thousand US dollars in the first quarter of 2020, revenue rises steadily each quarter, reaching 761,553 thousand US dollars by the first quarter of 2025. This represents nearly a sixfold increase over the five-year span, highlighting robust expansion in the company's core operations.

Accounts receivable, net of allowance for credit losses, generally follows an increasing trend analogous to revenue growth but with notable fluctuations. Beginning at 108,437 thousand US dollars in early 2020, receivables increase substantially over time, with some periods of volatility. For instance, after a peak of 399,551 thousand US dollars at the end of 2022, there is a decrease in early 2023 and mid-2023, followed by another rise leading to 598,919 thousand US dollars in mid-2024 before declining again by the first quarter of 2025. This variability suggests occasional changes in billing cycles, collection patterns, or credit policies that affect accounts receivable balances.

The receivables turnover ratio displays a fluctuating but generally improving pattern over the quarters listed. Initial values are missing for 2020 but from early 2021 onwards, the ratio ranges between approximately 3.69 and 5.78. A higher ratio indicates more efficient credit management and faster collection of receivables relative to revenue. The uptick to values above 5 in several recent quarters suggests enhanced operational efficiency in managing outstanding customer balances, though the presence of some lower values highlights periodic inconsistencies in receivables management.

In summary, revenue growth is strong and steady, supported by increasing accounts receivable which at times present volatility. The receivables turnover ratio improvements reflect better collection efficiency, albeit with some variation. These dynamics together suggest effective expansion with ongoing efforts to optimize working capital management.

Revenue Trend

Consistent quarter-over-quarter growth, almost sixfold increase over five years.

Accounts Receivable Development

Overall increased in line with revenue but showed fluctuations indicating variable collection periods or credit management changes.

Receivables Turnover Ratio

Generally improving, indicating more efficient collections, with some fluctuations pointing to occasional operational variations.

Overall Insight

Strong revenue growth underpinned by growing receivables and improved efficiency in receivables collection, suggesting expansion combined with enhanced working capital control efforts.

The cost of revenue demonstrates a consistent upward trajectory across the periods analyzed, indicating steadily increasing expenses associated with the production or delivery of services. Beginning at approximately $26.5 million in March 2020, the cost of revenue grows to over $157 million by March 2025. This almost sixfold increase suggests expansion in operations or rising costs in inputs over time.

Accounts payable exhibit significant volatility throughout the periods. Initially rising from about $14.2 million in March 2020 to a peak nearing $48 million in June 2023, they then fluctuate with sharp increases and decreases. For example, accounts payable surge from $25.3 million in December 2021 to $47.7 million in June 2022, then drop and rise again, reaching approximately $98.4 million by March 2025. Such variability may reflect changes in supplier payment terms, procurement activity, or working capital management strategies.

The payables turnover ratio shows considerable fluctuations and lacks a clear upward or downward trend. Several spikes are observed, such as a high ratio of 14.77 in September 2022 and 14.07 in June 2022, indicating rapid payment to suppliers during these quarters. Conversely, lower ratios seen around June 2023 (4.71) and December 2023 (4.67) suggest slower payment cycles in those periods. The variability in turnover ratio could point to shifting company policies on managing payables, possible seasonality in expenditures, or changes in supplier relationships.

Overall, the data reflect a company experiencing growth in cost-related activities but managing accounts payable with variable efficiency or strategies over time. The disconnect between steadily rising costs and the fluctuating payables turnover may warrant further analysis of cash flow management and supplier negotiations to understand the underlying causes of these patterns.

Working Capital

The working capital exhibits an overall increasing trend from March 31, 2020, through March 31, 2025. Starting at approximately 722 million USD in the first quarter of 2020, it more than quadruples by the first quarter of 2025, reaching approximately 3.2 billion USD. There are occasional fluctuations, such as a noticeable dip between June 30, 2024 (about 1.8 billion USD) and September 30, 2024 (about 2.0 billion USD), before continuing the upward trend. The increase is generally steady, reflecting growing operational liquidity or assets minus liabilities available to the firm over the period.

Revenue

Revenue shows a consistent and strong upward trend across the observed quarters. Starting at roughly 131 million USD in the first quarter of 2020, revenue steadily rises to reach over 760 million USD by the first quarter of 2025. Each year demonstrates significant incremental growth, with no quarters indicating a decline. The company appears to be experiencing robust sales growth or service expansion, with the quarterly increases remaining steady or accelerating in later periods, suggesting strong demand or effective market penetration.

Working Capital Turnover Ratio

The working capital turnover ratio, which measures how efficiently working capital is used to generate revenue, is available beginning in 2020, though early data is sparse. From the earliest complete data points, the ratio rises from 0.42 in a quarter of 2020 to peak values around 1.06 in late 2021 and early 2023, indicating improved efficiency in using working capital to drive revenue. After this peak, the ratio slightly declines, stabilizing around values between 0.88 and 1.33, with some volatility observed in the latest quarters through 2025. This variability could suggest fluctuating efficiency or shifts in working capital management strategies vis-à-vis revenue generation in recent quarters.

Overall Summary

Across the examined period, both working capital and revenue demonstrate strong growth trends, suggesting expanding operational scale and market success. While revenue growth is steady and consistent, the working capital increases at a higher absolute rate, indicating that the company is investing more in short-term assets or incurring higher short-term liabilities. The working capital turnover ratio’s improvement through the middle of the period indicates gains in capital efficiency, but recent fluctuations suggest some challenges or strategic adjustments in balancing capital and revenue growth. Maintaining or improving working capital efficiency alongside revenue growth will be critical for sustaining financial performance.

Receivables Turnover Ratio

The receivables turnover ratio shows a general increasing trend over the reported periods, starting from 3.69 in March 2020 and reaching 5.78 by March 2025. Initial values between March 2020 and December 2020 illustrate moderate turnover rates close to the 3.7 to 4.0 range. From early 2021 onwards, the turnover ratio improves steadily, peaking at 5.7 in June 2023 before fluctuating slightly around the 4.5 to 5.7 range in subsequent quarters. This indicates an overall improvement in the company's efficiency in collecting receivables over time.

Average Receivable Collection Period

The average receivable collection period exhibits an inverse pattern relative to the receivables turnover ratio, decreasing from 99 days in March 2020 to 63 days in March 2025. Early 2020 values start near 99 days, then show a downward trajectory with some fluctuations, reaching a low of 64 days in June 2023. Periods following mid-2023 demonstrate moderate variability, with values oscillating primarily between 63 and 87 days. This trend confirms an overall reduction in the number of days required to collect receivables, implying enhanced cash flow efficiency.

Summary of Trends and Insights

The complementary movement between the receivables turnover ratio and the average receivable collection period suggests improved management of receivables over the analyzed timespan. Increasing turnover ratios paired with decreasing collection days indicate the company has become more effective at converting credit sales into cash. Fluctuations observed in recent quarters may point to seasonal variations or operational adjustments. Overall, the company's receivables management demonstrates enhanced liquidity and operational efficiency through sustained improvement in key collection metrics.

Payables Turnover

The payables turnover ratio demonstrates significant volatility over the observed periods. Initially, the ratio increased sharply to a peak of 14.77 in December 2022 before experiencing a notable decline to a low of 3.81 by June 2024. More recently, the ratio exhibits moderate recovery, rising to 5.72 by March 2025. The fluctuations indicate varying efficiency in the company's payment cycle, with periods of accelerated payment (higher turnover) followed by slower payment practices (lower turnover).

Average Payables Payment Period

The average payables payment period in days inversely correlates with the payables turnover ratio, as expected. Starting from 60 days in March 2021, the period shortens substantially to 25 days by December 2022, reflecting faster payment practices. Subsequently, the payment period lengthens considerably, peaking at 96 days in September 2024. Towards the end of the series, it decreases somewhat to 64 days in March 2025. This pattern indicates a shift from rapid payments to extended payment terms, followed by a moderate attempt to speed up payment cycles again.

Overall Trends and Insights

The data reveals a cyclical pattern in payables management over the period analyzed. The company initially improved its payables turnover, paying obligations more promptly, which might suggest stronger liquidity or better vendor negotiations. However, this is followed by a reversal toward lengthier payment periods, potentially signaling cash flow management adjustments or strategic deferral of payables. The recent partial recovery in payables turnover and reduction in payment days might indicate an effort to balance supplier relationships and working capital optimization. These shifts should be monitored closely, as they impact supplier credit terms, operational fluidity, and financial stability.