Stock Analysis on Net

Datadog Inc. (NASDAQ:DDOG)

$24.99

Enterprise Value to FCFF (EV/FCFF)

Microsoft Excel

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Free Cash Flow to The Firm (FCFF)

Datadog Inc., FCFF calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income (loss)
Net noncash charges
Changes in operating assets and liabilities
Net cash provided by operating activities
Cash paid for interest, net of tax1
Purchases of property and equipment
Capitalized software development costs
Free cash flow to the firm (FCFF)

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).


Operating Activities Cash Flow
The net cash provided by operating activities has exhibited a strong and consistent upward trend over the five-year period. Starting at $109,091 thousand in 2020, the figure escalated significantly each year, reaching $286,545 thousand in 2021, $418,407 thousand in 2022, $659,954 thousand in 2023, and finally $870,603 thousand in 2024. This progression indicates improving operational efficiency and increasing cash generation capabilities.
Free Cash Flow to the Firm (FCFF)
Free cash flow to the firm has similarly shown a continuous and robust increase throughout the same period. The FCFF grew from $83,635 thousand in 2020 to $251,258 thousand in 2021, and further to $354,256 thousand in 2022. Subsequent years saw even greater rises, with FCFF reaching $598,301 thousand in 2023 and $775,937 thousand in 2024. This suggests that after accounting for capital expenditures, the company has increasingly more cash available to all capital providers, reflecting sound financial health and effective investment management.
Overall Trends and Insights
The simultaneous and substantial increases in both net cash from operating activities and free cash flow suggest strong operational growth and enhanced profitability. The disparity in growth magnitudes indicates that capital expenditures have been well controlled relative to operating cash inflows, enabling the firm to expand liquidity reserves. The consistent year-over-year improvement points to a positive trajectory in the company’s financial stability and capacity to generate cash internally, which could support future growth initiatives, debt servicing, or shareholder returns.

Interest Paid, Net of Tax

Datadog Inc., interest paid, net of tax calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Effective Income Tax Rate (EITR)
EITR1
Interest Paid, Net of Tax
Cash paid for interest, before tax
Less: Cash paid for interest, tax2
Cash paid for interest, net of tax

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 See details »

2 2024 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= × =


Effective Income Tax Rate (EITR)

The effective income tax rate remained stable at 21% for the years ending December 31, 2020, 2021, and 2022. In 2023, a decrease is observed, with the rate dropping to 19.37%. This declining trend continues more sharply into 2024, where the rate falls to 9.9%. The reduction in the effective tax rate over the latter years may indicate changes in tax strategy, benefits from tax credits, adjustments in the statutory tax environment, or other tax planning measures.

Cash Paid for Interest, Net of Tax

The cash paid for interest, net of tax, shows an overall upward trend from 2020 through 2024. In 2020, the amount was 427 thousand US dollars. There is a significant increase in 2021 to 738 thousand US dollars, which then remains almost constant in 2022 at 738 thousand. In 2023, a slight increase to 753 thousand is noted, followed by a further increase to 834 thousand in 2024. This gradual rise suggests an increasing interest expense burden over the period, possibly reflective of increased borrowings or rising interest rates impacting financing costs.


Enterprise Value to FCFF Ratio, Current

Datadog Inc., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Selected Financial Data (US$ in thousands)
Enterprise value (EV)
Free cash flow to the firm (FCFF)
Valuation Ratio
EV/FCFF
Benchmarks
EV/FCFF, Competitors1
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.
EV/FCFF, Sector
Software & Services
EV/FCFF, Industry
Information Technology

Based on: 10-K (reporting date: 2024-12-31).

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

Datadog Inc., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in thousands)
Enterprise value (EV)1
Free cash flow to the firm (FCFF)2
Valuation Ratio
EV/FCFF3
Benchmarks
EV/FCFF, Competitors4
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.
EV/FCFF, Sector
Software & Services
EV/FCFF, 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 See details »

2 See details »

3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =

4 Click competitor name to see calculations.


Enterprise value (EV)
The enterprise value exhibited significant volatility over the five-year period. Initially, it rose sharply from approximately 28.98 billion USD at the end of 2020 to nearly 49.85 billion USD in 2021. However, in 2022, EV decreased substantially to around 23.38 billion USD. The value rebounded again in 2023 to over 41.14 billion USD but then slightly declined to about 40.69 billion USD in 2024. Overall, this reflects fluctuations with a peak in 2021, followed by a drop, and a partial recovery thereafter.
Free cash flow to the firm (FCFF)
FCFF demonstrated a consistent and strong upward trend throughout the period. Starting at approximately 83.64 million USD in 2020, the figure increased significantly each year, reaching roughly 251.26 million USD in 2021, then 354.26 million USD in 2022, followed by 598.30 million USD in 2023, and finally 775.94 million USD in 2024. This steady growth suggests improving cash generation capabilities and operational performance over time.
EV to FCFF ratio (EV/FCFF)
The EV/FCFF multiple declined markedly across the period, moving from an extremely high 346.45 in 2020 to 198.4 in 2021, then dropping sharply to 66 in 2022. It remained relatively stable but decreased further in 2023 and 2024, reaching 68.76 and 52.45 respectively. This trend indicates that the enterprise value relative to free cash flow became more reasonable and suggests an increasing valuation efficiency or improved investor perception of cash flow generation relative to enterprise value.