Signal Ledger LabSignal Ledger valuation · DDOG
Datadog, Inc.
What the shares are worth today on our research (cited consensus, company plans and peers, since management sets no usable targets): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Jun 30, 2026.
- Business value at FY2030
- $11B
- FY2030 revenue
- $8.5B
- FY2030 EPS · P/E
- $0.52 · 78×
- Discount rate (WACC · equity)
- 9.77% · 9.87%
How this is built. No dated long-range revenue target; use current full-year guidance and FY2027 S&P Global revenue consensus, while retaining the public margin objective with an explicit GAAP reconciliation. Each input below shows its basis: consensus, company plan, peer or rule.
Latest quarter in this research: Q2 FY2026
Reported Aug 6, 2026 for the quarter to Jun 30, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
| Segment | Revenue | vs a year ago | Operating income | Margin |
|---|---|---|---|---|
| Observability and Security Platform | $1.12B | +36% | $5M | 0.5% |
- Revenue increased 36% to $1.121454B; about 4,720 customers had $100k+ ARR.
- GAAP operating income was $5.455M versus non-GAAP $257.031M; $220.251M SBC is a major difference.
- FY2026 revenue guidance raised to $4.45–4.47B.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Observability and Security Platform | Margin | $8.5B | $6.8B | $18.90 | 49.1× EBIT | 89% |
| All businesses | $8.5B | $6.8B | $18.90 |
From 2030 back to today
- Enterprise value at end of FY2030$11B
- Plus net cash at FY2030$3.7B
- Equity value at FY2030$14B
- ÷ (1 + 9.87%)^4.5 years at the cost of equity$9.5B
- + dividends paid on the way, discounted$0B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 12.1% — more than our 5% tolerance. Usually the net debt path borrows at a much lower rate than the discount rate assumes; treat the value as less certain.
From businesses to one share
- All businesses, valued today$6.8B
- − borrowings$1B
- − finance leases$0B
- + cash and short-term investments$5B
- ÷ diluted shares0.359B
- Signal Ledger valuation$30.04
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2026 | $4.5B | $0.1B | $0.2B | −$0.1B | $4B cash |
| FY2027 | $5.5B | $0.1B | $0.2B | −$0.1B | $3.9B cash |
| FY2028 | $6.5B | $0.2B | $0.3B | −$0.1B | $3.8B cash |
| FY2029 | $7.5B | $0.3B | $0.3B | −$0.1B | $3.7B cash |
| FY2030 | $8.5B | $0.3B | $0.3B | −$0B | $3.7B cash |
What must be true
- Observability and Security Platform grows revenue from $4.5B in FY2026 to $8.5B in FY2030 (1.9×).
- Observability and Security Platform raises its EBIT margin from 0.4% to 2.6%.
- The company spends $1.3B of capital expenditure through FY2030.
- The company stays net cash throughout (lowest point $3.7B of net cash in FY2030).
What the price implies
To reach $257.75 at our discount rate, Datadog, Inc. would need about $25.6B of FY2030 sales (growth of about 54.8% a year from FY2026) with 8.4% GAAP EBIT margin — versus $8.5B and 2.6% GAAP EBIT margin in our research.
At the research price of $257.75 (2026-10-23), the price asks more than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
If sales and margins changed together
Each row matches the same research price at our unchanged discount rate, by scaling every operating line's margin by one common factor. Sales cover margin and capacity lines only; other valuation lines stay fixed. Margins are revenue-weighted within each metric, before separately modeled corporate costs and eliminations. The conclusion uses the row at our research margins when sales alone can match the price, otherwise the solved row needing the least sales growth; this is a trade-off between growth and profitability, not a forecast.
| FY2030 sales factor | FY2030 sales | FY2026–30 CAGR | Required FY2030 margin | Requirement |
|---|---|---|---|---|
| 1.50× | $12.8B | 30.2% | — | InfeasibleCannot reach the price within 50% EBIT / 100% EBITDA limits. |
| 2.00× | $17.1B | 39.9% | — | InfeasibleCannot reach the price within 50% EBIT / 100% EBITDA limits. |
| 3.00× | $25.6B | 54.8% | 8.4% GAAP EBIT | Within margin guardrails |
CAGR uses $4.5B of same-scope FY2026 sales from the published model or its sourced research base, over four fiscal years. “Within margin guardrails” checks numeric limits only, not commercial plausibility. Each line and year must stay at or below 50.0% GAAP EBIT and 100% EBITDA, or our research margin where that is higher; capacity EBIT uses the engine's equipment depreciation. Unsolved margins are not extrapolated.
- Implied discount rate
- 3.8%
- All-business FY2030 sales factor
- —
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 9.8% WACC · 9.9% cost of equity.
Sales alone cannot match this price within the search range. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
If only one business changed
Businesses with margin or capacity revenue paths, ordered by value today. Revenue and margin are separate alternatives; these requirements are not added together.
Observability and Security Platform
- Revenue alone
- This business alone cannot get there within the search range.
- Margin alone
- This business alone cannot get there within the search range.
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 9.87%
- WACC
- 9.77%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.20 after Blume adjustment × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 16 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Mature GAAP EBIT margin FY2034 (SBC included)Observability and Security Platform | 12.4% | Rule | 25% issuer long-term adjusted EBIT lower-bound retained; subtract mature SBC plus CURRENT payroll taxes, amortization and M&A shares (27.643+1.672+2.010)/1121.454. Only SBC declines. 2034 timing is a research assumption. investors.datadoghq.com ↗ · stockanalysis.com ↗ · investors.datadoghq.com ↗ |
| SBC / revenue FY2030 (expensed)Observability and Security Platform | 19.6% | Rule | Assume Q2 FY2026 recognized operating SBC $220.251M / revenue $1,121.454M =19.6398% persists through FY2030. This decomposes the existing GAAP margin; it is not an additional expense or a company forecast. Equity payroll taxes remain separate and are not reduced. investors.datadoghq.com ↗ |
| Mature SBC / revenue (expensed)Observability and Security Platform | 9.8% | Rule | Research assumption: max(8.5%, half FY2030 SBC ratio) = 9.8199%. Mature actuals: Adobe FY2025 1.942/23.769=8.1703%; Salesforce FY2026 3.509/41.525=8.4503%. Retain at least half the original ratio; 8.5% is a conservative policy floor, not company guidance. For peer-GAAP target this only decomposes the final margin; no second uplift. d18rn0p25nwr6d.cloudfront.net ↗ · adobe.com ↗ |
| Revenue FY2026Observability and Security Platform | $4.5B | Guidance | target (methodology §4.2), growth 30.1% stockanalysis.com ↗ |
| Revenue FY2030Observability and Security Platform | $8.5B | Consensus | fade high growth (methodology §4.2), growth 13.2% stockanalysis.com ↗ |
| EBIT margin FY2030Observability and Security Platform | 2.6% | Guidance | linear path to 2.6% by FY2030 (management target) investors.datadoghq.com ↗ · stockanalysis.com ↗ · investors.datadoghq.com ↗ |
| Maintenance capexObservability and Security Platform | 4.0% | Reported | FY2025 cash PPE49.578M + capitalized internal-use software 85.840M =135.418M; divide by 3427.158M revenue. Corrects missing software cash investment. No SBC cashflow addback. sec.gov ↗ |
| Terminal growthObservability and Security Platform | 3.0% | Rule | methodology §4.2 terminal growth for a growth line Valuation methodology §4.2 · Read methodology ↗ |
| WACCDiscount rates | 9.77% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 9.87% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.20 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 21.0% | Rule | No verified normalized tax guidance or three-year cash-tax series; use the US statutory 21% fallback, not a transient GAAP benefit. sec.gov ↗ |
| Cash and short-term investmentsBalance sheet | $5.0B | Reported | cash, cash equivalents and short-term investments us-gaap:CashAndCashEquivalentsAtCarryingValue + us-gaap:AvailableForSaleSecuritiesDebtSecuritiesCurrent · 0001628280-26-054458 (filed 2026-08-06) |
| BorrowingsBalance sheet | $1.0B | Reported | borrowings due within a year plus long-term borrowings; current liabilities fully tagged and reconciled; no current borrowing line; 1 million aggregate principal amount of the 2025 Notes were converted prior to maturity and in connection with such conversions, the Company delivered $ 634. 6 In connection with the maturity of the 2025 Notes, the Company issued 1,354,569 shares to holders of the 2025 Notes that converted prior to maturity and received 1,360,738 shares from the relevant option counterparties upon settlement of the Capped Calls relating to the 2025 Notes. sec.gov ↗ |
| Finance leasesBalance sheet | $0.0B | Reported | no finance lease liability reported balance sheet 2026-06-30 |
| SharesBalance sheet | 0.359B | Reported | shares outstanding as of 2026-07-31 cover page of 10-Q 0001628280-26-054458 (2 share classes summed) |
| Dividends per yearShareholders | $0.0B | Reported | Most recent annual ordinary cash dividends; verify continuation against the latest release; no future repurchases. × 0.359B shares sec.gov ↗ |
Research notes
- share-count comparison: 0.371023B quarter 2026-04-01..2026-06-30 · 0001628280-26-054458; point-in-time denominator retained
- cost of equity 9.87% (β 1.20 after Blume adjustment), WACC 9.8%
- Observability and Security Platform: FY2031–34 mature GAAP EBIT target 12.4%, including SBC 9.8% of revenue (FY2030 19.6%). SBC is expensed once; no future-award dilution or cash addback. Capacity EBIT also depends on actual equipment depreciation.
- enterprise and equity-chain values differ by 12.1% (limit 5%)
- Observability and Security Platform: terminal value is 89% of value
- implied FY2030 P/E 77.9× is outside 8–35×
Signal Ledger research built from cited consensus, company plans and peer economics because management sets no usable targets — not a forecast and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →