Yahoo Finance Datadog, Inc. (NASDAQ:DDOG): When Will It Breakeven?
We feel now is a pretty good time to analyse Datadog, Inc.'s (NASDAQ:DDOG) business as it appears the company may be on the cusp of a considerable accomplishment. Datadog, Inc. operates an observability and security platform for cloud applications in North America and internationally. The company’s loss has recently broadened since it announced a US$50m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$84m, moving it further away from breakeven. As path to profitability is the topic on Datadog's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Datadog
According to the 32 industry analysts covering Datadog, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$321m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Datadog's upcoming projects, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Datadog currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Datadog's case is 49%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Datadog, so if you are interested in understanding the company at a deeper level, take a look at Datadog's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Datadog worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Datadog is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Datadog’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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