DDOG Research Update — September 20, 2026 (Updated)
Updated Thesis
Datadog is a cloud observability platform that unifies infrastructure monitoring, application performance management, log management, security, and incident response into a single SaaS offering used by developers and IT operations teams across North America and internationally. The business quality is high on the top line: revenue grew 35.6% year over year in the most recent quarter, TTM gross margin is 79.5%, and the company generates $3.26 in free cash flow per share on $11.14 of revenue per share, with 8,100 employees and a founder-led management team under CEO Olivier Pomel. However, GAAP profitability remains thin, with TTM operating margin of 0.4% and TTM net margin of 4.5%, and the shares are priced for perfection at 23.06 times sales, 78.93 times free cash flow, 350.59 times EV/EBITDA, and 513.27 times trailing earnings.
The investment grade as of this refresh is C — average business quality. A-tier business, D-tier valuation, with 28.7% upside to $330.72 fair value but a historical multiple regime that is expensive.
Grade Change
In this research cycle, the investment grade for Datadog, Inc. moved from B to C. A-tier business, D-tier valuation, with 28.7% upside to $330.72 fair value but a historical multiple regime that is expensive.
Key Metrics at a Glance
- Revenue growth: +35.6% year over year
- Net margin: 4.5%
- Fair value upside: +28.7% to our estimate of $331
Current price: $256.92
These figures reflect our most recent data pull and are one input into a multi-factor valuation framework.
Our 12–18 Month Outlook
Quality companies held over a multi-year horizon benefit from compounding fundamentals and the patience to ride through short-term volatility. Datadog, Inc. remains in our covered universe with a average-quality assessment. We update research when material data changes — earnings revisions, management shifts, or regime changes in valuation — not on every price fluctuation.
Long-term accumulation of quality businesses at fair or better prices is the core of the Patient Accumulator approach. Research updates like this one inform whether to add, hold, or wait for a better zone — not whether to react to short-term price moves.
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