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. provides monitoring and analytics platform for developers, information technology operations teams, and business users in the cloud in North America and internationally. The US$58b market-cap company posted a loss in its most recent financial year of US$25m and a latest trailing-twelve-month loss of US$44m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Datadog will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

According to the 19 industry analysts covering Datadog, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$14m in 2023. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 83% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Datadog's growth isn’t the focus of this broad overview, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

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 77%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Datadog which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Datadog, take a look at Datadog's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. 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.
2. 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.
3. 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.

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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