Datadog (DDOG) has wrapped up FY 2025 with fourth quarter revenue of US$953.2 million and basic EPS of US$0.13, alongside net income of US$46.6 million. This puts a clear spotlight on how its topline and per share earnings are tracking as the year closes out. Over the past six quarters, revenue has moved from US$690.0 million in Q3 2024 to US$953.2 million in Q4 2025. Over the same period, quarterly basic EPS has ranged from US$0.15 in Q3 2024 to US$0.01 in Q2 2025 and then to US$0.13 in the latest quarter. This sets up a results season in which investors are likely to weigh the quality and direction of margins as closely as the growth in dollars. Overall, the print keeps attention on how efficiently Datadog is converting that revenue base into sustainable profitability.

See our full analysis for Datadog.

With the headline numbers on the table, the next step is to see how these results line up against the widely followed Datadog narratives on growth, profitability and risk, and where the fresh data challenges what the market has been assuming.

Margins Thin Out At 3.1% On TTM Basis

• On a trailing 12 month view, Datadog recorded net income of US$107.7 million on US$3.4b of revenue, which works out to a 3.1% net margin compared with 6.8% a year earlier in the same dataset.
• Consensus narrative talks about profitability improving over time. However, the current 3.1% trailing margin and quarterly EPS swings from US$0.15 in Q3 2024 to US$0.01 in Q2 2025 show that earnings are still sensitive to spending and usage trends.
  • Analysts in that view are expecting margins to move from 4.1% to 7.8% over several years, while the last six quarters of net income have ranged from US$2.6 million to US$51.7 million, which is a wide band for a company already at US$953.2 million in quarterly revenue.
  • This contrast means anyone leaning on the consensus growth story needs to pay attention to how quickly margins move off the current 3.1% level rather than assuming a smooth path to higher profitability.

High P/S Multiple Versus Software Peers

• The shares trade on a trailing P/S of 13.3x compared with 3.8x for the broader US Software group and 7.3x for peers, while the stock price sits at US$129.67.
• Bulls point to strong growth potential to support this higher multiple, but the current 3.1% trailing margin and TTM EPS of about US$0.31 leave a lot of the bullish case resting on future execution rather than current profitability.
  • The optimistic narrative assumes revenue growth around 25.6% a year and earnings reaching US$724.6 million by 2028, versus the latest trailing net income of US$107.7 million, which is a sizeable gap that requires sustained scaling.
  • At the same time, the data here shows a DCF fair value of roughly US$217.50, which heavily supports the bullish argument that the current P/S might be justified if those growth and margin assumptions are met.

Bulls argue Datadog's current margins and P/S premium could be early-stage footprints of a much larger profit pool, while today’s numbers still look modest next to those forecasts. 🐂 Datadog Bull Case

DCF Upside Versus Bear Concerns On Margins

• The DCF fair value in the analysis is US$217.50, about 68% above the current share price of US$129.67. This sits alongside a trailing margin that has moved from 6.8% to 3.1% in the last year of data and TTM EPS that has eased from US$0.58 to roughly US$0.31.
• Bears focus on pressure points like compressed margins and higher costs, and the recent quarterly pattern in net income and EPS gives their concerns some footing even while the modelled DCF upside is large.
  • Across the last six reported quarters, net income has been as low as US$2.6 million in Q2 2025 and as high as US$51.7 million in Q3 2024, which supports the bearish view that earnings can be quite variable as the company spends on growth.
  • Those cautious narratives also flag rising operating and cloud hosting costs, and the step down from prior year TTM net income of about US$183.7 million to US$107.7 million in the latest TTM set aligns with concerns about profitability coming under pressure even with higher revenue.

Skeptics warn that a large DCF gap alone is not enough if margins remain tight and earnings stay choppy while the company scales. 🐻 Datadog Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Datadog on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Datadog research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

Datadog's rich P/S multiple, thin 3.1% trailing net margin and choppy EPS pattern show the market is paying up while earnings quality still looks unsettled.

If that mix of premium pricing and margin swings makes you uneasy, temper the risk by checking out 83 resilient stocks with low risk scores that focus on more consistent fundamentals right now.

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.