How to Invest in Datadog (DDOG)

How to buy Datadog stock

Anyone interested in adding Datadog stock to their portfolio can do so through their brokerage account. Here's a step-by-step guide to investing in stocks.

• Step 1: Open your brokerage app: Log into your brokerage account where you handle your investments.
• Step 2: Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
• Step 3: Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
• Step 4: Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
• Step 5: Submit your order: Confirm the details and submit your buy order.
• Step 6: Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Should I invest in Datadog?

Before entering a buy transaction in your brokerage account, consider whether investing in Datadog is right for you. Here are some reasons to buy the cloud stock:

• You think Datadog can continue growing its revenue rapidly.
• You believe its stock can outperform the S&P 500 over the next three to five years.
• You like the company's moves to integrate AI into its platform.
• You don't need dividend income right now.
• You think Datadog can grow into its lofty valuation.
• You believe the company can capture a meaningful share of the large and rapidly expanding cloud security total addressable market opportunity.

On the other hand, here are some reasons why you might opt against buying Datadog stock:

• You don't understand what Datadog does.
• You're in or nearing retirement and need dividend income.
• You think Datadog stock is overvalued.
• You're concerned that Datadog's increasing competition could affect its ability to continue growing rapidly.

Is Datadog profitable?

Digging into a company's profitability is a vital aspect of investment research. Increasing profitability tends to drive a stock's price higher over the long term.

Datadog is a profitable company. In 2024, the cloud company generated $2.6 billion of revenue (up 26%) and $54 million of operating income (up from a $33 million loss in 2023). The company was even more profitable on a non-GAAP basis. Its non-GAAP operating income was $674 million (up from $490 million in 2023). While Datadog didn't post a GAAP profit in the first quarter of 2025 ($12 million loss), it was still profitable on a non-GAAP basis ($167 million).

The company is also generating strong and growing cash flow. Its operating cash flow was $871 million in 2024, while its free cash flow was $775 million (up from $660 million and $598 million, respectively). This trend continued into early 2025, as the company generated $244 million in free cash flow during the first quarter. Datadog's growing excess free cash is currently piling up on its balance sheet ($4.4 billion of cash, cash equivalents, and marketable securities at the end of the first quarter).

Investors should monitor the company's profitability, which ideally should continue to improve.

Does Datadog pay a dividend?

As of mid-2025, Datadog had yet to initiate a dividend. The company is retaining its earnings to fund its growth and maintain a strong financial position.

The bottom line on Datadog

Datadog is growing fast as more companies utilize its platform to observe and secure their data. The company is rapidly innovating its platform to integrate AI capabilities, better serving its customers' evolving needs. That growth potential has helped drive the company's stock price higher since its IPO and could continue to power it in the future.

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