Datadog Inc (DDOG)

Working capital turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Revenue	US$ in thousands	2,684,280	2,128,360	1,675,100	1,028,780	603,466
Total current assets	US$ in thousands	4,911,120	3,178,140	2,344,230	1,870,950	1,718,080
Total current liabilities	US$ in thousands	1,862,710	1,003,050	759,748	528,696	297,844
Working capital turnover		0.88	0.98	1.06	0.77	0.42

December 31, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $2,684,280K ÷ ($4,911,120K – $1,862,710K)
= 0.88

The working capital turnover ratio for Datadog Inc over the period from December 31, 2020, to December 31, 2024, exhibits notable fluctuations that reflect changes in the company's operational efficiency concerning its working capital management.

In 2020, the ratio was 0.42, indicating that the company generated approximately $0.42 of revenue for each dollar of working capital invested. This relatively low ratio suggests a conservative utilization of working capital or potentially less efficient revenue generation relative to its working capital base at that time.

By the end of 2021, the ratio increased significantly to 0.77, demonstrating an improvement in the efficiency of working capital utilization, with revenue generation per dollar of working capital nearly doubling compared to the previous year. This upward trend continued into 2022, reaching a ratio of 1.06, thereby surpassing the 1.0 mark. Crossing this threshold indicates that Datadog was generating more revenue than its working capital investment, reflecting enhanced operational efficiency and possibly better management of current assets and liabilities.

However, in subsequent years, the ratio declined marginally. In 2023, the ratio decreased to 0.98, slightly below the previous year's peak. This suggests a small reduction in the efficiency gains achieved in 2022, potentially due to changes in revenue streams, working capital management practices, or operational adjustments.

In 2024, the ratio further decreased to 0.88, indicating a continued but modest decline in working capital efficiency. While still higher than the 2020 level, this downward trend may point to a stabilization or slight regression in the company's ability to generate revenue relative to its working capital investment.

Overall, the company's working capital turnover ratio shows a significant improvement from 2020 to 2022, followed by a slight decline in the subsequent two years. This pattern suggests that Datadog initially enhanced its operational efficiency concerning working capital utilization but experienced some normalization or challenges that led to a reduction in this ratio from its peak.