Datadog Inc (DDOG)

Return on equity (ROE)

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net income	US$ in thousands	183,746	48,568	-50,160	-20,745	-24,547
Total stockholders’ equity	US$ in thousands	2,714,360	2,025,350	1,410,500	1,041,200	957,432
ROE		6.77%	2.40%	-3.56%	-1.99%	-2.56%

December 31, 2024 calculation

ROE = Net income ÷ Total stockholders’ equity
= $183,746K ÷ $2,714,360K
= 6.77%

The analysis of Datadog Inc.'s return on equity (ROE) over the specified period reveals a notable trend in the company's financial performance and profitability metrics. Historically, the company's ROE was negative for the years ending December 31, 2020, through December 31, 2022, specifically reflecting -2.56%, -1.99%, and -3.56% respectively. These negative values indicate that during this period, Datadog was not generating sufficient net income relative to shareholders' equity, suggesting challenges in achieving profitability on shareholders' investments or potential losses impacting retained earnings.

Beginning in 2023, a significant positive turnaround is observed, with the ROE rising to 2.40%. This shift signifies the company's transition into profitability, as it began producing net income that effectively increased the return generated for shareholders. The upward trajectory continues into 2024, with the ROE reaching 6.77%. Such an improvement suggests enhanced operational efficiency, better profit margins, or strategic initiatives that positively impacted net income relative to shareholders' equity.

Overall, the progression from negative to positive ROE indicates that Datadog Inc. has experienced a substantial transformation in its profitability profile within this timeframe. The positive ROE in 2023 and 2024 reflects an improvement in the company's ability to generate returns on shareholder equity, signaling a potentially healthier financial position and increased value creation for shareholders in recent periods.