Datadog Inc (DDOG)

Return on equity (ROE)

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Net income (ttm)	US$ in thousands	165,757	183,746	192,145	163,078	115,285	48,568	-34,459	-83,074	-83,984	-50,160	-13,957	6,544	2,061	-20,745	-44,074	-53,740	-44,094	-24,547	-7,496	3,493
Total stockholders’ equity	US$ in thousands	2,916,670	2,714,360	2,629,140	2,407,310	2,202,360	2,025,350	1,806,480	1,649,360	1,512,100	1,410,500	1,289,440	1,215,120	1,116,860	1,041,200	957,412	912,879	841,330	957,432	936,188	912,871
ROE		5.68%	6.77%	7.31%	6.77%	5.23%	2.40%	-1.91%	-5.04%	-5.55%	-3.56%	-1.08%	0.54%	0.18%	-1.99%	-4.60%	-5.89%	-5.24%	-2.56%	-0.80%	0.38%

March 31, 2025 calculation

ROE = Net income (ttm) ÷ Total stockholders’ equity
= $165,757K ÷ $2,916,670K
= 5.68%

The analysis of Datadog Inc's return on equity (ROE) over the specified period reveals a trajectory characterized initially by negative values, transitioning to positive figures more recently. From June 30, 2020, onward, the company’s ROE exhibited considerable fluctuation, beginning at a modest 0.38% and then declining into negative territory, reaching as low as -5.89% on June 30, 2021. This period of negative ROE indicates that the company was not generating adequate net income relative to shareholders’ equity, reflecting potential challenges in profitability or increased costs relative to equity investments during that timeframe.

Throughout the following quarters, the ROE showed signs of gradual recovery. From the low point of -5.89% in June 2021, there was a steady upward trend, culminating in positive territory at the end of 2023 with a ROE of 2.40% on December 31, 2023. This positive shift suggests improved profitability and better utilization of shareholders' equity, possibly driven by operational efficiencies, revenue growth, or a combination thereof.

The most recent data points (up to March 2025) indicate a continuation of this upward trend, with ROE reaching 5.68%. Notably, the levels peaked at 7.31% on September 30, 2024, representing a significant turnaround from earlier negative figures. The progression from negative to positive ROE over the observed period demonstrates substantial improvements in the company’s ability to generate returns on equity investments, reflecting evolving operational health, profitability, or both.

Overall, the ROE pattern reveals a period of initial financial strain or strategic restructuring, followed by a notable recovery and sustained improvement, corresponding to a shift toward more profitable operations and efficient capital utilization.