Datadog Inc (DDOG)

Return on total capital

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	211,008	66,537	-21,535	2,630	8,212
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	2,714,360	2,025,350	1,410,500	1,041,200	957,432
Return on total capital		7.77%	3.29%	-1.53%	0.25%	0.86%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $211,008K ÷ ($—K + $2,714,360K)
= 7.77%

The analysis of Datadog Inc.'s return on total capital (ROTC) over the period from December 31, 2020, to December 31, 2024, reveals notable fluctuations and a general upward trend in the company's capacity to generate returns from its total capital base.

At the end of 2020, the ROTC stood at 0.86%, indicating a marginally positive return on the company's total capital invested. This figure decreased significantly by December 31, 2021, to 0.25%, reflecting a decline in the efficiency of capital utilization or profitability during that period.

The subsequent year, 2022, saw a further deterioration in ROTC, which turned negative at -1.53%. This negative value signals that the company was not generating adequate returns relative to its total capital, possibly due to increased costs, lower revenues, or operational challenges.

However, an encouraging turnaround is evident in the data from 2023 onwards. By December 31, 2023, the ROTC had improved markedly to 3.29%, suggesting a recovery in profitability and effective use of capital. This positive shift may be attributed to strategic initiatives, operational efficiencies, or market conditions favorable to the company.

The most significant growth is observed by December 31, 2024, when the ROTC reached 7.77%. This indicates a substantial enhancement in the company's ability to generate returns on its total capital base, reflecting improved operational performance, increased efficiencies, or successful expansion strategies.

Overall, the trend illustrates a period of initial contraction in ROTC during 2021 and 2022, followed by a robust recovery and growth trajectory through 2023 and into 2024. This progression signifies a strengthening in Datadog Inc.'s capacity to utilize its capital effectively and enhance shareholder value over the observed period.