Datadog Inc. (DDOG) shares soared 5.35% in pre-market trading on Thursday, as investors cheered the company's promising growth trends and improving profitability.
The cloud monitoring and analytics platform provider has seen a significant increase in its return on capital employed (ROCE), a key metric that measures profitability relative to the capital invested in the business. According to a recent analysis, Datadog's ROCE has risen to 2.5%, indicating that the company is generating positive returns from its investments.
While this ROCE figure is still relatively low compared to the software industry average of 9%, the upward trend in Datadog's ROCE is encouraging. The company has successfully transitioned from being loss-making five years ago to generating profits, which signals its ability to reinvest its earnings effectively and create value for shareholders.
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