DDOG · investment memo
NOT AN INPUT TO THIS VALUATION. The implied-path test is run on an EV/SALES basis (GAAP operating margin is -0.67%, so there is no interim EBIT to discount), and the terminal EBIT margin is a SOLVE OUTPUT, not an assumption: 65.4% at a 15x EBIT exit, 49.1% at 20x, 39.2% at 25x, 32.7% at 30x, against a current non-GAAP operating margin of ~+20.6%. The document's finding is that the price requires a terminal margin ABOVE what enterprise software has demonstrated at scale (Microsoft runs mid-40s). Recording any single figure as 'the' terminal margin would misrepresent the instrument. Separately: the Tier-1 screen assigned exactly 0.107 to four of the five cluster names as an 'industry median' - a field-collapse defect the memo explicitly rejects.
Four distinct questions, one field each. A price is not a thesis: the trigger below forces a re-underwrite and freezes further purchases — it is never an automatic sell.
A daily close below $224.90 triggers a mandatory re-underwrite and freezes further purchases. It is not an automatic sell unless a separate fundamental invalidation condition has been breached.
Not stated. This name has no falsifiable invalidation conditions on file, so it cannot be risk-monitored. That is a gap in the research, not a clean bill of health — recorded rather than hidden.
Type: MEASURED. Logged and scored on every name; it does not reject the name. Named cause: multiple compression from the 100th percentile, triggered by a single decelerating quarter the NRR disclosure cannot pre-warn. Going-concern: not argued. See §9 of the research document for the balance-sheet basis. Full reasoning, the mechanism, and why the probabilities are what they are: DDOG_Research.md §9.