DigitalOcean Announces Third Quarter 2022 Financial Results
DigitalOcean Holdings, Inc. (NYSE: DOCN) reported third-quarter 2022 results with a 37% year-over-year revenue increase, totaling $152.1 million. The acquisition of Cloudways contributed $4.1 million to revenues, with standalone growth at 33%. Annual Run-Rate Revenue (ARR) reached $640.6 million, up 41% year-over-year. Free cash flow improved to $22.4 million, with a 15% free cash flow margin. Looking ahead, fourth-quarter revenue guidance is set between $160 and $162 million, with a full-year revenue forecast of $573 to $575 million.
- Revenue increased 37% year-over-year to $152.1 million.
- Net Dollar Retention Rate improved to 118%, up 600 basis points.
- Free cash flow rose to $22.4 million, reflecting stronger profitability.
- Acquisition of Cloudways positioned for market expansion.
- Average Revenue Per Customer increased by 28% to $79.22.
- Operating margin remained modest at 6%.
- Non-GAAP operating margin guidance for Q4 is 16%, indicating pressure on profitability.
Revenue Increased
Improving Profitability Drives
“I'm proud that we delivered top-line acceleration combined with significant operating margin and free cash flow leverage in the third quarter, despite the difficult operating environment due to global macro challenges,” said
Third Quarter 2022 Financial Highlights:
-
Revenue was
, an increase of$152.1 million 37% year-over-year and included a net revenue contribution from Cloudways, and revenue growth was$4.1 million 33% on a standalone basis. -
Annual Run-Rate Revenue (ARR) ended the quarter at
, representing$640.6 million 41% year-over-year growth. -
Gross profit of
or$97.6 million 64% of revenue, an increase of 300 basis points year-over-year, and adjusted gross profit of or$121.5 million 80% of revenue. -
Income from operations was
and operating margin was$9.4 million 6% . -
Non-GAAP income from operations was
and non-GAAP operating margin was$39.7 million 26% . -
Net income per share was
and non-GAAP diluted net income per share was$0.10 .$0.38 -
Free cash flow was
as compared to$22.4 million during Q3'21.$13.5 million -
Cash, cash equivalents, and marketable securities was
as of$825 million September 30, 2022 .
Third Quarter 2022 Operational Highlights:
-
Acquired Cloudways, a rapidly growing managed hosting provider, for
.$350 million -
Net Dollar Retention Rate (NDR) improved 600 basis points versus the prior quarter to
118% . -
Average Revenue Per Customer (ARPU) was
, an increase of$79.22 28% from the third quarter of 2021. -
Customers spending more than
per month grew$50 50% year-over-year to 142,000, which was an increase of 37,000 from the prior quarter.DigitalOcean added 17,000 and Cloudways contributed 20,000 in the period. - The company repurchased approximately 1.1 million shares in the quarter, which completes its share repurchase programs.
Financial Outlook:
Based on information available as of
-
Total revenue of
to$160 .$162 million -
Non-GAAP operating margin of
16% . -
Non-GAAP diluted net income per share of
to$0.18 .$0.19 - Fully diluted weighted average shares outstanding of approximately 114 to 115 million shares.
For the full year 2022, we expect:
-
Total revenue of
to$573 .$575 million -
Non-GAAP operating margin of
17% . -
Free cash flow in the range of
10% to11% of revenue. -
Non-GAAP diluted net income per share of
to$0.79 .$0.80 - Fully diluted weighted average shares outstanding of approximately 116 to 117 million shares.
A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. For example, stock-based compensation expense-related charges are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. Accordingly, a reconciliation is not available without unreasonable effort and we are unable to assess the probable significance of the unavailable information, although it is important to note that these factors could be material to our results computed in accordance with GAAP.
Conference Call Information:
Following the completion of the call, a telephonic replay will be available through
About
Forward‑Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding our performance, including but not limited to statements in the section titled “Financial Outlook.” The forward-looking statements contained in this release and the accompanying earnings call referenced in this release are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause actual results or outcomes to be materially different from any future results or outcomes expressed or implied by the forward-looking statements. These risks, uncertainties, assumptions, and other factors include, but are not limited to: (1) our recent growth may not be indicative of our future growth; (2) our history of operating losses; (3) our limited operating history; (4) our ability to attract and retain customers and/or expand usage of our platform by such customers; (5) breaches in our security measures allowing unauthorized access to our platform, our data, or our customers’ data; (6) our ability to release updates and new features to our platform and adapt and respond effectively to rapidly changing technology or customer needs; (7) the competitive markets in which we participate; (8) the rapidly evolving laws and industry standards that relate to privacy, data security, liability for service providers regarding the activities of customers, and access to the internet; (9) risks associated with successfully managing our growth; (10) our ability to successfully integrate acquired businesses, including Cloudways, and achieve expected synergies and benefits; and (11) general market, political, economic, and business conditions.
Further information on these and additional risks, uncertainties, assumptions and other factors that could cause actual results or outcomes to differ materially from those included in or contemplated by the forward-looking statements contained in this release are included under the caption “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended
We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this release. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur. The forward-looking statements made in this release relate only to events as of the date on which the statements are made. We assume no obligation to, and do not currently intend to, update any such forward-looking statements after the date of this release.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in
Adjusted Gross Profit and Adjusted Gross Margin
We believe adjusted gross profit and adjusted gross margin, when taken together with our GAAP financial results, provides a meaningful assessment of our performance, and is useful for the preparation of our annual operating budget and quarterly forecasts.
We define adjusted gross profit as gross profit exclusive of stock-based compensation, amortization of capitalized internal-use software development costs and depreciation of our data center equipment included within Cost of revenue. We exclude stock-based compensation, which is a non-cash item, because we do not consider it indicative of our core operating performance. We exclude depreciation and amortization, which primarily relates to our investments in our data center servers that are long lived assets with an economic life of five years, because it may not reflect our current or future cash spending levels to support our business. While we intend to spend a significant amount on capital expenditures on an absolute basis in the coming years, our capital expenditures as a percentage of revenue has declined significantly and will continue to decline. We define adjusted gross margin as a percentage of adjusted gross profit to revenue.
Non-GAAP Income from Operations and Non-GAAP Operating Margin
We define non-GAAP income from operations as (Loss) income from operations, excluding stock-based compensation, acquisition related compensation, amortization of acquired intangibles, acquisition and integration related costs, loss on sublease, asset impairment, restructuring and severance, and other unusual or non-recurring transactions as they occur. We define non-GAAP operating margin as non-GAAP income from operations as a percentage of revenue. We use non-GAAP income from operations to understand and evaluate our core operating performance and trends and to develop short-term and long-term operating plans. We believe that non-GAAP income from operations facilitates comparison of our operating performance on a consistent basis between periods, and when viewed in combination with our results prepared in accordance with GAAP, helps provide a broader picture of factors and trends affecting our results of operations.
Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share
We define non-GAAP net income (loss) as Net loss attributable to common stockholders, excluding stock-based compensation, acquisition related compensation, amortization of acquired intangibles, acquisition and integration related costs, release of VAT reserve, loss on sublease, loss on extinguishment of debt, asset impairment, restructuring and severance expense, revaluation of warrants, and other unusual or non-recurring transactions as they occur. We define non-GAAP diluted net income per share as non-GAAP net income divided by the weighted-average shares including the dilutive effects of our convertible preferred stock, warrants, stock options, RSUs, PRSUs, ESPP and Convertible Notes.
We believe non-GAAP net income per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of unusual or non-recurring items from period to period for reasons unrelated to overall operating performance.
Free Cash Flow and Free Cash Flow Margin
Free cash flow is a non-GAAP financial measure that we define as Net cash provided by operating activities less purchases of property and equipment, capitalized internal-use software costs and purchase of intangible assets. Free cash flow margin is calculated as free cash flow divided by total revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our core operations that, after the purchases of property and equipment, can be used for strategic initiatives, including investing in our business and selectively pursuing acquisitions and strategic investments. We further believe that historical and future trends in free cash flow and free cash flow margin, even if negative, provide useful information about the amount of Net cash provided by operating activities that is available (or not available) to be used for strategic initiatives. For example, if free cash flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives. One limitation of free cash flow and free cash flow margin is that they do not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period.
Key Business Metrics:
We utilize the key metrics set forth below to help us evaluate our business and growth, identify trends, formulate financial projections and make strategic decisions.
Customers
We define customers paying more than
ARPU
We calculate ARPU on a monthly basis as our total revenue in that period divided by the number of customers determined as of the last day of that period. For a quarterly or annual period, ARPU is determined as the weighted average monthly ARPU over such three or 12-month period.
ARR
We calculate ARR at a point in time by multiplying the latest monthly period’s revenue by 12.
Net Dollar Retention Rate
We calculate net dollar retention rate monthly by starting with the revenue from the cohort of all customers during the corresponding month 12 months prior, or the Prior Period Revenue. We then calculate the revenue from these same customers as of the current month, or the Current Period Revenue, including any expansion and net of any contraction or attrition from these customers over the last 12 months. The calculation also includes revenue from customers that generated revenue before, but not in, the corresponding month 12 months prior, but subsequently generated revenue in the current month and are therefore reflected in the Current Period Revenue. We include this group of re-engaged customers in this calculation because our customers frequently use our platform for projects that stop and start over time. We then divide the total Current Period Revenue by the total Prior Period Revenue to arrive at the net dollar retention rate for the relevant month. For a quarterly or annual period, the net dollar retention rate is determined as the average monthly net dollar retention rates over such three or 12-month period.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) (unaudited) |
|||||||
|
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
24,115 |
|
|
$ |
1,713,387 |
|
Marketable securities |
|
800,539 |
|
|
|
— |
|
Accounts receivable, less allowance for doubtful accounts of |
|
52,425 |
|
|
|
39,619 |
|
Prepaid expenses and other current assets |
|
31,277 |
|
|
|
17,050 |
|
Total current assets |
|
908,356 |
|
|
|
1,770,056 |
|
|
|
|
|
||||
Property and equipment, net |
|
270,985 |
|
|
|
249,643 |
|
Restricted cash |
|
1,935 |
|
|
|
2,038 |
|
|
|
315,161 |
|
|
|
32,170 |
|
Intangible assets, net |
|
122,543 |
|
|
|
42,915 |
|
Deferred tax assets |
|
82 |
|
|
|
88 |
|
Other assets |
|
4,625 |
|
|
|
4,085 |
|
Total assets |
$ |
1,623,687 |
|
|
$ |
2,100,995 |
|
|
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
11,762 |
|
|
$ |
12,657 |
|
Accrued other expenses |
|
36,645 |
|
|
|
31,907 |
|
Deferred revenue |
|
5,476 |
|
|
|
4,826 |
|
Other current liabilities |
|
44,925 |
|
|
|
8,849 |
|
Total current liabilities |
|
98,808 |
|
|
|
58,239 |
|
|
|
|
|
||||
Deferred tax liabilities |
|
22,107 |
|
|
|
421 |
|
Long-term debt |
|
1,468,393 |
|
|
|
1,462,676 |
|
Other long-term liabilities |
|
4,162 |
|
|
|
1,462 |
|
Total liabilities |
|
1,593,470 |
|
|
|
1,522,798 |
|
Commitments and Contingencies |
|
|
|
||||
|
|
|
|
||||
Preferred stock ( |
|
— |
|
|
|
— |
|
Common stock ( |
|
2 |
|
|
|
2 |
|
|
|
— |
|
|
|
(4,598 |
) |
Additional paid-in capital |
|
235,278 |
|
|
|
769,705 |
|
Accumulated other comprehensive loss |
|
(4,308 |
) |
|
|
(374 |
) |
Accumulated deficit |
|
(200,755 |
) |
|
|
(186,538 |
) |
Total stockholders’ equity |
|
30,217 |
|
|
|
578,197 |
|
|
|
|
|
||||
Total liabilities and stockholders’ equity |
$ |
1,623,687 |
|
|
$ |
2,100,995 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Revenue |
$ |
152,115 |
|
|
$ |
111,428 |
|
|
$ |
413,324 |
|
|
$ |
308,899 |
|
Cost of revenue |
|
54,536 |
|
|
|
43,506 |
|
|
|
148,539 |
|
|
|
126,195 |
|
Gross profit |
|
97,579 |
|
|
|
67,922 |
|
|
|
264,785 |
|
|
|
182,704 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Research and development |
|
30,243 |
|
|
|
29,927 |
|
|
|
104,440 |
|
|
|
79,450 |
|
Sales and marketing |
|
19,097 |
|
|
|
13,312 |
|
|
|
56,360 |
|
|
|
35,545 |
|
General and administrative |
|
38,847 |
|
|
|
26,354 |
|
|
|
115,109 |
|
|
|
68,756 |
|
Total operating expenses |
|
88,187 |
|
|
|
69,593 |
|
|
|
275,909 |
|
|
|
183,751 |
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations |
|
9,392 |
|
|
|
(1,671 |
) |
|
|
(11,124 |
) |
|
|
(1,047 |
) |
|
|
|
|
|
|
|
|
||||||||
Other (income) expense: |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
2,127 |
|
|
|
186 |
|
|
|
6,281 |
|
|
|
2,675 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
407 |
|
|
|
3,435 |
|
Other (income) expense, net |
|
(3,274 |
) |
|
|
140 |
|
|
|
(6,206 |
) |
|
|
(157 |
) |
Other (income) expense |
|
(1,147 |
) |
|
|
326 |
|
|
|
482 |
|
|
|
5,953 |
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes |
|
10,539 |
|
|
|
(1,997 |
) |
|
|
(11,606 |
) |
|
|
(7,000 |
) |
Income tax expense (benefit) |
|
442 |
|
|
|
(145 |
) |
|
|
2,611 |
|
|
|
378 |
|
Net income (loss) attributable to common stockholders |
$ |
10,097 |
|
|
$ |
(1,852 |
) |
|
$ |
(14,217 |
) |
|
$ |
(7,378 |
) |
Basic and diluted net income (loss) per share |
$ |
0.10 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.08 |
) |
Weighted average shares used to compute basic net income (loss) per share |
|
96,559 |
|
|
|
107,955 |
|
|
|
102,134 |
|
|
|
88,265 |
|
Weighted average shares used to compute diluted net income (loss) per share |
|
104,931 |
|
|
|
107,955 |
|
|
|
102,134 |
|
|
|
88,265 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
|||||||
|
Nine Months Ended
|
||||||
|
2022 |
|
2021 |
||||
Operating activities |
|
|
|
||||
Net loss attributable to common stockholders |
$ |
(14,217 |
) |
|
$ |
(7,378 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
73,900 |
|
|
|
64,922 |
|
Stock-based compensation |
|
77,758 |
|
|
|
37,380 |
|
Bad debt expense |
|
12,217 |
|
|
|
6,055 |
|
Loss on extinguishment of debt |
|
407 |
|
|
|
3,435 |
|
Net accretion of discounts and amortization of premiums on investments |
|
(3,099 |
) |
|
|
— |
|
Release of VAT reserve |
|
— |
|
|
|
3,188 |
|
Non-cash interest expense |
|
5,898 |
|
|
|
386 |
|
Loss on impairment |
|
144 |
|
|
|
212 |
|
Revaluation of warrants |
|
— |
|
|
|
(556 |
) |
Deferred income taxes |
|
247 |
|
|
|
— |
|
Other |
|
2,396 |
|
|
|
477 |
|
Changes in operating assets and liabilities, net of acquisition: |
|
|
|
||||
Accounts receivable |
|
(20,270 |
) |
|
|
(14,462 |
) |
Prepaid expenses and other current assets |
|
(4,580 |
) |
|
|
(134 |
) |
Accounts payable and accrued expenses |
|
(5,771 |
) |
|
|
4,001 |
|
Deferred revenue |
|
(364 |
) |
|
|
263 |
|
Other assets and liabilities |
|
5,342 |
|
|
|
2,587 |
|
Net cash provided by operating activities |
|
130,008 |
|
|
|
100,376 |
|
|
|
|
|
||||
Investing activities |
|
|
|
||||
Capital expenditures - property and equipment |
|
(77,717 |
) |
|
|
(66,480 |
) |
Capital expenditures - internal-use software development |
|
(6,593 |
) |
|
|
(4,297 |
) |
Purchase of intangible assets |
|
(4,915 |
) |
|
|
(5,636 |
) |
Cash paid for acquisition of businesses, net of cash acquired |
|
(305,163 |
) |
|
|
(5,000 |
) |
Cash paid for asset acquisitions |
|
(5,400 |
) |
|
|
— |
|
Purchase of available-for-sale securities |
|
(1,379,277 |
) |
|
|
— |
|
Sales of available-for-sale securities |
|
19,992 |
|
|
|
— |
|
Maturities of available-for-sale securities |
|
558,371 |
|
|
|
— |
|
Purchased interest on available-for-sale securities |
|
(1,556 |
) |
|
|
— |
|
Proceeds from interest on available-for-sale securities |
|
1,549 |
|
|
|
— |
|
Proceeds from sale of equipment |
|
967 |
|
|
|
209 |
|
Net cash used in investing activities |
|
(1,199,742 |
) |
|
|
(81,204 |
) |
|
|
|
|
||||
Financing activities |
|
|
|
||||
Repayment of notes payable |
|
— |
|
|
|
(33,214 |
) |
Repayment of term loan |
|
— |
|
|
|
(166,813 |
) |
Repayment of borrowings under revolving credit facility |
|
— |
|
|
|
(63,200 |
) |
Payment of debt issuance costs |
|
(1,520 |
) |
|
|
— |
|
Proceeds related to the issuance of common stock under equity incentive plan |
|
10,352 |
|
|
|
13,145 |
|
Proceeds from the issuance of common stock under employee stock purchase plan |
|
5,245 |
|
|
|
— |
|
Employee payroll taxes paid related to net settlement of equity awards |
|
(24,618 |
) |
|
|
(2,777 |
) |
Proceeds from initial public offering, net of underwriting discounts and commissions and other offering costs |
|
— |
|
|
|
723,126 |
|
Repurchase and retirement of common stock |
|
(600,000 |
) |
|
|
— |
|
Net cash (used in) provided by financing activities |
|
(610,541 |
) |
|
|
470,267 |
|
|
|
|
|
||||
(Decrease) increase in cash, cash equivalents and restricted cash |
|
(1,680,275 |
) |
|
|
489,439 |
|
Cash, cash equivalents and restricted cash - beginning of period |
|
1,715,425 |
|
|
|
102,537 |
|
Cash, cash equivalents and restricted cash - end of period |
$ |
35,150 |
|
|
$ |
591,976 |
|
RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) |
|||||||||||||||
Adjusted Gross Profit and Adjusted Gross Margin |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
(In thousands) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Gross profit |
$ |
97,579 |
|
|
$ |
67,922 |
|
|
$ |
264,785 |
|
|
$ |
182,704 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
23,442 |
|
|
|
20,838 |
|
|
|
68,278 |
|
|
|
60,105 |
|
Stock-based compensation |
|
492 |
|
|
|
196 |
|
|
|
1,405 |
|
|
|
797 |
|
Adjusted gross profit |
$ |
121,513 |
|
|
$ |
88,956 |
|
|
$ |
334,468 |
|
|
$ |
243,606 |
|
Gross margin |
|
64 |
% |
|
|
61 |
% |
|
|
64 |
% |
|
|
59 |
% |
Adjusted gross margin |
|
80 |
% |
|
|
80 |
% |
|
|
81 |
% |
|
|
79 |
% |
Non-GAAP Income from Operations and Non-GAAP Operating Margin |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
(In thousands) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
(Loss) income from operations |
$ |
9,392 |
|
|
$ |
(1,671 |
) |
|
$ |
(11,124 |
) |
|
$ |
(1,047 |
) |
Adjustments: |
|
|
|
|
|
|
|
||||||||
Stock-based compensation |
|
23,594 |
|
|
|
18,555 |
|
|
|
77,758 |
|
|
|
37,380 |
|
Acquisition related compensation |
|
2,361 |
|
|
|
— |
|
|
|
2,361 |
|
|
|
— |
|
Amortization of acquired intangibles |
|
1,661 |
|
|
|
168 |
|
|
|
2,687 |
|
|
|
320 |
|
Acquisition and integration related costs |
|
2,700 |
|
|
|
280 |
|
|
|
2,868 |
|
|
|
280 |
|
Loss on sublease |
|
— |
|
|
|
— |
|
|
|
1,471 |
|
|
|
— |
|
Asset impairment |
|
24 |
|
|
|
212 |
|
|
|
144 |
|
|
|
212 |
|
Non-GAAP income from operations |
$ |
39,732 |
|
|
$ |
17,544 |
|
|
$ |
76,165 |
|
|
$ |
37,145 |
|
Operating margin |
|
6 |
% |
|
|
(1 |
)% |
|
|
(3 |
)% |
|
|
— |
% |
Non-GAAP operating margin |
|
26 |
% |
|
|
16 |
% |
|
|
18 |
% |
|
|
12 |
% |
Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
(In thousands) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
GAAP Net income (loss) attributable to common stockholders |
$ |
10,097 |
|
$ |
(1,852 |
) |
|
$ |
(14,217 |
) |
|
$ |
(7,378 |
) |
|
Stock-based compensation |
|
23,594 |
|
|
18,555 |
|
|
|
77,758 |
|
|
|
37,380 |
|
|
Acquisition related compensation |
|
2,361 |
|
|
— |
|
|
|
2,361 |
|
|
|
— |
|
|
Amortization of acquired intangible assets |
|
1,661 |
|
|
168 |
|
|
|
2,687 |
|
|
|
320 |
|
|
Acquisition and integration related costs |
|
2,700 |
|
|
280 |
|
|
|
2,868 |
|
|
|
280 |
|
|
Reclaim of VAT reserve |
|
— |
|
|
(3,188 |
) |
|
|
— |
|
|
|
(3,188 |
) |
|
Loss on sublease |
|
— |
|
|
— |
|
|
|
1,471 |
|
|
|
— |
|
|
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
|
407 |
|
|
|
3,435 |
|
|
Asset impairment |
|
24 |
|
|
212 |
|
|
|
144 |
|
|
|
212 |
|
|
Revaluation of warrants |
|
— |
|
|
— |
|
|
|
— |
|
|
|
(556 |
) |
|
Income tax effects of non-GAAP adjustments(1) |
|
710 |
|
|
(19 |
) |
|
|
992 |
|
|
|
90 |
|
|
Non-GAAP net income(2) |
$ |
41,147 |
|
$ |
14,156 |
|
|
$ |
74,471 |
|
|
$ |
30,595 |
|
|
Non-GAAP diluted net income per share(2)(3) |
$ |
0.38 |
|
$ |
0.12 |
|
|
$ |
0.69 |
|
|
$ |
0.27 |
|
|
Weighted-average shares used to compute Non-GAAP diluted net income per share |
|
113,334 |
|
|
120,854 |
|
|
|
114,509 |
|
|
|
114,815 |
|
___________________ |
|||
(1) |
The income tax effects of non-GAAP adjustments are calculated based on the applicable statutory tax rate for the relevant jurisdiction, except for those items which are non-taxable or subject to valuation allowances for which the tax expense (benefit) was calculated at |
||
(2) |
Amounts are attributable for both the common and convertible preferred stockholders, treated as one class of stock. |
||
(3) |
Non-GAAP net income has been adjusted for the dilutive impact of deferred financing fees related to the Convertible Notes of |
Free Cash Flow and Free Cash Flow Margin |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
(In thousands) |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by operating activities |
$ |
54,356 |
|
|
$ |
40,179 |
|
|
$ |
130,008 |
|
|
$ |
100,376 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Capital expenditures - property and equipment |
|
(29,676 |
) |
|
|
(19,444 |
) |
|
|
(77,717 |
) |
|
|
(66,480 |
) |
Capital expenditures - internal-use software development |
|
(2,263 |
) |
|
|
(1,584 |
) |
|
|
(6,593 |
) |
|
|
(4,297 |
) |
Purchase of intangible assets |
|
— |
|
|
|
(5,636 |
) |
|
|
(4,915 |
) |
|
|
(5,636 |
) |
Free cash flow |
$ |
22,417 |
|
|
$ |
13,515 |
|
|
$ |
40,783 |
|
|
$ |
23,963 |
|
As a percentage of revenue: |
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities |
|
36 |
% |
|
|
36 |
% |
|
|
31 |
% |
|
|
32 |
% |
Free cash flow margin |
|
15 |
% |
|
|
12 |
% |
|
|
10 |
% |
|
|
8 |
% |
SUPPLEMENTAL FINANCIAL INFORMATION (unaudited) |
|||||||||||
Stock-Based Compensation |
|||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
(In thousands) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Cost of revenue |
$ |
492 |
|
$ |
196 |
|
$ |
1,405 |
|
$ |
797 |
Research and development |
|
8,236 |
|
|
6,099 |
|
|
28,617 |
|
|
13,794 |
Sales and marketing |
|
3,356 |
|
|
2,582 |
|
|
10,553 |
|
|
5,621 |
General and administrative |
|
11,510 |
|
|
9,678 |
|
|
37,183 |
|
|
17,168 |
Total |
$ |
23,594 |
|
$ |
18,555 |
|
$ |
77,758 |
|
$ |
37,380 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221104005474/en/
Investor
investors@digitalocean.com
Media
press@digitalocean.com
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