DigitalOcean Announces Third Quarter 2024 Financial Results
DigitalOcean (NYSE: DOCN) reported strong Q3 2024 results with revenue of $198 million, up 12% year-over-year. The company achieved a net income of $33 million with a 17% margin and Adjusted EBITDA of $87 million with a 44% margin. Key highlights include the release of 42 new product features, launch of GPU Droplets with NVIDIA H100 GPUs, and early availability of GenAI Platform. The company raised its full-year revenue guidance to $775-777 million while maintaining free cash flow margin guidance at 15-17%. Average Revenue Per Customer increased 11% to $102.51, with Builders and Scalers revenue growing 15% year-over-year.
DigitalOcean (NYSE: DOCN) ha riportato risultati solidi per il terzo trimestre del 2024, con un fatturato di 198 milioni di dollari, in aumento del 12% rispetto all'anno precedente. L'azienda ha raggiunto un utile netto di 33 milioni di dollari con un margine del 17% e un EBITDA rettificato di 87 milioni di dollari con un margine del 44%. I punti salienti includono il rilascio di 42 nuove funzionalità di prodotto, il lancio dei GPU Droplets con GPU NVIDIA H100 e la disponibilità anticipata della piattaforma GenAI. L'azienda ha innalzato le previsioni di fatturato per l'intero anno a 775-777 milioni di dollari, mantenendo le previsioni del margine di flusso di cassa libero tra il 15% e il 17%. Il fatturato medio per cliente è aumentato dell'11% a 102,51 dollari, con i ricavi da Builders e Scalers in crescita del 15% rispetto all'anno precedente.
DigitalOcean (NYSE: DOCN) reportó resultados sólidos para el tercer trimestre de 2024, con ingresos de 198 millones de dólares, un aumento del 12% en comparación con el año anterior. La compañía logró un ingreso neto de 33 millones de dólares con un margen del 17% y un EBITDA ajustado de 87 millones de dólares con un margen del 44%. Los aspectos destacados incluyen el lanzamiento de 42 nuevas características de productos, la introducción de Droplets GPU con GPU NVIDIA H100 y la disponibilidad anticipada de la plataforma GenAI. La empresa elevó su guía de ingresos para todo el año a 775-777 millones de dólares, manteniendo la guía del margen de flujo de efectivo libre en un 15-17%. Los ingresos promedio por cliente aumentaron un 11% a 102,51 dólares, con ingresos de Builders y Scalers que crecieron un 15% en comparación con el año anterior.
디지털오션(DigitalOcean, NYSE: DOCN)이 2024년 3분기 강력한 실적을 발표했습니다. 수익은 1억 9천8백만 달러로 전년 대비 12% 증가했습니다. 이 회사는 순이익 3천3백만 달러를 기록했고, 이는 17%의 마진을 나타내며 조정된 EBITDA는 8천7백만 달러로 44%의 마진을 보였습니다. 주요 하이라이트로는 42개의 새로운 제품 기능 출시, NVIDIA H100 GPU가 탑재된 GPU Droplets 출시, 조기 출시된 GenAI 플랫폼이 포함됩니다. 이 회사는 올해 전체 수익 전망을 7억 7천5백만 달러에서 7억 7천7백만 달러로 상향 조정했으며, 자유 현금 흐름 마진에 대한 가이던스는 15-17%를 유지했습니다. 고객당 평균 수익은 11% 증가하여 102.51달러에 이르렀으며, Builders와 Scalers의 수익은 전년 대비 15% 성장했습니다.
DigitalOcean (NYSE: DOCN) a annoncé des résultats solides pour le troisième trimestre de 2024, avec un chiffre d'affaires de 198 millions de dollars, en hausse de 12% par rapport à l'année précédente. L'entreprise a réalisé un bénéfice net de 33 millions de dollars avec une marge de 17% et un EBITDA ajusté de 87 millions de dollars avec une marge de 44%. Les principaux points forts incluent le lancement de 42 nouvelles fonctionnalités de produits, le lancement des GPU Droplets avec des GPU NVIDIA H100 et la disponibilité anticipée de la plateforme GenAI. L'entreprise a rehaussé ses prévisions de chiffre d'affaires pour l'année entière à 775-777 millions de dollars tout en maintenant ses prévisions de marge de flux de trésorerie libre entre 15 et 17%. Le revenu moyen par client a augmenté de 11% pour atteindre 102,51 dollars, avec des revenus de Builders et Scalers en hausse de 15% par rapport à l'année précédente.
DigitalOcean (NYSE: DOCN) hat starke Ergebnisse für das dritte Quartal 2024 gemeldet, mit Umsätzen von 198 Millionen Dollar, ein Anstieg von 12% im Vergleich zum Vorjahr. Das Unternehmen erzielte einen Nettoertrag von 33 Millionen Dollar mit einer Marge von 17% und ein bereinigtes EBITDA von 87 Millionen Dollar mit einer Marge von 44%. Zu den wichtigsten Höhepunkten gehören die Veröffentlichung von 42 neuen Produktfunktionen, die Einführung von GPU Droplets mit NVIDIA H100 GPUS und die vorzeitige Verfügbarkeit der GenAI-Plattform. Das Unternehmen erhöhte seine Umsatzprognose für das gesamte Jahr auf 775-777 Millionen Dollar, während die Leitlinie für den freien Cashflow-Margen bei 15-17% bleibt. Der durchschnittliche Umsatz pro Kunde stieg um 11% auf 102,51 Dollar, wobei die Einnahmen aus Builders und Scalers im Vergleich zum Vorjahr um 15% wuchsen.
- Revenue grew 12% YoY to $198 million
- Net income increased 72% YoY to $33 million
- Adjusted EBITDA rose 14% YoY to $87 million
- ARPU increased 11% to $102.51
- Builders and Scalers revenue grew 15% YoY
- Raised full-year revenue guidance
- Net Dollar Retention Rate remained flat at 97%
- Adjusted free cash flow decreased to $26 million from $56 million in Q3 2023
Insights
DigitalOcean delivered a strong Q3 with notable financial improvements. Revenue grew 12% YoY to
Key performance metrics show healthy business fundamentals: ARPU increased 11% to
The raised full-year revenue guidance to
The launch of NVIDIA H100 GPU Droplets and GenAI Platform marks DigitalOcean's strategic pivot into the high-growth AI infrastructure market. The H100 GPUs represent top-tier AI computing capabilities, positioning the company to capture demand from AI-focused startups and developers.
The release of 42 new product features in Q3, including Global Load Balancers and Kubernetes Log Forwarding, demonstrates accelerated innovation velocity. These enterprise-grade features strengthen DigitalOcean's competitive position against larger cloud providers while maintaining its simplicity-first approach for the SMB market.
Revenue of
Net Income was
Continues innovation in product, releasing 42 new product features
“We had a successful quarter, enabling us to raise our full year revenue guidance while still maintaining full year free cash flow margin guidance,” said Paddy Srinivasan, CEO of DigitalOcean. “We continued to accelerate innovation, releasing 42 new product features across our core Cloud and AI platforms in Q3, that directly meet the needs of our larger customers. We made solid progress towards our objective of democratizing access to AI infrastructure and becoming a software-centric AI platform for growing digital-native companies.”
Third Quarter 2024 Financial Highlights:
-
Revenue was
$198 million 12% year-over-year. -
Annual Run-Rate Revenue (ARR) ended the quarter at
$798 million 12% year-over-year. -
Gross profit of
$119 million 12% year-over-year, and gross profit margin was60% . -
Net income attributable to common stockholders was
$33 million 72% year-over-year, and net income margin was17% . -
Adjusted EBITDA was
$87 million 14% year-over-year, and adjusted EBITDA margin was44% . -
Diluted net income per share was
$0.33 $0.52 -
Net cash from operating activities was
$73 million $54 million -
Adjusted free cash flow was
$26 million $56 million -
Cash and cash equivalents was
$440 million
Third Quarter 2024 Operational Highlights:
- Announced that GPU Droplets accelerated by NVIDIA H100 Tensor Core GPUs are available to all customers as of October 1, 2024. This launch offers our users to spin up NVIDIA H100 instances in 1 and 8 GPU configurations directly through the control panel and API.
- Launched the early availability of GenAI Platform, DigitalOcean's first generative AI product.
- Released 42 new product features during the quarter, including Global Load Balancers and Kubernetes Log Forwarding.
-
Average Revenue Per Customer (ARPU) was
$102.51 11% over the third quarter 2023. -
Builders and Scalers, those customers spending more than
$50 6% from the third quarter 2023 and their revenue grew15% year-over-year. -
Net Dollar Retention Rate (NDR) remained stable at
97% as compared to the prior quarter. - The Company repurchased 297,827 shares during the quarter.
Financial Outlook:
DigitalOcean is initiating guidance for the fourth quarter ending December 31, 2024 as follows:
-
Total revenue of
$199 $201 million -
Adjusted EBITDA margin of
34% to38% . -
Non-GAAP diluted net income per share of
$0.27 $0.32 - Fully diluted weighted average shares outstanding of approximately 103 to 104 million shares.
DigitalOcean is updating guidance for the full year 2024 as follows:
-
Increasing total revenue guidance of
$775 $777 million -
Adjusted EBITDA margin of
40% to41% . -
Adjusted free cash flow margin in the range of
15% to17% of revenue. -
Non-GAAP diluted net income per share of
$1.70 $1.75 - Fully diluted weighted average shares outstanding of approximately 103 to 104 million shares.
A reconciliation of non-GAAP outlook 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:
DigitalOcean will host a conference call today, November 4, 2024, at 8:00 a.m. ET to review its results. The conference call and presentation can be accessed by registering for the webcast at https://events.q4inc.com/attendee/240964588. A live webcast and replay of the conference call in addition to the presentation can be accessed from the DigitalOcean investor relations website at http://investors.digitalocean.com.
About DigitalOcean
DigitalOcean simplifies cloud computing so businesses can spend more time creating software that changes the world. With its mission-critical infrastructure and fully managed offerings, DigitalOcean helps developers at startups and growing digital-native businesses rapidly build, deploy and scale, whether creating a digital presence or building digital products. DigitalOcean combines the power of simplicity, security, community and customer support so customers can spend less time managing their infrastructure and more time building innovative applications that drive business growth. For more information, visit digitalocean.com.
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) fluctuations in our financial results make it difficult to project future results; (2) our history of operating losses; (3) our identification of a material weakness in our internal control over financial reporting, which may impact our ability to accurately report our financial statements; (4) if we fail to effectively onboard and integrate new members of our executive leadership team and senior management, our business and future growth prospects could be harmed; (5) our ability to attract and retain customers and/or expand usage of our platform by such customers; (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) our increased focus on the development and use of artificial intelligence and machine learning may result in reputational harm, liability or other adverse consequences to our business, results of operations or financial results; (8) breaches in our security measures allowing unauthorized access to our platform, our data, or our customers’ data; (9) the competitive markets in which we participate; (10) general market, political, economic, and business conditions; (11) the operational challenges related to international operations; (12) our ability to successfully integrate acquired businesses, including Paperspace, and achieve expected synergies and benefits; (13) liability we may incur due to the activities of our customers; and (14) our customers’ ability to have continued and unimpeded access to our platform, including as a result of evolving laws and industry standards.
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 December 31, 2023, and subsequent filings and reports we make with the SEC.
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 condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted EBITDA as net income attributable to common stockholders, adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, acquisition related compensation, acquisition and integration related costs, income tax expense, restructuring and other charges, restructuring related charges, impairment of long-lived assets, and other income, net. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We believe that adjusted EBITDA, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business, evaluating our operating performance, and for internal planning and forecasting purposes.
Our calculation of adjusted EBITDA and adjusted EBITDA margin may differ from the calculations of adjusted EBITDA and adjusted EBITDA margin by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, including our net income attributable to common stockholders and other GAAP results.
Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share
We define non-GAAP net income as net income attributable to common stockholders, excluding stock-based compensation, acquisition related compensation, amortization of acquired intangibles, acquisition and integration related costs, restructuring and other charges, restructuring related charges, impairment of long-lived assets, 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 diluted shares outstanding, which includes the potentially dilutive effect of our stock options, RSUs, PRSUs, and Convertible Notes.
We believe non-GAAP diluted 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.
Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin
Adjusted 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 excluding cash paid for restructuring and other charges, acquisition related compensation, restructuring related charges, and acquisition and integration related costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue.
We believe that adjusted free cash flow and adjusted 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 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 adjusted free cash flow and adjusted 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. One limitation of adjusted free cash flow and adjusted free cash flow margin is that they do not reflect our future contractual commitments. Additionally, adjusted 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 divide our customer population into the following categories:
-
Testers: users that both (i) spend less than or equal to
$50 -
Learners: users that both (i) spend less than or equal to
$50 -
Builders: users that spend greater than
$50 $500 -
Scalers: users that spend greater than
$500
We view Learners, Builders and Scalers as the most appropriate measure of our customer population, and Testers have therefore been excluded from the total customer population count. While we believe the total number of these customers is an important indicator of the growth of our business and future revenue opportunity, the trends relating to our Builders and Scalers is of particular importance to us as these customers represent a significant majority of our revenue and revenue growth, and they are representative of the SMB customers that grow on our platform and use multiple products.
ARPU
We calculate ARPU on a monthly basis as our total revenue from Learners, Builders and Scalers in that period divided by the total number of Learner, Builder and Scaler customers determined as of the last day of the reported 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 revenue of the last month of the reported period by 12. For our ARR calculations, we include the total revenue from all customers, including Testers, Learners, Builders and Scalers.
Net Dollar Retention Rate
We calculate net dollar retention rate monthly by starting with the revenue from customers, including Testers, Learners, Builders and Scalers, for our IaaS, PaaS and SaaS offerings 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 our net dollar retention rate calculations, we include the total revenue from customers, including Testers, Learners, Builders and Scalers, for our IaaS, PaaS and SaaS offerings. 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.
DIGITALOCEAN HOLDINGS, INC. |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(in thousands, except share amounts) |
|||||
(unaudited) |
|||||
|
September 30, 2024 |
|
December 31, 2023 |
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
439,872 |
|
$ |
317,236 |
Marketable securities |
|
— |
|
|
94,532 |
Accounts receivable, less allowance for credit losses of |
|
68,936 |
|
|
62,186 |
Prepaid expenses and other current assets |
|
43,198 |
|
|
29,040 |
Total current assets |
|
552,006 |
|
|
502,994 |
|
|
|
|
||
Property and equipment, net |
|
371,000 |
|
|
305,444 |
Restricted cash |
|
1,747 |
|
|
1,747 |
Goodwill |
|
348,674 |
|
|
348,322 |
Intangible assets, net |
|
123,110 |
|
|
140,151 |
Operating lease right-of-use assets, net |
|
121,430 |
|
|
155,201 |
Deferred tax assets |
|
2,035 |
|
|
1,994 |
Other assets |
|
6,476 |
|
|
5,114 |
Total assets |
$ |
1,526,478 |
|
$ |
1,460,967 |
|
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable |
$ |
12,946 |
|
$ |
3,957 |
Accrued other expenses |
|
28,065 |
|
|
31,046 |
Deferred revenue |
|
5,575 |
|
|
5,340 |
Operating lease liabilities, current |
|
68,113 |
|
|
81,320 |
Other current liabilities |
|
61,311 |
|
|
70,982 |
Total current liabilities |
|
176,010 |
|
|
192,645 |
|
|
|
|
||
Deferred tax liabilities |
|
3,518 |
|
|
3,533 |
Long-term debt |
|
1,483,470 |
|
|
1,477,798 |
Operating lease liabilities, non-current |
|
73,556 |
|
|
91,161 |
Other long-term liabilities |
|
1,627 |
|
|
9,528 |
Total liabilities |
|
1,738,181 |
|
|
1,774,665 |
|
|
|
|
||
Preferred stock ( |
|
— |
|
|
— |
Common stock ( |
|
2 |
|
|
2 |
Additional paid-in capital |
|
65,701 |
|
|
30,989 |
Accumulated other comprehensive loss |
|
(398) |
|
|
(452) |
Accumulated deficit |
|
(277,008) |
|
|
(344,237) |
Total stockholders’ deficit |
|
(211,703) |
|
|
(313,698) |
|
|
|
|
||
Total liabilities and stockholders’ deficit |
$ |
1,526,478 |
|
$ |
1,460,967 |
DIGITALOCEAN HOLDINGS, INC. |
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(in thousands, except per share amounts) |
|||||||||||
(unaudited) |
|||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
Revenue |
$ |
198,484 |
|
$ |
177,062 |
|
$ |
575,690 |
|
$ |
512,010 |
Cost of revenue |
|
79,043 |
|
|
70,329 |
|
|
226,826 |
|
|
209,562 |
Gross profit |
|
119,441 |
|
|
106,733 |
|
|
348,864 |
|
|
302,448 |
Operating expenses: |
|
|
|
|
|
|
|
||||
Research and development |
|
37,377 |
|
|
32,627 |
|
|
105,388 |
|
|
109,468 |
Sales and marketing |
|
17,036 |
|
|
19,015 |
|
|
57,970 |
|
|
53,346 |
General and administrative |
|
40,422 |
|
|
20,064 |
|
|
127,034 |
|
|
117,861 |
Restructuring and other charges |
|
— |
|
|
(441) |
|
|
— |
|
|
20,862 |
Total operating expenses |
|
94,835 |
|
|
71,265 |
|
|
290,392 |
|
|
301,537 |
|
|
|
|
|
|
|
|
||||
Income from operations |
|
24,606 |
|
|
35,468 |
|
|
58,472 |
|
|
911 |
|
|
|
|
|
|
|
|
||||
Other income (expense): |
|
|
|
|
|
|
|
||||
Interest expense |
|
(2,262) |
|
|
(2,333) |
|
|
(6,887) |
|
|
(6,634) |
Interest income and other income, net |
|
7,297 |
|
|
3,979 |
|
|
17,120 |
|
|
18,967 |
Other income, net |
|
5,035 |
|
|
1,646 |
|
|
10,233 |
|
|
12,333 |
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
29,641 |
|
|
37,114 |
|
|
68,705 |
|
|
13,244 |
Income tax benefit (expense) |
|
3,308 |
|
|
(17,939) |
|
|
(2,479) |
|
|
(9,774) |
Net income attributable to common stockholders |
$ |
32,949 |
|
$ |
19,175 |
|
$ |
66,226 |
|
$ |
3,470 |
Net income per share attributable to common stockholders |
|||||||||||
Basic |
$ |
0.36 |
|
$ |
0.22 |
|
$ |
0.72 |
|
$ |
0.04 |
Diluted |
$ |
0.33 |
|
$ |
0.20 |
|
$ |
0.70 |
|
$ |
0.04 |
Weighted-average shares used to compute net income per share attributable to common stockholders |
|||||||||||
Basic |
|
92,145 |
|
|
87,667 |
|
|
91,413 |
|
|
90,769 |
Diluted |
|
102,591 |
|
|
102,674 |
|
|
102,678 |
|
|
97,747 |
DIGITALOCEAN HOLDINGS, INC. |
|||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
(in thousands) |
|||||
(unaudited) |
|||||
|
Nine Months Ended September 30, |
||||
|
|
2024 |
|
|
2023 |
Operating activities |
|
|
|
||
Net income attributable to common stockholders |
$ |
66,226 |
|
$ |
3,470 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||
Depreciation and amortization |
|
100,825 |
|
|
87,085 |
Stock-based compensation |
|
67,659 |
|
|
65,589 |
Provision for expected credit losses |
|
12,018 |
|
|
11,416 |
Operating lease right-of-use assets and liabilities, net |
|
2,861 |
|
|
5,783 |
Net accretion of discounts and amortization of premiums on investments |
|
2,569 |
|
|
(2,262) |
Non-cash interest expense |
|
5,987 |
|
|
5,958 |
Loss on impairment of long-lived assets |
|
356 |
|
|
1,140 |
Deferred income taxes |
|
— |
|
|
561 |
Release of VAT reserve |
|
— |
|
|
(819) |
Other |
|
(2,572) |
|
|
484 |
Changes in operating assets and liabilities: |
|
|
|
||
Accounts receivable |
|
(18,768) |
|
|
(16,777) |
Prepaid expenses and other current assets |
|
(13,594) |
|
|
(7,569) |
Accounts payable and accrued expenses |
|
1,136 |
|
|
(15,870) |
Deferred revenue |
|
235 |
|
|
(561) |
Other assets and liabilities |
|
(13,552) |
|
|
16,798 |
Net cash provided by operating activities |
|
211,386 |
|
|
154,426 |
|
|
|
|
||
Investing activities |
|
|
|
||
Capital expenditures - property and equipment |
|
(132,886) |
|
|
(67,077) |
Capital expenditures - internal-use software development |
|
(6,492) |
|
|
(4,075) |
Cash paid for acquisition of businesses, net of cash acquired |
|
— |
|
|
(99,340) |
Cash paid for asset acquisitions |
|
— |
|
|
(2,500) |
Purchase of marketable securities |
|
— |
|
|
(352,313) |
Maturities of marketable securities |
|
91,675 |
|
|
773,335 |
Purchased interest on marketable securities |
|
— |
|
|
(151) |
Proceeds from interest on marketable securities |
|
— |
|
|
151 |
Proceeds from sale of equipment |
|
42 |
|
|
236 |
Net cash (used in) provided by investing activities |
|
(47,661) |
|
|
248,266 |
|
|
|
|
||
Financing activities |
|
|
|
||
Proceeds related to the issuance of common stock under equity incentive plan |
|
11,890 |
|
|
15,358 |
Proceeds from the issuance of common stock under employee stock purchase plan |
|
2,231 |
|
|
2,797 |
Principal repayments of finance leases |
|
(4,097) |
|
|
(947) |
Employee payroll taxes paid related to net settlement of equity awards |
|
(21,166) |
|
|
(15,594) |
Repurchase and retirement of common stock including related costs |
|
(29,878) |
|
|
(474,950) |
Net cash used in financing activities |
|
(41,020) |
|
|
(473,336) |
|
|
|
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(69) |
|
|
(55) |
Increase (decrease) in cash, cash equivalents and restricted cash |
|
122,636 |
|
|
(70,699) |
Cash, cash equivalents and restricted cash - beginning of period |
|
318,983 |
|
|
151,807 |
Cash, cash equivalents and restricted cash - end of period |
$ |
441,619 |
|
$ |
81,108 |
DIGITALOCEAN HOLDINGS, INC. |
|||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
|||||||||||
(unaudited) |
|||||||||||
Adjusted EBITDA and Adjusted EBITDA Margin |
|||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
(In thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
GAAP Net income attributable to common stockholders |
$ |
32,949 |
|
$ |
19,175 |
|
$ |
66,226 |
|
$ |
3,470 |
|
|
|
|
|
|
|
|
||||
Adjustments: |
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
35,810 |
|
|
30,554 |
|
|
100,825 |
|
|
87,085 |
Stock-based compensation(1) |
|
22,949 |
|
|
28,731 |
|
|
67,512 |
|
|
92,754 |
Interest expense |
|
2,262 |
|
|
2,333 |
|
|
6,887 |
|
|
6,634 |
Acquisition related compensation |
|
3,193 |
|
|
7,995 |
|
|
11,439 |
|
|
22,576 |
Acquisition and integration related costs |
|
— |
|
|
2,366 |
|
|
— |
|
|
5,113 |
Income tax expense |
|
(3,308) |
|
|
17,939 |
|
|
2,479 |
|
|
9,774 |
Restructuring and other charges(1) |
|
— |
|
|
(441) |
|
|
— |
|
|
20,862 |
Restructuring related charges(1)(2) |
|
162 |
|
|
(29,484) |
|
|
4,025 |
|
|
(26,757) |
Impairment of long-lived assets |
|
— |
|
|
587 |
|
|
356 |
|
|
1,140 |
Other income, net(3) |
|
(7,297) |
|
|
(3,979) |
|
|
(17,120) |
|
|
(18,967) |
Adjusted EBITDA |
$ |
86,720 |
|
$ |
75,776 |
|
$ |
242,629 |
|
$ |
203,684 |
As a percentage of revenue: |
|
|
|
|
|
|
|
||||
Net income margin |
|
17 % |
|
|
11 % |
|
|
12 % |
|
|
1 % |
Adjusted EBITDA margin |
|
44 % |
|
|
43 % |
|
|
42 % |
|
|
40 % |
| _____________________________ | ||
(1) |
For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes |
|
(2) |
For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges. For the three and nine months ended September 30, 2023, primarily consists of the |
|
(3) |
For the three and nine months ended September 30, 2024 and 2023, primarily consists of interest and accretion income from our cash and cash equivalents and marketable securities. |
|
Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share |
|||||||||||
|
|
|
|
|
|
||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
(In thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
GAAP Net income attributable to common stockholders |
$ |
32,949 |
|
$ |
19,175 |
|
$ |
66,226 |
|
$ |
3,470 |
Stock-based compensation(1) |
|
22,949 |
|
|
28,731 |
|
|
67,512 |
|
|
92,754 |
Acquisition related compensation |
|
3,193 |
|
|
7,995 |
|
|
11,439 |
|
|
22,576 |
Amortization of acquired intangible assets |
|
5,571 |
|
|
5,651 |
|
|
17,041 |
|
|
13,231 |
Acquisition and integration related costs |
|
— |
|
|
2,366 |
|
|
— |
|
|
5,113 |
Restructuring and other charges(1) |
|
— |
|
|
(441) |
|
|
— |
|
|
20,862 |
Restructuring related charges(1)(2) |
|
162 |
|
|
(29,484) |
|
|
4,025 |
|
|
(26,757) |
Impairment of long-lived assets |
|
— |
|
|
587 |
|
|
356 |
|
|
1,140 |
Non-GAAP income tax adjustment(3) |
|
(13,150) |
|
|
9,011 |
|
|
(24,573) |
|
|
(14,393) |
Non-GAAP Net income |
$ |
51,674 |
|
$ |
43,591 |
|
$ |
142,026 |
|
$ |
117,996 |
|
|
|
|
|
|
|
|
||||
Non-cash charges related to convertible notes(4) |
$ |
1,590 |
|
$ |
1,563 |
|
$ |
4,764 |
|
$ |
4,684 |
Non-GAAP Net income used to compute net income per share, diluted |
$ |
53,264 |
|
$ |
45,154 |
|
$ |
146,790 |
|
$ |
122,680 |
|
|
|
|
|
|
|
|
||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
(In thousands, except per share amounts) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
GAAP Net income per share attributable to common stockholders, diluted |
$ |
0.33 |
|
$ |
0.20 |
|
$ |
0.70 |
|
$ |
0.04 |
Stock-based compensation(1) |
|
0.22 |
|
|
0.27 |
|
|
0.66 |
|
|
0.87 |
Acquisition related compensation |
|
0.03 |
|
|
0.07 |
|
|
0.11 |
|
|
0.21 |
Amortization of acquired intangible assets |
|
0.05 |
|
|
0.05 |
|
|
0.16 |
|
|
0.12 |
Acquisition and integration related costs |
|
— |
|
|
0.02 |
|
|
— |
|
|
0.05 |
Restructuring and other charges(1) |
|
— |
|
|
— |
|
|
— |
|
|
0.20 |
Restructuring related charges(1)(2) |
|
— |
|
|
(0.28) |
|
|
0.03 |
|
|
(0.25) |
Impairment of long-lived assets |
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
Non-cash charges related to convertible notes(4) |
|
0.02 |
|
|
0.02 |
|
|
0.04 |
|
|
0.04 |
Non-GAAP income tax adjustment(3) |
|
(0.13) |
|
|
0.09 |
|
|
(0.27) |
|
|
(0.13) |
Non-GAAP Net income per share, diluted* |
$ |
0.52 |
|
$ |
0.44 |
|
$ |
1.43 |
|
$ |
1.16 |
|
|
|
|
|
|
|
|
||||
GAAP Weighted-average shares used to compute net income per share, diluted |
|
102,591 |
|
|
102,674 |
|
|
102,678 |
|
|
97,747 |
Weighted-average dilutive effect of potentially dilutive securities |
|
— |
|
|
— |
|
|
— |
|
|
8,403 |
Non-GAAP Weighted-average shares used to compute net income per share, diluted |
|
102,591 |
|
|
102,674 |
|
|
102,678 |
|
|
106,150 |
*May not foot due to rounding |
|||||||||||
| ______________ | ||
(1) |
For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes |
|
(2) |
For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges. For the three and nine months ended September 30, 2023, primarily consists of the |
|
(3) |
For the three and nine months ended September 30, 2024, we used a tax rate of |
|
(4) |
Consists of non-cash interest expense for amortization of deferred financing fees related to the Convertible Notes. | |
Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin |
|||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
(In thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
GAAP Net cash provided by operating activities |
$ |
73,353 |
|
$ |
54,050 |
|
$ |
211,386 |
|
$ |
154,426 |
Adjustments: |
|
|
|
|
|
|
|
||||
Capital expenditures - property and equipment |
|
(57,352) |
|
|
(20,229) |
|
|
(132,886) |
|
|
(67,077) |
Capital expenditures - internal-use software development |
|
(2,446) |
|
|
(1,180) |
|
|
(6,492) |
|
|
(4,075) |
Restructuring and other charges |
|
— |
|
|
848 |
|
|
61 |
|
|
16,774 |
Restructuring related charges(1) |
|
289 |
|
|
1,231 |
|
|
4,919 |
|
|
3,958 |
Acquisition related compensation |
|
12,386 |
|
|
16,851 |
|
|
20,712 |
|
|
16,851 |
Acquisition and integration related costs |
|
— |
|
|
4,506 |
|
|
302 |
|
|
6,067 |
Adjusted free cash flow |
$ |
26,230 |
|
$ |
56,077 |
|
$ |
98,002 |
|
$ |
126,924 |
As a percentage of revenue: |
|
|
|
|
|
|
|
||||
GAAP Net cash provided by operating activities |
|
37 % |
|
|
31 % |
|
|
37 % |
|
|
30 % |
Adjusted free cash flow margin |
|
13 % |
|
|
32 % |
|
|
17 % |
|
|
25 % |
| ____________________ | ||
(1) |
For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges. For the three and nine months ended September 30, 2023, primarily consists of salary continuation charges and executive reorganization charges, including CEO search firm fees and other legal and professional service costs. |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241104838409/en/
Investor Contact
Melanie Strate
investors@digitalocean.com
Media Contact
Dan Jensen
press@digitalocean.com
Source: DigitalOcean Holdings, Inc.
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