DigitalOcean First Quarter Revenue Jumps 36% YoY

DigitalOcean

Photo Yancey Spruill, CEO at DigitalOcean
“Despite an uncertain macro environment, we had a good start to the year with strong growth and free cash flow,” said Yancey Spruill, CEO at DigitalOcean.

Global cloud provider DigitalOcean, a company focused on serving developers, startups and SMBs, has released its first-quarter results for the period ending March 31, 2022. Revenue was $127.3 million, up 36 percent from the previous year.

“Despite an uncertain macro environment, we had a good start to the year with strong growth and free cash flow,” said Yancey Spruill, Chief Executive Officer (CEO) at DigitalOcean. “We are focused on broadening our product offerings, investing in our go-to-market capabilities, both to enable our customers’ success and drive consistent revenue growth combined with ramping free cash flow.”

Financial and Operational Highlights

The following are some of DigitalOcean’s additional financial highlights for the first quarter of 2022:

  • Annual Run-Rate Revenue (ARR) was $524 million at the end of the quarter, up 35 percent year over year
  • $80.6 million in gross profit, or 63 percent of sales, and $103.3 million in adjusted gross profit, or 81 percent of revenue
  • The loss from operations was $13.1 million, with a 10% operating margin
  • The non-GAAP income from operations was $13.6 million, with an 11 percent non-GAAP operating margin
  • Non-GAAP diluted net income per share was $0.07. Net loss per share was $(0.17)

The following are some of DigitalOcean’s operational highlights for the first quarter of 2022:

  • The Net Dollar Retention Rate (NDR) was 117 percent in the first quarter of 2021, up from 107 percent the previous quarter
  • The average revenue per customer (ARPU) for the period was $68.90, up 28% from the first quarter of 2021
  • Total consumers increased by 6% to 623K, with customers spending more than $50 per month increasing by 20% to 102K
  • Year over year, revenue from consumers who spend more than $50 each month increased by 43%. The NDR for these consumers was 118 percent, and they currently account for 84 percent of overall income
  • CSS Tricks, a front-end development instructional site with 6,500 articles, videos, tutorials, and other content that generates over 3 million monthly unique users, was acquired

Financial Outlook 2nd Quarter 2022 and Full Year 2022

Based on information available as of May 4, 2022, for the second quarter of 2022, DigitalOcean expects the following:

  • $133 to $135 million in total sales
  • A non-GAAP operating margin of 10% to 11% is expected
  • $0.09 to $0.10 non-GAAP diluted net income per share
  • There are roughly 122 to 124 million fully diluted weighted average shares outstanding

For the full year 2022, DigitalOcean expects the following:

  • Total revenue ranges between $564 and $568 million
  • A non-GAAP operating margin of 13% to 15% is expected
  • Free cash flow should be in the region of 8% to 10% of revenue
  • $0.70 to $0.71 in non-GAAP diluted net income per share
  • There are roughly 123 to 125 million fully diluted weighted average shares outstanding