DigitalOcean, global cloud provider for developers, startups and small and medium-sized businesses (SMBs), has announced its financial results for the first quarter ended March 31, 2023. The company reported a revenue of $165.1 million, an increase of 30% compared to the same quarter last year.
Annual Run-Rate Revenue (ARR) also grew by 28% YoY, ending the quarter at $669.1 million. Gross profit stood at $93.3 million or 56% of revenue, and adjusted EBITDA was $56.2 million with a margin of 34%.
DigitalOcean’s CEO Yancey Spruill credited the strong Q1 results to the company’s ability to offer simple and easy-to-use cloud solutions combined with high-touch customer service. The company also reported a net loss of $34.9 million attributable to common stockholders. However, CFO Matt Steinfort highlighted DigitalOcean’s ability to balance growth and profitability while improving margins and cash flow. The company’s cash, cash equivalents, and marketable securities stood at $613 million as of March 31, 2023.
Growth in Clients Spending $50+ per Month
In terms of operational highlights, DigitalOcean’s Net Dollar Retention Rate (NDR) was 107%, compared to 117% in Q1 2022. The Average Revenue Per Customer (ARPU) was $88.35, an increase of 16% over the same quarter last year. The company’s Builders and Scalers segment, which consists of customers spending more than $50 per month, increased by 43% from Q1 2022, with their revenue growing 32% YoY. DigitalOcean also repurchased 7,759,973 shares for $266 million under its share repurchase program.
Looking ahead, DigitalOcean forecasts a total revenue of $169.5 to $170.5 million for Q2 2023, with an adjusted EBITDA margin of 37% to 38% and non-GAAP diluted net income per share of $0.40 to $0.41. The company expects a total revenue of $700 to $720 million for the full year 2023, with an adjusted EBITDA margin of 38% to 39% and non-GAAP diluted net income per share of $1.70 to $1.73. Fully diluted weighted average shares outstanding are estimated to be approximately 103 to 105 million shares.
