DigitalOcean’s Cloud Services Revenue Growth Accelerated to 37%

As a provider of cloud services for developers, startups and SMBs, DigitalOcean saw its revenue growth in Q3 accelerate to 37% year-over-year. The cloud provider’s total revenue in Q3 2021 came down to $111.4 million.

Photo Yancey Spruill, CEO of DigitalOcean
“We are building the foundation for durable 30%+ revenue growth,” said Yancey Spruill, CEO of DigitalOcean.

“We are excited about the continued acceleration across our business,” said Yancey Spruill, Chief Executive Officer (CEO) of DigitalOcean. “We are building the foundation for durable 30%+ revenue growth with strong free cash flow generation driven by investments in product innovation to support our customers’ needs and sales and marketing initiatives to further penetrate our massive market opportunity.”

The loss from operations was $1.7 million, with an operating margin of 1%, compared to a $6.7 million loss from operations and an operating margin of 8% in the prior year quarter.

DigitalOcean’s adjusted EBITDA was $36.4 million in Q3, with an adjusted EBITDA margin of 33 percent of revenue, up from $26.4 million and a 33 percent adjusted EBITDA margin in the prior year quarter.

Capital expenditures of the cloud provider were $26.7 million or 24% of revenue as compared to $26.1 million or 32% of revenue in the previous year quarter.

Some of DigitalOcean’s third quarter 2021 operational highlights include:

  • The average revenue per customer (ARPU) for the period was $61.97, up 28% from the third quarter of 2020
  • At the conclusion of the quarter, there were roughly 598K clients, up 7% from the third quarter of 2020

Nimbella, a serverless platform built on open-source software, was acquired by DigitalOcean. Its goal is to make cloud programming easier for developers and SMBs by allowing them to focus on application development and business results rather than infrastructure management.

Financial Outlook DigitalOcean

For the fourth quarter of 2021 DigitalOcean is expecting the following financial results:

  • Total revenue of $117 to $119 million
  • Adjusted EBITDA margin of 30% to 31%

For the full year 2021, the cloud provider is expecting the following:

  • Total revenue of $426 to $428 million
  • Adjusted EBITDA margin of 30% to 31%
  • Capital expenditures as a percentage of revenue of 25% to 26%
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