Digitalocean Holdings, Inc. · NYSE:DOCN
Digitalocean — Q4 2023 Earnings Presentation
23 slides from Digitalocean's earnings presentation, Feb 21, 2024
Slide 1: Earnings Presentation Q4 2023
Earnings Presentation Q4 2023
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements that involve This presentation includes statistical and other industry and market data that substantial risks and uncertainties. In some cases, you can identify we obtained from industry publications and research, surveys and studies
Slide 3: Our Mission
Our Mission DigitalOcean simplifies cloud computing so businesses can spend more time creating software that changes the world. digitalocean.com
Slide 4: Key Performance Indicators
Key Performance Indicators Q4’22 Q4’23 Y-o-Y Growth Strong Revenue Growth $163.0M $180.9M +11% Scaling ARR $658.8M $730.3M +11% Adjusted EBITDA Margin 34% 41% +700 bps ARPU1 $87.52 $92.63 +6% Non GAAP Net Income Per Diluted Share $0.28 $0.44 +57% 1. See slide 11 for our definition of ARPU. digitaloc
Slide 5: Large and Rapidly Growing Market Opportunity
Large and Rapidly Growing Market Opportunity Individuals and Companies with <500 Employees IaaS PaaS $213Bn $96Bn $114Bn 23% CAGR $46Bn $117Bn $68Bn 2024 2027 Source: IDC: Worldwide Software and Public Cloud Services Spending Guide (February 2024) 5
Slide 6: DigitalOcean's Differentiators from Enterprise Platforms
DigitalOcean’s Differentiators from Enterprise Platforms Complex systems: Enterprise-focused vendors have complicated implementation processes which limit onboarding for startups and growing digital businesses. Onerous pricing: Existing providers have intricate and unpredictable pricing models that
Slide 7: DigitalOcean's Offerings are Highly Differentiated
DigitalOcean’s Offerings are Highly Differentiated Simplicity Support Community Open Infrastructure and Platform Live, personal support to all Free knowledge base with tens Enabling faster, lower cost Technologies that can be spun customers regardless of their of thousands of pieces of innovation wi
Slide 8: Cloud Platform Purpose Built for Developers at Startups and Growing Digital Businesses
DigitalOcean Offers a Cloud Platform Purpose Built for Developers at Startups and Growing Digital Businesses Cloud Developer VPS Hosting Infrastructure Cloud 2012-2015 2015-2018 2018-2024+ Droplets: Simple and scalable Key components underpinning cloud Essential elements to help developers and virtu
Slide 9: Global Infrastructure Supports Customers in 190 Countries
Global Infrastructure Supports Customers in 190 Countries 16 Data Centers Across 9 Regions Customers in 190 Countries London Amsterdam Frankfurt Toronto New York Asia San Francisco 24% Europe of revenue 29% Bangalore of revenue North America 37% Singapore of revenue RoW 10% of revenue Sydney Notes:
Slide 10: Customer Concentration, Revenue Contribution and Growth
Customer Concentration, Revenue Contribution and Growth Customer Customer Customer ARR Growth2 % ARPU3 Growth2,5 Growth2% Growth4 % (figures as of y-o-y q-o-q q-o-q Dec-23) Total1 5% $93 11% 11,302 2% Scalers 13% $1,980 13% 636 4% Builders 8% $136 9% 1,302 1% Learners 4% $15 8% 9,364 2% Testers Lear
Slide 11: Financials
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Slide 12: Balanced Profile of Growth and Profitability
Balanced Profile of Growth and Profitability Revenue (M) Adjusted EBITDA (M) 35% 34% 40% 20% 35% 32% Revenue YoY Revenue Growth Adjusted EBITDA Adjusted EBITDA Margin digitalocean.com 12
Slide 13: Return on Invested Capital Drivers
Return on Invested Capital Drivers Non-GAAP Diluted Weighted Average Adjusted Free Cash Flow (M) Shares Outstanding 22% 13% 6% Adj. Free Cash Flow Adj. Free Cash Flow Margin digitalocean.com 13
Slide 14: Healthy Customer Economics
Healthy Customer Economics Net Dollar Retention Rate ARPU digitalocean.com 14
Slide 15: Financial Outlook
Financial Outlook Metric Q1 2024 FY 2024 (as of 2/21) Revenue $182-$183M $755-$775M Adjusted EBITDA Margin 37-38% 36-38% Non-GAAP Diluted Net Income Per Share $0.37-$0.39 $1.60-$1.67 Adjusted Free Cash Flow Margin NA 19-21% Fully Diluted Weighted Average Shares Outstanding 101-102M 102-103M digitalo
Slide 16: Appendix
Appendix digitalocean.com
Slide 17: Financial Highlights and KPIs
Financial Highlights and KPIs Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Revenue (M) $119.7 $127.3 $133.9 $152.1 $163.0 $165.1 $169.8 $177.1 $180.9 Revenue Growth 37% 36% 29% 37% 36% 30% 27% 16% 11% ARR (M) $490 $524 $544 $641 $659 $669 $682 $713 $730 ARR Increase (M) $35 $34 $20 $97 $18
Slide 18: Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin 1) For the year ended December 31, 2023, non-GAAP stock-based compensation excludes the $31.3 million reversal related to the former CEO’s forfeited MRSU award that is reported in Restructuring related charges, as well as $3.9 million that is reported in Re
Slide 19: Non-GAAP Net Income
Non-GAAP Net Income 1) For the year ended December 31, 2023, non-GAAP stock-based compensation excludes the $31.3 million reversal related to the former CEO’s forfeited MRSU award that is reported in Restructuring related charges, as well as $3.9 million that is reported in Restructuring and other c
Slide 20: Non-GAAP Diluted Net Income per Share
Non-GAAP Diluted Net Income per Share 1) For the year ended December 31, 2023, non-GAAP stock-based compensation excludes the $31.3 million reversal related to the former CEO’s forfeited MRSU award that is reported in Restructuring related charges, as well as $3.9 million that is reported in Restruc
Slide 21: Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin
Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin 1) Primarily consists of salary continuation charges, executive reorganization charges including severance, CEO search firm fees, and other legal and professional service costs. digitalocean.com 21
Slide 22: Non-GAAP Operating Expenses
Non-GAAP Operating Expenses digitalocean.com 22
Slide 23: Non-GAAP Operating Expenses (cont.)
Non-GAAP Operating Expenses (cont.) digitalocean.com 23
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