Digitalocean Holdings, Inc. · NYSE:DOCN
Digitalocean — Q1 2022 Earnings Presentation
28 slides from Digitalocean's earnings presentation, May 4, 2022
Slide 1: Earnings Presentation Q1 2022
Earnings Presentation Q1 2022
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 builders can spend more time creating software that changes the world. digitalocean.com
Slide 4: Key Performance Indicators Driving 30%+ Revenue Growth
Key Performance Indicators Driving 30%+ Revenue Growth Q1’22 Q1’21 Y-o-Y Growth Strong Revenue Growth $127.3M $93.7M +36% Scaling ARR $524M $388M +35% Total Customers 623K 585K +6% Customers Spending More Than $50 per Month 102.4K 85.2K +20% Customers Spending More than $50 per Month 84% 80% +400 bp
Slide 5: Large and Rapidly Growing Market Opportunity
Large and Rapidly Growing Market Opportunity Individuals and Companies with <500 Employees IaaS PaaS $145Bn $54Bn $72Bn 27% CAGR $25Bn $91Bn $47Bn 2022 2025 Source: IDC: Public Cloud Service Spending Guide (January 2022) 5
Slide 6: Sources of Market Growth
Sources of Market Growth 43M 100M 14M Developers SMBs globally Yearly net by 2025 new SMBs Source: IDC: Understanding the Significance of the Worldwide Developer Forecast, 2020-2025 (March 2021) 6
Slide 7: What is the Problem DigitalOcean Solves for SMBs?
What is the Problem DigitalOcean Solves for SMBs? Complex systems: Enterprise-focused vendors have complicated implementation processes which limit onboarding for startups and SMBs. Onerous pricing: Existing providers have intricate and unpredictable pricing models that lack transparency. Lack of su
Slide 8: DigitalOcean's Offerings are Highly Differentiated
DigitalOcean’s Offerings are Highly Differentiated Simplicity Support Community Open Source 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 innova
Slide 9: DigitalOcean Offers a Cloud Platform Purpose Built for Developers and SMBs
DigitalOcean Offers a Cloud Platform Purpose Built for Developers and SMBs Cloud Developer & VPS Hosting Infrastructure SMB Cloud 2012-2015 2015-2018 2018-2022+ Droplets: Simple and scalable Key components underpinning cloud Essential elements to help developers and virtual machines such as Volumes,
Slide 10: Global Infrastructure Supports 623k Customers in 185 Countries
Global Infrastructure Supports 623k Customers in 185 Countries 14 Data Centers Across 8 Regions Customers in ~185 Countries London Amsterdam Frankfurt Toronto New York Asia San Francisco 23% Europe of revenue 29% Bangalore of revenue North America 38% Singapore of revenue RoW 10% of revenue Sydney*
Slide 11: 623K Total Customers with 102K Customers Paying More Than $50 per Month
623K Total Customers with 102K Customers Paying More Than $50 per Month Total Customers (K) +6% (%) - share of total company revenue Customers (84%) paying (82%) (83%) (83%) more than (78%) (79%) (80%) (77%) $50/month (77%) (K) +20% digitalocean.com 11
Slide 12: Customer Case Study - Scaling with DigitalOcean and increasing monthly spend 700X
Customer Case Study - Scaling with DigitalOcean and increasing monthly spend 700X over 2 years Customer Overview DigitalOcean Product Usage A two-year-old startup that provides a video chat platform to The video chat platform runs on DigitalOcean and utilizes make virtual interactions more human. mo
Slide 13: Financials
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Slide 14: Consistent Performance with Recent Acceleration (ARR)
Consistent Performance with Recent Acceleration (ARR) $524M in ARR Quarterly Revenue ($M) digitalocean.com 14
Slide 15: Scale with Free Cash Flow
Scale with Free Cash Flow Revenue (M) Free Cash Flow (M) 35% 9% 32% 6% 26% 25% Revenue YoY Revenue Growth Free Cash Flow Free Cash Flow as % of Revenue Notes: 2022E based on the midpoint of financial outlook as of May 4, 2022 digitalocean.com 15
Slide 16: Strong Top Line Growth
Strong Top Line Growth Revenue Growth ARR Growth digitalocean.com 16
Slide 17: Improving Customer Economics
Improving Customer Economics Net Dollar Retention Rate Monthly ARPU digitalocean.com 17
Slide 18: Financial Outlook
Financial Outlook Metric Q2 2022 FY 2022 Revenue $133-$135M $564-$568M Non-GAAP Operating Margin 10%-11% 13%-15% Non-GAAP Diluted Net Income Per Share $0.09-$0.10 $0.70-$0.71 Free Cash Flow as a % of Revenue NA 8%-10% Fully Diluted Weighted Average Shares 122-124M 123-125M Outstanding digitalocean.c
Slide 19: Appendix
Appendix digitalocean.com
Slide 20: Financial Highlights and KPIs
Financial Highlights and KPIs Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Revenue (M) $72.8 $76.9 $81.2 $87.5 $93.7 $103.8 $111.4 $119.7 $127.3 Revenue Growth 25% 24% 24% 26% 29% 35% 37% 37% 36% ARR (M) $299 $313 $335 $357 $388 $426 $455 $490 $524 ARR Increase (M) $14 $14 $22 $22 $31 $38 $
Slide 21: Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Profit and Adjusted Gross Margin digitalocean.com 21
Slide 22: Non-GAAP Income from Operations and Non-GAAP Operating Margin
Non-GAAP Income from Operations and Non-GAAP Operating Margin digitalocean.com 22
Slide 23: Historical Non-GAAP Income from Operations and Non-GAAP Operating Margin
Historical Non-GAAP Income from Operations and Non-GAAP Operating Margin digitalocean.com 23
Slide 24: Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin (1) Consists of internal-use software impairment charges related to software that is no longer being used. (2) Consists primarily of third-party consulting costs to enhance our finance function. digitalocean.com
Slide 25: Non-GAAP Net Income (loss) and Non-GAAP Diluted Net Income (loss) per Share
Non-GAAP Net Income (loss) and Non-GAAP Diluted Net Income (loss) per Share (1) The income tax effects of non-GAAP adjustments are calculated based on the applicable statutory tax rate for the relevant jurisdiction, except for those items which are non-taxable or subject to valuation allowances for
Slide 26: Free Cash Flow and Free Cash Flow Margin
Free Cash Flow and Free Cash Flow Margin digitalocean.com 26
Slide 27: Non-GAAP Sales and Marketing Expense
Non-GAAP Sales and Marketing Expense digitalocean.com 27
Slide 28: Stock-Based Compensation
Stock-Based Compensation digitalocean.com 28
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