Digitalocean Holdings, Inc. · NYSE:DOCN
Digitalocean — Q3 2022 Earnings Presentation
27 slides from Digitalocean's earnings presentation, Nov 7, 2022
Slide 1: Earnings Presentation Q3 2022
Earnings Presentation Q3 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
Key Performance Indicators Q3’22 Q3’21 Y-o-Y Growth Strong Revenue Growth $152.1M $111.4M +37% Scaling ARR $640.6M $454.8M +41% GAAP Gross Margin 64% 61% +300 bps Non-GAAP Operating Margin 26% 15% +1100 bps Customers Spending More Than $50 per Month 142.1K 94.6K +50% Customers Spending More than $50
Slide 5: Acquired Market Leader in Managed Cloud Hosting in Q3'22
Acquired Market Leader* in Managed Cloud Hosting in Q3’22 Extended Product Offering and Provides Financial and Strategic Benefits ● Customer intimacy and knowledge ● Accelerates our revenue growth ● Higher price point due to managed infrastructure ● Does not impact our profit margin ● Expands our si
Slide 6: 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) 6
Slide 7: 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) 7
Slide 8: 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 9: 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 10: 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 11: Global Infrastructure Supports Customers in 185 Countries
Global Infrastructure Supports Customers in 185 Countries 14 Data Centers Across 8 Regions Customers in ~185 Countries London Amsterdam Frankfurt Toronto New York Asia San Francisco 22% Europe of revenue 30% Bangalore of revenue North America 38% Singapore of revenue RoW 10% of revenue Sydney* Notes
Slide 12: 142K Customers Paying More Than $50 per Month
142K Customers Paying More Than $50 per Month Customers paying more than $50/month (K)* +50% Revenue Contribution from $50/month Customers +3% *For customers paying more than $50/month, DigitalOcean added 17K and Cloudways added 20K in Q3’22. digitalocean.com 12
Slide 13: Financials
AAA AULA AL TOU
Slide 14: Quarterly Revenue ($M)
Consistent Performance with Recent Acceleration (ARR) $641M in ARR Quarterly Revenue ($M) digitalocean.com 14
Slide 15: Scale with Free Cash Flow
Scale with Free Cash Flow Revenue (M) Free Cash Flow (M) 35% 10.5% 34% 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 November 7, 2022 digitalocean.com 15
Slide 16: Improving Profitability
Improving Profitability GAAP Gross Margin Non-GAAP Operating Margin digitalocean.com 16
Slide 17: Healthy Customer Economics
Healthy Customer Economics Net Dollar Retention Rate Monthly ARPU digitalocean.com 17
Slide 18: Financial Outlook
Financial Outlook Metric Q4 2022 FY 2022 Revenue $160-$162M $573-$575M Non-GAAP Operating Margin 16% 17% Non-GAAP Diluted Net Income Per Share $0.18-$0.19 $0.79-$0.80 Free Cash Flow as a % of Revenue NA 10%-11% Fully Diluted Weighted Average Shares 114-115M 116-117M Outstanding digitalocean.com 18
Slide 19: Appendix
Appendix digitalocean.com
Slide 20: Financial Highlights and KPIs
Financial Highlights and KPIs Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Revenue (M) $81.2 $87.5 $93.7 $103.8 $111.4 $119.7 $127.3 $133.9 $152.1 Revenue Growth 24% 26% 29% 35% 37% 37% 36% 29% 37% ARR (M) $335 $357 $388 $426 $455 $490 $524 $544 $641 ARR Increase (M) $22 $22 $31 $38 $28 $35
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: Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin (1) Consists primarily of interest income from our marketable securities digitalocean.com
Slide 24: 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 25: Free Cash Flow and Free Cash Flow Margin
Free Cash Flow and Free Cash Flow Margin digitalocean.com 25
Slide 26: Non-GAAP Sales and Marketing Expense
Non-GAAP Sales and Marketing Expense digitalocean.com 26
Slide 27: Stock-Based Compensation
Stock-Based Compensation digitalocean.com 27
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