Digitalocean Holdings, Inc. · NYSE:DOCN

Digitalocean — Q2 2022 Earnings Presentation

30 slides from Digitalocean's earnings presentation, Aug 8, 2022

  1. Slide 1: Earnings Presentation Q2 2022

    Earnings Presentation Q2 2022

  2. 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

  3. Slide 3: Our Mission

    Our Mission DigitalOcean simplifies cloud computing so builders can spend more time creating software that changes the world. digitalocean.com

  4. Slide 4: Key Performance Indicators

    Key Performance Indicators Q2’22 Q2’21 Y-o-Y Growth Strong Revenue Growth $133.9M $103.8M +29% Scaling ARR $544M $426M +28% GAAP Gross Margin 65% 58% +700 bps Non-GAAP Operating Margin 17% 9% +800 bps Customers Spending More Than $50 per Month 105.4K 90.7K +16% Customers Spending More than $50 per M

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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,

  10. Slide 10: 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 23% Europe of revenue 29% Bangalore of revenue North America 38% Singapore of revenue RoW 10% of revenue Sydney* Notes

  11. Slide 11: 105K Customers Paying More Than $50 per Month

    105K Customers Paying More Than $50 per Month Customers paying more than +16% $50/month (K) Revenue Contribution from $50/month Customers +3% digitalocean.com 11

  12. Slide 12: Loot.tv finds simplicity and scalability with DigitalOcean

    DigitalOcean / Case Studies Loot.tv finds simplicity and scalability with DigitalOcean Scenario Advertising Country USA COST SAVINGS SCALABILITY GROWTH The team discovered that Loot.tv was able to spend a The solid foundation Loot.tv has Spaces, DigitalOcean’s S3 weekend creating Kubernetes built wit

  13. Slide 13: Financials

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  14. Slide 14: Quarterly Revenue ($M)

    Consistent Performance with Recent Acceleration (ARR) $544M in ARR Quarterly Revenue ($M) digitalocean.com 14

  15. Slide 15: Scale with Free Cash Flow

    Scale with Free Cash Flow Revenue (M) Free Cash Flow (M) 35% 9.5% 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 August 8, 2022 digitalocean.com 15

  16. Slide 16: Improving Profitability

    Improving Profitability GAAP Gross Margin Non-GAAP Operating Margin digitalocean.com 16

  17. Slide 17: Healthy Customer Economics

    Healthy Customer Economics Net Dollar Retention Rate Monthly ARPU digitalocean.com 17

  18. Slide 18: Financial Outlook

    Financial Outlook Metric Q3 2022 FY 2022 Revenue $145.5-$147M $564-$568M Non-GAAP Operating Margin 17%-18% 15%-16% Non-GAAP Diluted Net Income Per Share $0.22-$0.23 $0.74-$0.75 Free Cash Flow as a % of Revenue NA 9%-10% Fully Diluted Weighted Average Shares 113-115M 117-119M Outstanding digitalocean

  19. Slide 19: Appendix

    Appendix digitalocean.com

  20. Slide 20: Financial Highlights and KPIs

    Financial Highlights and KPIs Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Revenue (M) $76.9 $81.2 $87.5 $93.7 $103.8 $111.4 $119.7 $127.3 $133.9 Revenue Growth 24% 24% 26% 29% 35% 37% 37% 36% 29% ARR (M) $313 $335 $357 $388 $426 $455 $490 $524 $544 ARR Increase (M) $14 $22 $22 $31 $38 $28

  21. Slide 21: Adjusted Gross Profit and Adjusted Gross Margin

    Adjusted Gross Profit and Adjusted Gross Margin digitalocean.com 21

  22. 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

  23. 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

  24. Slide 24: Adjusted EBITDA and Adjusted EBITDA Margin

    Adjusted EBITDA and Adjusted EBITDA Margin (1) Consists primarily of interest income from our marketable securities digitalocean.com

  25. Slide 25: Historical Adjusted EBITDA and Adjusted EBITDA Margin

    Historical Adjusted EBITDA and Adjusted EBITDA Margin (1) Restated to conform to our existing credit agreement which excludes the impact of foreign exchange, interest income and other components reported in Other (income) expense, net in the Condensed Consolidated Statements of Operations. digitaloc

  26. Slide 26: 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

  27. Slide 27: Free Cash Flow and Free Cash Flow Margin

    Free Cash Flow and Free Cash Flow Margin digitalocean.com 27

  28. Slide 28: Non-GAAP Sales and Marketing Expense

    Non-GAAP Sales and Marketing Expense digitalocean.com 28

  29. Slide 29: Stock-Based Compensation

    Stock-Based Compensation digitalocean.com 29

  30. Slide 30: Appendix

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