Digitalocean Holdings, Inc. · NYSE:DOCN
Digitalocean — Q3 2023 Earnings Presentation
24 slides from Digitalocean's earnings presentation, Nov 2, 2023
Slide 1: Earnings Presentation Q3 2023
Earnings Presentation Q3 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 builders can spend more time creating software that changes the world. digitalocean.com
Slide 4: Key Performance Indicators
Key Performance Indicators Q3’22 Q3’23 Y-o-Y Growth Strong Revenue Growth $152.1M $177.1M +16% Scaling ARR $640.6M $713.3M +11% Adjusted EBITDA Margin 40% 43% +300 bps ARPU1 $86.54 $92.06 +6% Non GAAP Net Income Per Diluted Share $0.36 $0.44 +22% Adjusted Free Cash Flow Margin 16% 32% +1,600 bps 1 S
Slide 5: Large and Rapidly Growing Market Opportunity
Large and Rapidly Growing Market Opportunity Individuals and Companies with <500 Employees IaaS PaaS $195Bn $78Bn $98Bn 26% CAGR $36Bn $116Bn $62Bn 2023 2026 Source: IDC: Worldwide Software and Public Cloud Services Spending Guide (Jan. 2023) 5
Slide 6: 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 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: 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 2018-2023+ Droplets: Simple and scalable Key components underpinning cloud Essential elements to help developers and virtual machines such as Volumes,
Slide 9: Global Infrastructure Supports Customers in 190 Countries
Global Infrastructure Supports Customers in 190 Countries 15 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: 154K Customers Paying More Than $50 per Month
154K Customers Paying More Than $50 per Month Builders and Scalers (K) +9% Revenue Contribution from Builders And Scalers digitalocean.com 10
Slide 11: 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 Sep-23) Total1 2% $92 11% 16,785 3% Scalers 13% $1,979 13% 458 3% Builders 8% $136 9% 3,669 3% Learners 0% $15 4% 12,658 3% Testers Lea
Slide 12: Financials
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Slide 13: Balanced Profile of Growth and Profitability
Balanced Profile of Growth and Profitability Revenue (M) Adjusted EBITDA (M) 35% 34% 38.5% 20% 35% 32% Revenue YoY Revenue Growth Adjusted EBITDA Adjusted EBITDA Margin Notes: 2023E based on the midpoint of financial outlook as of November 2, 2023 digitalocean.com 13
Slide 14: Return on Invested Capital Drivers
Return on Invested Capital Drivers Diluted Weighted Average Shares Adjusted Free Cash Flow (M) Outstanding 21.5% 13% 6% Adj. Free Cash Flow Adj. Free Cash Flow Margin Notes: 2023E based on the midpoint of financial outlook as of November 2, 2023 digitalocean.com 14
Slide 15: Healthy Customer Economics
Healthy Customer Economics Net Dollar Retention Rate ARPU digitalocean.com 15
Slide 16: Financial Outlook
Financial Outlook Metric Q4 2023 FY 2023 FY 2023 FY 2023 FY 2023 (as of 2/16) (as of 5/9) (as of 8/11) (as of 11/2) Targeting Targeting Revenue $178M $700-$720M $700-$720M $680-$685M $690M Adjusted EBITDA Margin 36-37% 38-39% 38-39% 38-39% 38-39% Non-GAAP Diluted Net Income $0.36-$0.37 $1.65-$1.69 $
Slide 17: Appendix
Appendix digitalocean.com
Slide 18: Financial Highlights and KPIs
Financial Highlights and KPIs Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Revenue (M) $111.4 $119.7 $127.3 $133.9 $152.1 $163.0 $165.1 $169.8 $177.1 Revenue Growth 37% 37% 36% 29% 37% 36% 30% 27% 16% ARR (M) $455 $490 $524 $544 $641 $659 $669 $682 $713 ARR Increase (M) $28 $35 $34 $20 $97
Slide 19: Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin (1) For the three and nine months ended September 30, 2023, non-GAAP stock-based compensation excludes the $31.3 million reversal related to the forfeited MRSU award as it is presented in Restructuring related charges. (2) Primarily consists of salary conti
Slide 20: Non-GAAP Net Income
Non-GAAP Net Income (1) For the three and nine months ended September 30, 2023, non-GAAP stock-based compensation excludes the $31.3 million reversal related to the forfeited MRSU award as it is presented in Restructuring related charges. (2) Primarily consists of salary continuation charges, execut
Slide 21: Non-GAAP Diluted Net Income per Share
Non-GAAP Diluted Net Income per Share (1) For the three and nine months ended September 30, 2023, non-GAAP stock-based compensation excludes the $31.3 million reversal related to the forfeited MRSU award as it is presented in Restructuring related charges. (2) Primarily consists of salary continuati
Slide 22: 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 and executive reorganization charges, including CEO search firm fees and other legal and professional service costs. digitalocean.com 22
Slide 23: Non-GAAP Operating Expenses
Non-GAAP Operating Expenses digitalocean.com 23
Slide 24: Non-GAAP Operating Expenses (cont.)
Non-GAAP Operating Expenses (cont.) digitalocean.com 24
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