Digitalocean Holdings, Inc. · NYSE:DOCN
Digitalocean — Q4 2022 Earnings Presentation
28 slides from Digitalocean's earnings presentation, Feb 16, 2023
Slide 1: Earnings Presentation Q4 2022
Earnings Presentation Q4 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 Q4’22 Q4’21 Y-o-Y Growth Strong Revenue Growth $163.0M $119.7M +36% Scaling ARR $658.8M $489.8M +34% Non-GAAP Operating Margin 16% 12% +400 bps Customers Spending More Than $50 per Month 144.2K 99.4K +45% Customers Spending More than $50 per Month 86% 84% +200 bps Percenta
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: Sources of Market Growth
Sources of Market Growth 48M 100M 14M Developers by SMBs globally Yearly net 20271 new SMBs 1 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 2018-2023+ Droplets: Simple and scalable Key components underpinning cloud Essential elements to help developers and virtual machines such as Volumes,
Slide 10: 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 22% Europe of revenue 30% Bangalore of revenue North America 38% Singapore of revenue RoW 10% of revenue Sydney Notes:
Slide 11: 144K Customers Paying More Than $50 per Month
144K Customers Paying More Than $50 per Month Customers paying more than $50/month (K) +45% Revenue Contribution from Customers paying more than +2% $50/month digitalocean.com 11
Slide 12: Customer Concentration, Revenue Contribution and Growth
Customer Concentration, Revenue Contribution and Growth Customer Average ARR Growth2 % ARPU Customer Age 4 (figures as of Growth3 % Dec-22) y-o-y (months) Total1 11% 34% $81 44 Scalers 42% 34% $1,974 57 Builders 45% 44% $135 47 Learners 5% 20% $15 48 Testers 1% 9% $12 2 1. Scalers spend more than $5
Slide 13: Steady, Growing Graduation Rates from Learner to Builders to Scalers
Steady, Growing Graduation Rates from Learner to Builders to Scalers Learners Builders Scalers Spend <$50 per month and have been Spend between $50 and $500 customers for at least 3 months per month Spend >$500 per month Annual Net Graduation Rate Annual Net Graduation Rate (% of Learners to Builder
Slide 14: Steady Growth: Builder and Scaler pools have materially grown
Steady Growth: While Learner pool has grown modestly, the Builder and Scaler pools have materially grown both customer count and spend Indexed Customer Count Monthly Revenue 500% $30M 400% $20M 300% 200% $10M 100% 0% $0M 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Learners Builders Scalers Lea
Slide 15: Financials
AAA AULA AL TOU
Slide 16: Quarterly Revenue ($M)
Consistent Performance with Recent Acceleration (ARR) $659M in ARR Quarterly Revenue ($M) digitalocean.com 16
Slide 17: Scale with Free Cash Flow
Scale with Free Cash Flow Revenue (M) Free Cash Flow (M) 35% 34% 13% 25% 6% Revenue YoY Revenue Growth Free Cash Flow Free Cash Flow as % of Revenue digitalocean.com 17
Slide 18: Improving Profitability
Improving Profitability Adjusted EBITDA Non-GAAP Operating Margin digitalocean.com 18
Slide 19: Healthy Customer Economics
Healthy Customer Economics Net Dollar Retention Rate Monthly ARPU digitalocean.com 19
Slide 20: Financial Outlook
Financial Outlook Metric Q1 2023 FY 2023 Revenue $163-$165M $700-$720M Adjusted EBITDA Margin 31-32% 38-39% Non-GAAP Diluted Net Income Per Share $0.28-$0.29 $1.65-$1.69 Free Cash Flow as a % of Revenue NA 21-22% Fully Diluted Weighted Average Shares 113-115M 114-116M Outstanding digitalocean.com 20
Slide 21: Appendix
Appendix digitalocean.com
Slide 22: Financial Highlights and KPIs
Financial Highlights and KPIs Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Revenue (M) $87.5 $93.7 $103.8 $111.4 $119.7 $127.3 $133.9 $152.1 $163.0 Revenue Growth 26% 29% 35% 37% 37% 36% 29% 37% 36% ARR (M) $357 $388 $426 $455 $490 $524 $544 $641 $659 ARR Increase (M) $22 $31 $38 $28 $35 $3
Slide 23: Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Profit and Adjusted Gross Margin digitalocean.com 23
Slide 24: Non-GAAP Income from Operations and Non-GAAP Operating Margin
Non-GAAP Income from Operations and Non-GAAP Operating Margin digitalocean.com 24
Slide 25: Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin (1) For the three months and year ended December 31, 2022, amount is Other income (expense), net and consists primarily of interest and accretion income from our marketable securities. For the three months and year ended December 31, 2021, amounts are attri
Slide 26: Non-GAAP Net Income (loss) and Non-GAAP Diluted Net Income 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 w
Slide 27: Free Cash Flow and Free Cash Flow Margin
Free Cash Flow and Free Cash Flow Margin digitalocean.com 27
Slide 28: Stock-Based Compensation
Stock-Based Compensation digitalocean.com 28
DigitalOcean Holdings — Q4 2022 Earnings Presentation on 6ix