NEW YORK - DigitalOcean Holdings, Inc. (NYSE: DOCN), a cloud services provider for startups and growing technology businesses, reported a positive start to the year with its first-quarter earnings and revenue surpassing Wall Street expectations.
The company announced a Q1 adjusted EPS of $0.43, which was $0.05 higher than the analyst consensus of $0.38. Revenue for the quarter was also above expectations, coming in at $185 million against the consensus estimate of $182.61 million.
The company's stock rose 4% in response to the earnings and revenue beat, indicating a favorable market reaction to the company's financial performance. DigitalOcean's CEO, Paddy Srinivasan, attributed the strong results to the solid performance of their core cloud services and the growing demand for their AI platform.
Compared to the same quarter last year, DigitalOcean's revenue increased by 12%, showcasing robust growth in its core business segments. The company's net income margin stood at 8%, with an adjusted EBITDA margin of 40%, reflecting strong profitability. Additionally, DigitalOcean's gross profit saw a 20% increase year-over-year (YoY), reaching $112 million, which constitutes 61% of the revenue.
Looking ahead, DigitalOcean provided guidance for the second quarter of 2024, projecting an EPS range of $0.38 to $0.40, which brackets the analyst consensus of $0.39. The company also anticipates Q2 revenue to be between $188 million and $189 million, slightly above the consensus estimate of $187.1 million.
For the full year 2024, DigitalOcean expects to achieve an EPS between $1.60 and $1.67, with the midpoint of this range slightly below the consensus estimate of $1.62. The company's revenue guidance for the year is set at $760 million to $775 million, with the midpoint just below the analyst consensus of $767.3 million.
DigitalOcean's operational highlights for the quarter included an 8% increase in Average Revenue Per Customer (ARPU) over the first quarter of 2023. The company also reported that Builders and Scalers, customers spending more than $50 per month, increased by 8% from the first quarter of 2023, with their revenue growing by 13% YoY. The Net Dollar Retention Rate (NDR) was 97%, up from 96% in the prior quarter.
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