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Solid start and increased revenues…

  • Income: $185 million, up 12% year-over-year, above estimates of $182.58 million.

  • Net income: $14 million for a net profit margin of 8%, below estimates of $38.60 million.

  • Earnings per share (EPS): Non-GAAP diluted net earnings per share were $0.43, exceeding the estimate of $0.38.

  • Adjusted EBITDA: $74 million, up 33% year over year, with an adjusted EBITDA margin of 40%.

  • Free cash flow: Adjusted free cash flow was $34 million, up from $26 million in Q1 2023.

  • Gross margin: Gross profit reached $112 million, representing 61% of revenue and 20% year-over-year growth.

  • Annual operating revenues (ARR): It ended the quarter with $749 million, a 12% year-over-year increase.

On May 10, 2024, DigitalOcean Holdings Inc (NYSE:DOCN) published its 8-K filing, showing a promising start to the year with significant revenue growth and improved profitability. The company, a leading cloud computing platform tailored for startups and growing technology companies, reported 12% year-over-year revenue growth, reaching $185 million in the first quarter of 2024. This result exceeded analyst revenue estimates of $182.58 million.

DigitalOcean Holdings Inc (DOCN) Q1 2024 Earnings Report: Solid Start with Increased Revenue and ProfitabilityDigitalOcean Holdings Inc (DOCN) Q1 2024 Earnings Report: Solid Start with Increased Revenue and Profitability

DigitalOcean Holdings Inc (DOCN) Q1 2024 Earnings Report: Solid Start with Increased Revenues and Profitability

Informations about company

DigitalOcean Holdings Inc provides on-demand infrastructure and platform tools for developers, startups, and small and medium-sized businesses. Its services are widely used in a variety of applications including web and mobile applications, website hosting, e-commerce, media and gaming, and more. DigitalOcean operates globally, with a presence in North America, Europe, Asia and other regions.

The most important financial and operational information

The company’s net profit for the first quarter of 2024 was $14 million, which translates to a net profit margin of 8%. This represents a significant improvement over the prior-year net loss and is closely comparable to the earnings per share estimate of $0.38. Adjusted EBITDA was $74 million, a significant increase of 33% year-over-year, with an impressive adjusted EBITDA margin of 40%.

DigitalOcean’s operating efficiency is also reflected in its cash flow performance, with net cash from operations of $67 million, up from $36 million in the first quarter of 2023. The company’s balance sheet remains strong, with cash and cash equivalents at $419 million USD. March 31, 2024

Strategic development and market position

During the first quarter, DigitalOcean focused on improving its core cloud services and expanding the capabilities of its AI platform. According to CEO Paddy Srinivasan, the quarterly results demonstrate solid performance and highlight the potential of the growing artificial intelligence platform. The company also recorded a net dollar retention rate of 97%, indicating high levels of customer retention and satisfaction.

Additionally, DigitalOcean actively manages its capital, as evidenced by the repurchase of 200,258 shares during the quarter. Looking ahead, the company provided positive guidance for the second quarter of 2024, forecasting revenue of $188 million to $189 million and adjusted EBITDA margin of 37% to 38%.

Analysis and future prospects

Despite the competitive nature of the cloud computing market, DigitalOcean’s strategic focus on startups and digital enterprises, combined with simplified solutions, positions the company well for sustained growth. The company’s financial health and proactive management strategies are likely to support its continued growth and ability to capitalize on emerging technology trends.

Investors and stakeholders can expect a year of growth as DigitalOcean continues to successfully execute its business strategies with a strong focus on increasing shareholder value and expanding market reach.

Application

DigitalOcean’s first-quarter 2024 results not only exceeded revenue expectations, but also demonstrated significant improvement in profitability. With solid financial foundations and strategic initiatives, DigitalOcean is poised for continued growth, making it a noteworthy entity in the cloud computing landscape.

Detailed financial data and future forecasts can be found in the full earnings report here.

Read the full 8k profit publication. (here) from DigitalOcean Holdings Inc for more details.

This article first appeared on GuruFocus.