2023 Revenue Increased 20% to $693 million
Full Year Operating Cash Flow of $235
million
DigitalOcean Holdings, Inc. (NYSE: DOCN), the developer cloud
optimized for startups and growing digital businesses, today
announced results for its fourth quarter and fiscal year ended
December 31, 2023.
“I’m excited to have joined DigitalOcean and to advance our
position as a preferred platform for developers at startups and
growing digital businesses, enabling them to rapidly build, deploy
and scale applications that can change the world,” said Paddy
Srinivasan, CEO of DigitalOcean. “We will take advantage of this
market opportunity by embracing product-led growth and obsessing
over the developer experience, while continuing to innovate in our
core platform and investing in our transformational new AI
solutions.”
“In 2023, we accelerated our long-term margin targets, expanded
our addressable market with an AI/ML acquisition, and established a
solid double digit growth foundation,” said Matt Steinfort, CFO of
DigitalOcean. “Our strong balance sheet, healthy top-line outlook,
and attractive free cash flow are enabling us to invest in
expansion initiatives for 2024 and beyond.”
Fourth Quarter 2023 Financial Highlights:
- Revenue was $181 million, an increase of 11%
year-over-year.
- Annual Run-Rate Revenue (ARR) ended the quarter at $730
million, representing 11% year-over-year growth.
- Gross profit of $106 million, an increase of 4% year-over-year,
and 59% of revenue.
- Net income attributable to common stockholders was $16 million
and net income margin was 9%.
- Adjusted EBITDA was $73 million, an increase of 34%
year-over-year, and adjusted EBITDA margin was 41%.
- Diluted net income per share was $0.17 and non-GAAP diluted net
income per share was $0.44.
- Net cash from operating activities was $81 million as
compared to $65 million in the fourth quarter 2022.
- Adjusted free cash flow was $29 million as compared to $36
million in the fourth quarter 2022.
- Cash, cash equivalents and marketable securities was $412
million as of December 31, 2023.
Fourth Quarter 2023 Operational Highlights:
- Average Revenue Per Customer (ARPU) was $92.63, an increase of
6% over the fourth quarter 2022.
- Builders and Scalers, those customers spending more than $50
per month, increased 8% from the fourth quarter 2022 and their
revenue grew 12% year-over-year.
- Net Dollar Retention Rate (NDR) was 96% as compared to 112% in
the prior year.
Fiscal Year 2023 Financial Highlights:
- Revenue was $693 million, an increase of 20%
year-over-year.
- Gross profit of $409 million, an increase of 12%
year-over-year, and 59% of revenue.
- Net income attributable to common stockholders was $19 million
and net income margin was 3%.
- Adjusted EBITDA was $277 million, an increase of 39%
year-over-year, and adjusted EBITDA margin was 40%.
- Diluted net income per share was $0.20 and non-GAAP diluted net
income per share was $1.59.
- Net cash from operating activities was $235 million as compared
to $195 million in the prior year.
- Adjusted free cash flow was $156 million as compared to $78
million in the prior year.
Fiscal Year 2023 Operational Highlights:
- Returned $488 million to shareholders by repurchasing
14,487,509 shares.
- Acquired Paperspace, a leading provider of cloud infrastructure
as a service for highly scalable applications leveraging graphics
processing units (GPUs).
- Introduced premium CPU-optimized droplets for enhanced
performance and seamless scaling.
- Launched a new managed Kafka offering, a fully managed data
streaming platform as a service offering allowing customers to
access and process data streams in real time while eliminating
complexity.
Share Repurchase Plan:
On February 20, 2024, the Board of Directors approved a new
stock repurchase program designed to maximize value for
DigitalOcean investors. The approval authorizes the Company to
repurchase up to $140 million of stock through fiscal year
2025.
This capital return strategy reflects the Company’s confidence
that its cash flow generation will provide the flexibility to
invest in key organic growth priorities and strategic M&A
opportunities while at the same time maintaining a strong balance
sheet and further enhancing shareholder returns.
Financial Outlook:
Based on information available as of February 21, 2024, for the
first quarter of 2024 we expect:
- Total revenue of $182 to $183 million.
- Adjusted EBITDA margin of 37% to 38%.
- Non-GAAP diluted net income per share of $0.37 to $0.39.
- Fully diluted weighted average shares outstanding of
approximately 101 to 102 million shares.
For the full year 2024, we expect:
- Total revenue of $755 to $775 million.
- Adjusted EBITDA margin of 36% to 38%.
- Adjusted free cash flow margin in the range of 19% to 21% of
revenue.
- Non-GAAP diluted net income per share of $1.60 to $1.67.
- Fully diluted weighted average shares outstanding of
approximately 102 to 103 million shares.
A reconciliation of non-GAAP outlook measures to corresponding
GAAP measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty regarding, and the
potential variability of, expenses that may be incurred in the
future. For example, stock-based compensation expense-related
charges are impacted by the timing of employee stock transactions,
the future fair market value of our common stock, and our future
hiring and retention needs, all of which are difficult to predict
and subject to constant change. Accordingly, a reconciliation is
not available without unreasonable effort and we are unable to
assess the probable significance of the unavailable information,
although it is important to note that these factors could be
material to our results computed in accordance with GAAP.
Conference Call Information:
DigitalOcean will host a conference call today, February 21,
2024, at 4:30 p.m. ET to review its results. The conference call
can be accessed by dialing (888) 330-3637 with conference ID
7741047. A live webcast and replay of the conference call can be
accessed from the DigitalOcean investor relations website at
http://investors.digitalocean.com.
About DigitalOcean
DigitalOcean simplifies cloud computing so businesses can spend
more time creating software that changes the world. With its
mission-critical infrastructure and fully managed offerings,
DigitalOcean helps developers at startups and growing digital
businesses rapidly build, deploy and scale, whether creating a
digital presence or building digital products. DigitalOcean
combines the power of simplicity, security, community and customer
support so customers can spend less time managing their
infrastructure and more time building innovative applications that
drive business growth. For more information, visit
digitalocean.com.
Forward‑Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
regarding our performance, including but not limited to statements
in the section titled “Financial Outlook.” The forward-looking
statements contained in this release and the accompanying earnings
call referenced in this release are subject to known and unknown
risks, uncertainties, assumptions, and other factors that may cause
actual results or outcomes to be materially different from any
future results or outcomes expressed or implied by the
forward-looking statements. These risks, uncertainties,
assumptions, and other factors include, but are not limited to: (1)
fluctuations in our financial results make it difficult to project
future results; (2) our history of operating losses; (3) our
identification of a material weakness in our internal control over
financial reporting, which may impact our ability to accurately
report our financial statements; (4) our ability to attract and
retain customers and/or expand usage of our platform by such
customers; (5) our ability to release updates and new features to
our platform and adapt and respond effectively to rapidly changing
technology or customer needs; (6) breaches in our security measures
allowing unauthorized access to our platform, our data, or our
customers’ data; (7) the competitive markets in which we
participate; (8) our ability to effectively onboard our new chief
executive officer and manage the chief executive officer
transition; (9) general market, political, economic, and business
conditions; (10) the operational challenges related to
international operations; (11) our ability to successfully
integrate acquired businesses, including Paperspace, and achieve
expected synergies and benefits; (12) liability we may incur due to
the activities of our customers; and (13) our customers’ ability to
have continued and unimpeded access to our platform, including as a
result of evolving laws and industry standards.
Further information on these and additional risks,
uncertainties, assumptions and other factors that could cause
actual results or outcomes to differ materially from those included
in or contemplated by the forward-looking statements contained in
this release are included under the caption “Risk Factors” and
elsewhere in our Annual Report on Form 10-K for the year ended
December 31, 2023, and subsequent filings and reports we make with
the SEC.
We operate in a very competitive and rapidly changing
environment. New risks and uncertainties emerge from time to time,
and it is not possible for us to predict all risks and
uncertainties that could have an impact on the forward-looking
statements contained in this release. The results, events and
circumstances reflected in the forward-looking statements may not
be achieved or occur. The forward-looking statements made in this
release relate only to events as of the date on which the
statements are made. We assume no obligation to, and do not
currently intend to, update any such forward-looking statements
after the date of this release.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with generally accepted
accounting principles in the United States, or GAAP, we provide
investors with non-GAAP financial measures including: (i) adjusted
EBITDA and adjusted EBITDA margin; (ii) non-GAAP net income and
non-GAAP diluted net income per share; and (iii) adjusted free cash
flow and adjusted free cash flow margin. These measures are
presented for supplemental informational purposes only, have
limitations as analytical tools and should not be considered in
isolation or as a substitute for financial information presented in
accordance with GAAP. In particular, adjusted free cash flow is not
a substitute for cash provided by operating activities.
Additionally, the utility of adjusted free cash flow as a measure
of our financial performance and liquidity is further limited as it
does not represent the total increase or decrease in our cash
balance for a given period. Our calculations of each of these
measures may differ from the calculations of measures with the same
or similar titles by other companies and therefore comparability
may be limited. Because of these limitations, when evaluating our
performance, you should consider each of these non-GAAP financial
measures alongside other financial performance measures, including
the most directly comparable financial measure calculated in
accordance with GAAP and our other GAAP results. A reconciliation
of each of our non-GAAP financial measures to the most directly
comparable financial measure calculated in accordance with GAAP is
set forth in the tables in the section “Reconciliation of GAAP to
Non-GAAP Data.”
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted EBITDA as net income (loss) attributable to
common stockholders, adjusted to exclude depreciation and
amortization, stock-based compensation, interest expense,
acquisition related compensation, acquisition and integration
related costs, income tax expense, loss on extinguishment of debt,
restructuring and other charges, restructuring related charges,
impairment of long-lived assets, and other income, net. We define
adjusted EBITDA margin as adjusted EBITDA as a percentage of
revenue. We believe that adjusted EBITDA, when taken together with
our GAAP financial results, provides meaningful supplemental
information regarding our operating performance and facilitates
internal comparisons of our historical operating performance on a
more consistent basis by excluding certain items that may not be
indicative of our business, results of operations or outlook. In
particular, we believe that the use of adjusted EBITDA is helpful
to our investors as it is a measure used by management in assessing
the health of our business, determining incentive compensation,
evaluating our operating performance, and for internal planning and
forecasting purposes.
Our calculation of adjusted EBITDA and adjusted EBITDA margin
may differ from the calculations of adjusted EBITDA and adjusted
EBITDA margin by other companies and therefore comparability may be
limited. Because of these limitations, when evaluating our
performance, you should consider adjusted EBITDA and adjusted
EBITDA margin alongside other financial performance measures,
including our net income (loss) attributable to common stockholders
and other GAAP results.
Non-GAAP Net Income and Non-GAAP Diluted Net Income Per
Share
We define non-GAAP net income as net income (loss) attributable
to common stockholders, excluding stock-based compensation,
acquisition related compensation, amortization of acquired
intangibles, acquisition and integration related costs, loss on
extinguishment of debt, restructuring and other charges,
restructuring related charges, impairment of long-lived assets and
other unusual or non-recurring transactions as they occur. We
define non-GAAP diluted net income per share as non-GAAP net income
divided by the weighted-average diluted shares outstanding, which
includes the potentially dilutive effect of our stock options,
RSUs, PRSUs, and Convertible Notes.
Prior to 2023, we calculated the income tax effects of non-GAAP
adjustments based on the applicable statutory tax rate for the
relevant jurisdiction, except for those items which were
non-taxable or subject to valuation allowances for which the tax
expense (benefit) was calculated at 0%. As a result, U.S. income
tax effects of non-GAAP adjustments were subject to a valuation
allowance and, therefore, were taxed at 0%. Beginning January 1,
2023, we used a tax rate of 17%, which we believe is a reasonable
estimate of our long-term effective tax rate applicable to non-GAAP
pre-tax income for 2023.
We believe non-GAAP diluted net income per share provides our
management and investors consistency and comparability with our
past financial performance and facilitates period-to-period
comparisons of operations, as this metric generally eliminates the
effects of unusual or non-recurring items from period to period for
reasons unrelated to overall operating performance.
Adjusted Free Cash Flow and Adjusted Free Cash Flow
Margin
Adjusted free cash flow is a non-GAAP financial measure that we
define as Net cash provided by operating activities less purchases
of property and equipment, capitalized internal-use software costs,
purchase of intangible assets and excluding cash paid for
restructuring and other charges, acquisition related compensation,
restructuring related charges, and acquisition and integration
related costs. Adjusted free cash flow margin is calculated as
adjusted free cash flow divided by total revenue.
We believe that adjusted free cash flow and adjusted free cash
flow margin are useful indicators of liquidity that provide
information to management and investors about the amount of cash
generated from our core operations that can be used for strategic
initiatives, including investing in our business and selectively
pursuing acquisitions and strategic investments. We further believe
that historical and future trends in adjusted free cash flow and
adjusted free cash flow margin, even if negative, provide useful
information about the amount of Net cash provided by operating
activities that is available (or not available) to be used for
strategic initiatives. One limitation of adjusted free cash flow
and adjusted free cash flow margin is that they do not reflect our
future contractual commitments. Additionally, adjusted free cash
flow does not represent the total increase or decrease in our cash
balance for a given period.
Key Business Metrics:
We utilize the key metrics set forth below to help us evaluate
our business and growth, identify trends, formulate financial
projections and make strategic decisions.
Customers
We divide our customer population into the following
categories:
- Testers: users that both (i) spend less than or equal to $50
per month and (ii) utilize our platform for three months or
less.
- Learners: users that both (i) spend less than or equal to $50
for the month-end period and (ii) have been on our platform for
more than three months.
- Builders: users that spend greater than $50 and less than or
equal to $500 for the month-end period.
- Scalers: users that spend greater than $500 for the month-end
period.
We view Learners, Builders and Scalers as the most appropriate
measure of our customer population, and Testers have therefore been
excluded from the total customer population count. While we believe
the total number of these customers is an important indicator of
the growth of our business and future revenue opportunity, the
trends relating to our Builders and Scalers is of particular
importance to us as these customers represent a significant
majority of our revenue and revenue growth, and they are
representative of the SMB customers that grow on our platform and
use multiple products.
ARPU
We calculate ARPU on a monthly basis as our total revenue for
Learners, Builders and Scalers in that period divided by the number
of total Learner, Builder and Scaler customers determined as of the
last day of that period, excluding aggregate Testers revenue and
total user count from the calculation. Beginning in the first
quarter of 2023, we redefined ARPU to exclude testers. For a
quarterly or annual period, ARPU is determined as the weighted
average monthly ARPU over such three or 12-month period.
ARR
We calculate ARR at a point in time by multiplying the latest
monthly period’s revenue by 12. For our ARR calculations, we
include the total revenue from all customers, including Testers,
Learners, Builders and Scalers.
Net Dollar Retention Rate
We calculate net dollar retention rate monthly by starting with
the revenue from the cohort of all customers during the
corresponding month 12 months prior, or the Prior Period Revenue.
We then calculate the revenue from these same customers as of the
current month, or the Current Period Revenue, including any
expansion and net of any contraction or attrition from these
customers over the last 12 months. The calculation also includes
revenue from customers that generated revenue before, but not in,
the corresponding month 12 months prior, but subsequently generated
revenue in the current month and are therefore reflected in the
Current Period Revenue. We include this group of re-engaged
customers in this calculation because our customers frequently use
our platform for projects that stop and start over time. We then
divide the total Current Period Revenue by the total Prior Period
Revenue to arrive at the net dollar retention rate for the relevant
month. For our net dollar retention rate calculations, we include
the total revenue from all customers, including Testers, Learners,
Builders and Scalers. For a quarterly or annual period, the net
dollar retention rate is determined as the average monthly net
dollar retention rates over such three or 12-month period.
DIGITALOCEAN HOLDINGS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
amounts)
(unaudited)
December 31, 2023
December 31, 2022
Current assets:
Cash and cash equivalents
$
317,236
$
140,772
Marketable securities
94,532
723,462
Accounts receivable, less allowance for
credit losses of $5,848 and $6,099, respectively
62,186
53,833
Prepaid expenses and other current
assets
29,040
27,924
Total current assets
502,994
945,991
Property and equipment, net
305,444
273,170
Restricted cash
1,747
1,935
Goodwill
348,322
315,168
Intangible assets, net
140,151
118,928
Operating lease right-of-use assets,
net
155,201
153,701
Deferred tax assets
1,994
751
Other assets
5,114
5,987
Total assets
$
1,460,967
$
1,815,631
Current liabilities:
Accounts payable
$
3,957
$
21,138
Accrued other expenses
31,046
33,987
Deferred revenue
5,340
5,550
Operating lease liabilities, current
81,320
57,432
Other current liabilities
70,982
47,409
Total current liabilities
192,645
165,516
Deferred tax liabilities
3,533
20,757
Long-term debt
1,477,798
1,470,270
Operating lease liabilities,
non-current
91,161
107,693
Other long-term liabilities
9,528
3,826
Total liabilities
1,774,665
1,768,062
Preferred stock ($0.000025 par value per
share; 10,000,000 shares authorized; 0 shares issued and
outstanding as of December 31, 2023 and 2022)
—
—
Common stock ($0.000025 par value per
share; 750,000,000 shares authorized; 90,243,442 and 96,732,507
issued and outstanding as of December 31, 2023 and 2022,
respectively)
2
2
Additional paid-in capital
30,989
263,957
Accumulated other comprehensive loss
(452
)
(2,048
)
Accumulated deficit
(344,237
)
(214,342
)
Total stockholders’ (deficit) equity
(313,698
)
47,569
Total liabilities and stockholders’
(deficit) equity
$
1,460,967
$
1,815,631
DIGITALOCEAN HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Revenue
$
180,874
$
162,998
$
692,884
$
576,322
Cost of revenue
74,405
60,181
283,967
211,927
Gross profit
106,469
102,817
408,917
364,395
Operating expenses:
Research and development
30,897
39,445
140,365
143,885
Sales and marketing
19,681
24,662
73,027
81,022
General and administrative
44,881
50,076
162,742
165,185
Restructuring and other charges
25
—
20,887
—
Total operating expenses
95,484
114,183
397,021
390,092
Income (loss) from operations
10,985
(11,366
)
11,896
(25,697
)
Other income (expense):
Interest expense
(2,311
)
(2,115
)
(8,945
)
(8,396
)
Loss on extinguishment of debt
—
—
—
(407
)
Interest income and other income, net
4,857
4,409
23,825
10,615
Other income (expense), net
2,546
2,294
14,880
1,812
Income (loss) before income taxes
13,531
(9,072
)
26,776
(23,885
)
Income tax benefit (expense)
2,407
(1,308
)
(7,367
)
(3,919
)
Net income (loss) attributable to common
stockholders
$
15,938
$
(10,380
)
$
19,409
$
(27,804
)
Net income (loss) per share attributable
to common stockholders
Basic
$
0.18
$
(0.11
)
$
0.22
$
(0.28
)
Diluted
$
0.17
$
(0.11
)
$
0.20
$
(0.28
)
Weighted-average shares used to compute
net income (loss) per share attributable to common stockholders
Basic
87,929
96,481
90,141
100,806
Diluted
92,028
96,481
96,415
100,806
DIGITALOCEAN HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Year Ended December
31,
2023
2022
Operating activities
Net income (loss) attributable to common
stockholders
$
19,409
$
(27,804
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
117,866
102,232
Stock-based compensation
88,347
105,829
Provision for expected credit losses
15,357
16,551
Operating lease right-of-use assets and
liabilities, net
5,709
11,417
Loss on extinguishment of debt
—
407
Net accretion of discounts and
amortization of premiums on investments
1,866
(6,135
)
Non-cash interest expense
7,949
7,880
Loss on impairment of long-lived
assets
1,140
1,635
Deferred income taxes
(67
)
(1,835
)
Release of VAT reserve
(819
)
—
Other
627
166
Changes in operating assets and
liabilities:
Accounts receivable
(22,668
)
(26,645
)
Prepaid expenses and other current
assets
(9,593
)
(1,424
)
Accounts payable and accrued expenses
(11,077
)
5,500
Deferred revenue
(315
)
(290
)
Other assets and liabilities
21,211
7,668
Net cash provided by operating
activities
234,942
195,152
Investing activities
Capital expenditures - property and
equipment
(119,299
)
(106,389
)
Capital expenditures - internal-use
software development
(5,514
)
(8,913
)
Purchase of intangible assets
—
(4,915
)
Cash paid for acquisition of businesses,
net of cash acquired
(99,023
)
(305,170
)
Cash paid for asset acquisitions
(2,500
)
(5,400
)
Purchase of available-for-sale
securities
(352,313
)
(1,695,165
)
Sales of available-for-sale securities
—
19,992
Maturities of available-for-sale
securities
979,565
956,847
Purchased interest on available-for-sale
securities
(151
)
(1,575
)
Proceeds from interest on
available-for-sale securities
151
1,549
Proceeds from sale of equipment
236
981
Net cash provided by (used in)
investing activities
401,152
(1,148,158
)
Financing activities
Payment of debt issuance costs
—
(1,520
)
Proceeds related to the issuance of common
stock under equity incentive plan
38,410
11,509
Proceeds from the issuance of common stock
under employee stock purchase plan
4,977
7,926
Principal repayments of finance leases
(2,260
)
—
Employee payroll taxes paid related to net
settlement of equity awards
(21,575
)
(28,278
)
Repurchase and retirement of common
stock
(488,455
)
(600,000
)
Net cash (used in) provided by
financing activities
(468,903
)
(610,363
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(15
)
(249
)
Increase (decrease) in cash, cash
equivalents and restricted cash
167,176
(1,563,618
)
Cash, cash equivalents and restricted cash
- beginning of period
151,807
1,715,425
Cash, cash equivalents and restricted
cash - end of period
$
318,983
$
151,807
DIGITALOCEAN HOLDINGS,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP DATA
(unaudited)
Adjusted EBITDA and Adjusted EBITDA
Margin
Three Months Ended
Year Ended
December 31,
December 31,
(In
thousands)
2023
2022
2023
2022
GAAP Net income (loss) attributable to
common stockholders
$
15,938
$
(10,380
)
$
19,409
$
(27,804
)
Adjustments:
Depreciation and amortization
30,781
28,332
117,866
102,232
Stock-based compensation(1)
22,265
28,071
115,019
105,829
Interest expense
2,311
2,115
8,945
8,396
Acquisition related compensation
5,187
7,082
27,763
9,443
Acquisition and integration related
costs
1,032
2,571
6,145
5,439
Income tax expense
(2,407
)
1,308
7,367
3,919
Loss on extinguishment of debt
—
—
—
407
Restructuring and other charges
25
—
20,887
—
Restructuring related charges(2)
3,222
—
(23,535
)
—
Impairment of long-lived assets
—
20
1,140
1,635
Other income, net(3)
(4,857
)
(4,409
)
(23,825
)
(10,615
)
Adjusted EBITDA
$
73,497
$
54,710
$
277,181
$
198,881
As a percentage of revenue:
Net income (loss) margin
9
%
(6
)%
3
%
(5
)%
Adjusted EBITDA margin
41
%
34
%
40
%
35
%
___________________
(1)
For the year ended December 31, 2023,
non-GAAP stock-based compensation excludes the $31.3 million
reversal related to the former CEO’s forfeited MRSU award that is
reported in Restructuring related charges, as well as $3.9 million
that is reported in Restructuring and other charges, in the table
above.
(2)
Primarily consists of the $31.3 million
reversal of stock-based compensation related to the former CEO’s
forfeited MRSU award, partially offset by salary continuation
charges, executive reorganization charges including severance, CEO
search firm fees, and other legal and professional service
costs.
(3)
For the years ended December 31, 2023 and
2022, Other income, net primarily consists of interest income from
our marketable securities.
Non-GAAP Net Income and Non-GAAP
Diluted Net Income Per Share
Three Months Ended
Year Ended
December 31,
December 31,
(In thousands,
except per share amounts)
2023
2022
2023
2022
GAAP Net income (loss) attributable to
common stockholders
$
15,938
$
(10,380
)
$
19,409
$
(27,804
)
Stock-based compensation(1)
22,265
28,071
115,019
105,829
Acquisition related compensation
5,187
7,082
27,763
9,443
Amortization of acquired intangible
assets
5,736
3,614
18,967
6,301
Acquisition and integration related
costs
1,032
2,571
6,145
5,439
Loss on extinguishment of debt
—
—
—
407
Restructuring and other charges
25
—
20,887
—
Restructuring related charges(2)
3,222
—
(23,535
)
—
Impairment of long-lived assets
—
20
1,140
1,635
Non-GAAP income tax adjustment(4)
(11,076
)
(1,026
)
(25,469
)
(34
)
Non-GAAP Net income
$
42,329
$
29,952
$
160,326
$
101,216
Non-cash charges related to convertible
notes(3)
$
1,565
$
1,482
$
6,249
$
5,910
Non-GAAP Net income used to compute net
income per share, diluted
$
43,894
$
31,434
$
166,575
$
107,126
Three Months Ended
Year Ended
December 31,
December 31,
(In thousands,
except per share amounts)
2023
2022
2023
2022
GAAP Net income (loss) per share
attributable to common stockholders, diluted
$
0.17
$
(0.11
)
$
0.20
$
(0.28
)
Stock-based compensation(1)
0.22
0.27
1.10
0.91
Acquisition related compensation
0.05
0.07
0.26
0.09
Amortization of acquired intangible
assets
0.06
0.03
0.18
0.06
Acquisition and integration related
costs
0.01
0.02
0.06
0.06
Restructuring and other charges
—
—
0.20
—
Restructuring related charges(2)
0.03
—
(0.23
)
—
Impairment of long-lived assets
—
—
0.01
0.01
Non-cash charges related to convertible
notes(3)
0.02
0.01
0.06
0.06
Non-GAAP income tax adjustment(4)
(0.12
)
(0.01
)
(0.25
)
—
Non-GAAP Net income per share, diluted
$
0.44
$
0.28
$
1.59
$
0.91
GAAP weighted-average shares used to
compute net income (loss) per share, diluted
92,028
96,481
96,415
100,806
Weighted-average dilutive effect of
potentially dilutive securities
8,403
15,801
8,403
17,372
Non-GAAP weighted-average shares used to
compute net income per share, diluted
100,431
112,282
104,818
118,178
______________
(1)
For the year ended December 31, 2023,
non-GAAP stock-based compensation excludes the $31.3 million
reversal related to the former CEO’s forfeited MRSU award that is
reported in Restructuring related charges, as well as $3.9 million
that is reported in Restructuring and other charges, in the table
above.
(2)
Primarily consists of the $31.3 million
reversal of stock-based compensation related to the former CEO’s
forfeited MRSU award, partially offset by salary continuation
charges, executive reorganization charges including severance, CEO
search firm fees, and other legal and professional service
costs.
(3)
Consists of non-cash interest expense for
amortization of deferred financing fees related to the Convertible
Notes.
(4)
Prior to 2023, we calculated the income
tax effects of non-GAAP adjustments based on the applicable
statutory tax rate for the relevant jurisdiction, except for those
items which were non-taxable or subject to valuation allowances for
which the tax expense (benefit) was calculated at 0%. As a result,
U.S. income tax effects of non-GAAP adjustments were subject to a
valuation allowance and, therefore, were taxed at 0%. Beginning
January 1, 2023, the Company projects to be a U.S. taxpayer and
will use a long term fixed forecasted rate of 17% on non-GAAP
pre-tax income for 2023.
Adjusted Free Cash Flow and Adjusted Free Cash Flow
Margin
Three Months Ended
Year Ended
December 31,
December 31,
(In
thousands)
2023
2022
2023
2022
GAAP Net cash provided by operating
activities
$
80,515
$
65,144
$
234,942
$
195,152
Adjustments:
Capital expenditures - property and
equipment
(52,222
)
(28,672
)
(119,299
)
(106,389
)
Capital expenditures - internal-use
software development
(1,439
)
(2,320
)
(5,514
)
(8,913
)
Purchase of intangible assets
—
—
—
(4,915
)
Restructuring and other charges
17
—
16,792
—
Restructuring related charges(1)
1,413
—
5,371
—
Acquisition related compensation
—
—
16,851
—
Acquisition and integration related
costs
544
1,531
6,611
2,863
Adjusted free cash flow
$
28,828
$
35,683
$
155,754
$
77,798
As a percentage of revenue:
GAAP Net cash provided by operating
activities
45
%
40
%
34
%
34
%
Adjusted free cash flow margin
16
%
22
%
22
%
13
%
___________________ (1)
Primarily consists of salary continuation
charges, executive reorganization charges including severance, CEO
search firm fees, and other legal and professional service
costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220330521/en/
Investor Contact Rob Bradley
investors@digitalocean.com
Media Contact Spencer Anopol press@digitalocean.com
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