United States securities and exchange commission logo
February 2, 2021
Yancey Spruill
Chief Executive Officer
DigitalOcean Holdings, Inc.
101 6th Avenue
New York, New York 10013
Re: DigitalOcean
Holdings, Inc.
Amendment No. 1 to
Draft Registration Statement on Form S-1
Submitted January
22, 2021
CIK No. 0001582961
Dear Mr. Spruill:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments. References to prior comments are to those in our letter dated
December 17, 2020.
Amended Draft Registration Statement Submitted January 22, 2021
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Key Business Metrics, page 65
1. We note the changes to
your definition of Net Dollar Retention Rate. Since the metric is
designed to demonstrate
your ability to grow revenue from existing customers and you
may include revenue
from customers who did not generate revenue in the previous 12
months, please provide
greater context to investors by quantifying the impact of re-
engaged customers on
your Net Dollar Retention Rate.
Yancey Spruill
FirstName LastNameYancey
DigitalOcean Holdings, Inc. Spruill
Comapany2,NameDigitalOcean
February 2021 Holdings, Inc.
February
Page 2 2, 2021 Page 2
FirstName LastName
Audited Financial Statements
Note 15. Subsequent Events, page F-33
2. We note in your response to comment 9 that certain secondary share
purchase transactions
took place between May and November among new and existing investors
and "the
primary buyers and sellers in such transactions had access to
information about the
Company s operations and financial condition." It appears these
transactions were at fair
value since it appears they were between a willing buyer and a willing
seller, and both
parties had reasonable knowledge of relevant facts. Please explain to
us why it is
necessary and appropriate to rely upon estimates of value when known
fair values are
available.
3. We note in your response to comment 9 that in the October and November
valuations, the
value of the common shares was determined by applying a weighting of
the IPO scenario
(50%) and the sale scenario (50%). In light of the filing date of your
DRS, the October
14th IPO organizational meeting, and your hiring of bankers between
the June 2020
Valuation and the October 2020 Valuation, please explain to us why it
is reasonable to
only apply a 50% weighting to the IPO scenario. Also tell us of any
objective evidence of
the Company undertaking a sale during this period, including the
nature and extent of any
discussions with interested buyers, which would justify assigning a
50% weighting to the
sale scenario.
You may contact Lisa Etheredge, Staff Accountant, at (202) 551-3424 or
Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Matthew Crispino,
Staff Attorney, at (202) 551-3456 or Larry Spirgel, Office Chief, at (202)
551-3815 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Alison A. Haggerty