DOCN - Earnings call transcript Q1 2021 | DigitalOcean Holdings, Inc.

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Operator

Good day and thank you for standing by. Welcome to the DigitalOcean's First Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker for today Rob Bradley, Vice President of Investor Relations. Please go ahead.

Rob Bradley

morning, to good XXXX First and Call. Earnings you, and DigitalOcean's welcome Quarter Thank discuss financial the distributed will DigitalOcean Today, quarterly morning. earlier results this were that manage Statements free growth; profitability future expand customers, our ability our statements, goals recruit of include and ability expectations our success of our and on on sustain ability generate we ability including growth; positive and revenue and results, growth engage and promote flow; effectively effectively our market including skilled compete future regarding and to and to to this usage call cash and our that our financial identify, reliance forward-looking the entrants the our our and on cost sustain to customers our such to investments regarding efforts existing in then and our ability ability marketing annual markets expenditures profitability; compete. capital and retain with business; the personnel; requirements; existing basis key an anticipated and acquire achieve and our brand; profitability our our our competitors successfully capital rates estimates personnel of future new our new to our to ability known cause to during materially subject risks are that unknown could call. this statements These those projected uncertainties actual and differ to implied results and from or be ended described December our particular, in ended quarter and Form XX, March our the that included the those for in for XXXX, will In risk our XXXX. risk in factors Form XX-Q included XX, year the XX-K factors

today, ease we except we make to based call future required forward-looking undertake as update by of that no All rely and law. on as events. obligation forward-looking are our not statements this on of statements should assumptions and as them, You on predictions

found from be in considered Our addition isolation release and discussion our results our for may which like supplemental website reconciliation was the materials furnished DigitalOcean's on filed to Spruill. to be call posted as in to be in the non-GAAP financial today Yancey now may also should found I or Officer, Relations will a the in Executive turn with GAAP of These with to investor over would GAAP Investor our X-K results. non-GAAP Chief substitute today Form Yancey? at not investors.digitalocean.com. measures. measures A SEC non-GAAP include and our earnings

Yancey Spruill

Thanks, Rob. first a for DigitalOcean's public us earnings Good everyone. morning, Thank you call as for company. joining

have to next annual into DigitalOcean's phase We entered the plus accelerating SMBs. developers, in in $XXX serve which opportunity are billion evolution, software and we entrepreneurs the

strong grow the our with strategy context grow to in together. our review to results QX excited you are of faster, We smarter and

businesses. or be understand Thought address was changes on strategy business. developers with the cloud as to our technology get [indiscernible] stuck, want fundamentally in our it and on and $XXX publicly help long-standing They intuitively. full starting might reach turn tireless realize clear million front larger incredible is and world. isn't, the raised There milestone QX customer a journey building and to Before efforts workflow values business opportunity. software into infrastructure. individual growing and outlook story. for of achieved a the decade, purpose-built ideas is taking their software DigitalOcean want to of support businesses incredible company. documentation our many applications as and simply, able be simplicity, And to build us their time, turning the their them developers the more past our to to financial than IT to us, would idea, The and our And time when customers hard to open-source founders, this without the numerous journey and and they be are an them potential helpful a a for many, simplify newer our your IPO support founded in is the nurturing questions, spend been elements traded of when To work of Taking to different reality. our to couldn't initiative our share to key for and month, are managing excited opportunity. goal for to key They DigitalOcean start-ups unstuck. is it of to developers, customers I ingredients commitment SMBs thing more provide Bill the get the to journey we experiencing of an our have and it IPO, creating is and they of community that One importance people put DigitalOcean the success. this entrepreneurs provide details this become with dedication would their to an computing, our work, to enable today. focus that of the want investors to are opportunity work towards over out, not enable patience Last and is we investors. that some support and just the will alternative vision than have lived so of faith, focus their financial over can the to of perseverance. capital mission, expertise it for year. employees It passion they a milestone complexities to and compelling don't results true need our and developing and and the our to wild peaks testimony it, we of

the of started. $XXX globe, to to in every country earned just specific XX nearly have in our on are and across and needs serve customers, we right just the we grown ARR, the customers million getting business XXX,XXX years, in Focusing have the nearly

QX Now I'd to results. to speak like our

a We to XXXX. strong start are off in

they value grow we of growth core not our value cash front smarter to and because improving Going the of our massive speak believe We want proposition, faster, phase CapEx we infrastructure leverage, able systems are on because rate broader support have our to given enable a free by us grow the revenue And that generate only than grow that faster plans, X to addressable the significant imperatives these faster speak the elements EBITDA to put our our processes, flow. smarter to our build in key together. this We so of adjusted to and we should to we growth deliver in grow to market. efficiently and of to robust We life. but also grow creation us. opportunity grow execution in place are company's context imperatives

business will invest to to our $X our all at ensure we as together jobs grow revenue people we DigitalOcean our we of Finally, billion and as first this as approach our that in in our decade. the we of talent grows scale middle processes

XX% do? QX, QX previous run revenue, million XX% $XX $XXX increase million, over ARR, a increase we In and did generated year, of annualized last revenue year. over a of we how So the rate, or was

will retention accelerated are accelerating progress thoughts but focused on and some best date with progress through of driving I customer our net customer. dollar progress through against we be pleased growth, our viewed measures key these We to levers the share revenue per core And remain The on each. can trends XXXX. growth continuing as

potential. platform which customers year. important new are XXX million are growth with rate each globally, at join XX million added First, our customer stay our on growth. businesses new and long-term indicators of over There SMBs the Increasing

sustained acceleration. We customer is our are growth a relevant proxy strong a base to and digital for those presence seeking all growth in

low Our cost. self-service suited significant unique attract go-to-market massive fuel is progress we customers And are making efficient onboard to model that in ever and making of ideally growth. at engine to our numbers more

X% customers needs for adding are onboarding QX, on a larger to progress self-serve. year-over-year. as SMB we customer a made Additionally, whose via complex little we capability accelerated are growth good In focus sales too to

last metric an net the quality This was important dollar NDR, is area. QX over growth. year. And QX, on XXX% basis In of point XXX focused retention, the years improving Second, recent from of our improvement in is expand strong on XXX%, they driver improve we fulfillment platform deliver indicator sustainability our quality as needs it specific will progress are service NDR and initiatives and a on the NDR to of focused willingness a our us. believe remain stay improving our customer XXXX. through of to we with or to customers and and of their We

products revenue Third, adding customer of our ARPU, is or our and an larger effort. And our base. in new our our sales nascent our indicator in per both growth drive continue customer success to platform, well as capabilities add ability to within reliant ability through SMBs to is as to

as new workflow new continue new customers. us more deeply Our expansion in better to better custom. XX% existing to and by drive $XX.XX, product ARPU enable customers of economics QX, improved and In the initiatives per products growth to and evolving embed

than in networking measures. like do a growth than these laser-focused million We platform on customer a are X and be trends, more we will social And higher customer on power XXX I'd users. continuing The of that as to make these to a global reporting so, sustain are we to to to migrated To the highlight QX. illustrate rate help then able that caters achieve DigitalOcean today. we streaming and is live progress

base customer their bandwidth. cloud spend major portion is magnitude, of the a of With on that

contract became terms internal the unpredictable, involving players, they one These their owners. their pain the of them understand with DigitalOcean. points a onboarding through ours. As and requirements won found personalized their customer to they scaled and and We cloud lacking to time the invested team trust led support approach cost larger

of are Better those in larger QX to migrated of their days XXX over how DigitalOcean and sustaining months, our In below compared benefit to host improvement accelerate and compelling and generate to price plan XXXX, robust supporting CapEx they deprioritize an about revenue result, activities demonstrates are in in currently data margin. in points. threshold. XX they coming combination year. the XX% improvement the XX% The drove we activities their customers to migration of capabilities initial generated to can This we our a versus basis revenue droplets adjusted which we well. that as in As centers consistent $XX.X leverage that workloads. down on X,XXX operating represented production DigitalOcean running QX, XXX infrastructure multiple highest of core QX We're In that was to million result by QX last migrate the as over yet, QX, with EBITDA as SMBs. basis completed point was prioritizing growth a XX% focused across

with are to matching serve better growth capital them. the our platform in our utilization We of we customers' deploy

on in XXXX intensity that CapEx reduction Our on a is in path for a of and working team initiatives puts number a beyond. sustained us

narrow and within growing the to on ranges ahead with Very exclusive. Importantly, spend way path our be reduce fundamental believe economics margins, target measure we our longer-term managing to materially business. free faster the We higher are of the about margins not to generation this down mutually avoid flow will that cash important lumpiness. of CapEx our encouraged

are In fact, as are we they complementary. demonstrating,

execute testament This testament to Not terms the of all and I improve together. have down Our improved team across lot remotely is joined the of together the entire be faster year, execution our couldn't last how in due recent great people, processes midst up to pandemic. a better. the our change efficiency coming grow change. IPO driving to is goal this and the Since smarter. of mention implemented a and I did prioritization, in the and to we a to we company prouder XXXX, grow in of for of grow in to with summer to business, this we

something of commitment to our demonstrates want DigitalOcean I touch values. and Finally, to that spirit is to the on our foundational

allocating that we first to There of communities bigger Good cases. a so to our breadth then, the our In use their to and connection encouragement customers initial examples we X,XXX IPO our during great have COVID-XX our projects challenging Hub next joined good. time. valuation Pledge public being has program. at of Good of us. community across spring, our for program a for with were the Last and movement and for used infrastructure is and the pandemic. be employees X% variety is the individuals this heartwarming organizations to It of expand inspiring the include our Since of donate launched offering, the many during which we we'll DigitalOcean to over decade X% expanded Hub are The helping both just than over been

was as company because to community Good family. legacy Good. Just is renamed to to Force one community, and And before beloved as the recent stronger our up proud founders to honor Hub we an just for strong our Good it bigger She our Hub DigitalOcean us. our for away. was IPO, capabilities of member commitment of quarter of Hollie's continue for have a than we suddenly us legacy for our leverage her a Hub Good set has passed even In a We're Hollie's for our sum, that XXXX. to

now for to and mission are like turn phase in our the simplify balance can our We of this software Sorenson, Bill excited the businesses on creating financial developers as to to spend Financial next continue this so focus computing, our our detail results on more to the world. year. QX I'd call will Chief over provide we cloud that outlook Officer, and who for changes time

William Sorenson

revenue the call of increasing XX%. a reducing And progress all call. this with for of percentage the improving keep our is profitability operational for company discussed many drive by Improving QX. we're as the above, during we as joining you We the key performance. conference and in take DigitalOcean's revenues just progress those we'll but continue by I category, exciting I'll your measured that, IPO the of want we cash potential remarks to company's adjusted driving and clearly an saw margin, to Yancey, flow what's you further for that important day growth. that Thanks, key is the making recent and earnings of to against share This we're open thanks questions. acceleration us first our improvement. brief continued the demonstrates metrics of that my all on DigitalOcean to morning with today EBITDA taking showed elaborate In you every CapEx free to After metrics to actions improvements mentioned process.

or driver XX% to from XXX to the points XXX last important mentioned, basis As from and QX improvement accelerated was XX% net retention, a NDR, revenue growth up acceleration XXX%, quarter. in up just of Yancey year-over-year, An substantial dollar year-over-year. points basis

retention as past grow increasingly, offerings Kubernetes we've As of launched several That's our of new alongside of grow, compute customers original are XX/X components well recently droplet and managed set drive databases, with customer support further Expanding along bandwidth, and over acceleration. types. our storage usage as better growth how can high-performance focus of our our years, as revenue and as our and of product introduced the continued service on the the products key we them. and detailed, offering customer adoption their usage such

efficiency continues processes in margins, Along expenses customers service invest and point our QX. in these people, make in with higher our acceleration, of to businesses. drive go-to change improvement our basis on of than which continue will as operating reflected each developers greater We the That's adjusted profitability DigitalOcean year-over-year. across areas all to help in future. and executional retain continued were all organization. believe to long efforts that a today's gross these focus the XXX systems year-over-year spend the small us XX% margin, our EBITDA revenue We for DO in to to increased Contributing more growth and marketing into

We in The for the step-up and focus in the XX% from our final adjusted utilization also our flow during potential is debt basis of and of procurement has current to to our in This than additional efficiency be in which capabilities margin healthy still led help business. prior XXX year-over-year. capacity. the reduction said, but EBITDA expect company's levels, capital pillar profitability of improvement the saw hires year a million EBITDA quarter. first the a That contributing internal cash the will moderation signal new with managing expenditure operating last revenue growth in a objectives, expenses Improving is the quarter was higher was or an from ramp first we in increasing also our plan. of our muscle $XX operations, the the as reached some our encouraging from bad through meaningful year. our heiring investments, point increase we technical what's factor year of behind An materially our

a of down For the from XXXX. quarter, had just XX% in as quarter reduction revenues of revenue of XX% CapEx percentage revenue, a in the meaningful to we first of

continue intend positive the we to efficiently be with investment we flow expect possible as cash beneficial acceleration, manage flow to such, go goal our be revenue pursue combination driving we As as as we generation. CapEx our This lower. And as to cash expenses of forward. even should for

billion-plus in $XXX we're achieve about One during as As note us we've the clearly with access DigitalOcean, and of to milestone pursue quarter, to ahead. pursue improvements really the opportunity, shareholders, quickly of discussed, goals. that is help as operating of a exciting This QX the becoming our performance capital we results long-term journey this we market a provides a making the are did new reflect we public excited group objective achievement company indeed long-term well company. to as the

shares $XXX million outstanding our of has we XX.X X, of over all still Using under sale to reduced proceeds borrowings DigitalOcean capacity, resulted but retain terms borrowing proceeds, in of Our revolver. if to the needed, those million.

we funds. generating improvement our the CapEx anticipate capability, from internal our given However, we that will cash requirements fund in

outlook. our me and you year full share let QX with Finally,

of For quarter, to revenue the million. $XX expect million second to we in range $XX be the

XX%. the XXX the We weighted range range diluted margin the month of shares the in reflects which expect March. XXX of will of new million, Fully during average million adjusted outstanding in to shares issued XX% EBITDA of to to be be impact

represents which XX% we million full in growth $XXX range be at the revenue the For to expect midpoint. the million, to year, $XXX of

XX% to margin the in EBITDA range adjusted to expect of be XX%. We

the timing and between fully you attention of Weighted our the project the support we IPO outstanding of QX. to all And finally, a of and as for average that of of the XXX year, turn percentage let's received at will the outstanding given weighted million. joining And analysts. for the average are be diluted CapEx impact our range us today. For now Thank million we've revenues to for from our XX% in your the the the end continued shares questions XX%. XXX to year, be lower shares

Rob Bradley

you Thanks, thanks for of all joining Bill, us and today.

have of permitting, we mentioned, a let to Bill questions. and then minutes answer ask time, those questions collected ahead we'll few and As first, we'll other panelists time

question how are Sachs, at Are the with spending going motion? from asked your things Goldman cross to customers? manage and So continuing came rates Chris improving and he you for among Morban database higher first offerings, particularly the sell attach see

Yancey Spruill

Chris, Thanks, morning, and everyone. good

adoption recently And see will, revenue X X, products, platform, revenue. Xx They're company's ago. launched growing of as approximate our our X Service, than growth of total those to you our that about the materially higher, our XX% from years continue We if rate. XX% marketplace, our Database PaaS Kubernetes, a higher is up app to of

customers. different this digital think very our with with number on And retention, across our seen seeing by we're XX% earlier, acceleration and go of our ARPU using So And that best multi-product cohort. as really our revenue. We've adopting science, we net the encouraged ARPU, we the and tools, grow that talking XXX, driving progress continue data to our that talked to as see basis of in proxies, here and our the about had that well back we dollar today. engage focus the cohort We engagement models potential long-term in with our we're Those cohorts view, of point seeing expansion. using more that's we're we're into pleased teams growth adoption exceed as initiatives are journey, progress. early having XXX we've a using we

Rob Bradley

should of And over asked CapEx, -- the main about a JMP others. Yancey. along revenue Can CapEx as percentage Thanks, Pat time? Securities we lower And it Great. how Walravens walk how about of with your you many think you at drivers would through us spend?

Yancey Spruill

Bill?

William Sorenson

longer-term We've [indiscernible] the we server how maximize can. this, of to area, team But a maintain of young our So us CapEx platform so. And we in past of very we years, to X with how for tremendous CapEx. in the at around a over XX% best price terms made able plan focus view, on our and we've again, to we which just-in-time area. major to the very our year, countries to given to allows to that deliver better work the CapEx continuing world. area us us constraints. there that XXX It's much capital to allowed the confident over advance next a of material have and X major And drive changes Today, will also, that focus looking which quarters, we our our acquire a XX%, will allowing have built we push for us is of expectations. that's was suppliers capital to focus this of continue investment, well a to our order the taken understanding continue be cost can utilization view, to mid Previously as of has long-term in is XX in be an CapEx technology as a revenues in work investment We're customers a as investment much those we part of XX% a to lower. been company, major opportunity fleet.

runway long-term see there. And for basically drive not of think towards will accelerating XX% look we to that are XX%, but allows growth, we provide to given or forecasting to lumpiness down numbers we sub-XX% that goal will goal medium us plenty of over the still and growth, our So that we XX% any time. long-term that to

Rob Bradley

for that at what to KeyBanc, been what's improving talk that it shown growth? driving you And rate. Could come? What's first Turits said Virtually, expansion asked but mean revenue Bill. got net improvement? still accelerate analysts an Thanks, and this, Great. you've all could in Michael potential your about to

Yancey Spruill

and or of a accelerate. reported from to plus what metric roughly that we be we've net about retention excited the XXX% up dollar is driving expect year to ago XXX% And see progress what's today really flat we're that importantly, expansion. driving continuing Well, to made

progress the I but our across on expansion both churn, number it's teams a And churn. made number year, first aggregate we X:X initiatives the phase. that have between what's over the ratio in We have driving would about of onboarding higher, say

the customer is our majority year business. a churn if our of see de customers, for essentially, we in Both churn first and where the vast small platform on or large The year is minimis. more, they're

on been software the we've year onboarding platform of lot experience optimized of the customer. customers life have first get like that engage of data good to on early. So Using focusing their to that experience, science, sure using that a tools digital products. make the they help a They

If see typically stick with and move it shuck don't, it. You people on. they they

customers. upgrades we the so we've have, number have. off. different as be then seen engagement those first business been but to products cases, that them. have, pretty starts the number into complex to also of using a propensity scaling a lot who tools the might significant is more scratched or of we've just this, and employees their success rates candidates cohort they use And customers initiatives identify digital of And of the number we've of And and product with surface customers they analysis, after been case with driving for evolve. year. takes a back around year, lot workflow their business our we of who are see Their their And they going becoming are the And growing use customers there,

And what's so the that's driving expansion.

you we is had teams, not just in value lot a this As That's to to not journey. optimistic around the a had our in We're We a But proactively, actually we've course not the as with changed improvement during early for looking proactively. that we've this pretty of in What where at always waiting success just turn And support. landed We've time this runway call that we're always we've discussing that we're more we're think support have reporting a and done. are you've last we and DigitalOcean. to differentiator engaging XXX. and forward metric. for commitment seen, year. over been year significant plus, over have

Rob Bradley

Horan been a competition Oppenheimer point free. And products Timothy to have you compete similar asked. Great. as for discuss and that you how services are has with investors at SMB big Microsoft this? Can and for seems do focal you

Yancey Spruill

a -- Yes. Thanks, It's Tim, worth market. it's for noting, I massive think it's the off, question. first

to think data SMB, where and is but XX% today a opportunity plays, $XX billion, going Our market. it's $XXX it's at big there's annually, no a We so think don't serve market. an winner-take-all over to billion markets, size believe cloud cloud just different. massive the were growing it's other We we

our that? they're their customers, I think speaks simplicity. carve talk the coating. do can doing marketing, how the XXX,XXX out the think CEO And customers we to we How of customers, our interesting $XXX here. you that million to founder, differentiate we the about is fact and sort their DevOps, run very rate a niche focusing on When you

when experience They so on our our working And they work. And service need multiple to their that need help. they are it platform work, jobs. need They doesn't really is simplicity.

regardless our of quality to everybody that times larger come insignificant that terms their and of on customers customer of the A this script, about customers, being businesses an And the have onboarding them you're the experience of scale where of customer still personalized revenue in as the our us they a of and journey are many just personalized whether grow early the example customer, I in support support. or some the documentation, documentation, because platforms, of the size gets Our largest That can't many, to our think get they time. matters one don't size talked happens month quarter. we support.

if found scale get and a no we stuck to as support is or or the documentation what difficult. start and are you're you it terms so can't And free, ramp if is experience you contractual there's helpful

is And important. really even we our our really, people customers who to And as matter of aren't our differentiation fact, think and customers. a so tutorials for is free documentation

that's the think creates people we've a a that strong have offerings in why our position we of for lot and attract on brand. it I And evangelist marketplace such So established product.

Rob Bradley

a Bank Our It's services segue. Pass versus would the about asked, good great. can Mohan you IS? additional be examples America clients Wamsi looking at larger across and Pass spend most for of talk probably opportunity any

Yancey Spruill

Yes.

a to and reflects XX% business. business. a thanks, getting typically level our lift we as a people services development a that base a or as comes fact team that of of software as services. of they than our manage storage marketplace set, the is to XX from piece X evolves. off Database more they Their software. result Again, and They platform. higher building have XX% more X-person pie the customer idea app we're Service, they From are individual our thousands for a teams hundreds our and X revenue core of growing that our that. they question. need from need customers, go to grow the So are compute Kubernetes, to And testing from customers called workflow who as building significantly as that growing And roughly writing Infrastructure and They're the scale, XX-person to And solutions revenue And overall rate. from the Wamsi, initial that of writing and to network no complexity, increasing Service. company. go is their a of growth

people customers. and managing own So where their analytics a with service a database customer as helps their that's

in increase with adoption And customers individuals QX, organizations. we're with with has also to you our in workflow that's a premium a in that see core And also droplet, and first QX which of and the on had But dollar core driving its in of larger ARPU. volumetrics helps fundamental net lot significant strategy option making infrastructure the better both. from grow seen have that. see of That's what's our Our innovating what's scale deployment app our launched storage we that's And the software adoption. there X Kubernetes, to has aspect platform existence. adoption a as retention. months driving premium that the We just

important growth platform to innovating of workflow our better us, applications infrastructure, also of Security are terms evolving services. services reliability the of terms So then as also and scalability. new critically optionality customers. and platform the whole making And of in the in driving flexibility because with of is that we're the

to a couple focused evolve. been how it's we it's how which over in X-pronged customers products really the doing So workflow the and choose and successful launch, and That's so. on the pretty years last we've our strategy, -- of

Rob Bradley

bring And greater have Great. the customer to success efficiency? marketing level and highlight you engagement, sales efforts, greater discipline can the Stifel to you had as continue a and Brad you asked, overall operational driving at of

Yancey Spruill

effort a sales It's about Well, do we -- it We're year. years of relaunched this this think couple of revenue investing generated will our to ago. year. last X% We year. our X% X%

expand One of where opportunities see faster our are certain overall regionally and key than markets to of in sort ahead is of growth opportunities we initiatives our opportunities the growth additional there effort. large

marketing. So we're on very to a focused at it. starting sales grow and We're XX% on total sales revenue effort managing of for spend a

in runway people model pulling. to better opportunities. customer X customer in support And to keeping we're to revamped XXX higher our earlier year. dynamics self-serve We've and exciting been sales self-serve of as scale. our minimis very with here science great expansion sales, we to our seeing consume a talked that days. next I increasing in keep million think engage led And And invest normalize de customer days, levels support a through growth the have And through lot platform, more the last this reduce but operational we've et I is, We're those expansion operational as only XX, excited efforts across We're becomes drives from that customer that journey Sales we service we're as the our the first excellence. first our to a customer extent optimize top of optimizing first our and on the those our room engagement website making. of on year, we're early. churn collaboration, to operational starts dramatically, level the in with of can the been the digitally of operational increasing lot Other X rate. very how we're that's that process data triggers with every have We've the month. lower self-serve. success, over and about And we lot success a also to our much additions them help year drive to cross-functional churn. driving to engagement. seen that. other what's drive And using doing visits for of there's a first improvements whole and not teams about using marketing focused cetera. funnel and million us them to a metrics, it Again, well on about bearing experience, support So levers new are XX, fruit, you've efforts XXX that

we're we they're process. really heartening And is are the in impact in improved early the having how operational how early what's So much improvements. despite

Rob Bradley

CapEx? asked, think geographic And at how for should this expansion? plans would about Baer then And Stanley we Josh impact how Morgan

Yancey Spruill

through stuck And having. the searching online community come content. or drive the of visits of tutorials power People Thanks, been our self-serve efficient mechanisms. an people each countries thousands to They this and what other those those million from customers of we in That's million month X model paying tens Josh. on Well, that Google to good news read that our they're visits increasing we're online idea. highly because XXX of website already site. can search a search from is X the we've attract drives

markets. these So of we're in all

the as in markets United We Asia, are it's out whether South Middle our sales East, well and as certain Africa expand States. looking to America, Europe capabilities in

people. salespeople optimized a adding to And our of And get people they're not so for lot the we're self-serve. leads how when come website, targeted

the can monthly customer, larger earlier having a for growth revenue mentioned bring teams come that drive self-serve customer. we work individuals higher when like And in they so I example, a to investing the because new and substantially on who one customers, versus ways sales targeted at We're with today script. in

ago. principally self-serve seeing of motion. we're X%, revenue, X of level because we're sales But a it couple the X% can a supplement, so And of this go scale to going years X% year of to from and be principally

So trends. our certainly to growth accelerating will contribute it

Rob Bradley

And before you Lenschow Raimo or collected to was the we new we give product us then operator on could update go Great. last from take And additional the question at an uptake? ones Barclays.

Yancey Spruill

intel the PaaS faster platform, Those ago. to growing really significant cetera. new company. Again, chip. innovated was in droplets. We're or overall QX. XX% also X $X essentially adoption. Service premium a our premium than strong. significant are to saw have across $X in been that, two Well, years Xx droplet the X We the a offerings That case with a in now X app million-plus We we products cumene uptick We're a marketplace, seeing But DBaaS, pure around et AMD or Infrastructure droplet a from went our ARR company $X as XX%, weeks.

a we option similar so a back QX. in premium And by saw providing storage dynamic

customers marketing growth, our in about applications for to continue same support this businesses, going onboarding efforts customers addition call as productivity the Again, to we'll make we them easy, as as we're and to platform build better. we've build our talked and So a talking driver anything their accelerating the been the there, around their to drive optimizations our help about. to more as whole simple, are on innovate looking and intuitive that's go-to-market they of

Rob Bradley

Operator, we're to questions the take ready queue. from

Operator

Instructions]. [Operator

with You have a question from the line of Mark JPMorgan. Murphy

Mark Murphy

we the be a lot in than on was Yancey, XX% level thought possible. going closing to growth you're sooner

we X QX. fact, take you're there would to essentially thought it in years. X In But

all the ARR, heard inning? is you this the you much see do commentary all in in runway kind with how In words, I to and of think left initiatives. so the other But when transformation? about new marketing we're think what growth the cross-sell this And your triple-digit the do we respect net operational there? sales, inning campaigns And direct intelligent what and upsell, new

Yancey Spruill

Yes.

think -- thank you. Mark, I

I think year Anthem, I just the gotten our per and National we on and hands my we haven't sitting down mustard And even any are yet. our first after have hotdog.

conversation the out investors Board very the is less X were a not made. after see it's I early. think script, typical lot before here, It's very that or unusual. public. a with I as than It's bear in we years very it's to see XX, the months, changes joined the we X we've let's of fruit. mention And mentioned unusual distinct a I the operational ago. in that So we public opportunity. for you go a year This this And month to important XX And run room company. is, In start think

go-to-market to in for innovation also experience very with think that for that where what's it's we're there's more money so we're focusing more exciting that's incredible their us. early. to enable are them around operational both really see a this quarter-to-quarter, our to it's it It's the our seeing, And just get then we I success. for spend productive, sales, self-serve, teams And keeps able going our that to thing improvements because And customers, allows so journey. that more customers that. very products to our to but investors we're a very then interesting public And is such see just the about help do our And such way a they on be in opportunity. opportunity an exciting massive the and the month-to-month,

really about early that. very and So excited

Mark Murphy

Okay. just if I quick a Great. may, And Bill. follow-up, as maybe for

CapEx improvement tremendous ratio. this in have You the

how maybe you've year? I you and sustainable? like think the gives the a wondering Or last into we're and confidence just what that of just that, having structural is to sustainable differently, more prebuying volume been that's discounts being preloaded versus much -- due the said and maybe implemented everything little

William Sorenson

Great question.

who are use customers, are we those approaching the platform to was think use for they out couple how Historically, they fulfilling to things I the platform? a it. our customers, are, of how everyone we relative how there

combination are. new the to those what understanding And that are additional cases how also drive those the that for servers. we we've products those products against revenue products. can using opportunity see within in time provide opportunities spending of additional and margin us use Pricing an drive customers those we're Now clearly offered,

really as ways manufacturers we of the way across we continuing a component Continuing service major they're live you suppliers, can provide includes opportunity? revenue drive them this yet continue costs, to our how X a say well. that what can servers, excited in to that will time, So paid XX/X we what out as ways How and we're do They customers get find the they're the we need, maximizing with part can is, expect, And would they lower. run the servers. drive years. that looking back about we do we through year, more entire we indeed those the to revenue I'd at Our But within would more at work, our same platform? X we're or they is globe. find

it driving us to into opportunity keep more an that platform. revenue So allows

have will to do, exciting of but procurement the utilization provides the upside. of combination us we So platform, also real to think

Mark Murphy

Okay.

for per that So while per see. grow decline the far you to fair? continues to can continues and as Is a server server as revenue cost that

William Sorenson

That's fair. Yes.

Operator

line have D.J. the from Canaccord. You of question with a Hynes

Unidentified Analyst

start. great the and Yancey congrats Bill, on

wholesale or does? just is cloud? around DO it as of scales. if do that to public workloads How thoughts you is along the platforms it other customers do or another Like those when see Just incremental be that those risk? off So of a I've a been of questions go cloud one to replacement you getting lot would from user happening? that lines any keep I Do guess, graduating helpful. larger as

Yancey Spruill

Yes.

So D.J., thanks.

IPO use we from even So on customers graduation don't graduate DigitalOcean. lingo looking conversations, a is the

a if churn a customer, X%. less year, customer I keep after X.X% mentioned de earlier, the or a we over less than or literally large whether small customer is As it's a than minimis year, certainly a

us leave view. than infrastructure, talked It in This simplicity is encourage cloud in about the reliable. it's What go don't multi-cloud. business It's part We're earlier, the people the about And because of isn't it's that's in see secure, you providers. our almost as cheaper cloud tech cheap. we is they do So the substantially multi-cloud every scales. larger we lock-in. because

And we software and companies probably lock so our and extent bad to try the our of be counterintuitive And to business. the stack, with for and low us speed them in support open-source of cost. our tech X looking is, reasons for are exit for to it velocity the

we risk portfolio, our see product don't see makes customers customers cheaper. graduate mentioned so with sense to grow enterprise -- QX, the off vendor you We people in it relatively from still earlier frequently come of example we're customer we that us fulfill small as but big see medium-sized, sometimes have growing in that, you'll case. to cetera, have multi-cloud. an pond clouds platform. a the And management, as of at And see for supplier script but we so are for et we larger And management, their they SMB, management, customers because some use can increasing

we case, and use that price performance. without that a in when was sacrificing point, said against that against for were they better mentioned given our that actually value, fact, They we player In the earlier, they the orders are. magnitude benchmarked company case, were we of larger than

scale, see think tailwind them. So We don't see about as in our And a and Historically, I they we to grow us embrace We versus think that's graduation. go multi-cloud business. that. technology, want if certainly people multi-cloud it's for cetera, they risk and at in of have to it. our serving a differently. go we And been et looked and business, that's churn certain the customers apps, well barrier, embrace people profile

Operator

line You have a Goldman Chris Sachs. from with question the Merwin of

Unidentified Analyst

here. customer quarters about state step the about last should What ask to going for change? think I a of the how that adds more forward? mean, wanted adds. steady customer I And that's of strong very we been function couple drove

Yancey Spruill

talked Chris, is script. a Yes. about critical in the we measure, adds, why acceleration that's the it in so customer this

it and NDR, dollar on platform. customers -- people we sets grow every for really adds. the addition retention metric early us triangulation because scale. businesses and important they percentage for results ARPU, And those get on we've start And customer some that's keeping and of up the with net the a them the to as these seen more platform, of In us

the us so it's on to platform. important bring people And really for

year. not content, only So seen focused more motion. drive we've more aspects other are last jump over to X and driving our And website-visit-plus tutorials revamped the we and community we've self-serve on million website visitors,

we've visit paid part funnel. a the down XXX up. But initial So that's the journey to operationalized step of phase each website added post those focus conversion days top and also workflow then as of on XX, of first to sign it from

just the days. puts that across We So integrated bell credit we workflow have our onboarding because experience the that first churn card team XX, actually don't happens our majority down. because somebody of in ring XXX a on focusing

them a drive better for customers more can lead stay. to and that's our going of we experience more So to

about rate. where growth mid- already, we're a early those is the If growth we working we're not very percent area, about customer retention levers grew hopefully, that's be know But to steady And teens I in double We of that digits, on this at want earlier to double-digit the accelerating year-over-year, And and state. us We see growth can asked again, rate year-over-year And rate that customers we'll continue X% formula want there Mark we we double very that get as handle certainly in base. have to think and to don't in dollar ARPU actively. sight. -- high see XX% So for essentially and talking we're that March. are this about And close, I XX-plus digit. there a be the net today. XX-plus beyond if a acceleration. being our in again, us, formula we're for

Operator

of Tim have with You a from Oppenheimer. the line Horan question

Timothy Horan

I'm sounds are? more? bit you just about to a put strategy products, Yancey, think? inning any trying you on that, And in your doing closer but little developing How what math are you not new you. Could important product like on to talk the pressure it partners XX%, in, do

Yancey Spruill

critical us. Well, And for defined. think is innovation that really broadly product about

when If so it's better et downtime, secure, you it we bought more data more different it's company, reliable, than centers, a robust, is infrastructure much cetera. first just the launched more the many droplet, was less

simplicity. the we're want our in maintain So then because sure think, that to we experience marketplace, that I going investing is, software And we're make critical. customers. that's services tension find the to we to foundational The in are that

to apps, don't use innovating of these pretty the our folks other Because in early-stage businesses are with like cloud. going us So see case I thousands you're simple. think some of of

and adoption with so a And And growth workflow to think we'll great that as highly the a then their what is. I want to of is database the testament. the service, overlap diagram

targeted So we'll products we on be that innovate. very the

focus us our is an and we're And then across opportunity a platform to that give customers incredible apps have areas We our have marketplace with right ecosystem, integrate the now. best-of-breed at for looking the choice.

with So some clearly I vendors We Marketplace going of big think DBaaS organically own to so then those And to and that's we're be we'll formula. tools. angle, develop. some with help the is early us our and there. a partnership partner

of over of a billion it'll the decade. billion. about talked middle in be first combination our this We're -- -- the to the massive early TAM a We're before again. is market, going journey, So $X both. by we this $XXX addressable But

runway. a there's we us the ton of have scale for and to think so have And today, size we

innovation, product better foundational cash today, higher term. about reduce here growth. we in as elements that's going in better are our near and we're to reliable, are be sustained cetera, as self-serve then core to and the And New and And good capital capabilities intensity to growth et talking more high And both on formula. we really getting acquisition, the making be going higher-margin the secure, sales. customer where free driving and dramatically flow

Operator

the You have Wamsi a line of question of from with America. Bank Mohan

Wamsi Mohan

How do even about drive you is the you're growth to capital can cash. obviously, business. there maybe at view, thinking maybe are help $X.X this know that this? How Is little exactly you tremendous M&A? in is here. there mean, Yancey, increases, growth. you are you said thinking billion outset this center results showing bit? further you What I a footprint deploying? Nice particular, be capacity? adding things going a I deploying But about in the acceleration? Is there little think constraining data currently you can that accelerate deploying

Yancey Spruill

for thank Wamsi, the you questions.

M&A. to be and think I the certainly done is X going part we've of M&A program, already it's some So pronged.

on So in supplement to give to us product is varieties: X it innovation. velocity more One comes

an and integrated came of platform. X platform So a our NanoBox, took months acquisition smaller product we've launched we ago that about that that platform. the and series significant it we IP of from years And adoption in X ago with start-up app seen named those

what I we're on recipe for think focused that's a now.

maybe a little $XX $XX I so like think the to bit larger revenue. buy million, of we'd be company, million

product from benefit base. So large of and customer but market network has a already fit could distribution the our

do we've and internally to to more So the we'll team CorpDev. want to on to faster of invested continue capabilities in that. put in drive And the

We acquired tutorials also a to our accelerating tutorials years And supplement ability publish. last visits in to jump $X million-plus have that organic had some by over big that community the write content. we and reason website

So that's another area.

a we're side. they're do we a this way they're have organically. More certainly free the product then on certainly on done to we'll cash got positive, CorpDev So year bigger velocity what you beyond. of big big recently driving will, And what business well not than be focus going if -- and center, but that and supplement can flow we've data deals, be That's hopefully using and the innovation we ours. product to

it the of economics So we'll fund our business. from

going that center we we'll we and us us and about where infrastructure. to as around add the have. potentially will sheet be we we lining to new aggressive We'll add work we existing those well able about more data And this will a centers. want doing at quickly subsequent date. having the But lot are and is where how analytics adding data up to as make to to to communicate balance enable However, of to enable footprint cash strong when a well a be say want have more decisions

Operator

it That remarks. over today. is to Yancey concluding all EQAA turn for we time would the for I questions have now

Yancey Spruill

we've at we forward our We're DigitalOcean made. this Thank delighted excited publicly conversations to have quarters really, about years, the we us. And progress. joining coming phase work traded excited on progress share you, over you IPO next hard. earlier We're as we your and really company. we this our the appreciate look take as everybody, a And year. thanks, to We're and these as really updating to for support on

is a all day. businesses dreams, a incredible about in business. opportunity. we business how forward have of our realize to massive build an you software entrepreneurs' and look developers We This the successful their great front doing ideas, we're is have against Thanks, us. enabling opportunity over updating and And time their about and

Operator

for you call. conference participating. today's concludes Thank This

disconnect. now may You

DigitalOcean (DOCN) 9 May 212021 Q1 Earnings call transcript