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DigitalOcean (DOCN) Reports Q2: Everything You Need To Know Ahead Of Earnings


Kayode Omotosho /
2022/08/07 6:27 am EDT
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Cloud computing provider DigitalOcean (NYSE: DOCN) will be reporting earnings tomorrow after market hours. Here's what to expect.

Last quarter DigitalOcean reported revenues of $127.3 million, up 35.9% year on year, in line with analyst expectations. It was a mixed quarter for the company, with a strong revenue growth but an underwhelming revenue guidance for the next quarter. The company added 14,000 customers to a total of 623,000.

Is DigitalOcean buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting DigitalOcean's revenue to grow 29.5% year on year to $134.4 million, slowing down from the 34.9% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.10 per share.

DigitalOcean Total Revenue

The analysts covering the company have been growing increasingly bearish about the business heading into the earnings, with revenue estimates seeing two downward revisions over the last thirty days. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 2.62%.

Looking at DigitalOcean's peers in the data and analytics software segment, some of them have already reported Q2 earnings results, giving us a hint of what we can expect. Commvault Systems delivered top-line growth of 7.93% year on year, beating analyst estimates by 1.41% and Confluent reported revenues up 57.8% year on year, exceeding estimates by 5.71%. Commvault Systems traded flat on the results, and Confluent was up 7.72%. Read our full analysis of Commvault Systems's results here and Confluent's results here.

There has been positive sentiment among investors in the software segment, with the stocks up on average 4.68% over the last month. DigitalOcean is up 2.66% during the same time, and is heading into the earnings with analyst price target of $54.3, compared to share price of $45.4.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.