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

Jabin Bastian /
2023/08/02 4:03 am EDT

Cloud computing provider DigitalOcean (NYSE: DOCN) will be announcing earnings results tomorrow after the bell. Here's what investors should know.

Last quarter DigitalOcean reported revenues of $165.1 million, up 29.7% year on year, in line with analyst expectations. It was a slower quarter for the company, with a decline in its gross margin and its net revenue retention rate in jeopardy.

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This quarter analysts are expecting DigitalOcean's revenue to grow 26.9% year on year to $169.9 million, in line with the 29% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.41 per share.

DigitalOcean Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company only missed Wall St's revenue estimates once over the last two years, and has on average exceeded top line expectations by 1.7%.

With DigitalOcean being the first among its peers to report earnings this season, we don't have anywhere else to look at to get a hint at how this quarter will unravel for data and analytics software stocks, but there has been positive sentiment among investors in the segment, with the stocks up on average 8.89% over the last month. DigitalOcean is up 21.3% during the same time, and is heading into the earnings with with analyst price target of $44.20, compared to share price of $48.24.

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.