Cloud computing provider DigitalOcean (NYSE: DOCN) will be reporting results tomorrow after market hours. Here's what to look for.
Last quarter DigitalOcean reported revenues of $169.8 million, up 26.8% year on year, missing analyst expectations by 0.06%. It was an ok quarter for the company, with revenue guidance for the full year, exceeding market's expectations even if just slightly. On the other hand, it was less good to see the pretty significant deterioration in gross margin and the revenue retention rate deteriorated.
Is DigitalOcean buy or sell heading into the earnings? Read our full analysis here.
This quarter analysts are expecting DigitalOcean's revenue to grow 14% year on year to $173.4 million, slowing down from the 36.5% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.35 per share.
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 missed Wall St's revenue estimates twice over the last two years.
Looking at DigitalOcean's peers in the data and analytics software segment, only Commvault Systems has so far reported results, delivering top-line growth of 6.88% year on year, and beating analyst estimates by 2.96%. Commvault was flat after the results.Read our full analysis of Commvault Systems's earnings results here.
Technology stocks have been hit hard by fears of higher interest rates and while some of the data and analytics software stocks have fared somewhat better, they have not been spared, with share price declining 4.45% over the last month. DigitalOcean is down 11.8% during the same time, and is heading into the earnings with analyst price target of $30.4, compared to share price of $20.3.
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.
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The author has no position in any of the stocks mentioned.