Earnings To Watch: DigitalOcean (DOCN) Reports Q1 Results Tomorrow

Adam Hejl /
2022/05/03 7:27 am EDT

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 $119.6 million, up 36.7% year on year, in line with analyst expectations. Despite trading down on the results, it was still a solid quarter for the company, with accelerating customer growth and an exceptional revenue growth. The company added 11,000 customers to a total of 609,000.

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 34.7% year on year to $126.2 million, improving on the 28.6% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.12 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 has a history of exceeding Wall St's expectations, beating revenue estimates every single time since going public on average by 3.06%.

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 the whole sector has been hit hard on fears of higher interest rates, with stocks down on average 16.9% over the last month. DigitalOcean is down 29.6% during the same time, and is heading into the earnings with analyst price target of $76.3, compared to share price of $42.51.

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.