Cloud infrastructure provider DigitalOcean had a revenue of $198 million during Q3, 2024.
In its latest financial earnings, the company reported steady growth with revenue increasing by 12 percent year-over-year (YoY). Annual run rate revenue was also up 12 percent, to $798.3 million.
According to Matt Steinfort, DigitalOcean's CFO, much of this was put down to DigitalOcean's "builders and scalers" customers - the company's largest customers - which increased by 15 percent YoY.
Adjusted EBITDA was $87 million for the quarter, an increase of 14 percent.
Steinfort noted that areas such as profit margins and free cash flow were reduced due to the company continuing to make investments that "capitalized on the AI opportunity to fuel future growth."
"Our AI strategy reflects our belief that the AI market will evolve in a similar fashion to other major technology transformations with initial progress and monetization at the infrastructure layer which will eventually be eclipsed by the opportunities in value creation of platform and application layers," said Paddy Srinivasan, CEO of Digital Ocean.
Srinivasan noted that the company is still "actively participating" in developing the infrastructure layer, the same as other cloud providers in the market, but is also "innovating rapidly in the platform and application pillars to make it easy for our customers to use Gen AI at scale without requiring deep AI/ML expertise." Capex, as a percentage of revenue, was 30 percent for the quarter.
The infrastructure layer referred to includes investment in GPUs - specifically Nvidia H100 GPUs DigitalOcean announced the availability of the GPUs via the DigitalOcean Kubernetes platform in Q3, and has been offering them via its Paperspace cloud computing platform since January of this year.
Steinfort added that the company has Nvidia H200s coming, and "we're keeping an eye on Blackwell to see the timing of that."
He reiterated the importance of investing efficiently, noting that the company is not spending "hundreds of millions of dollars on GPUs" and that because its offering is "more on demand and less committed contract," you have to see what utilization is and plan purchases based on that capacity.
According to Srinivasan, DigitalOcean launched 42 new products across its core Cloud and AI platforms in Q3.
Despite posting better-than-expected results for the quarter, DigitalOcean's stock price has taken a 13 percent hit.
DigitalOcean operates out of 15 in-house data centers which are linked together by a private network. The company is currently building out a data center in Atlanta, Georgia, which is set to launch in Q1 of 2025.
The company's customer base currently sits at around 638,000 users, 18,000 of which spend more than $500 per month on the platform.
