Cloud Service Provider DigitalOcean Shares Are Rocketing Today: What's Going On?

DigitalOcean Holdings Inc DOCN shares are trading higher today by around 21% after it reported Q3 FY23 results.

Revenue grew 16% Y/Y to $177.1 million, beating the consensus of $173.4 million.

Annual Run-Rate Revenue (ARR) ended the quarter at $713 million, up 11% Y/Y, and Average Revenue Per Customer (ARPU) increased 6% Y/Y to $92.06.

Builders and Scalers (customers spending over $50 per month) grew 9% Y/Y, and their revenue rose 16% Y/Y in the quarter.

Adjusted EBITDA rose 23% Y/Y to $76 million, with a margin of 43% vs. 40% a year ago.

Adjusted EPS of $0.44 surpassed the consensus of $0.36.

As of September 30, 2023, cash, cash equivalents, and marketable securities stood at $384 million. The company bought back shares worth $106 million in Q3.

Outlook: For Q4, DOCN expects EPS of $0.36-$0.37 vs. $0.38 estimate and revenue of $178 million vs. street view of $175.15 million.

For FY23, the company raised the outlook for revenue to $690 million ($680 million-$685 million) vs. consensus of $683.35 million and expects EPS of $1.52-$1.54 vs. $1.46 estimate.

Price Action: DOCN shares are up 21.29% at $25.75 premarket on the last check Friday.