Independent cloud provider DigitalOcean falls on Wall Street debut

The New York Stock Exchange welcomes DigitalOcean, Inc. (NYSE: DOCN) today, Wednesday, March 24, 2021 in celebration of its IPO. To mark the occasion, CEO Yancey Spruill and John Tuttle, NYSE Vice Chairman and Chief Commercial Officer, will ring in The Opening Bell®.


The small cloud infrastructure provider DigitalOcean made its debut on Wednesday on the New York Stock Exchange under the ticker symbol “DOCN”.

The stock traded at $ 41.50 per share, which was about 12% below the $ 47 price it sold shares for when it went public and below the $ 44-47 per share range the company had stated in updates to its IPO prospectus. By the end of Wednesday’s trading session, shares had fallen nearly 10% to $ 42.50, valued at $ 4.48 billion.

DigitalOcean is challenging much larger companies in the marketplace, including Amazon and Microsoft, to provide computing and storage resources that companies can use to run their software rather than running their own data center infrastructure. DigitalOcean built a business by keeping its products easy to use. Most of the revenue comes from using droplets, which are virtual parts of physical servers.

“We offer a personalized support experience to every customer, regardless of their size. We therefore believe that if we make it easy and straightforward, the way to earn the hearts and minds of our developers and entrepreneurs every day is helping our customers when they need it. ” On CNBC’s Squawk Alley, CEO Yancey Spruill said the market is big, with over $ 100 billion in annual cloud spending for small and medium-sized businesses.

The company sees an opportunity to add analytics software that will allow users to get more out of data stored in databases and intends to add data center infrastructure in more locations around the world, Spruill told CNBC later on Wednesday.

DigitalOcean raised $ 775 million when it went public. The company operates 14 of its own data centers in the US and abroad under lease agreements and intends to expand its presence like its competitors. However, unlike its big competitors, DigitalOcean doesn’t have billions of dollars paid for by customers for services they haven’t used yet. The company posted prepaid expenses of less than $ 5 million in late 2020.

In 2020, DigitalOcean recorded a net loss of $ 43.6 million on total sales of $ 318.4 million. The loss increased by 7% compared to 2019 and sales increased by around 25%. In a presentation to potential investors, CFO Bill Sorenson said the company aims to increase the amount of money it receives from each customer while reducing research and development costs and general and administrative expenses as a percentage of sales.

“We still see a way to further increase our operating margins in some spending areas,” said Sorenson on Wednesday.

At an IPO price of $ 47, DigitalOcean was rated 16 for value for money based on 2020 sales, compared to 12 for Microsoft.

– CNBC’s Ari Levy contributed to this report.

SEE: Bessemer’s Byron Deeter on the resurgence of cloud computing stocks

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