DigitalOcean shares slump as Q4 earnings guidance falls short

Investing.com -- DigitalOcean Holdings Inc (NYSE:DOCN) saw its shares tumble more than 6% in premarket trading Monday after the company’s fourth-quarter guidance fell short of analyst estimates.

For the Q3 of fiscal 2024, the cloud service provider reported earnings per share (EPS) of $0.52, topping the consensus estimate of $0.40. Revenue came in at $198 million, also above the estimated $196.68 million.

DigitalOcean also posted adjusted EBITDA of $86.7 million, marking a 14% increase year-over-year, and exceeding the estimated $74.2 million. The adjusted EBITDA margin was 44%, compared to 43% in the same period last year.

“We had a successful quarter, enabling us to raise our full-year revenue guidance while still maintaining full-year free cash flow margin guidance,” said Paddy Srinivasan, CEO of DigitalOcean.

“We continued to accelerate innovation, releasing 42 new product features across our core Cloud and AI platforms in Q3, that directly meet the needs of our larger customers. We made solid progress towards our objective of democratizing access to AI infrastructure and becoming a software-centric AI platform for growing digital-native companies.”

For the fourth quarter of 2024, DigitalOcean expects EPS between $0.27 and $0.32, below the consensus estimate of $0.38.

Revenue is projected to be in the range of $199 million to $201 million, aligning closely with the consensus of $200.1 million.

The company anticipates an adjusted EBITDA margin between 34% and 38%.

For the full fiscal year 2024, DigitalOcean forecasts EPS between $1.70 and $1.75, above the consensus of $1.67. Full-year revenue is projected at $775 million to $777 million, also higher than the $773.9 million estimated by analysts.