DigitalOcean Named Top-Tier Software Vendor by APPS RUN THE WORLD in the APPS and CLOUD TOP 500 Market Report

DigitalOcean Strengths, Domain Expertise, and Key Differentiators

DigitalOcean's strength lies in its commitment to simplicity, accessibility, reliability, and affordability in cloud computing. The recent introduction of Premium Droplets and the acquisition of Nimbella showcase the company's agility and responsiveness to market trends. The platform's ease of use, catering to developers, startups, and SMBs, coupled with a focus on innovation, positions DigitalOcean as a key player in the cloud computing landscape. The partnership with MongoDB further enriches its product portfolio, offering managed services tailored to the needs of its target audience.

DigitalOcean Recent Developments

In a strategic move to empower small and medium-sized businesses (SMBs) with advanced data management capabilities, DigitalOcean Holdings unveiled DigitalOcean Managed Kafka in September 2023. This fully managed data streaming platform as a service is specifically designed for Apache Kafka, catering to diverse industries such as video streaming, the Internet of Things (IoT), data analytics, gaming, and eCommerce. By offering real-time access and processing of data streams, DigitalOcean Managed Kafka eliminates the intricacies associated with Kafka administration, providing startups and tech entrepreneurs with a simplified yet powerful tool to fuel innovation and growth in the cloud. This addition to DigitalOcean's portfolio not only enhances the company's competitiveness but also aligns with its commitment to making sophisticated technologies more accessible to SMBs, fostering their journey toward digital transformation.

Following this, in October 2023, DigitalOcean Holdings introduced Scalable Storage for DigitalOcean PostgreSQL and MySQL Managed Databases. This innovative offering addresses the challenge of cloud underutilization by allowing SMBs to pay only for the data resources they require, optimizing their spending on cloud services. This scalable storage solution enables DigitalOcean customers to effortlessly increase the disk storage of their Managed Databases without the need for adjustments in computing and memory resources. By providing a flexible and cost-effective approach to managing data resources, DigitalOcean continues to empower SMBs, enabling them to efficiently scale their operations while maintaining control over their cloud expenses. These strategic launches reflect DigitalOcean's commitment to delivering practical, user-centric solutions that facilitate the growth and success of startups and small businesses in the dynamic landscape of cloud computing.

DigitalOcean's announcement in May 2022 marked a significant leap forward in addressing the evolving needs of developers, particularly those in small businesses and startups, with the introduction of DigitalOcean Functions. This new serverless solution offers a fast, scalable, and cost-effective computing option that empowers businesses to build, scale, and save costs without the burden of managing and provisioning their own servers. Gabe Monroy, Chief Product Officer of DigitalOcean, highlighted the customer-driven nature of this development, noting that serverless functions were among the most common requests from their user base. The strategic acquisition of Nimbella in the previous year has played a pivotal role in shaping this serverless offering, emphasizing the company's dedication to seamless integration within its cloud ecosystem.

DigitalOcean Functions addresses a key pain point for developers by allowing them to focus on creating and scaling software without the complexities of infrastructure management. The solution's automatic scaling based on demand is particularly advantageous for managing unpredictable workloads, providing a dynamic and efficient computing environment. According to IDC's IaaSView buyer survey, the planned adoption rate of serverless functions among cloud IaaS buyers is notably high, with DigitalOcean Functions well-positioned to meet this demand. The offering provides a unified and integrated experience, a developer console for testing functions, seamless integration with DigitalOcean Managed Databases, and support for common languages and runtimes, making it a versatile and developer-friendly solution.

DigitalOcean's recent move to enhance its cloud offerings with Premium Droplets featuring processors from both Intel and AMD is a strategic step to cater to the evolving needs of developers and businesses. This expansion brings faster performance, flexibility in hardware selection, and improved memory and disk capabilities, reinforcing DigitalOcean's commitment to empowering innovation. This move is likely to contribute significantly to the revenue growth of the company. As of now, DigitalOcean's revenue and profit data post these developments are not publicly available, but the market response indicates a positive trajectory.

DigitalOcean Mergers and Acquisitions (M&A) Activities

In a strategic move to bolster its capabilities in the realm of artificial intelligence and machine learning (AI/ML), DigitalOcean Holdings completed the acquisition of Paperspace in July 2023. Paperspace, recognized as a leading provider of cloud infrastructure as a service specializing in highly scalable applications powered by graphics processing units (GPUs), brings forth advanced technology that will be seamlessly integrated into the DigitalOcean platform. This integration aims to empower DigitalOcean's customers, offering them enhanced capabilities to test, develop, and deploy AI/ML applications with a focus on leveraging GPU technology.

The acquisition not only benefits Paperspace's existing customer base by granting access to a broader cloud services platform but also extends the reach of DigitalOcean's extensive documentation, tutorials, and support system to aid Paperspace customers in their AI application endeavors.

Under the terms of the transaction, DigitalOcean acquired Paperspace for $111 million in cash. The acquisition is projected to have an immaterial impact on the financial results for 2023. DigitalOcean's CFO, Matt Steinfort, highlighted Paperspace's rapid growth and leading-edge technology, anticipating its positive contribution to revenue growth in 2024 and beyond.

In a transformative move, DigitalOcean Holdings, Inc. proudly announced the successful conclusion of its $350 million acquisition of Cloudways in September 2022. Cloudways, a prominent managed cloud hosting, and software as a service (SaaS) provider tailored for small to medium-sized businesses (SMBs), now stands as an integral part of DigitalOcean's dynamic ecosystem. The acquisition signifies a strategic alignment with DigitalOcean's overarching mission to streamline cloud computing, allowing creators to dedicate more time to crafting innovative software that has the potential to impact the world positively.

The collaboration extends beyond a mere acquisition, as DigitalOcean and Cloudways are set to synergize their efforts. The amalgamation of their respective strengths and expertise is expected to amplify the drive for simplicity in cloud computing, providing an environment where builders can thrive.

The acquisition of Nimbella in September 2021 demonstrates DigitalOcean's focus on diversifying its service portfolio. This strategic move expands the company's presence in the function-as-a-service (FaaS) market, aligning with the industry trend of serverless computing. The synergy between Nimbella's serverless platform and DigitalOcean's existing Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) offerings positions the company as a comprehensive cloud solution provider.

DigitalOcean Customers in ARTW Customer Database

Leveraging a rigorous data-centric research methodology, APPS RUN THE WORLD asks the simple question: Who’s buying DigitalOcean applications and why? And we provide the answers – supported by decades of research – to our clients around the world. Our Customer database has over 100 data fields that detail company usage of DigitalOcean and other enterprise apps by function, customer size, industry, location, implementation status, partner involvement, Line of Business Key Stakeholders and IT decision makers contact details. List of Verified Virtual Private Cloud (VPC) customers.

DigitalOcean Key Enterprise and Cloud Applications

Virtual Private Cloud (VPC)

DigitalOcean Revenues, $M:

DigitalOcean Revenue Breakdown By Type, $M:

DigitalOcean Enterprise Applications Revenues By Functional Markets, $M:

DigitalOcean Enterprise Applications Revenues By Verticals, $M:

DigitalOcean Revenues By Region, $M

DigitalOcean Direct vs Indirect sales

DigitalOcean Customers - Breakdown by Geo, Size, Vertical and Product

List of Verified DigitalOcean Customers

No. of DigitalOcean Customers: 623000

No. of DigitalOcean Enterprise Applications Customers: x

No. of DigitalOcean Cloud Customers: x

No. of DigitalOcean Cloud Subscribers: x

With approximately 623,000 individual and business customers, DigitalOcean has a substantial user base. The diverse customer profile includes software engineers, researchers, data scientists, system administrators, students, and hobbyists. The platform caters to various industry verticals, including web and mobile applications, e-commerce, media, gaming, and more. This broad customer base provides ample opportunities for revenue growth, with a focus on increasing platform usage, expanding product offerings, and targeted sales initiatives.

DigitalOcean Market Opportunities, M&A and Geo Expansions

DigitalOcean has unveiled its strategic move to broaden its global footprint with the establishment of a cutting-edge data center in Sydney, Australia (SYD1). This development, marking Sydney as the ninth global region and the fifteenth facility overall for DigitalOcean, is poised to significantly enhance the support for existing and potential customers in Australia and New Zealand.

Yancey Spruill, CEO of DigitalOcean, expressed enthusiasm about expanding the company's infrastructure to better serve the needs of small and medium-sized businesses (SMBs) in Australia, New Zealand, and the surrounding region. The establishment of this advanced data center aligns with the company's commitment to providing low-latency connectivity and productivity tools for startup businesses and SMBs in these flourishing markets. As the cloud computing market in Australia is projected to grow by 12.5% by 2025, with SMBs leading in cloud spending growth, the strategic decision to establish a presence in Sydney positions DigitalOcean for success.

DigitalOcean's opportunities lie in both horizontal and vertical market expansion. The company can tap into the growing demand for cloud services globally, especially in regions where Premium AMD Droplets are yet to be introduced. Embracing Cloud, IoT, AI, and ML technologies further opens doors for innovation and service differentiation. The focus on larger customers and targeted sales initiatives aligns with the potential for increased adoption of DigitalOcean's platform and services.

DigitalOcean Risks and Challenges

DigitalOcean's recent announcement of a leadership succession plan raises potential risks associated with the transition process. Yancey Spruill, the current Chief Executive Officer (CEO), will continue to serve until a successor is identified, at which point he will step down from his role and the Board. While the Board has initiated a search for the next CEO and engaged an executive search firm, Spencer Stuart, to assist in the process, the leadership transition introduces an element of uncertainty. The identification of a candidate with deep cloud technology and operational expertise, as mentioned by Executive Chairman Warren Adelman, is crucial for the seamless execution of ongoing strategic initiatives and to ensure continued strong results. However, the search for the right candidate and the subsequent transition period could potentially create a period of ambiguity and impact the strategic direction and operational efficiency of DigitalOcean.

One potential internal risk highlighted by DigitalOcean is the reliance on the growth of its core customer base, consisting of individual developers, early-stage start-ups, and small-to-medium-sized businesses. If these customers fail to grow as expected, it could adversely impact DigitalOcean's path to growth. Additionally, challenges in offering suitable services for both initial and scaled business states pose a risk. External risks include market competition and evolving technology landscapes, which may impact DigitalOcean's market positioning and financial performance.

DigitalOcean Ecosystem, Partners, Resellers and SI

DigitalOcean's ecosystem is strengthened through strategic partnerships, such as the one with MongoDB. The collaboration expands DigitalOcean's managed offerings, providing developers, startups, and SMBs with a fully managed database as a service (DBaaS) solution. This ecosystem integration aligns with the company's mission to simplify cloud computing and empower its users. DigitalOcean's network effects with system integrators and value-added resellers contribute to the seamless integration of technology and services within the broader cloud ecosystem.

DigitalOcean Cloud Infrastructure Insights

Subscribe to read more about:

• DigitalOcean Public Cloud and Infrastructure (IaaS)
• DigitalOcean Platform (PaaS)
• DigitalOcean Application Delivery
• DigitalOcean Private Cloud and Data Centers

Research Methodology

Data used in research reports are derived from publicly available documents, continuous surveys of applications vendors, customers, resellers, Independent Software Vendors, systems integrators and other verifiable sources.

Vendor shares and market forecast results are based on a combination of existing databases as well as demand side and supply side research conducted throughout the year with validation from vendors, customers, channel partners and documentations such as earnings releases and 10Q and 10K filings, vertical industry studies, regional and country-level statistics from public and private institutions(i.e. colleges, universities, government agencies and trade associations).

For additional information on our methodologies, here's the link: