DigitalOcean

Investment Idea Details

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About the company

DigitalOcean is a company that delivers the fastest and easiest way for developers and businesses to deploy and scale any application in the cloud. With a focus on simplifying the end-user experience, DigitalOcean accelerates software development so developers spend more time building features and less time managing their infrastructure.

With more than 1,000,000 registered developers and 78M droplets, DigitalOcean claims to be one of the largest web hosting companies in the world. Notable investors including Andreessen Horowitz, Fortress Investment Group, and IA Ventures.

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Risks

DigitalOcean competes in the cloud computing industry and faces a competitive landscape, which may affect DigitalOcean’s long-term viability.

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Market Opportunities

The global cloud computing market size is expected to grow from USD 272 billion in 2018 to USD 623.3 billion by 2023, at a CAGR of 18% during the forecast period.

Increased automation and agility, need for delivering enhanced customer experience, and increased cost savings and return on investment are the major growth factors for the cloud computing market.

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Financials and Valuation

DigitalOcean reported to Business Insider that it has achieved an annualized run rate of $220 million in 2018. Additionally, the company disclosed that its been profitable on an EBITDA basis since 2015.

The company's shares are trading at an estimated value of $2.7B. Given the revenue growth, profitability and a large potential market, we expect the company to be worth of $5B after an IPO. The potential return on investment may reach 100%. Estimated IPO date - 2021.

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