DigitalOcean is a leading cloud computing platform offering mission-critical infrastructure and fully managed offerings for developers, startups and small and medium-sized businesses (SMBs). DigitalOcean was founded with the guiding principle that the transformative benefits of the cloud should be easy to leverage, broadly accessible, reliable and affordable. Our platform simplifies cloud computing, enabling our customers to rapidly accelerate innovation and increase their productivity and agility. Currently, over 570,000 individual and business customers use our platform to build, deploy and scale innovative software applications that drive business growth.
DigitalOcean simplifies cloud computing so developers and businesses can spend more time building software that changes the world. With its mission-critical infrastructure and fully managed offerings, DigitalOcean helps developers, startups and small and medium-sized businesses (SMBs) rapidly build, deploy and scale applications to accelerate innovation and increase productivity and agility. DigitalOcean combines the power of simplicity, community, open source, and customer support so customers can spend less time managing their infrastructure and more time building innovative applications that drive business growth.
An Update on the DigitalOcean Business
We make cloud hosting simple and cost-efficient, so you can focus on growing your hosting business. Our powerful and low-cost compute options combined with our support make DigitalOcean the perfect infrastructure to power a managed hosting business.
To update your billing address, tax location, or add an applicable Tax ID in the DigitalOcean Control Panel, select Billing from the main menu. In the Billing Settings section, select Edit Address. If you are adding a tax ID, click Add Tax ID.
In 2003, Ben Uretsky and Moisey Uretsky, who founded the ServerStack, a managed hosting business,[7] wanted to create a new product which would combine web hosting and virtual servers and target entrepreneurial with software developers.[8][7]
DigitalOcean was widely criticized for its role in creating a perverse incentive when it promoted Hacktoberfest 2020 with free t-shirts for contributions to open source projects, resulting in massive spurious pull requests on open source GitHub repositories, amounting to an unintentional "corporate-sponsored distributed denial of service attack against the open source maintainer community".[54][55][56][57] DigitalOcean was quick to respond, and issued updates to Hacktoberfest to help prevent this, by allowing open source maintainers to specifically opt into Hacktoberfest, updating the Hacktoberfest process to allow maintainers to mark spammy content, and preventing repositories set up just to game the system from participating.[58][59][60][better source needed]
DigitalOcean (NYSE:DOCN) is a cloud computing platform specialising in infrastructure and platform tools, with a focus on serving small and medium-sized businesses (aka SMBs). This SMB segment has been largely ignored by the cloud behemoths of Amazon (AMZN), Microsoft (MSFT), and Google (GOOGL), who offer enterprise-focused solutions that are overly complex and too opaque for smaller companies.
The company will start out with a much lower valuation than those other companies. In a Monday update to the prospectus for its initial public offering, DigitalOcean said it expects to sell shares at $44 to $47 per share, which would give it a market cap of about $4.8 billion at the middle of the range. DigitalOcean also said Tiger Global and an entity tied to existing investor Access Industries want to buy up to $175 million in the company's shares at the time of the IPO.
DigitalOcean took a swipe at the big public-cloud vendors in its prospectus, saying their products aren't intuitive enough for sole developers and small businesses and "suffer from near-infinite feature complexity and have opaque pricing and billing practices that are often accompanied by significant hidden costs." As a result, the company said, small businesses are often unable to enjoy the benefits of cloud computing.
If DigitalOcean has found a sweet spot, it's with small businesses, rather than large enterprises, which the big clouds have been fighting over in the past few years. It's a self-service business that doesn't rely heavily on a large group of salespeople. In that way it will be like website-building company Wix and e-commerce software maker Shopify.
But DigitalOcean is hopeful. In the prospectus the company said it expects more than 14 million small and medium-size businesses to be formed each year, and their founders don't necessarily come with sharp technical skills. "These individuals are able to leverage simple and reliable development tools and the widespread availability and significantly lower upfront cost of cloud computing to start companies," the company said.
There's a war raging in the cloud as the leader, Amazon Web Services, defends its $16 billion business from the rise of Microsoft Azure and Google Cloud. The battleground: Lucrative customer deals with Fortune 500 companies.
Competing in the cloud is hard. The whole business model hinges on offering companies access to fundamentally unlimited supercomputing power, rented at a rate of pennies per hour. To achieve the kind of scale to make that profitable, a provider needs lots and lots of servers, plus the land, electricity, and manpower to keep them running.
In terms of product strategy, co-founder and CMO Mitch Wainer says that DigitalOcean is taking a "different approach" to the likes of Amazon and Microsoft, who make a point of catering their offerings to the needs of large businesses. That's borne out by Dave Bartoletti, Principal Analyst at Forrester Research, who tells us that DigitalOcean is very popular among startups, but rarely spotted in the enterprise.
Cloud computing marks the next stage in business analytics, computing resources, and information storage. It will be one of the most significant business innovations over the next decade, which is why many market research companies think the cloud computing market could grow by more than 17% annually to $1.6 trillion by 2030.
Companies of all sizes can find this useful, but the problem is the big three don't want to be spending their time on mom-and-pop start-up businesses. They're after big customers that bring sizable contracts. That's not to say AWS, Azure, or Google Cloud can't be used for this purpose; they're just not optimized for it and are likely more expensive. Providing cloud infrastructure to these smaller businesses is where DigitalOcean's niche is.
DigitalOcean's targets are small businesses and developers, and it emphasizes its simplicity, customer support, and open-source platform, making this solution ideal for its customer base. To back up its affordability claim, here's how it compares to the big three:
However, DigitalOcean points out that there will be 43 million developers by 2025, and more than 100 million small businesses exist globally, with 14 million more being added each year. Not every small business needs to use cloud computing. But many could benefit by using DigitalOcean's product, and relatively few have utilized its services so far.
Despite general economic uncertainty, cloud computing is an area where businesses continue to spend. This trend was reflected in Amazon's and Alphabet's most recent quarterly results, with AWS sales growing 33% year over year to $19.7 billion and Google Cloud rising 36% year over year to $6.3 billion. (Microsoft doesn't individually break out Azure sales, so it was excluded from this comparison). DigitalOcean's entire business is cloud computing, so investors don't need to look at individual segments. Its revenue was up 29% year over year to $134 million, with annual run rate revenue up 28% from the prior-year period to $544 million.
Cloud computing has massive benefits and doesn't need to be solely reserved for the largest businesses. DigitalOcean is there to ensure customers of all sizes are taken care of. As one of few pure-play cloud computing investments, it could generate massive shareholder returns as this space matures over the next decade.
The biggest move to keep your business's nose clean here is to check and doublecheck your security standards. For Mailchimp in particular, just one specific question could have helped: Do all the software services your employees use offer Single Sign-On (SSO)?
Two-factor user authentications are another security standard that will help business software users protect their data and their business, and saved DigitalOcean's customers in this case, as the attacker never proceded past the second authentication.
That said, both two-factor authentication and SSO are not always available, and can vary depending on which software plan you opt for. For example, project management software Smartsheet doesn't add SSO on any plan expect its Enterprise plan, aimed at the largest businesses.
Security features are factored into all of our software reviews for this reason. We've ranked the best options for tools ranging from accounting solutions and small business VoIP systems to free payroll software or restaurant-specific POS systems.
Also "doing business with a Fortune 500 company" most of the time means a team inside that Fortune 500 is using your service or tool for the team's purpose. General Electric does not run on your bootstrapped stamp collecting SaaS, trust me.
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 1.9%. We discount the terminal cash flows to today's value at a cost of equity of 6.9%.
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at DigitalOcean Holdings as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.9%, which is based on a levered beta of 1.180. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. 2ff7e9595c
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