The market hasn’t been kind to small-cap stocks. Over the last three years, the Russell 2000 index lost over 11% of its value compared to 30% gains by its larger brethren in the S&P 500. Rampant inflation and rising interest rates hit small-cap stocks far harder than the largest stocks on the market. Yet, beginning from the stock market’s low point in late October, small-cap stocks have outperformed virtually all others. The Russell 2000 is up 25% since then, while the S&P trails behind with a 24% gain and ...

The recent all-time highs in the stock market indexes create a challenge for growth investors. A dramatic recovery in some AI-driven stocks, particularly in the "Magnificent Seven," drove most of the gains in the indexes. Amid that situation, investors may wonder whether they are too late, which could make them skeptical about growth stocks that did not join the rally.Despite such concerns, growth stock investors can still likely benefit, particularly in stocks that sell at a considerable discount to 2021 h ...

DigitalOcean Holdings (DOCN 1.89%) may not be a popular name in the cloud computing space when compared to the likes of Microsoft and Amazon, and that's not surprising as it is currently in its early phases of growth.Founded in 2012, DigitalOcean isn't a cloud service provider in the mold of its more illustrious peers. The company is known for providing an on-demand cloud computing platform that's used by small businesses, developers, and start-ups, and it has been struggling in the past year because of wea ...

It turns out that investors interested in small upstart cloud computing platform DigitalOcean (DOCN 1.27%) got not one but two opportunities to buy the big dip. After bottoming during the bear market at the very end of 2022, shares rocketed higher in the first half of 2023. But then the stock reached fresh all-time lows later in the year after slowing revenue growth hit, past accounting errors were found, and a shake-up at the CEO level was announced.DigitalOcean (DO from here on out) is back on the mend ag ...

Putting aside Nvidia is practically impossible, considering nearly every large technology company in America seems to be racing to buy its data center chips designed to process artificial intelligence (AI) workloads. Plus, Nvidia stock was the best performer in the S&P 500 index in 2023 with a 239% gain, and it's already up another 61% in 2024.But the AI industry is expanding quickly, and a number of other opportunities warrant attention, so let's forget Nvidia for a moment.Palo Alto Networks (PANW -2.62%) ...

DigitalOcean Holdings, Inc. (DOCN) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.Analysts' growing optimism on the earnings prospects of this company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-te ...

SerrNovik/iStock via Getty Images Investment thesis A lot has changed for DigitalOcean (NYSE:DOCN) in the past 14 months. Let's start by doing a sanity check on the company's stock performance. DigitalOcean, or DO as the company sometimes calls itself, underperformed the benchmark index by scoring a ~17% return, ~10% under the S&P 500 index (SP500) over the past year. sa Last year, the company's Q2 FY23 results shocked its investors after it announced in that report that customers were churning and spend wa ...

Financial Data and Key Metrics Changes - Q4 2023 revenue was $181 million, up 11% year-over-year, exceeding the high end of the revenue outlook by $3 million [38] - Adjusted EBITDA was $73 million, representing a 41% margin, while adjusted free cash flow was $29 million, or 16% of revenue [39] - Non-GAAP fully diluted net income per share was $0.44, a 57% increase year-over-year [40] - Total revenue for 2023 increased 20% year-over-year to $693 million, driven by over 18,000 new customers and a 6% increase in revenue per customer [49] Business Line Data and Key Metrics Changes - Revenue from the managed hosting platform Cloudways increased to $80 million, growing 43% year-over-year [53] - The recently acquired Paperspace AI/ML products contributed to revenue growth, with expectations of 3% revenue growth from AI/ML solutions in 2024 [51][55] Market Data and Key Metrics Changes - DigitalOcean serves over 640,000 customers globally, with revenue generated in over 190 countries [19] - The cloud computing market, particularly for developers, is projected to grow over 23% through 2027, representing a $114 billion opportunity [18] Company Strategy and Development Direction - The company plans to enhance its platform with features like global load balancing and data resiliency, while investing in network and infrastructure to improve performance [23] - A focus on AI/ML capabilities is emphasized, with significant investments planned to leverage this market opportunity [24][55] - The strategy includes augmenting self-service customer acquisition with direct sales and customer success initiatives [25] Management's Comments on Operating Environment and Future Outlook - The company acknowledges a challenging macro demand environment in 2023 but aims for low double-digit growth in 2024 [28] - Management is optimistic about improving net dollar retention (NDR) and customer engagement through product innovation [28][56] - The CEO emphasizes a commitment to understanding customer needs and enhancing the developer experience [30][32] Other Important Information - The company has a share repurchase authorization of $140 million to be executed over the next two years [69] - Stock-based compensation expense decreased from 18% to 13% of revenue year-over-year [62] Q&A Session Summary Question: What is the company's strategy for expansion into new areas? - The CEO believes in balancing internal product development with acquiring expertise through M&A, emphasizing the importance of both approaches [43][44] Question: How does the company plan to achieve a higher growth trajectory? - Management is focused on disciplined investments in innovation and understanding customer needs to drive growth [78][84] Question: What is the company's philosophy on leadership? - The CEO's leadership philosophy centers on understanding customers deeply and placing the right people in key positions to drive innovation [122] Question: How does the company view the potential for future pricing increases? - Management sees a mix of growth from new customer acquisition and potential pricing adjustments, but specifics on pricing strategies were not disclosed [125]

DigitalOcean Holdings, Inc. (DOCN) reported $180.87 million in revenue for the quarter ended December 2023, representing a year-over-year increase of 11%. EPS of $0.44 for the same period compares to $0.28 a year ago.The reported revenue represents a surprise of +1.47% over the Zacks Consensus Estimate of $178.26 million. With the consensus EPS estimate being $0.37, the EPS surprise was +18.92%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expec ...

Exhibit 99.1 "In 2023, we accelerated our long-term margin targets, expanded our addressable market with an AI/ML acquisition, and established a solid double digit growth foundation," said Matt Steinfort, CFO of DigitalOcean. "Our strong balance sheet, healthy top-line outlook, and attractive free cash flow are enabling us to invest in expansion initiatives for 2024 and beyond." DigitalOcean Announces Fourth Quarter and Fiscal Year 2023 Financial Results 2023 Revenue Increased 20% to $693 million Full Year ...