DigitalOcean(DOCN) - 2023 Q4 - Annual Report

Customer Growth and Revenue - As of December 31, 2023, the company had approximately 17,000 Scalers and 139,000 Builders, representing an increase from approximately 15,000 and 11,000 Scalers, and 129,000 and 89,000 Builders in 2022 and 2021, respectively[36] - Revenue from Builders increased by 26% and from Scalers by 18% for the year ended December 31, 2023, compared to the previous year[36] - Builders and Scalers accounted for 86% of total revenue in 2023, up from 85% in 2022 and 83% in 2021[41] - The average revenue per customer (ARPU) rose from $65.83 in 2021 to$90.99 in 2023[36] - In 2023, the average revenue per user (ARPU) increased from $82.76 in 2022 to$90.99, reflecting a growth of approximately 9.9%[63] - The customer base expanded to approximately 139,000 Builders and 17,000 Scalers as of December 31, 2023[63] - Approximately two-thirds of the company's revenue in 2023 came from customers located outside the United States[62] - The top 25 customers contributed only 10% of total revenue in 2023, indicating no material customer concentration risk[64] Acquisitions and Investments - The company acquired Paperspace in 2023 to enhance its AI/ML offerings and Cloudways in 2022 to add Managed Hosting services[44] - The company acquired Paperspace in 2023 to enhance its AI/ML offerings, providing customers with scalable GPU-accelerated applications[55] - The company invested in its content delivery network and launched Scalable Storage for Managed Databases in 2023[44] Global Operations and Market Reach - The company operates 16 data centers worldwide, enabling deployment across nine geographic regions[43] - The company operates in approximately 190 countries, showcasing its global reach and diverse customer base[62] Financial Performance and Management - The net dollar retention (NDR) decreased from 2022 to 2023, but the company expects future revenue growth from existing customers through new product introductions[40] - The company generated a significant majority of its revenue from a self-service marketing model, which allows customers to quickly start using the platform without assistance[56] - The company plans to continue investing in sales and marketing capabilities while maintaining efficiency in sales and marketing expenses as a percentage of revenue[60] - As of December 31, 2023, the company had cash, cash equivalents, and marketable securities totaling $412 million[366] - The company issued Convertible Notes with an aggregate principal amount of$1.5 billion in November 2021[367] - The Convertible Notes have a fixed annual interest rate of 0.0%, indicating no economic interest rate exposure[368] Social Responsibility and Employee Engagement - The company has committed to allocating $50 million over ten years to expand its social impact initiatives as part of the Pledge 1$1.6 million in cash and $765,000 in infrastructure credits to over 1,600 organizations[84] - Employee donations in 2023 exceeded$175,000, which was matched 100% by the company's donation match program[87] - The company offers over 250 courses and videos for employee development, covering various topics from specific skills to leadership training[81] - The company has a strong commitment to pay equity, monitoring diversity numbers and ensuring equal total rewards opportunities for all employees[80] - The company maintains a remote-friendly work culture, allowing access to a global talent pool and fostering a competitive advantage[77] Risk Management and Currency Exposure - Sales are primarily denominated in U.S. dollars, minimizing significant foreign currency risk[369] - Operating expenses are incurred in various currencies, including the U.S., Canada, Netherlands, Germany, Australia, India, Pakistan, and the U.K.[369] - Consolidated results and cash flows are subject to fluctuations due to foreign currency exchange rate changes[369] - No hedging arrangements have been entered into regarding foreign currency risk or derivative financial instruments[369] - A hypothetical 10% increase or decrease in the U.S. dollar's value relative to other currencies would not materially affect operating results[369] Product and Service Offerings - The DigitalOcean Marketplace offers over 280 preconfigured one-click applications, enhancing customer access to efficient tools for building their businesses[59] - The customer support team includes developers and engineers, providing free technical support and creating a feedback loop for product improvements[59] Intellectual Property - The company has filed applications for registration for two additional trademarks in the United States and two in various non-U.S. jurisdictions as of December 31, 2023[86]