Shares of cloud computing solutions provider DigitalOcean (NYSE:DOCN) surged nearly 22% in the pre-market session today after its third-quarter results fared better than estimates and the company delivered an upbeat outlook. EPS of $0.44 outpaced expectations by $0.08. Further, revenue of $177.06 million clocked a 16% year-over-year growth, exceeding estimates by $3.7 million.
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During the quarter, annual run-rate revenue (ARR) increased by 11% to $713 million, and adjusted EBITDA surged by 23% to $76 million. Additionally, the company introduced multiple new products and features to its offerings and closed the acquisition of cloud infrastructure services provider Paperspace.
What’s more, the number of DigitalOcean’s customers spending upwards of $50 million per month increased by 9%, with the company’s average revenue per customer (ARPU) ticking higher by 6% to $92.06.
For Fiscal year 2023, DigitalOcean expects an adjusted free cash flow margin in the range of 21% to 22% on revenue of $690 million. EPS for the year is anticipated to hover in the range of $1.52 to $1.54. For the upcoming quarter, the company expects EPS to be in the range of $0.36 to $0.37 on $178 million in revenue.
What Is the Forecast for DOCN Stock?
Overall, the Street has a Hold consensus rating on DigitalOcean. The average DOCN price target of $30.13 implies a hefty 42% potential upside.
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