Cloud computing provider DigitalOcean (NYSE: DOCN) will be reporting earnings tomorrow before the bell. Here’s what to look for.
DigitalOcean beat analysts’ revenue expectations by 2% last quarter, reporting revenues of $192.5 million, up 13.3% year on year. It was a strong quarter for the company, with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ ARR (annual recurring revenue) estimates.
Is DigitalOcean a buy or sell going into earnings? Read our full analysis here, it’s free.
This quarter, analysts are expecting DigitalOcean’s revenue to grow 11.1% year on year to $196.8 million, slowing from the 16.4% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.40 per share.
The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. DigitalOcean has only missed Wall Street’s revenue estimates once over the last two years, exceeding top-line expectations by 1.4% on average.
Looking at DigitalOcean’s peers in the data and analytics software segment, some have already reported their Q3 results, giving us a hint as to what we can expect. Commvault Systems delivered year-on-year revenue growth of 16.1%, beating analysts’ expectations by 5.6%, and MicroStrategy reported a revenue decline of 10.3%, falling short of estimates by 4.4%. Commvault Systems traded up 18.4% following the results while MicroStrategy was down 1.1%.
Read our full analysis of Commvault Systems’s results here and MicroStrategy’s results here.
There has been positive sentiment among investors in the data and analytics software segment, with share prices up 6.4% on average over the last month. DigitalOcean’s stock price was unchanged during the same time and is heading into earnings with an average analyst price target of $40.09 (compared to the current share price of $41.93).
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