The New York Stock Exchange welcomes DigitalOcean, Inc. (NYSE: DOCN), today, Wednesday, March 24, 2021, in celebration of its initial public offering. To honor the occasion, CEO Yancey Spruill, along with John Tuttle, vice president and commercial director of NYSE, called The Opening Bell®.
NYSE
Small-scale cloud infrastructure provider DigitalOcean debuted on the New York Stock Exchange on Wednesday, under the symbol “DOCN”.
The stock began trading at $ 41.50 per share, about 12% lower than the $ 47 price at which it sold shares in the initial public offering and below the $ 44 to $ 47 per share that the company provided in the updates to its IPO prospectus. At the opening price, it has a market cap of $ 4.37 billion.
Shares fell about 5.5 percent on Wednesday afternoon.
DigitalOcean challenges much larger companies, including Amazon and Microsoft, in the marketplace to provide computing and storage resources that companies can use to run their software, instead of operating their own data center infrastructure. DigitalOcean has built a business, keeping its products easy to use. Most of its revenue comes from the use of drops, which are virtual slices of physical servers.
“We offer each customer, regardless of size, a personalized support experience, so we believe that simplification and simplicity and providing help to our customers when they need it is the way to win the hearts and minds of our developers and entrepreneurs,” CEO Yancey Spruill told CNBC’s “Squawk Alley” that the market is large, with more than $ 100 billion in annual cloud spending for small and medium-sized businesses.
DigitalOcean has raised $ 775 million in the stock market. The company operates 14 of its own data centers in the US and abroad through leasing, and the company intends to expand its footprint, as well as its competitors. But unlike its big rivals, DigitalOcean doesn’t have billions of dollars that customers have agreed to pay for services they haven’t used yet. The company had deferred revenues of less than $ 5 million at the end of 2020.
In 2020, DigitalOcean posted a net loss of $ 43.6 million on a total revenue of $ 318.4 million. The loss increased by 7% compared to 2019, and revenues increased by approximately 25%. In a presentation to potential investors, Chief Financial Officer Bill Sorenson said the company wants to increase the amount of money it gets from each client, while reducing research and development and administrative costs as a percentage of revenue.
At its IPO of $ 47, DigitalOcean was valued at a selling price multiple of 16 based on 2020 revenue, compared to 12 for Microsoft.
– CNBC’s Ari Levy contributed to this report.
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