Photo Credit: Gerd Altmann from Pixabay.

According to a recent report, the global serverless architecture market is projected to grow at 23% CAGR to reach $21.1 billion by 2025. Digital Ocean (NYSE: DOCN) has been expanding its presence in the market by acquiring smaller players in the market.

DigitalOcean’s Financials

For the second quarter of the year, revenues grew 29% to $133.9 million but missed the market’s estimates by 0.29%. Annual Run-Rate Revenue (ARR) grew 28% to $544.1 million. Net income was $0.20 per share compared with the market’s estimate of $0.10 per share.

Among other key metrics, Net Dollar Retention Rate (NDR) was 112%. Average Revenue Per Customer (ARPU) grew 24% to $71.76. Customers spending more than $50 per month grew 16% to 105,000 with revenues growing 34% over the year. These customers had an NDR of 113% and represented 85% of revenue in the quarter.

For the third quarter, DigitalOcean forecast revenues of $145.5-$147 million and an EPS of $0.22-$0.23. The market forecast revenues of $147.5 million and an EPS of $0.24. For the fiscal year, the company forecast revenues of $564-$568 million and an EPS of $0.74-$0.75. Analysts estimate revenues of $568.39 million and an EPS of $0.69 for the fiscal year.

DigitalOcean’s Acquisitions

DigitalOcean recently announced the acquisition of Cloudways, a leading managed cloud hosting and software-as-a-service provider for SMBs. The acquisition will simplify workflows for small to medium-sized businesses that are looking for easier ways to build and scale their digital businesses. Cloudways provides SMBs with access to outsourced services that make it easier to onboard and manage the cloud infrastructure.

The acquisition of Cloudways will expand DigitalOcean’s serviceable market within global SMBs and increases options for digital agencies. Cloudways provides an open and flexible platform while delivering high customer experience. DigitalOcean and Cloudways have been partners since 2014. Cloudways already relies on DigitalOcean infrastructure to power nearly half 50% of its customer base. Together, DigitalOcean and Cloudways will now serve over 124,000 customers paying over $50 per month. Terms of the acquisition were not disclosed.

Earlier in the quarter, DigitalOcean also announced the acquisition of the JournalDev website, a portal with more than 3,000 content pieces that complement DigitalOcean’s tutorial library. JournalDev provides resources across Java, Python and other web development frameworks. Its content is helpful to developers for their work as well as for them to prepare for job interviews.

Earlier in the year, it had also announced a similar acquisition of the CSS-Tricks website, a learning site with 6,500 articles, videos, guides and other content focused on frontend development. DigitalOcean has been working on providing high-quality content for developers and entrepreneurs. It already has more than 6,000 developer tutorials and 30,000 community-generated questions & answers that help the developers with access to individuals learning, growing, and building. The acquisitions will help it accelerate its library buildup. Terms of the acquisitions were not disclosed.

DigitalOcean’s stock is currently trading at $36.13 with a market capitalization of $3.5 billion. It was trading at a 52-week high of $133.40 in November last year and a 52-week low of $30.05 in June.

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