Photo Credit: Gerd Altmann from Pixabay

According to a recent report by Verified Market Research, the global serverless architecture market is estimated to grow at 22% CAGR to reach $38.6 billion by 2028. Digital Ocean (NYSE: DOCN) sees that as an opportunity as it expands its presence in the market.

Digital Ocean’s Financials

For the fourth quarter of the year, its revenues grew 37% to $119.7 million. Annual Run-Rate Revenue (ARR) grew 37% to $490 million. Adjusted EBITDA was $37.8 million, compared to adjusted EBITDA of $27.1 million a year ago.

Among other key metrics, total customers grew to 609,000. Net Dollar Retention (NDR) rate grew to 116%, up from 105% a year ago, and Average Revenue Per Customer (ARPU) grew 29% to $65.87 during the quarter.

For the full fiscal year 2021, Digital Ocean’s revenue grew 35% to $428.6 million. Gross profit of $258 million. Adjusted EBITDA was $136.3 million.

For the first quarter, DigitalOcean forecast revenues of $126-$126.5 million. For the fiscal year, it forecast revenues of $564-$568 million. The market forecast revenues of $126.3 million for the quarter, and $566.11 million for the fiscal year.

DigitalOcean’s Nimbella Acquisition

Recently, DigitalOcean announced its acquisition of Santa Clara-based Nimbella, a serverless startup. Serverless capabilities take the burden of managing infrastructure away from developers and businesses. It allows customers to have more flexibility to configure tools based on their requirements, allowing them to move faster. Digital Ocean classifies Nimbella’s offerings as a function-as-a-service solution that will be integrated with DigitalOcean’s platform to create serverless applications built on Kubernetes and Apache OpenWhisk. When merged with DigitalOcean services such as managed databases, storage, and other services, it will make it easier for developers to create full applications that are completely stateless.

Last year, DigitalOcean offered its initial serverless tooling. The acquisition of Nimbella helps it enter that market with a stronger offering. Prior to the acquisition, Nimbella raised $4 million in a round of funding held in December 2018 and led by Engineering Capital, Elefund, and Converge. The terms of the acquisition or Nimbella’s prior financial details are not disclosed.

DigitalOcean’s stock is currently trading at $57.85 with a market capitalization of $6.4 billion. It was trading at a 52-week high of $133.40 in November last year and reached a low of $35.35 in May last year. DigitalOcean had gone public last year when it raised $775.5 million at a valuation of $5 billion. Prior to listing, it had raised $455.6 million in 13 rounds of funding, with the most recent round being held in May 2020. Its investors include Andreessen Horowitz, Access Industries, EquityZen, Kliwla Family Office AG, Viaduct Ventures, Mighty Capital, Opus Bank, Barclays Investment Bank, East West Bank, and HSBC Bank.