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DigitalOcean (DOCN) to Post Q1 Earnings: What's in Store?

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DigitalOcean (DOCN - Free Report) is scheduled to report first-quarter 2022 results on May 4.

For the first quarter, DigitalOcean projects revenues between $126.0 million and $126.5 million. The Zacks Consensus Estimate for quarterly revenues stands at $126.29 million, suggesting growth of 34.84% year over year.

The company projects earnings in the range of 10 cents to 12 cents.  The consensus mark for first-quarter earnings is pegged at 12 cents per share, unchanged over the past 30 days.

DOCN beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average surprise being 5.64%.

Factors to Note

DigitalOcean's first-quarter performance is likely to have benefited from effectively altered capex intensity. Aggressive approach toward managing the cost structure might have contributed to the company’s to-be-reported quarter bottom line.

The company’s first-quarter results are likely to reflect benefits from higher operating efficiencies.

The company’s first-quarter top line is likely to reflect benefits from sustained growth in customer acquisitions due to recent investments broadening product portfolio. The new products may have helped developers test ideas and early-stage companies to rapidly grow business. This, in turn, is likely to have attracted new customers.

DigitalOcean may have gained from attracting larger and rapidly growing businesses into their platform. The company is expected to have witnessed improvements in NDR and ARPU as a result of their customer mix evolution, where customers are spending more than $50 per month.

What Our Model Indicates

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

DigitalOcean has a Earnings ESP of -0.90% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

BWX Technologies (BWXT - Free Report) has an Earnings ESP of +2.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

BWX shares have returned 9.2% in the year-to-date period against the Zacks Computer and Technology sector’s decline of 23.2%.

Fabrinet (FN - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank of 2.

Fabrinet shares have fallen 16.2% in the year-to-date period.

Analog Devices (ADI - Free Report) has an Earnings ESP of +2.17% and a Zacks Rank #2.

ADI shares have slumped 13.6% in the year-to-date period.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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