Back to top

Image: Bigstock

DigitalOcean (DOCN) to Post Q2 Earnings: What's in Store?

Read MoreHide Full Article

DigitalOcean (DOCN - Free Report) is scheduled to report second-quarter 2022 results on Aug 8.

For the second quarter, DigitalOcean anticipates revenues between $133 million and $135 million. The Zacks Consensus Estimate for quarterly revenues stands at $134.41 million, suggesting growth of 29.48% year over year.

The company projects earnings in the range of 9 cents to 10 cents.  The consensus mark for second-quarter earnings remained unchanged over the past 30 days at 10 cents per share, suggesting growth of 42.86% year over year.

DOCN beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 20.22%.

Factors to Note

DigitalOcean’s second-quarter results are likely to reflect the negative impacts of the ongoing Russia-Ukraine war. The company expects a potential loss of approximately $3 million of revenues from Russian and Ukrainian customers.

However, DigitalOcean’s aggressive approach toward managing the cost structure might have contributed to the to-be-reported quarter’s performance.

The company’s second-quarter top line is likely to reflect benefits from sustained growth in customer acquisitions, courtesy of recent investments to expand its product portfolio. One of the key products launched is the serverless offering. This is likely to have helped with customer acquisition and propelled ARPU growth.

The company may have gained from the recent acquisition of CSS-Tricks, a learning platform with 6,500 articles, videos, guides and other content focused on front-end development. This complements DigitalOcean’s existing library of content and is expected to have attracted both front-end and full-stack developers to the company’s platform. DigitalOcean is expected to have benefited from an increase in the number of visitors to its website in the to-be-reported quarter.

DigitalOcean’s strategy to boost its inbound and outbound sales capabilities is likely to have benefited the company’s self-service revenue growth. The new sales strategy contributed 3% to first-quarter revenues. The trend is likely to have sustained in the second quarter as well.

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 an Earnings ESP of -1.24% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

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

Blink Charging (BLNK - Free Report) has a Zacks Rank #2 and an Earnings ESP of +4.23%. You can see the complete list of today’s Zacks #1 Rank stocks here.

BLNK’s shares have fallen 16.8% in the year-to-date period compared with the Zacks Electronics - Miscellaneous Services industry’s decline of 15.5%.

Intuit (INTU - Free Report) has an Earnings ESP of +1.92% and a Zacks Rank #2.

Intuit’s shares have fallen 27.6% in the year-to-date period compared with the Zacks Computer - Software industry’s decline of 18.4%.

Keysight Technologies (KEYS - Free Report) has an Earnings ESP of +1.23% and a Zacks Rank #2.

KEY’s shares have fallen19.9% in the year-to-date period compared with the Zacks Electronics - Measuring Instruments industry’s decline of 21.8%.

Published in