Unlike most hosting companies, DigitalOcean (NYSE: DOCN) is a publicly-traded company and hence must file quarterly audited financial reports. While there are other big hosting companies that must file (e.g., Amazon, Microsoft, Google), their hosting is mixed in with their other products. DO is a “pure play” and it’s interesting to look at their financials.

As of this quarter, they are not profitable. DO recorded revenue of $103.8m and a loss of $2.2m. Even if we look only at operations (not including interest, taxes, etc.) DO is losing money on its day-to-day operations.

DO has about $37m in accounts receivable, and I imagine much of that is very short-term (things like waiting to be paid by VISA, etc.) Interestingly, they have a “doubtful accounts” reserve of $3m, which seems surprisingly high for a company that is primarily in the month-to-month business. But I suppose they get burned like all hosting companies sometimes, and they perhaps extend credit to larger customers.

DO has 243m worth of property and equipment, presumably all of its datacenters.

They break out their expenses as follows. Here’s what happens to each dollar you spend at DO:

• About 40 cents goes to cost of operations, such as paying people, electricity, etc.
• 27 cents pays for R&D, which in DO’s case is chiefly software development.
• 12 cents pays for sales, which is probably a mix of advertising, promotions, salespeople to call on larger accounts, etc.
• 24 cents goes to “general and administrative” which is everything from the CEO’s salary to payroll costs to janitors to accountants

And yes, that adds up to more than a dollar, because they’re losing money.

raindog308

Raindog308 is a longtime LowEndTalk community administrator, technical writer, and self-described techno polymath. With deep roots in the *nix world, he has a passion for systems both modern and vintage, ranging from Unix, Perl, Python, and Golang to shell scripting and mainframe-era operating systems like MVS. He’s equally comfortable with relational database systems, having spent years working with Oracle, PostgreSQL, and MySQL.

As an avid user of LowEndBox providers, Raindog runs an empire of LEBs, from tiny boxes for VPNs, to mid-sized instances for application hosting, and heavyweight servers for data storage and complex databases. He brings both technical rigor and real-world experience to every piece he writes.

Beyond the command line, Raindog is a lover of German Shepherds, high-quality knives, target shooting, theology, tabletop RPGs, and hiking in deep, quiet forests.

His goal with every article is to help users, from beginners to seasoned sysadmins, get more value, performance, and enjoyment out of their infrastructure.

You can find him daily in the forums at LowEndTalk under the handle @raindog308.