DigitalOcean was in pursuit of gaining more small and medium-sized business customers, which led them to buy Cloudways, Pakistan’s mega cloud host and SAAS provider. This purchase is still underway, and the transaction is expected to close in September due to the massive sum.
Although the initial payment is unknown, a large chunk of the $350 million will be paid over a period of 30 months after the completion of the acquisition, according to a statement put out by DigitalOcean.
Both of these firms have been working together since 2014, and they have formed a good coalition, and it is reported that almost half of Cloudway’s clients use DigitalOcean. Therefore, their users significantly overlap. The Chief Executive of Cloudways, Aaqib Gadit, stated that they have always felt like they were a part of the DigitalOcean team. Therefore, they were excited to become an official part of the company.
DigitalOcean has been on an upward rise. Earlier in August, they reported having a 29% growth in sales to $133.9 million. Their net loss has come down to 6 cents a share for the quarter that ended on June 30. The deal with Cloudways is expected to further add to DigitalOcean’s revenue growth. It may contribute around $13 million to $15 million in the current fiscal year.
According to the company, Cloudway’s revenue will most likely exceed $52 million in the current fiscal year, and over the course of three years, it will see a compound annual growth rate in excess of 50%. Therefore, to DigitalOcean. The company will be generating free cash flow.
In their statements regarding the acquisition, both of the founders seemed keen and had an opportunistic attitude. Together, they claimed to turbocharge the mission of helping SMBs grow. The Cloudways CEO claims that their cloud offerings are precisely what the SMBs love, including predictability, performance, affordability, and great support.