DigitalOcean Holdings Inc (DOCN)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|
| Gross profit margin | 59.69% | 57.37% | 63.23% | 60.19% |
| Operating profit margin | 11.66% | 1.72% | -4.46% | -2.61% |
| Pretax margin | 12.52% | 3.86% | -4.01% | -4.25% |
| Net profit margin | 10.82% | 2.80% | -4.82% | -4.55% |
DigitalOcean Holdings Inc has shown an improvement in its gross profit margin over the years, increasing from 60.19% in 2021 to 63.23% in 2022, although it slightly declined to 57.37% in 2023 before recovering to 59.69% in 2024. This indicates the company's ability to efficiently manage its production costs and generate profit from its core operations.
In terms of operating profit margin, the company has struggled with negative margins in 2021 and 2022, with -2.61% and -4.46% respectively. However, there was a significant improvement in 2023 with a margin of 1.72%, which further increased to 11.66% in 2024. This suggests that DigitalOcean has been able to control its operating expenses more effectively and increase its operational efficiency in recent years.
The pretax margin also reflects a similar trend, with negative margins in 2021 and 2022, but a turnaround in 2023 and 2024. The pretax margin improved from -4.25% in 2021 and -4.01% in 2022 to 3.86% in 2023 and further to 12.52% in 2024. This indicates the company's ability to manage its taxation and interest expenses better and generate higher profits before taxes.
Lastly, the net profit margin, which is a key indicator of overall profitability, also demonstrates a positive trend for DigitalOcean. The company saw negative net profit margins in 2021 and 2022, but managed to turn around to positive margins in 2023 and 2024. The net profit margin improved from -4.55% in 2021 and -4.82% in 2022 to 2.80% in 2023 and significantly increased to 10.82% in 2024. This indicates that DigitalOcean has been successful in increasing its bottom line profitability by controlling costs and improving operational efficiency in recent years.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.55% | 0.81% | -1.42% | -0.53% |
| Return on assets (ROA) | 5.16% | 1.33% | -1.53% | -0.93% |
| Return on total capital | 7.10% | 3.07% | -0.97% | -0.71% |
| Return on equity (ROE) | — | — | -58.45% | -3.37% |
DigitalOcean Holdings Inc has shown varying trends in profitability ratios over the past four years.
1. Operating return on assets (Operating ROA) has improved from -0.53% in December 2021 to 5.55% in December 2024. This indicates that the company's operating profitability in relation to its total assets has increased significantly over this period.
2. Return on assets (ROA) has also shown improvement, increasing from -0.93% in December 2021 to 5.16% in December 2024. This suggests that DigitalOcean has become more efficient in generating profits from its total assets.
3. Return on total capital has demonstrated a positive trend, rising from -0.71% in December 2021 to 7.10% in December 2024. This indicates that the company is generating higher returns on its total capital, which includes both debt and equity financing.
4. Return on equity (ROE) has shown significant fluctuations, with a drastic decline from -3.37% in December 2021 to -58.45% in December 2022. Unfortunately, data for 2023 and 2024 are not available. The negative ROE values suggest that the company's net income has not been sufficient to generate returns for its shareholders' equity.
Overall, while the company has shown improvements in its operating profitability and returns on assets and total capital, the fluctuating trend in ROE indicates potential challenges in generating returns for its shareholders. Additional analysis would be required to understand the reasons behind these fluctuations and their implications for DigitalOcean's long-term financial performance.