DigitalOcean Holdings Inc (DOCN)

Return on total capital

		Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	77,942	17,154	-5,332	-34,307	-46,233	-14,730	-18,219	-30,502	-27,096	-14,457
Long-term debt	US$ in thousands	1,479,690	1,477,800	1,475,910	1,474,030	1,472,150	1,470,270	1,468,390	1,466,520	1,464,520	1,462,680	0	0	0
Total stockholders’ equity	US$ in thousands	-286,072	-313,698	-358,773	-267,579	-202,608	47,569	27,010	47,260	427,386	578,197	906,433	858,084	845,110
Return on total capital		6.53%	1.47%	-0.48%	-2.84%	-3.64%	-0.97%	-1.22%	-2.01%	-1.43%	-0.71%

March 31, 2024 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $77,942K ÷ ($1,479,690K + $-286,072K)
= 6.53%

DigitalOcean Holdings Inc's return on total capital has shown fluctuations over the past several quarters. The company's return on total capital was 6.53% as of March 31, 2024, which represents an improvement compared to the prior period. However, it is important to note that the return on total capital was negative in the three preceding quarters, indicating challenges in generating sufficient returns relative to the total capital employed.

The negative returns in the previous quarters suggest that the company may be facing operational or financial inefficiencies that are impacting its profitability. Management should focus on optimizing the allocation of capital and improving operational performance to enhance the return on total capital going forward.

Overall, the trend in DigitalOcean Holdings Inc's return on total capital highlights the importance of closely monitoring and addressing factors impacting profitability and capital efficiency to drive sustainable long-term financial performance.