DigitalOcean Holdings Inc (DOCN)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 96,028 | 79,336 | 94,177 | 77,942 | 17,154 | -5,332 | -34,307 | -46,233 | -14,730 | -18,219 | -30,502 | -27,096 | -14,457 |
| Interest expense (ttm) | US$ in thousands | 9,113 | 9,198 | 9,269 | 9,060 | 8,945 | 8,749 | 8,543 | 8,526 | 8,396 | 7,350 | 5,409 | 3,547 | 3,744 |
| Interest coverage | 10.54 | 8.63 | 10.16 | 8.60 | 1.92 | -0.61 | -4.02 | -5.42 | -1.75 | -2.48 | -5.64 | -7.64 | -3.86 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $96,028K ÷ $9,113K
= 10.54
DigitalOcean Holdings Inc's interest coverage ratio has shown significant fluctuations over the past few quarters. The company experienced negative interest coverage ratios from December 31, 2021, to September 30, 2023, indicating that its earnings were insufficient to cover its interest expenses during those periods. This raised concerns about the company's ability to meet its interest obligations using its operating income.
However, there was a notable improvement in the interest coverage ratio from December 31, 2023, onwards. The ratio turned positive, reaching 1.92 on December 31, 2023, and increasing further to 10.54 on December 31, 2024. This positive trend suggests that DigitalOcean's operating income has become more capable of servicing its interest payments, indicating improved financial health and reduced risk of default due to interest payment obligations.
Overall, the fluctuating interest coverage ratios highlight the importance of closely monitoring a company's ability to meet its interest obligations and the impact of changes in operating performance on its financial stability.
Peer comparison
Dec 31, 2024