Cloud services company DigitalOcean has agreed to pay $350 million in cash for the website hosting company Cloudways.
In an effort to attract more small- and medium-sized business clients, DigitalOcean will purchase Malta-based Cloudways. A “significant portion” of the $350 million will be paid over a 30-month period following the completion of the acquisition, according to a statement released by DigitalOcean on Tuesday. The deal is anticipated to finalize in September.
Since 2014, the two businesses have collaborated, and nearly half of Cloudways’ clients are already using DigitalOcean. In the release, Cloudways Chief Executive Officer Aaqib Gadit said, “We have always felt like a part of the DigitalOcean team, so we are incredibly excited to officially become a part of the company.”
DigitalOcean reported a net loss of 6 cents per share and a 29% increase in sales to $133.9 million earlier this month. The transaction won’t change the yearly margin forecast given in August, according to the business, and is anticipated to contribute $13 million to $15 million in additional revenue growth for DigitalOcean in the current fiscal year. In fiscal 2022, Cloudways revenue is anticipated to surpass $52 million with a three-year compound annual growth rate of more than 50%. According to DigitalOcean, the company generates free cash flow.
The stock of DigitalOcean, which went public in March 2021, has fallen 68% from its peak in November to $41.96 as of Monday’s close, which is below the IPO price.