DigitalOcean Holdings Inc., a cloud services provider, agreed to acquire website-hosting firm Cloudways for $350 million in an all-cash deal.
(Bloomberg) — DigitalOcean Holdings Inc., a cloud services provider, agreed to acquire website-hosting firm Cloudways for $350 million in an all-cash deal.
DigitalOcean will buy Malta-based Cloudways in a bid to pick up more small-and-medium sized business customers.
The transaction is expected to close in September, and a “significant portion” of the $350 million will be paid over a 30-month period following the completion of the acquisition, DigitalOcean said Tuesday in a statement.
The two firms have worked together since 2014, with about half of Cloudways’s clients already using DigitalOcean.
“We have always felt like a part of the DigitalOcean team so we are incredibly excited to officially become a part of the company,” said Cloudways Chief Executive Officer Aaqib Gadit said in the statement.
Earlier this month, DigitalOcean reported 29% sales growth to $133.9 million and a net loss of 6 cents a share for the quarter ending June 30.
The deal is expected to add to DigitalOcean’s revenue growth, contributing $13 million to $15 million in the current fiscal year, and won’t affect the annual margin outlook provided in August, the company said in the statement.
Cloudways revenue is expected to exceed $52 million in fiscal 2022, with a three-year compound annual growth rate in excess of 50%. The company generates free cash flow, DigitalOcean said.
DigitalOcean had its initial public offering in March 2021, and the stock has dropped 68% from a November peak to $41.96 by Monday’s close — below IPO levels.
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