The Cloud Computing Slowdown Hits DigitalOcean
Businesses big and small are looking for ways to rein in costs as a tough economy fuels uncertainty. An easy target for these cost cuts is cloud computing. The mega-cloud platforms like Amazon Web Services (AWS) and Microsoft Azure have already suffered a sharp slowdown as customers optimize spending. AWS grew by 12% year over year in the second quarter, while Azure posted 26% growth.
DigitalOcean (NYSE: DOCN) focuses on serving developers and small businesses. While this makes its customer base fickler than the enterprise-heavy cloud giants, its customers likely have less fat to cut from their cloud computing bill. An enterprise customer spending millions each year with cloud resources spread across dozens of teams is more likely to have let cloud spending get away from it than a small business shelling out 90 bucks a month.
Even so, DigitalOcean is now starting to feel some pain. The company's revenue grew by 27% year over year in the second quarter, but the real story was its guidance. DigitalOcean sees growth slowing way down in the third quarter, and it cut its full-year guidance to reflect weaker demand for cloud computing services.
Source Fool.com
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