Kingsley Crane: Thank you, that’s exciting to hear. Thanks for the time.
Operator: Your next question comes from the line of Josh Baer with Morgan Stanley. Your line is open.
Josh Baer: Great, thanks for the question. I did want to ask about the sequential downtick in the learner customer cohort segments just for any context there. And then as a follow-up, somewhat related, just wondering more broadly if sort of having — doing any strategy shifts away from maybe going after some of those smaller customers, thinking about moving more upmarket from a more to — land more strategic customers that can expand and use more products on the platform.
Matt Steinfort: Thanks, Josh. No I think the strategy remains the same which is we have a phenomenal platform for developers and entrepreneurs and small growing technical — technology companies to come and experiment and grow their business. I think the shift that you saw in the last quarter was a result of a couple things. One, we are focused very much on the builders and scalers on our platform, which are still, that’s not upmarket relative to the industry, it’s just the larger of our customers. Because we think there’s a lot of expansion opportunity there. And a lot of that feedback that Paddy was talking about when talking to customers is consistent with things that we’ve said in the past is that we think we can get a bigger share of wallet of those customers, our existing customers, by eliminating some product blockers and adding capabilities that they find valuable.
The decline in the learners, it’s again that we had 476,000 learners, the decline of 70 or 8,700 was like a point and a half of that. It’s not a material decline. And it was likely more driven by the fact that we’ve tightened our screening of those small customers that, and if you think about the bad actors that show up on platforms, hosting platforms, you’re constantly fighting battles to try to keep them off your platform. They don’t typically pay or they pay, but they’re doing things that aren’t helpful in the Internet community. So we’ve ramped that up a bit and that contributed to a kind of a lessening of the number that we added in the quarter and so the net of the learners was down a bit. But I don’t think that’s a long-term trend. I think that’s just a result of a heavy focus on builders and scalers during the quarter and some tightening around our security practice.
Josh Baer: Thank you, much appreciated.
Operator: Your next question comes from the line of Tim Horan with Oppenheimer. Your line is open.
Tim Horan: Thanks, guys. Can we focus on the GPU CapEx spend a little bit? It sounds like you’re still capacity constrained. Maybe you can go into that a little bit. And can you give us a little color of maybe the payback that you think you’ll get for this? And I know you touched on quite a bit the cross-selling capability. It would seem like more spend on CapEx here will help out the overall revenue growth with any color in what you’re thinking with GPU CapEx spend. Thanks.
Matt Steinfort: Yeah, so as we said, we were definitely capacity constrained in the first quarter and we continue to deploy the capital that we had committed at the end of last year that’s consistent with our plan and we’ll be turning that up over the course of this year to give us the ability to increase the revenue growth and that’s all part of the plan and we’re watching to see how that goes and as we learn more as Paddy described about the specific requirements of our target customers, which are different from the requirements of some of the larger customers that are buying from the hyperscalers or the large GPU farms. We’ll make good decisions about whether we should be adding incremental capital beyond what we had committed.
The return profile on the business, you’ve got to think about it in two different categories. The platform-as-a-service offering, which is what we had acquired from Paperspace is more consistent with kind of the traditional cloud offerings we have where there’s software wrappers and capabilities around the hardware. The payback on that is very similar, a little bit lower gross margins than the core business, the core DigitalOcean business, but not that dissimilar. In the GPU-as-a-service or the hardware business, I’m sure you have the same statistics that everyone else on the call has around what an H100 costs and when you load on the networking and everything else and then when you look at the kind of going rate for GPU or H100 by the hour, you get into a — you get maybe $0.50 of ARR for the dollar of CapEx that you put in place.
You see paybacks in the less than three years. And I’d say that that’s lower, clearly, the lower margin than our core service. But you’re in an interesting part of the market where the cost curve hasn’t bent yet. You’ve got one supplier who’s controlling the majority of the inventory. You’ve got high demand for that inventory. And the market prices are fairly, I’d say, consistent in what you hear across all the different providers that are out there. And so, I think that what will happen over time, we’ll see what happens to pricing over time, whether people still get the dollars per hour they’re getting today for an H100, but certainly the cost structure will improve dramatically over the coming years as you have other suppliers come into the market and people just get better at deploying these capabilities at scale.
Tim Horan: Well, and I know your pricing can vary from $2 an hour to $6 an hour. Can you talk a little bit about how the average ARPU is looking for these products or people taking more the spot market pricing as opposed to mortgage or contracts?
Matt Steinfort: I’d say it breaks into the two categories that I described. And you have, where it’s hardware-as-a-service, it’s at one end of that range and where it’s more of the platform-as-a-service, it’s at the higher end of that range. And again, it’s still early. We’ve only had the GPU-as-a-service as an offering on the hardware side since mid-January. So we, like most of the people in the market, are figuring things out as we go.
Tim Horan: Thank you.
Operator: Your next question comes from the line of Mike Cikos with Needham. Your line is open.
Mike Cikos: Hey guys, thanks for taking the questions here. I did just want to circle up on the expansion of the overall portfolio of services that you guys have. I think DigitalOcean obviously very well known historically for its products with the Droplet, but wanted to see just given how this portfolio has expanded. Are you actually seeing a shift as far as where you’re landing with new customers? Are they landing on products outside Droplet or does Droplet remain that bread and butter when we think about how customers are coming to the DigitalOcean platform?
