DigitalOcean Holdings, Inc. (NYSE:DOCN) Q1 2024 Earnings Call Transcript

James Fish: Very helpful and thorough answer. Matt, if I could sneak in one with you. You guys are reiterating your free cash flow margins at this point, which probably means that 15% to 17% CapEx range is still what you’re thinking. But GPU purchasing seems to be relatively strong. I’m going to guess that’s why CapEx was a little bit elevated versus what we were all thinking this quarter. Is it still on pace for that $50 million at this time, or should we interpret your language around potential free cash flow margins coming down in the coming quarters, as this is running ahead of plan, and really, are you thinking about using other GPU providers this year?

Matt Steinfort: So, I wouldn’t say we’re running ahead of plan on — what we had said is that we’re still deploying the capital that we had committed last year. So we have very good visibility into our capital spend on our current plan. What we had said is, we’re very encouraged by the progress that we’re seeing with the AI business and we’re learning a lot. Paddy’s only been here a couple of months. We’re evaluating the requirements of our customers and we’re learning about what customers we’re able to attract and what the requirements are and what the right configuration is from a technology standpoint. As we see continued positive signs and as we see the continued growth, we’ll make the right decisions on whether we want to spend any incremental capital beyond what was in the plan.

But we’re still on our plan. We’re not behind or ahead in any way relative to the capital intensity of our business. We’re just signaling that we’re encouraged and as we see more signs of encouragement, we’ll come back and provide updates as to whether we’re going to increase our spend any more than what we had said we would.

Operator: That concludes our Q&A session. I will now turn the conference back over to Paddy Srinivasan for the closing remarks.

Paddy Srinivasan: Thank you very much. As you just heard, we are accelerating our pace of innovation and delivering new capabilities in a very rapid cadence, which will help our customers grow on our platform. As I alluded to, there’s still a lot of work to do to take full advantage of our opportunity, but I’m very excited that we are moving in the right direction and continue to make steady, rapid, and respectable progress quarter-over-quarter. So with that, I would like to thank everyone for their time and talk to you all soon.

Operator: Thank you. That concludes today’s conference call. Thank you all for joining. You may now disconnect.