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Cloud Services, SaaS M&A: DigitalOcean Acquires Cloudways for 6.7X Annual Revenue

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DigitalOcean Holdings has acquired managed cloud hosting and software-as-a-service (SaaS) company Cloudways. DigitalOcean will gradually pay $350 million over 30 months for Cloudways, which values the M&A deal at roughly 6.7 times the seller’s expected 2022 annual revenue of $52 million.

This is technology M&A deal number 749 that ChannelE2E has covered so far in 2022. See more than 1,000 technology M&A deals involving MSPs, MSSPs & IT service providers listed here.

DigitalOcean, founded in 2012, is based in New York, New York. The company has 999 employees listed on LinkedIn. DigitalOcean’s areas of expertise include cloud computing, cloud servers, virtual hosting, cloud hosting, cloud infrastructure, simple hosting and virtual servers.

Cloudways, founded in 2011, is based in St. Julians, Malta. The company has 264 employees listed on LinkedIn. Cloudways’ areas of expertise include website migration and setup, PCI compliant hosting, enterprise cloud management, fully managed backups, cloud consultancy, regional hosting solutions, and managed CMS (Magento, WordPress, Drupal) hosting.

DigitalOcean M&A: Increased Offerings and Headcount

DigitalOcean CEO Yancey Spruill and CFO Bill Sorensen – both of whom joined the company in July 2019 – have extensive M&A experience.

The acquisition of Cloudways expands DigitalOcean’s serviceable market within global SMBs and increases options for digital agencies, e-commerce sites, bloggers, freelance developers and builders hosting on WordPress, PHP and Magento, according to the company.

DigitalOcean and Cloudways have been close partners since 2014 — Cloudways currently relies on DigitalOcean infrastructure to power approximately 50 percent of its customers.

The acquisition of Cloudways also increases DigitalOcean’s global employee base by 30%, the company said. Notably, DigitalOcean laid off between 30 and 50 employees in January 2020.

DigitalOcean Acquires Cloudways: Executive Insight

Yancey Spruill, CEO, DigitalOcean
Yancey Spruill, CEO, DigitalOcean

Yancey Spruill, CEO, DigitalOcean, commented:

“SMBs represent more than 50% of global gross domestic product (GDP) and spend $70 billion on cloud infrastructure today. With this acquisition, we are making it easier to launch, build and scale a business on DigitalOcean. Cloudways and DigitalOcean share values around simplicity, community, openness and support that are vital attributes to how we differentiate in the marketplace. Together, we will be focused on providing a simple, easy, intuitive and trusted platform to better serve SMBs so they can build their businesses and pursue their dreams of entrepreneurship."

Aaqib Gadit, co-founder and CEO, Cloudways, added:

“We have worked closely with the DigitalOcean team since 2014 and are now incredibly excited to officially be a part of the company. SMBs love simplicity, performance, predictability, affordability, and great support. Together with DigitalOcean, we can turbocharge our mission of helping SMBs grow through our cloud offerings.”