Austin Lieberman's avatar
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$DOCN Q3 2021 Earnings call notes

Revenue: 111.43M beat $108.51 consensus
Adj EPS $0.12 beat $0.07 cons

Raises FY21 revenue guidance to $427m from $421 m

Reaffirmed FY21 EBITDA margin: 30% - 31%

Capex as a % of FY21 revenue: 25%-26%

Customers grew to 598K, up 7% from 559K YoY

Average Revenue Per User (ARPU) grew to $61.97, up 28% from $48.58 YoY

Net Dollar Retention 116%, a 12% improvement YoY

Notes from the rest of the call in the comments ⬇️
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Austin Lieberman's avatar
@austinNovember 4
Author
Question: You mentioned 8,400 customer churned off platform due to security measures, what was the nature of that and how might it happen again in the future?

Answer: We changed some requirements which led to removing 8,400 first month customers (basically no revenue impact). We feel good that we are taking a proactive stance on this. Earning trust requires us to manage our customer base properly

Question: Even if we normalize for that change, it seems like customer adds is trending lower

Answer: Not focused on immediate customer growth, but larger NDR and ARPU... then longer term, customer growth is important because customers that grow can impact NDR and ARPU later on. Seeing normalized trend in first month of this quarter
Austin Lieberman's avatar
@austinNovember 4
Author
CEO prepared remarks are very up beat. Referencing new product growth + sustained 30%+ revenue growth

CFO: Largest customers churn much less than smaller customers. As new products roll out, it's an opportunity to grow ARPU and NDR with lower churn.
Austin Lieberman's avatar
@austinNovember 4
Author
CFO: During the quarter, we removed a number of low value customers as part of our security procedures which lowered overall customer count/growth.

My note: I'm curious how meaningful this # was and how many more customers they might remove in the future/how to avoid security risk customers joining to begin with?
Austin Lieberman's avatar
@austinNovember 4
Author
Question: SMB Competitors.. are they catching up to you?

Answer: Targeting $50B SMB market that's growing ~15% annually. We are growing far faster than that and our pace of innovation keeps us well positioned to continue accelerating into 2022 "feel like we are pulling away"
Austin Lieberman's avatar
@austinNovember 4
Author
Question: Any supply chain constraints to building infrastructure out?

Answer: We have not experienced and significant delays and have planned things out very far in advanced (6-8 quarter horizon). We are in a very good position

Question: What about new Chief Product Officer stood out in your hiring and what might his hire change about strategy moving forward?

Answer: He built a product, sold to Azure, then stayed there and had great success leading teams there. Very familiar with the road developers take.
Austin Lieberman's avatar
@austinNovember 4
Author
Question: How does $DOCN support customers as they grow larger? Do you ever see customers move workloads to larger vendors as they grow?

Answer: We get 1,000s of customers a month. Very low customer acquisition cost because of how much traffic comes to our website and are growing our offerings to serve them as they grow. Mgmnt is confident retention of large customers is not a problem
Austin Lieberman's avatar
@austinNovember 4
Author
Missed the question, but CEO just said he thinks revenue growth can go higher than 37% YoY which is encouraging, given the growth of other cloud providers at larger scale (AWS, GCP, Azure)

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