DigitalOcean Holdings Inc., a cloud services provider, has agreed to acquire website-hosting firm Cloudways for $350 million in an all-cash deal.
DigitalOcean will buy Malta-based Cloudways in a bid to pick up more small-and-medium sized business customers. The transaction is expected to close in September, and a “significant portion” of the $350 million will be paid over a 30-month period following the completion of the acquisition, DigitalOcean said in a statement.
The two firms have worked together since 2014, with about half of Cloudways’s clients already using DigitalOcean. “We have always felt like a part of the DigitalOcean team so we are incredibly excited to officially become a part of the company,” says Cloudways CEO Aaqib Gadit said in the statement.
Earlier this month, DigitalOcean reported 29 percent sales growth to $133.9 million and a net loss of 6 cents a share for the quarter ending June 30. The deal is expected to add to DigitalOcean’s revenue growth, contributing $13 million to $15 million in the current fiscal year, and won’t affect the annual margin outlook provided in August, the company said in the statement. Cloudways revenue is expected to exceed $52 million in fiscal 2022, with a three-year compound annual growth rate in excess of 50 percent. The company generates free cash flow, DigitalOcean said.