DigitalOcean acquires Cloudways for $350 million

DigitalOcean acquires Cloudways for $350 million
DigitalOcean acquires Cloudways for $350 million

DigitalOcean, a New York-based cloud hosting provider, has acquired Karachi-based Cloudways, a managed cloud hosting service, for $350 million in an all-cash transaction payable in 30 months.

Why is this a BFD: Cloudways is part of the Gaditek group, a venture studio and a tech company in Pakistan with products in diverse categories such as privacy (PureVPN), lifestyle (Savyour, Mandi Express), crypto (zignaly), and media (webAffinity).

Also, DigitalOcean is a public company listed on the New York Stock Exchange with a market capitalization of $4.4 billion as of August 24, 2022.

Make it make sense: Cloudways and DigitalOcean have been close partners since 2014. 

50% of Cloudways customers use DigitalOcean cloud infrastructure – the rest use Google Cloud, AWS, etc.

Over 124,000 customers worldwide will be served by DigitalOcean and Cloudways when they join forces in September when the deal closes.

Currently, Cloudways hosts over 570,000 websites for more than 72,000 customers worldwide.

By combining their resources and technology, they can target a market that spends $70 billion on managing the cloud infrastructure.

But why, Cloudways: Unless you know what you are doing, DigitalOcean is complicated to use.

Sensing an opportunity, Cloudways built an easy-to-use onboarding solution, so anyone could get cloud scale without managing it. 

It became the go-to managed cloud host for small businesses, digital agencies, e-commerce sites, and bloggers who needed cloud infrastructure without hassle.

Okay, show me the numbers: Cloudways expects to generate more than $52 million in revenue in fiscal 2022, an increase of more than 50% over three years.

At a headcount of less than 300, it’s a cash cow with $175k revenue per employee. 

Also, since the announcement, DigitalOcean’s market capitalization has increased by $160 million. Translation: investors like it.

You should know: Cloudways was founded in 2012 by Aaqib Gadit and Pere Hospital.

It was completely bootstrapped and never received any outside funding. 

Zoom out: After the deal closes, Cloudways will become a subsidiary of DigitalOcean under the leadership of its co-founder and CEO, Aaqib Gadit.

Acquisitions help validate the market and talent. 

Since Cloudways is technically based in Malta, non-Pakistani media coverage does not mention Pakistan.

Regardless, this is a clear win. And a BFD.

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