DigitalOcean Buys Cloudways, Enhances Offerings for SMBs

DigitalOcean Holdings has acquired Cloudways, a managed cloud hosting and software-as-a-service (SaaS) provider for SMBs. For small to medium-sized businesses, this deal will simplify workflows and make it easier to build and scale their digital businesses.

DigitalOcean — the cloud for developers, startups and SMBs — and Cloudways have been close partners since 2014. Cloudways currently relies on DigitalOcean infrastructure to power approximately 50% of its customers. Cloudways offers simple onboarding and day-to-day management for certain SMBs. These SMBs look to outsource their on-ramp to the internet, helping them offload the complexities of cloud infrastructure. As a result, they can spend more time running and scaling their businesses. The acquisition expands DigitalOcean’s serviceable market within global SMBs. It increases options for digital agencies, eCommerce sites, bloggers, freelance developers and builders hosting on WordPress, PHP and Magento. WordPress is the most popular content management system (CMS), powering 43% of all websites on the internet.

Growing Customer Base

Cloudways serves an international and growing customer base. Together, DigitalOcean and Cloudways will serve over 124,000 customers paying over $50 per month. This represents approximately 84% of the pro forma company’s total revenue.

DigitalOcean’s Yancey Spruill

Yancey Spruill is CEO at DigitalOcean.

“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,” Spruill said. “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.”

Cloudways has built a rapidly growing business generating free cash flow in addition to impressive customer metrics, the companies said.

Spruill added: “Importantly, we are excited to add Cloudways to the DigitalOcean family as they not only share our vision for the SMB market opportunity but are also a Rule of 50 business that shares our commitment to delivering compelling returns for our investors.”

Increasing Headcount

Cloudways’ Aaqib Gadit

Aaqib Gadit is co-founder and CEO at Cloudways.

“We have worked closely with the DigitalOcean team since 2014 and are now incredibly excited to officially be a part of the company,” Gadit said. “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.”

In addition to expanding DigitalOcean’s technology and tooling, the acquisition also increases DigitalOcean’s global employee base by 30%. This adds expertise in key growth areas that will continue to drive productivity and performance across the platform, the companies said.