4 ms·

Gross Profit isn't a helpful number as it doesn't account for any fixed costs like offices, wages, sales and marketing, etc. Operating profits is a better indic

Gross Profit isn't a helpful number as it doesn't account for any fixed costs like offices, wages, sales and marketing, etc. Operating profits is a better indicator (EBIT or EBITDA) and also much closer to the holy grail of Free Cash Flow that companies need to keep an eye on to make sure they make payroll and fulfill their interest payments obligation, among other things

time_to_smile 4y ago
Exactly. Parent's comment is only meaningful if you completely ignore paying workers which seems pretty relevant if you're going to be talking about layoffs. I've found a lot of tech workers (including myself) really need to learn how to read an earnings statement. Coursera has an excellent Intro to Financial account course [0] that I've found very helpful in understanding what's really happening at these places. 0. https://www.coursera.org/learn/wharton-accounting https://www.coursera.org/learn/wharton-accounting
- senko 4y ago
  Also, Aswath Damodaran has (among loads of other teaching material) a crash course into accounting just enough to get by when reading financial statements: https://www.youtube.com/watch?v=Jbp3-AU9v_g&list=PLUkh9m2BorqmKaLrNBjKtFDhpdFdi8f7C https://www.youtube.com/watch?v=Jbp3-AU9v_g&list=PLUkh9m2Bor...
- Moose_the_Goose 4y ago
  Yeah, I'm pretty thankful for my 4 year technical program for having us do a couple of business course. One which was accounting and the majority of the work was the teacher walking us through reading financial statements of public companies.
DwnVoteHoneyPot 4y ago
Last 12 months on Yahoo Finance is showing Digital Ocean's operating income at -$21M. Also, negative in 2019, 2020, 2021. It's either financially illiterate or completely disengenuous for commenters to cherry pick financials such as gross profit, which doesn't include salary expense, when we are talking about layoffs. Other commenters calling execs sociopaths when company is losing money, as if they can lose money forever.
- quags 4y ago
  Can anyone enlighten me on this because cloudflare seems to report similar high margins with no profits. What are these high margin numbers both DO and CF report? They both report high margins but then do not make any money. Are these margins excluding most expenses - because that makes no sense. Companies have expenses and that affects the bottom line. If digital ocean had real margins of 60% they would show a profit.
  - mardifoufs 4y ago
    It's because they are growing massively, meaning they invest a lot of those margins in capital expenses. At least that's true for CF, not sure about DO
    - quags 4y ago
      Ok I get it, still seems a bit dumb. DO for example still needs to replace failed components (ssd drives which have the highest failure rate can expect 1 - 3% failure rate per year on the low end), pay datacenter fees, likely power increases in the dc fees built in, replace servers on a 5 - 7 year scale (3 - 5 is better), and networking equipment generally on a 7 - 10 year level. Even if the growth is zero, these don't go away they just are not spending as much because they don't need to add so many new systems for their growth.

time_to_smile 4y ago

Exactly. Parent's comment is only meaningful if you completely ignore paying workers which seems pretty relevant if you're going to be talking about layoffs. I've found a lot of tech workers (including myself) really need to learn how to read an earnings statement. Coursera has an excellent Intro to Financial account course [0] that I've found very helpful in understanding what's really happening at these places. 0. https://www.coursera.org/learn/wharton-accounting https://www.coursera.org/learn/wharton-accounting

senko 4y ago
Also, Aswath Damodaran has (among loads of other teaching material) a crash course into accounting just enough to get by when reading financial statements: https://www.youtube.com/watch?v=Jbp3-AU9v_g&list=PLUkh9m2BorqmKaLrNBjKtFDhpdFdi8f7C https://www.youtube.com/watch?v=Jbp3-AU9v_g&list=PLUkh9m2Bor...
Moose_the_Goose 4y ago
Yeah, I'm pretty thankful for my 4 year technical program for having us do a couple of business course. One which was accounting and the majority of the work was the teacher walking us through reading financial statements of public companies.

DwnVoteHoneyPot 4y ago

Last 12 months on Yahoo Finance is showing Digital Ocean's operating income at -$21M. Also, negative in 2019, 2020, 2021. It's either financially illiterate or completely disengenuous for commenters to cherry pick financials such as gross profit, which doesn't include salary expense, when we are talking about layoffs. Other commenters calling execs sociopaths when company is losing money, as if they can lose money forever.

quags 4y ago
Can anyone enlighten me on this because cloudflare seems to report similar high margins with no profits. What are these high margin numbers both DO and CF report? They both report high margins but then do not make any money. Are these margins excluding most expenses - because that makes no sense. Companies have expenses and that affects the bottom line. If digital ocean had real margins of 60% they would show a profit.
- mardifoufs 4y ago
  It's because they are growing massively, meaning they invest a lot of those margins in capital expenses. At least that's true for CF, not sure about DO
  - quags 4y ago
    Ok I get it, still seems a bit dumb. DO for example still needs to replace failed components (ssd drives which have the highest failure rate can expect 1 - 3% failure rate per year on the low end), pay datacenter fees, likely power increases in the dc fees built in, replace servers on a 5 - 7 year scale (3 - 5 is better), and networking equipment generally on a 7 - 10 year level. Even if the growth is zero, these don't go away they just are not spending as much because they don't need to add so many new systems for their growth.