DigitalOcean buys Cloudways for $350 million in cash
DigitalOcean’s acquisition of Cloudways is an investment in the WordPress ecosystem with an emphasis on “digital agencies, eCommerce sites, bloggers, freelance developers and builders hosting on WordPress.”
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“Is this a WordPress acquisition?”
That question led some discussion in Post Status Slack this week.
The consensus was “yes it is,” and we’ve certainly included many WordPress-adjacent or partnered companies on our Acquisitions page. But I’d say the number-filled announcement to investors (and infographic) from DigitalOcean makes it clear they know they are buying into the WordPress ecosystem by acquiring Cloudways:
The acquisition of Cloudways expands DigitalOcean’s serviceable market within global SMBs and 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) and, according to W3Techs, it powers 43% of all websites on the internet.
- DigitalOcean sees itself expanding to gain small-to-mid-sized businesses (SMBs) in its customer demographic, and acquiring Cloudways with its WordPress and other open source eCommerce customers achieves that.
- There’s no easy button within DigitalOcean itself for setting up a WordPress site or anything else, but their 1-click apps are the latest progression toward something like that. It’s just not likely to appeal to most people in the low-end market in its current state. DigitalOcean marketing is still locked onto startups and developers too. I imagine all this will change if Cloudways is brought in as a SMB customer-facing easy-button.
- Focusing on less-technical end users and the people who build their sites will put DigitalOcean in direct competition with other hosting panel middleware like ServerPilot and SpinupWP. (In its early years, Serverpilot quickly turned its main focus to being a way to “Host WordPress on Digital Ocean.”)
- Build/Builder language shows up a lot in DigitalOcean’s messaging. This sounds a lot like WordPress’s mission updated for the era of (increasingly low/no-code) website builders (software and people) — “DigitalOcean simplifies cloud computing so builders can spend more time creating software that changes the world.”
Some interesting numbers from DigitalOcean:
- DigitalOcean and Cloudways have been close partners since 2014.
- Cloudways has approximately 50% of its customers on DigitalOcean servers.
- This acquisition increases DigitalOcean’s high spend customers by 18%. They will come away from the deal with a total of 124,000+ (new and existing) customers paying $50+ per month, which is 84% of DigitalOcean’s total revenue.
- Cloudways is projected to contribute between $13 and $15 million of revenue to DigitalOcean’s bottom line in the remaining months of FY2022 after the deal closes in September.