New addition to Shorts & Frauds list: Management walkout in $3.1B cloud infrastructure continues as retention declines
Despite strong industry tailwinds, key executives continue to jump ship as declining retention rates persist. Addressing this will likely require significant investment. Coupled with modest ARPU and slowing ARR growth, this warrants a soft sell approach.
In the past 18 months, the CEO, CFO, COO, Chief Product Officer, and Chief Accounting Officer have all resigned from this $3.1B cloud infrastructure company. In Jan 2024, old CEO, Yancey Spruill, Partner at Vista Equity Partners was succeeded by Paddy Srinivasan. Now the Chief Revenue Officer is stepping down after one and a half years “upon the commencement of employment of a successor.” So far, investors have been calm about it with a decent run in the share price since december lows (now 4% YTD). But this could be about to change.
DOCN has some impressive growth to show for it, with 28% 5-year CAGR, driven by compelling value proposition, competitive position, an effective go-to-market strategy and strong industry tailwinds.
However, DOCN’s DBRR ("dollar-based retention rate") is a concern, as it has fallen and remained below 100%, a clear sign that the company is struggling with customer value.
