Oppenheimer downgraded DigitalOcean Holdings, Inc. (NYSE:DOCN) to Perform from Outperform. Despite organic revenue being essentially flat for three quarters, the company aggressively guided to 23% revenue growth in 2023. The company is indexed to SMBs, which the analysts expect to come under more pressure as funding becomes scarce, and we enter a potential recession.

The company recently extended its $1.0 billion revenue guidance from 2024 to 2025, but analysts now see 2026 as more likely. Positively, Free cash flow is a major focus, guided to 22% for 2023, but cloud is a capital-intensive business and prior stalwarts have rarely sustained 25%- plus fee cash flow margins perpetually.