DigitalOcean raises $100M in debt as it scales toward revenue of $300M

Re:DigitalOcean raises $100M in debt as it scales toward rev... by rahimnathwani on Thursday February 20, 2020 @02:52PM (#22377976)

"Income statements include things like depreciation. That's real, in a sense. It's future CAPEX."

Depreciation is past capex, not future capex. You could argue that the two are equivalent, because the assets being depreciated will need replacement in the future. But:

1. The assets' useful life may be longer (or shorter) than the depreciation schedule.

2. The future replacements may cost less (or more) or just not be needed at all.

[ Parent | on HN ]

Re:DigitalOcean raises $100M in debt as it scales toward rev... by JumpCrisscross on Thursday February 20, 2020 @03:00PM (#22378044)

> Depreciation is past capex, not future capex

Technically (from an accounting perspective), yes. Practically (from a financial/economic perspective), not quite.

Past capex is a sunk cost. Investors care about future cash flows. If you strip out depreciation, you’ll be surprised by the bill when your machine breaks down. (You may still be surprised. Life is unpredictable and depreciation schedules are an estimate. But that’s one of the problems the concept tries to solve.)

[ Parent | on HN ]