I can understand the SaaS business model where you lose money in the short term to acquire customers, because that customer will be worth money over the next four to six years. If you are expanding aggressively, you will be losing money as a company for sales and marketing in order to acquire many long-term customers.

But I don't understand why Digital Ocean should be losing money. Unless I am mistaken, they do not seem to be spending on sales in order to acquire long-term customers. If they are losing money on operations, then doesn't that mean their business model is broken?

Perhaps they lose money on small-scale hosting as a marketing expense in order to acquire big long-term customers? Or perhaps they have big capital expenditures for data centers? Otherwise, this doesn't look good for Digital Ocean.