DigitalOcean Holdings Inc
NYSE:DOCN
DigitalOcean Holdings Inc
In the bustling world of cloud computing, DigitalOcean Holdings Inc. has carved out a unique space that emphasizes simplicity and ease of use. Founded with the mission to cater to developers and small- to medium-sized businesses, DigitalOcean thrives by providing cloud infrastructure and platform services that are straightforward and affordable. The company offers a range of products, including scalable compute instances—commonly referred to as "Droplets"—and managed database services, among others. DigitalOcean's focus on user-friendly interfaces and competitive pricing sets it apart in an industry dominated by giants like AWS, Microsoft Azure, and Google Cloud. The company’s dedication to community engagement is evident through its robust library of tutorials and documentation, ensuring users can hit the ground running without needing a deep technical background.
DigitalOcean’s business model capitalizes on a recurring revenue scheme derived from its myriad of services, primarily sold on a pay-as-you-go basis. Customers are charged based on their usage of compute, storage, and network resources, allowing for predictable revenue streams. Additionally, the company enhances its profitability by expanding its product suite, striving to foster deeper engagement with existing users while attracting new ones. As the digital transformation wave continues to surge globally, DigitalOcean's customer-centric approach and commitment to simplicity propel it as a viable option for developers and organizations that require reliable cloud solutions without the hefty complexity and cost typically associated with larger providers.
In the bustling world of cloud computing, DigitalOcean Holdings Inc. has carved out a unique space that emphasizes simplicity and ease of use. Founded with the mission to cater to developers and small- to medium-sized businesses, DigitalOcean thrives by providing cloud infrastructure and platform services that are straightforward and affordable. The company offers a range of products, including scalable compute instances—commonly referred to as "Droplets"—and managed database services, among others. DigitalOcean's focus on user-friendly interfaces and competitive pricing sets it apart in an industry dominated by giants like AWS, Microsoft Azure, and Google Cloud. The company’s dedication to community engagement is evident through its robust library of tutorials and documentation, ensuring users can hit the ground running without needing a deep technical background.
DigitalOcean’s business model capitalizes on a recurring revenue scheme derived from its myriad of services, primarily sold on a pay-as-you-go basis. Customers are charged based on their usage of compute, storage, and network resources, allowing for predictable revenue streams. Additionally, the company enhances its profitability by expanding its product suite, striving to foster deeper engagement with existing users while attracting new ones. As the digital transformation wave continues to surge globally, DigitalOcean's customer-centric approach and commitment to simplicity propel it as a viable option for developers and organizations that require reliable cloud solutions without the hefty complexity and cost typically associated with larger providers.
Revenue Beat: DigitalOcean reported Q3 revenue of $230 million, up 16% year-over-year, exceeding guidance and marking its highest growth since Q3 2023.
Profitability Above Guidance: Adjusted EBITDA was $100 million with a 43% margin, and adjusted free cash flow margin reached 21% trailing twelve months, both above expectations.
AI Growth: AI-specific revenue more than doubled year-over-year for the fifth consecutive quarter, driving strong traction with high-spending customers.
Large Customer Momentum: Customers with over $1 million in annual run rate reached $110 million in ARR, up 72% year-over-year, with multiple new 8-figure contracts signed after the quarter.
Raised Outlook: Management raised 2025 and 2026 revenue and adjusted free cash flow guidance, now expecting to achieve the prior 2027 growth target a year early.
Capacity Investments: DigitalOcean is accelerating investments, adding 30 megawatts of new data center capacity and more GPUs to meet AI demand.
Cash Position & Buybacks: The company strengthened its balance sheet, completed its 2024 share buyback, and ended with $237 million in cash.
Margin Guidance: 2025 adjusted free cash flow margin guided to 18–19%, with high-30s to 40% adjusted EBITDA margins expected in 2026.
