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If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider DigitalOcean Holdings, Inc. (DOCN - Free Report) . This company, which is in the Zacks Internet - Software industry, shows potential for another earnings beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 68.02%.

For the last reported quarter, DigitalOcean came out with earnings of $0.45 per share versus the Zacks Consensus Estimate of $0.26 per share, representing a surprise of 73.08%. For the previous quarter, the company was expected to post earnings of $0.27 per share and it actually produced earnings of $0.44 per share, delivering a surprise of 62.96%.

Price and EPS Surprise

For DigitalOcean, estimates have been trending higher, thanks in part to this earnings surprise history. And when you look at the stock's positive Zacks Earnings ESP (Expected Surprise Prediction), it's a great indicator of a future earnings beat, especially when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

DigitalOcean currently has an Earnings ESP of +26.81%, which suggests that analysts have recently become bullish on the company's earnings prospects. This positive Earnings ESP when combined with the stock's Zacks Rank #3 (Hold) indicates that another beat is possibly around the corner. We expect the company's next earnings report to be released on November 3, 2026.

When the Earnings ESP comes up negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock's earnings miss.

Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate.

Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Investors interested in Computer and Technology stocks should always be looking to find the best-performing companies in the group. DigitalOcean Holdings, Inc. (DOCN - Free Report) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? A quick glance at the company's year-to-date performance in comparison to the rest of the Computer and Technology sector should help us answer this question.

DigitalOcean Holdings, Inc. is one of 619 individual stocks in the Computer and Technology sector. Collectively, these companies sit at #4 in the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors.

The Zacks Rank is a proven system that emphasizes earnings estimates and estimate revisions, highlighting a variety of stocks that are displaying the right characteristics to beat the market over the next one to three months. DigitalOcean Holdings, Inc. is currently sporting a Zacks Rank of #2 (Buy).

Over the past three months, the Zacks Consensus Estimate for DOCN's full-year earnings has moved 12.7% higher. This means that analyst sentiment is stronger and the stock's earnings outlook is improving.

According to our latest data, DOCN has moved about 127.5% on a year-to-date basis. Meanwhile, stocks in the Computer and Technology group have gained about 18.9% on average. This shows that DigitalOcean Holdings, Inc. is outperforming its peers so far this year.

Another Computer and Technology stock, which has outperformed the sector so far this year, is Motorola (MSI - Free Report) . The stock has returned 19.1% year-to-date.

Over the past three months, Motorola's consensus EPS estimate for the current year has increased 4.5%. The stock currently has a Zacks Rank #2 (Buy).

To break things down more, DigitalOcean Holdings, Inc. belongs to the Internet - Software industry, a group that includes 178 individual companies and currently sits at #81 in the Zacks Industry Rank. This group has gained an average of 8.3% so far this year, so DOCN is performing better in this area.

Motorola, however, belongs to the Wireless Equipment industry. Currently, this 12-stock industry is ranked #45. The industry has moved +14.8% so far this year.

Investors interested in the Computer and Technology sector may want to keep a close eye on DigitalOcean Holdings, Inc. and Motorola as they attempt to continue their solid performance.

SAN FRANCISCO--(BUSINESS WIRE)--Ahead of its Open Intelligence Summit in San Francisco, DigitalOcean (NYSE: DOCN), the AI-Native Cloud, today announced Agent Learning and Data Services as another key element of its modern agentic stack, so teams can launch self-improving agents. Together with Inference Engine and Managed Agents, DigitalOcean is one of the few clouds where agents can run, learn, and improve on one platform. DigitalOcean Agent Learning Services: three products that work as one lo.

The S&P 500 stock market index has more than doubled from its 2022 bear market low point, driven by the technology sector, which has produced particularly strong returns thanks to the ongoing artificial intelligence (AI) boom. However, a rising inflation rate, interest rate hikes, and even a potential slowdown in AI development by labs like Anthropic and OpenAI could derail the current bull market.

The risk of a severe downturn is especially high right now because of the market's elevated valuation. The S&P 500 has a Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio of 41.4, the second-highest level since the peak of the dot-com internet bubble in 2000. The index plummeted by 49% when that bubble eventually burst, and while I'm not predicting a similar decline this time around, investors might want to use  caution.

Fortunately, the market typically trends higher over the long term, so any severe crash will almost certainly be a buying opportunity. Below, I'm going to share three stocks that investors might want to scoop up at a discount if the broader market tumbles and these stocks dip with it.

Image source: Getty Images.

1. Zscaler: Securing the AI revolution Zscaler (ZS +0.61%) was one of the early pioneers of the zero-trust cybersecurity architecture, which is now one of the best defenses against increasingly sophisticated AI-powered attacks. Zscaler's Zero Trust Exchange starts by protecting the identity layer, treating all network login attempts as hostile. It verifies each user not only by their credentials, but also by their location and the device they are using to ensure it's really them.

Moreover, the Zero Trust Exchange only gives employees access to the applications they need to complete their jobs, so a hacker won't have free rein within the corporate network even if they bypass the identity layer. Zscaler added new tools to the Exchange earlier this year, like AI Broker, which strictly monitors communications between AI agents, and Endpoint AI Security, which protects the computers and devices employees are using to run AI applications.

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This is all a part of Zscaler's "Zero Trust Everywhere" philosophy, which is now critical because AI-powered threats are constantly hunting for vulnerabilities in corporate networks. Keeping assets and internal agents hidden behind something like the Exchange has never been more important.

Zscaler generated a record $3.35 billion in revenue during its 2026 fiscal year (ended July 31), a 25% increase from the prior year. Its stock is already attractively valued, so any sell-off during a broader market correction could be a very juicy buying opportunity. With a price-to-sales (P/S) ratio of 9.3 as I write this, it's far cheaper than rivals like CrowdStrike and Palo Alto Networks.

CRWD PS Ratio data by YCharts

2. Uber Technologies: A future leader of the autonomous driving revolution Dozens of companies around the world are developing self-driving cars, but Uber Technologies (UBER -0.91%) isn't one of them. Instead, it's partnering with many of those companies and allowing them to deploy their vehicles into its global ride-hailing network.

This is a win-win arrangement. Developers of self-driving cars can immediately access Uber's pool of 208 million monthly active customers, while Uber gets to offer autonomous vehicles without incurring the costs involved in designing or manufacturing them. Plus, Uber paid $25 billion to the human drivers in its network during the second quarter of 2026 (ended June 30), which was its single largest cost, so the shift toward autonomous vehicles will significantly improve the company's financial results.

Like Zscaler, Uber stock is already attractively valued. Based on the company's trailing 12-month revenue of $55.2 billion, its stock is trading at a P/S ratio of just 2.5, making it significantly cheaper than the technology-heavy Nasdaq-100 index, which has a P/S ratio of 6.5. Therefore, Uber looks like a solid investment even today, so any dip in its stock from here could be a great long-term buy.

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3. DigitalOcean: Helping enterprises unlock the power of AI The average business doesn't have the billions of dollars or technical expertise required to build its own AI data centers. Therefore, many of them choose to rent computing capacity from third-party cloud providers. Amazon and Microsoft dominate this particular industry, but DigitalOcean (DOCN -2.85%) is taking the fight to those trillion-dollar giants.

DigitalOcean operates around 20 AI data centers spread across the globe, and they are fitted with specialized chips from suppliers like Nvidia and Advanced Micro Devices. It rents the computing capacity to businesses through a platform called AI-Native Cloud, which also provides access to the latest foundation models from labs like Anthropic and OpenAI, in addition to over 70 open-source models.

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DigitalOcean had $1.1 billion in annual recurring revenue (ARR) as of June 30. AI customers accounted for $234 million of that total, a whopping 212% increase from the year-ago period. That growth rate could accelerate, because the company's order backlog from customers who were waiting for more data centers to come online was $894 million as of June 30, a staggering 12-fold increase from the same time last year.

DigitalOcean stock is trading at a P/S ratio of 15.7, a steep premium to its five-year average of 7.9, so some of its future growth is already priced in. While I wouldn't buy it at the current price, it could be an enticing long-term buy if it experiences a correction of 20% to 30% in the coming months.

BROOMFIELD, Colo.--(BUSINESS WIRE)--DigitalOcean Holdings, Inc. (NYSE: DOCN), the AI-Native Cloud, today announced Agent Droplets giving companies a simple way to start their agentic journey on DigitalOcean and scale with predictable spending controls. DigitalOcean Managed Agents, launched in public preview on September 22, gave builders a managed runtime, governed access to 16,000+ tools, Serverless Inference, and persistent agent memory and storage on one cloud. Agent Droplets bundle those ca.

BROOMFIELD, Colo.--(BUSINESS WIRE)--DigitalOcean Holdings, Inc. (NYSE: DOCN), the AI-Native Cloud, today announced the public preview of DigitalOcean Managed Agents. Managed Agents is a set of services that gives every agent its own harness runtime, governed tool access, and fast Serverless Inference in one place so that developers can easily scale agentic work without having to build and maintain infrastructure themselves. Developers can pick a harness they already use, connect tools, and have.

At the close of trading on Tuesday, Sept. 15, the benchmark S&P 500 stock market index had a Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio of 40.3, its second-highest valuation since the peak of the dot-com internet bubble in 2000. Meanwhile, risks are quickly mounting.

Oil prices are currently soaring due to the ongoing geopolitical tensions in the Middle East, placing upward pressure on inflation and global interest rates. Moreover, start-ups like Anthropic, OpenAI, and xAI are calling for a slowdown in the pace of artificial intelligence (AI) development, which could derail high-growth sectors like semiconductors. To top things off, the midterm congressional elections are coming up in November, which could be another source of market volatility.

With all that said, the S&P 500 has trended higher over the long term, so I'll be looking for buying opportunities if the aforementioned headwinds cause a crash. Here are two stocks I'd like to scoop up at a discount.

Image source: Getty Images.

The first stock I plan to buy: DigitalOcean DigitalOcean (DOCN -1.98%) provides cloud services, but unlike its much larger competitors, such as Amazon Web Services and Microsoft Azure, it primarily targets small and mid-sized (SMB) enterprise customers. It offers them clear, transparent pricing, highly personalized support, and a simple platform that makes deployment easy, even for enterprises without in-house technical teams.

The company is now applying that blueprint to its growing portfolio of AI products and services. It offers these through a new platform called AI-Native Cloud, which features five distinct layers to help enterprises deploy AI software. The infrastructure layer sits at the foundation: DigitalOcean now operates 20 data centers equipped with specialized chips from suppliers like Nvidia and Advanced Micro Devices, and it leases the computing capacity to its customers.

Another key layer is the inference engine, where customers can tap into foundation models from developers, such as OpenAI and Anthropic, in addition to over 70 open-source models. Using these models and the computing capacity from the infrastructure layer, enterprises can rapidly build and deploy AI agents, chatbots, and other applications.

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DigitalOcean had $1.1 billion in annual recurring revenue (ARR) as of June 30. AI customers accounted for $234 million of that total, a staggering 212% increase from the same time last year. The company's order backlog from customers who are waiting for more data centers to come online was also $894 million as of June 30, a 12-fold increase from the year-ago period. That suggests even faster AI revenue growth might be on the horizon.

Its stock looks like a great investment based on those numbers alone, but valuation matters. Its shares currently sport a price-to-sales (P/S) ratio of 13.2, which far exceeds its long-term average of 8.6 since going public in 2021. I would be a buyer near the average because of the AI growth this company has in the pipeline, so I will wait and see if a broad market correction presents me with an opportunity.

DOCN PS Ratio data by YCharts

The second stock I plan to buy: Lemonade Lemonade (LMND -1.48%) offers homeowners, renters, life, pet, and car insurance to over 3.3 million customers across the U.S. and Europe. But it separates itself from traditional insurers by placing AI at the center of its business. For example, a prospective customer can get a quote from Lemonade in under 90 seconds via the Maya chatbot on its website, and a separate AI assistant, Jim, can process claims in just a few seconds without human intervention.

The insurer also uses AI to calculate premiums and manage its operations, resulting in a high degree of efficiency. During the second quarter of 2026, the company's loss adjustment expense (LAE) ratio fell to a record low of 5%, nearly half the industry average of 9%. The LAE ratio measures the percentage of premiums an insurer spends on handling claims (the lower the better), so 5% is very efficient.

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Lemonade had over $1.4 billion of in-force premiums (IFP) at the end of the second quarter of 2026, representing the value of the premiums from all active policies. That figure grew by 32% year over year. And thanks to the company's low gross loss ratio of 60% (the percentage of premiums paid out as claims), its revenue soared by 79% year over year to $294.4 million.

But Lemonade's growth story is still in the early stages, because management believes the company's IFP could grow by 600% to $10 billion by 2034. Its stock is already relatively inexpensive because its P/S ratio of 4.3 is actually lower than its three-year average of 5.3, so a broad market correction could present investors with a golden long-term buying opportunity.

LMND PS Ratio data by YCharts

As a result, Lemonade stock is very high on my watch list right now.

DigitalOcean Holdings, Inc. has outperformed expectations, with rapid AI-driven ARR and revenue growth, but shares now reflect much of this upside. Q2 results showed 29% revenue growth, 212% AI Customer ARR growth, and a record $93M incremental ARR, but cash conversion lags due to capital intensity. The new $725M debt facility signals strong lender confidence and supports capacity expansion, yet increases off-balance-sheet leverage and future cash flow risks.

DigitalOcean Holdings, Inc. (DOCN) Presents at Citi's 2026 Global TMT Conference Transcript

DigitalOcean Holdings, Inc. (DOCN) Presents at Goldman Sachs Communacopia + Technology Conference 2026 Transcript

Matt Steinfort, the Chief Financial Officer of DigitalOcean Holdings, Inc. (DOCN +2.81%), disposed of 35,151 shares between September 1, 2026 and September 3, 2026, for a total value of approximately $3.8 million, according to a recent SEC Form 4 filing.

Transaction summaryMetricValueTransaction value$3.8 millionShares sold35,151Post-transaction shares (directly held)503,692Post-transaction value$55.1 millionTransaction value based on SEC Form 4 weighted average sale price ($109.28); post-transaction value based on September 03, 2026 market close ($109.40).

Key questionsWhat prompted this disposition of common stock?
The disposal of 25,151 shares was non-discretionary, executed to satisfy tax withholding obligations associated with the vesting of restricted stock units (RSUs) previously awarded to the executive.What about the remaining 10,000 shares sold?
The sale of 10,000 shares was completed under a Rule 10b5-1 trading plan, a mechanism that allows insiders to execute pre-scheduled transactions to manage personal portfolios.How has the stock performed leading up to this CFO disposal?
Shares of the cloud computing company were priced at $104.87 as of the September 2, 2026 market close, having generated a 241% total return over the 12-month period ending on the September 3, 2026 transaction date.What is the scale of the insider's remaining financial interest in the company?
Following this filing, the CFO retains a direct interest of 503,692 shares, representing an equity holding valued at $55.1 million at recent market prices and a 0.43% stake in the company.Company OverviewMetricValueShare Price (as of market close 2026-09-02)$104.87Market Capitalization$12.0 billionRevenue (TTM)$1.0 billionNet Income (TTM)$235.2 millionCompany SnapshotDigitalOcean provides cloud infrastructure services and developer tools, including computing power, storage, networking capabilities, and managed services designed to enable developers and businesses to build and scale applications efficiently.The company generates revenue through a consumption-based model, offering on-demand cloud infrastructure and platform services that scale with customer usage, supplemented by managed services and premium features for enterprise customers.DigitalOcean serves individual developers, start-ups, and small to mid-sized businesses across North America, Europe, Asia, and beyond, positioning itself as an accessible alternative to larger cloud providers for organizations seeking simplicity and cost-effectiveness.DigitalOcean Holdings, Inc. operates as a global cloud infrastructure provider demonstrating significant scale within the developer-focused cloud computing segment. The company's platform delivers essential infrastructure and developer tools with geographic reach spanning multiple continents, targeting organizations that prioritize ease of use and operational efficiency.

DigitalOcean's competitive positioning emphasizes simplicity, affordability, and developer-centric design relative to enterprise-grade cloud providers, enabling it to capture a substantial portion of the growing market for accessible cloud infrastructure solutions.

What this transaction means for investorsCFO Matt Steinfort's Sept. 1 and Sept. 3 sale of DigitalOcean stock occurred for a couple of reasons, neither of which raise red flags for investors. The earlier trade involved 25,151 shares sold to fulfill tax withholding obligations in connection with the vesting of RSUs. This does not reflect the insider's view on the stock.

The Sept. 3 disposition of 10,000 shares was part of a pre-established Rule 10b5-1 plan, making this sale a non-discretionary transaction. Such plans are often adopted by insiders to sell shares at predetermined times to avoid concerns of trading on non-public information.

Steinfort retains over 500,000 shares post-disposition, which is a sizable equity stake. The holdings ensure his continued alignment with shareholder interests.

DigitalOcean's stock has done well over the past year, as the company's sales grew 29% in the second quarter compared to 2025 to $281 million. This is more than double the growth rate seen a year ago thanks to the artificial intelligence boom.

Robert Izquierdo has positions in DigitalOcean. The Motley Fool has positions in and recommends DigitalOcean. The Motley Fool has a disclosure policy.

A month has gone by since the last earnings report for DigitalOcean Holdings, Inc. (DOCN - Free Report) . Shares have lost about 15.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is DigitalOcean due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.

DOCN Q2 Earnings Beat Estimates on AI Growth, Strong MarginsDigitalOcean posted second quarter 2026 non-GAAP earnings of 45 cents per share, which fell 23.7% year over year but topped the Zacks Consensus Estimate by 73.08%.

Revenues increased 28.6% year over year to $281.18 million and beat the consensus mark by 1.23%. Annual Run-Rate Revenue (ARR) reached $1.125 billion, up 29%, while AI Customer ARR jumped 212% to $234 million.

DOCN's Large-Customer Cohorts Fueled GrowthGrowth was led by higher-spending customers. ARR from $1 million-plus customers reached $259 million, up 214% year over year and accounted for 23% of total ARR. ARR from $500,000-plus customers rose 160% to $291 million, while the $100,000-plus cohort increased 98% to $395 million.

The expansion also strengthened contracted visibility. Remaining performance obligations climbed to $894 million from $71 million a year earlier, with $366 million expected to be recognized over the next 12 months. DigitalOcean also signed its first nine-figure annual customer commitments, extending weighted average contract life from 1.6 years to more than three years.

DigitalOcean's AI-Native Cloud Gained TractionInference services grew 762% year over year, while 85% of AI customer ARR came from inference services and core cloud rather than bare metal. The Inference Engine attracted more than 6,000 customers after its late-April launch, and token volume increased roughly 30-fold over the prior 60 days.

Product expansion supported that adoption. DOCN shipped more than 80 releases across its five-layer AI-Native Cloud since April. Roughly 70% of AI customers with at least $100,000 in ARR attached a core cloud product, indicating broader use of compute, storage, databases and orchestration alongside AI workloads.

DOCN's Higher Costs Compressed GAAP MarginsGross profit increased to $154.66 million from $130.95 million, but gross margin declined to 55.0% from 59.9%.

Total operating expenses rose to $125.29 million from $95.33 million. Research and development expense climbed to $57.5 million from $39.6 million, while sales and marketing rose to $22.6 million from $19.3 million. General and administrative expense increased to $45.2 million from $36.4 million.

Adjusted EBITDA increased 26.9% to $113.56 million, while the margin edged down to 40% from 41%.

GAAP operating income fell 17.5% to $29.37 million, with operating margin contracting to 10% from 16%. Adjusted operating income rose 9.3% to $67.48 million, though its margin declined to 24% from 28%.

DigitalOcean's Cash Flow Supported Capacity BuildAs of June 2026, cash and cash equivalents totaled $767.03 million compared with $741.5 million as of March 31, 2026.

Net cash provided by operating activities rose 19.0% to $109.97 million, while the operating cash flow margin declined to 39% from 42%. Adjusted free cash flow increased 6.3% to $60.59 million, with the corresponding margin narrowing to 22% from 26%.

DOCN Raised Its 2026 OutlookFor the third quarter of 2026, DigitalOcean expects revenues of $304 million-$307 million, representing 32%-34% growth. Adjusted EBITDA margin is projected to be 38%-39%, while non-GAAP earnings are expected to be between 28 cents and 30 cents per share.

For 2026, DOCN raised revenue guidance to $1.170 billion-$1.180 billion from $1.130 billion-$1.145 billion. The company now expects 30%-31% revenue growth, a 38.5%-39.5% adjusted EBITDA margin, an 11%-13% adjusted free cash flow margin and non-GAAP earnings of $1.35-$1.40 per share. Management also expects revenue growth of at least 35% by the fourth quarter and reiterated confidence in more than 50% growth in 2027.

How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a upward trend in estimates revision.

VGM ScoresCurrently, DigitalOcean has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, DigitalOcean has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry PlayerDigitalOcean belongs to the Zacks Internet - Software industry. Another stock from the same industry, Reddit Inc. (RDDT - Free Report) , has gained 1.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Reddit Inc. reported revenues of $804.91 million in the last reported quarter, representing a year-over-year change of +61.1%. EPS of $1.25 for the same period compares with $0.45 a year ago.

Reddit Inc. is expected to post earnings of $1.33 per share for the current quarter, representing a year-over-year change of +66.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.7%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Reddit Inc.. Also, the stock has a VGM Score of B.

DigitalOcean Holdings, Inc. (NYSE: DOCN), the AI-Native Cloud, purpose-built for inference and agentic workloads, today announced that Chief Executive Officer P

Shares of DigitalOcean Holdings, Inc. (NYSE:DOCN – Get Free Report) have received an average recommendation of “Buy” from the seventeen ratings firms that are currently covering the company, MarketBeat.com reports. Two equities research analysts have rated the stock with a hold rating, thirteen have issued a buy rating and two have assigned a strong buy rating to the company. The average 12-month target price among brokers that have updated their coverage on the stock in the last year is $152.8125.

Several analysts have recently issued reports on the stock. Stifel Nicolaus raised shares of DigitalOcean from a “hold” rating to a “buy” rating and boosted their price target for the company from $135.00 to $160.00 in a research report on Tuesday, July 21st. Barclays raised their price objective on shares of DigitalOcean from $160.00 to $161.00 and gave the stock an “overweight” rating in a report on Wednesday, August 5th. KeyCorp began coverage on shares of DigitalOcean in a report on Tuesday, June 2nd. They set an “overweight” rating and a $200.00 target price on the stock. Canaccord Genuity Group restated a “buy” rating and set a $200.00 target price on shares of DigitalOcean in a research report on Friday, July 10th. Finally, Truist Financial started coverage on DigitalOcean in a report on Thursday. They issued a “buy” rating and a $175.00 price target for the company.

Check Out Our Latest Stock Analysis on DOCN

DigitalOcean Stock Performance Shares of DigitalOcean stock opened at $111.50 on Friday. DigitalOcean has a 12 month low of $30.89 and a 12 month high of $187.50. The firm has a market capitalization of $11.64 billion, a P/E ratio of 50.91, a price-to-earnings-growth ratio of 95.20 and a beta of 1.61. The business’s fifty day simple moving average is $128.72 and its 200 day simple moving average is $115.77. The company has a current ratio of 1.31, a quick ratio of 1.31 and a debt-to-equity ratio of 1.14. DigitalOcean (NYSE:DOCN – Get Free Report) last posted its quarterly earnings data on Tuesday, August 4th. The company reported $0.45 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.26 by $0.19. The business had revenue of $281.18 million during the quarter, compared to the consensus estimate of $279.03 million. DigitalOcean had a net margin of 23.26% and a return on equity of 31.01%. The firm’s quarterly revenue was up 28.6% compared to the same quarter last year. During the same quarter last year, the company posted $0.39 earnings per share. DigitalOcean has set its FY 2026 guidance at 1.350-1.400 EPS and its Q3 2026 guidance at 0.280-0.300 EPS. As a group, analysts anticipate that DigitalOcean will post 0.63 EPS for the current year.

Insider Buying and Selling In other DigitalOcean news, Director Warren J. Adelman sold 4,200 shares of DigitalOcean stock in a transaction dated Friday, August 7th. The stock was sold at an average price of $124.01, for a total transaction of $520,842.00. Following the completion of the transaction, the director owned 67,433 shares of the company’s stock, valued at $8,362,366.33. The trade was a 5.86% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. Also, CFO Matt Steinfort sold 10,000 shares of the company’s stock in a transaction dated Tuesday, June 2nd. The shares were sold at an average price of $170.07, for a total value of $1,700,700.00. Following the sale, the chief financial officer owned 538,414 shares in the company, valued at approximately $91,568,068.98. This represents a 1.82% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last quarter, insiders have sold 18,656 shares of company stock valued at $2,811,383. Corporate insiders own 0.96% of the company’s stock.

Hedge Funds Weigh In On DigitalOcean Several hedge funds have recently bought and sold shares of DOCN. Allworth Financial LP boosted its holdings in DigitalOcean by 54.4% in the 3rd quarter. Allworth Financial LP now owns 724 shares of the company’s stock valued at $25,000 after purchasing an additional 255 shares during the period. Parallel Advisors LLC grew its position in shares of DigitalOcean by 66.2% during the 1st quarter. Parallel Advisors LLC now owns 324 shares of the company’s stock valued at $28,000 after purchasing an additional 129 shares in the last quarter. Huntington National Bank increased its holdings in shares of DigitalOcean by 638.3% in the fourth quarter. Huntington National Bank now owns 598 shares of the company’s stock worth $29,000 after purchasing an additional 517 shares during the period. NBC Securities Inc. bought a new position in shares of DigitalOcean in the fourth quarter worth $32,000. Finally, Banque Cantonale Vaudoise purchased a new stake in shares of DigitalOcean in the first quarter worth $33,000. Hedge funds and other institutional investors own 49.77% of the company’s stock.

DigitalOcean Company Profile (Get Free Report)

DigitalOcean Holdings, Inc is a cloud infrastructure provider that focuses on simplicity, performance and developer experience. The company offers a range of cloud services designed to help software developers, startups and small- to medium-sized businesses deploy, manage and scale applications. Its flagship offering, Droplets, provides virtual private servers that can be configured with various CPU, memory and storage options. In addition to compute instances, DigitalOcean’s platform includes managed Kubernetes, scalable object and block storage, managed databases, load balancers and networking capabilities such as Virtual Private Cloud (VPC) and Floating IPs.

Founded in 2011 and headquartered in New York City, DigitalOcean was created with the goal of making cloud computing more accessible to individual developers and smaller teams.

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Padmanabhan T. Srinivasan, Chief Executive Officer of DigitalOcean Holdings, Inc. (DOCN -8.61%), sold 5,697 shares of common stock on Aug. 17, 2026, according to a SEC Form 4 filing.

Transaction summaryMetricValueTransaction value~$736,000Shares sold (directly held)5,697Post-transaction shares (directly held)~783,300Post-transaction value~$106.0 millionTransaction value based on SEC Form 4 weighted average sale price ($129.11); post-transaction value based on Aug. 17, 2026, market close ($135.28).

Key questionsWhat was the nature of this equity disposition?
The transaction was a scheduled sale under a Rule 10b5-1 trading plan, which allows corporate insiders to sell a predetermined number of shares at set times to avoid concerns regarding material non-public information.How does the current price level relate to the transaction?
Shares were sold at a weighted average price of $129.11, while the stock was priced at $125.25 as of the Aug. 18, 2026, market close.What is the scale of the executive's remaining equity position?
Following this transaction, the Chief Executive Officer retains a direct position of 783,300 shares, representing a significant portion of the 0.67% total insider ownership of the $14 billion company.How do the company's financial fundamentals compare to the trade size?
The ~$736,000 transaction is small relative to the company's $1.0 billion in trailing twelve-month (TTM) revenue and $235 million in net income.Company OverviewMetricValueShare Price (as of market close 2026-08-18)$125.25Market Capitalization$14.2 billionRevenue (TTM)$1.0 billionNet Income (TTM)$235.2 millionCompany SnapshotDigitalOcean provides cloud computing infrastructure and developer tools, including computing power, storage, networking capabilities, and application deployment services designed to serve individual developers, start-ups, and small to mid-sized businesses globally.The company operates a platform-based business model that generates revenue through subscription-based services for cloud infrastructure consumption, with customers paying for on-demand resources across multiple geographic regions spanning North America, Europe, Asia, and beyond.DigitalOcean's primary customer base consists of individual developers, early stage start-ups, and small- to mid-market enterprises seeking accessible, cost-effective cloud infrastructure solutions without the complexity of larger enterprise platforms.

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DigitalOcean Holdings is a leading cloud infrastructure provider with a market capitalization of $14 billion and TTM revenue of $1 billion, demonstrating significant scale and profitability, with TTM net income of $235 million.

The company has achieved a 336% one-year stock price appreciation, reflecting strong market recognition of its growth trajectory and operational execution.

DigitalOcean's competitive advantage derives from its developer-centric platform design, global infrastructure footprint, and focus on simplifying cloud computing for underserved market segments that require straightforward, cost-effective solutions.

What this transaction means for investorsThis sale shouldn't concern investors, as it represented a tiny percentage of the insider's stake in the company's stock. Moreover, it was executed under a pre-adopted plan that insiders often use to avoid appearing to act on material non-public information.

Importantly, TTM revenue grew 21% year over year. This continues the company's multi-year streak of reporting double-digit top-line growth, reflecting growing demand for its services.

Investors have recognized the opportunity for DigitalOcean's AI-native cloud platform, with the stock soaring over the past year. Even after the recent pullback, the stock's climb leaves the valuation at an elevated level, trading at high multiples of earnings and cash flow.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DigitalOcean. The Motley Fool has a disclosure policy.

On August 19, 2026, DigitalOcean Holdings Inc DOCN shares fell 6.9% to a current price of $116.66, continuing a downward trend that has seen a decline of 12.5% over the past week. The stock has fluctuated between a 52-week high of $187.50 and a low of $29.62.

GF Value™ verdict: Current price of $116.66 is 163.1% overvalued compared to GF Value of $44.34.GF Score™ is 72/100, indicating an above-average rating.Most notable signal: Insiders sold $569.8M worth of shares over the past 12 months, with no buying activity.Is DOCN Overvalued or Undervalued?According to the GF Value™, which is GuruFocus' proprietary estimate of intrinsic value based on historical trading multiples, past business growth, and future performance projections, DigitalOcean is significantly overvalued at its current trading price. The GF Value™ estimates fair value at $44.34, suggesting that DOCN is currently trading at a substantial 163.1% premium. This extreme reading serves as a directional warning for potential investors, indicating that the stock may not be a sound investment at this price level.

Given that DigitalOcean has been unprofitable and cash-flow-negative, traditional earnings-based valuations such as Price-to-Earnings (P/E) ratios may not accurately reflect the company's worth. Instead, a Price-to-Sales (P/S) analysis is more relevant, particularly in the context of DigitalOcean's historical median P/S ratio of approximately 5.6x. The current valuation indicates that investors are paying a significant premium, which elevates the risk associated with investing in the company at its current price.

How Does DOCN's Valuation Compare to Its History?MetricCurrentHistoricalP/E (TTM)53.3x44.9xForward P/E84.1x-The current P/E ratio of 53.3x is 19% higher than its 5-year median of 44.9x, indicating that the stock is trading above its historical valuation metrics. This assessment aligns with the GF Value™ verdict, reinforcing the conclusion that DOCN is overvalued based on its current earnings profile.

What Does DOCN's GF Score™ Tell Us?The GF Score™ evaluates a stock's performance across various dimensions, including financial strength, profitability, growth, valuation, and momentum. DigitalOcean's GF Score™ stands at 72/100, suggesting that it is performing better than average in the market.

MetricRatingGF Score™72Financial Strength6/10Profitability5/10Growth10/10Valuation1/10Momentum6/10In the context of its GF Score™, DigitalOcean demonstrates exceptional growth potential with a rank of 10/10, indicating strong future prospects. However, the company scores poorly on valuation with a rank of 1/10, suggesting that current prices may not be justified by its financial fundamentals. The financial strength and profitability ranks of 6/10 and 5/10, respectively, indicate that while the company is relatively stable, its profitability metrics remain a concern.

What Are Gurus and Insiders Doing with DOCN?Currently, six gurus hold positions in DigitalOcean, with one adding to their holdings and five trimming their positions in recent quarters. This mixed sentiment among professional investors signals caution, especially considering that insiders have sold a staggering $569.8 million worth of shares over the past year without any reported buying activity. Such a trend often raises red flags, as it may indicate a lack of confidence in the company's short-term performance or strategic direction.

The significant insider selling suggests that those closest to the company might not believe the stock is a good value at current levels. This insider activity serves as an important signal for prospective investors to consider when evaluating the stock's future potential.

What This Means for InvestorsConsidering the current pricing dynamics and the valuation metrics, DigitalOcean Holdings Inc appears to be overvalued based on the GF Value™ assessment. The substantial premium over the estimated fair value, combined with the concerning insider selling and guru activity, suggests that investors should exercise caution when considering an investment in DOCN at this time.

For further details and analysis, you can visit the DigitalOcean Holdings Inc DOCN stock page for more insights.

Frequently Asked QuestionsWhat is DOCN's GF Score™?

DOCN has a GF Score™ of 72/100, indicating that it performs above average compared to other stocks in the market.

Is DOCN overvalued or undervalued?

DOCN is currently overvalued according to the GF Value™, which estimates its fair value at $44.34, suggesting a significant premium at the current trading price of $116.66.

What is DOCN's P/E ratio?

The P/E ratio for DOCN is 53.3x, which is 19% above its 5-year median of 44.9x, indicating that the stock is trading at a higher valuation compared to its historical levels.

This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Shares of DigitalOcean (NYSE:DOCN | DOCN Price Prediction) are climbing midday Monday after the company announced general availability of Managed AI Agents through its Cloudways service. DigitalOcean stock is up 5% to $137.04, extending a 170% year-to-date advance.

The move stands out because the rest of cloud infrastructure is trading lower. Fastly (NYSE:FSLY) shares are down 4% to $28.67, and Akamai (NASDAQ:AKAM) shares are down 2% to $122.89. That divergence points to a company-specific reaction rather than a broad sector bid.

Managed AI Agents Land on Cloudways Cloudways, a DigitalOcean service, announced general availability of Managed AI Agents, a new product line launching with OpenClaw and Hermes as its first two managed agents, with additional open-source agents planned. The pitch is that deploying AI agents in production usually requires provisioning infrastructure, configuring containers, securing environments, and handling ongoing maintenance. The managed offering removes that overhead.

Customers can deploy through the same Cloudways platform they already use for application hosting. Every deployment runs in an isolated environment, agent runtime updates are validated by Cloudways before rollout, and a 1-click MCP integration lets an agent act on the servers and applications a customer already runs on the platform. DigitalOcean cited more than 386,000 GitHub stars for OpenClaw and more than 228,000 for Hermes as evidence of established communities behind both projects.

Suhaib Zaheer, SVP Managed Hosting at DigitalOcean and General Manager at Cloudways, provided a concise explanation:

The general availability of OpenClaw and Hermes on Cloudways represents an important milestone in our vision of making AI infrastructure simpler and more accessible. As AI agents become an increasingly important part of how the customer builds and deploys applications, we believe running them should be just as simple and reliable as deploying any other workload.

The announcement is DigitalOcean’s own press release distributed through Business Wire, not independent reporting. No pricing, customer commitments, revenue contribution, or financial targets were disclosed.

The Honest Read The constructive case is that DigitalOcean positions itself as an AI-native cloud built for inference and agentic workloads, serving more than 680,000 customers. Managed agent hosting fits that strategy, moving the company up the stack from raw infrastructure toward higher-value managed services (we profiled seven picks-and-shovels AI infrastructure names, from power to networking, in a report you can access here).

The skeptical case is that OpenClaw and Hermes are open-source projects DigitalOcean didn’t build, so packaging third-party software as managed hosting is a competitive convenience rather than proprietary technology. With DigitalOcean stock already up 170% year to date, the launch lands on a name with substantial expectations built in. That cuts both ways.

Peers Trade the Other Direction Fastly stock, from an edge cloud platform spanning delivery, security, compute, and observability, is down 4% today despite a 194% year-to-date run. Akamai stock is down 2% today for the cybersecurity and cloud computing company operating a highly distributed content delivery network, with Akamai stock up 43% year to date.

Cloudflare (NYSE:NET), a connectivity cloud company building infrastructure for agent-driven internet traffic, has Cloudflare stock up 60% year to date. The peer read reinforces that today’s action is about DigitalOcean specifically.

WisdomTree Cloud Computing Fund (NASDAQ:WCLD) shares are down 2% to $39.82, and the ETF is up 16% year to date. Its decline alongside gains in DigitalOcean isolates how company-specific the move is. The gap between the fund’s return and DigitalOcean’s shows how far the individual name has outrun the broad cloud basket.

What to Watch Investors can watch for whether DigitalOcean discloses pricing, adoption, or revenue contribution for Managed AI Agents in future reporting, and whether additional open-source agents are added on schedule. Also worth tracking is whether larger cloud providers move to offer comparable managed agent hosting, and whether the company’s AI-related workload mix continues accelerating into Q4 2026.

On the peer side, Fastly’s ability to defend edge and CDN turf against AI-native cloud entrants remains a key question, as does whether today’s rotation into DigitalOcean signals a broader repricing of cloud infrastructure names by AI exposure.

Contact [email protected] for any questions or corrections.

Warren J. Adelman, a Director at DigitalOcean Holdings, Inc. (DOCN +10.35%), sold 4,200 shares of common stock on August 7, 2026, as disclosed in a recent SEC Form 4 filing.

Transaction summaryMetricValueTransaction value$520,842Shares sold4,200Post-transaction shares (directly held)67,433Post-transaction value$8.37 millionTransaction value based on SEC Form 4 weighted average sale price ($124.01); post-transaction value based on August 07, 2026 market close ($124.15).

Key questionsHow does this divestment compare to the insider's total equity position?
Warren J. Adelman retained 67,433 shares directly after selling 4,200 shares. This indicates that 94% of the insider's reported equity remains intact, characterizing the move as a modest reduction in total direct exposure rather than a fundamental shift in position.What is the current market valuation context for the company?
As of the August 10, 2026 market close, the stock was priced at $129.73, which is 4.61% above the insider's weighted-average execution price. The company currently maintains a market capitalization of $13.6 billion and reported trailing-twelve-month revenue of $1.0 billion.Does the insider maintain exposure through other investment vehicles?
According to the filing, all reported equity is held directly. There are no reported indirect holdings or other share classes associated with this insider, and the firm's total beneficial ownership of 67,433 shares matches the direct common stock position.Company OverviewMetricValueShare Price (as of market close 2026-08-10)$129.73Market Capitalization$13.6 billionRevenue (TTM)$1.0 billionNet Income (TTM)$235.2 millionCompany SnapshotDigitalOcean provides cloud computing infrastructure and developer tools, including computing power, storage, and networking capabilities, generating revenue primarily through subscription-based cloud services and platform offerings.The company operates a scalable, self-service platform business model that enables customers to provision and manage cloud resources on-demand, with revenue derived from consumption-based pricing and tiered subscription plans.DigitalOcean serves individual developers, early-stage startups, and small to mid-sized businesses across North America, Europe, Asia, and other regions seeking accessible and cost-effective cloud infrastructure solutions.DigitalOcean Holdings, Inc. operates as a global cloud infrastructure provider with significant scale, evidenced by $1.0 billion in TTM revenue and a $13.6 billion market capitalization. The company has demonstrated strong profitability with $235.2 million in TTM net income, reflecting a net margin of 23.52%. DigitalOcean's competitive positioning centers on delivering simplified, developer-friendly cloud services at competitive price points, targeting the underserved market segment of individual developers and SMBs that require enterprise-grade infrastructure without enterprise complexity.

What this transaction means for investorsAs previously mentioned, Adelman’s sale of DigitalOcean stock amounted to only around 6% of his shares.

The report did not include any commentary on why he sold, but it looks like a liquidity event. For one, the stock was up 262% over the last 12 months after it spent years trading in a range following the 2022 bear market.

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Moreover, the fact that he kept 94% of his shares indicates a continuing belief in the DigitalOcean investment thesis. Its cloud infrastructure fills a need for small businesses and individual developers not directly addressed by the larger cloud companies.

Furthermore, its growth is accelerating, with revenue rising by 28% yearly in the second quarter of 2026. Although net income fell over the same period, a 45% increase in research and development probably means it has deferred some profit to invest in its business, something that could boost the cloud stock in the future.

Amid those conditions, it is safe to assume that Adelman banked some profits as he awaits future gains in the stock. Thus, this action should probably not change anyone’s DigitalOcean investment thesis.

Investors interested in Internet - Software stocks are likely familiar with OneSpan (OSPN) and DigitalOcean Holdings, Inc. (DOCN). But which of these two stocks offers value investors a better bang for their buck right now?

DigitalOcean offers a compelling buy-the-dip opportunity as shares are down ~25% from YTD highs despite strong fundamentals. DOCN posted a Q2 beat-and-raise, lifting full-year revenue guidance to over 30% y/y growth, underscoring robust AI-native enterprise momentum. Recurring revenue and $1.1B ARR growing >10% sequentially position DOCN favorably versus chip stocks reliant on one-time sales.

Catching the AI Wave: DigitalOcean Reels in AI WhalesDigitalOcean NYSE: DOCN reported second-quarter 2026 revenue of $281 million, up 29% from a year earlier and above the high end of its guidance, as growth accelerated among its largest customers and AI-focused offerings gained adoption.

Chief Executive Officer Paddy Srinivasan said the company added a record $93 million in annual recurring revenue during the quarter, nearly triple the incremental ARR reported in the year-earlier period. The company also raised its full-year outlook, citing demand that it said continues to exceed available capacity.

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3 Tech ETFs That Could Bounce Back After the AI Selloff“We delivered 29% year-over-year revenue growth while continuing to have strong profitability,” Srinivasan said. He added that DigitalOcean expects roughly 30% revenue growth for the full year and at least 35% growth in the fourth quarter.

Large Customers and AI Revenue Drive Growth DigitalOcean said ARR from customers spending at least $100,000 annually rose 98% year over year. ARR from customers spending at least $500,000 increased 160%, while ARR from customers spending $1 million or more climbed 214%.

DigitalOcean’s AI Surge: How Far Can This Rally Go?The company’s largest customer cohort represented 23% of total ARR in the second quarter, compared with 9% a year earlier. AI customer ARR reached $234 million, rising 212% year over year, according to Chief Financial Officer Matt Steinfort.

DigitalOcean said 85% of AI customer ARR came from inference services and Core Cloud products rather than Bare Metal offerings. Inference services grew nearly 800% year over year and accounted for more than 70% of total AI customer ARR, Srinivasan said.

The company’s remaining performance obligations rose to $894 million, more than 12 times the prior-year level, with an average duration of 3.7 years. Steinfort said those commitments were secured from a range of customers and that the company’s top 25 customers accounted for 20% of ARR during the quarter.

DigitalOcean also said it would no longer emphasize net dollar retention as a key metric. NDR reached 102% in the quarter, a three-year high, but Steinfort said the measure has become less representative of the company’s business as growth increasingly comes from its biggest customers and newer AI customers.

Inference Engine Expands AI Platform Adoption DigitalOcean launched its Inference Engine in late April, offering managed serverless inference and related technologies. Srinivasan said more than 6,000 customers have used the service since launch, with customer count growing by nearly 60% on average each month. Token volume increased 30-fold over the past 60 days, he said.

Open-weight models accounted for about 15% of token volume shortly after the launch and had grown to nearly 75% by the time of the call. The company said it now offers more than 75 open- and closed-source models through a single endpoint and has completed 14 day-zero model launches since April.

Srinivasan said DigitalOcean is seeing a shift from customers seeking the greatest possible token consumption toward optimizing the quality, latency and cost of AI workloads. He described the company’s Inference Engine as a production runtime that integrates functions including routing, model evaluations, batch inference, prompt caching and server-side tools for AI agents.

The company said its Inference Router, which adjusts requests across open and frontier models based on quality, latency and cost, had nearly 1,400 active customers. DigitalOcean also highlighted its launch-partner status for Kimi K3, stating that the model brought more than 400 net new customers in its first week on the platform.

Core Cloud Attachments and Capacity Plans Management said it is seeking to build an “AI-Native Cloud” platform that connects inference, agents, data products and core infrastructure. More than half of new AI customers added year to date had attached a Core Cloud product, Srinivasan said. Among AI customers with at least $100,000 in ARR, roughly 70% had attached a Core Cloud product in the second quarter.

The company cited customers and ecosystem relationships including OpenCode, Daytona, Vercel and OpenRouter. DigitalOcean said it serves more than 20 billion tokens per day through OpenRouter, up more than 330% over the prior 60 days.

DigitalOcean launched data centers in Richmond during the first quarter and Kansas City during the second quarter, both ahead of schedule, management said. The company remains on track to open its Memphis data center in the second half of 2026. It also secured about 20 megawatts of additional capacity expected to come online in late 2027 and 2028.

Total committed capacity is now approximately 155 megawatts, with the majority expected to be online by the end of 2027. Management said the company has 15 megawatts remaining to bring online this year.

During the quarter, DigitalOcean increased list prices on several GPU fleets by approximately 30%. Steinfort said the effect on second-quarter incremental ARR was modest, while pricing actions were included in the company’s outlook for the remainder of 2026.

Profitability, Balance Sheet and Outlook Adjusted EBITDA was $114 million, representing a 40% margin. GAAP operating income was $29 million, or a 10% margin, while adjusted operating income was $67 million, or a 24% margin. Non-GAAP diluted earnings per share were $0.45, and adjusted free cash flow totaled $61 million.

Trailing 12-month adjusted free cash flow was $175 million, equal to 17% of revenue. For the full year, DigitalOcean expects adjusted free cash flow margin of 11% to 13%.

In July, the company retired approximately $472 million of its 0% convertible senior notes due in 2030. Steinfort said the transaction reduced leverage with minimal cash use and effectively no dilution because the underlying shares had already been reflected in diluted share calculations.

Third-quarter revenue is projected at $304 million to $307 million, representing 32% to 34% year-over-year growth. Third-quarter adjusted EBITDA margin is expected to be 38% to 39%. Third-quarter non-GAAP diluted EPS is forecast at $0.28 to $0.30. Full-year revenue is expected to be $1.17 billion to $1.18 billion, representing approximately 30.5% growth. Full-year adjusted EBITDA margin is projected at about 39%, with non-GAAP diluted EPS of $1.35 to $1.40. Management did not provide formal 2027 guidance but reiterated greater confidence in its previous expectation for revenue growth of more than 50% next year. Steinfort said the timing of future data-center capacity additions remains an important variable in determining the company’s 2027 results.

About DigitalOcean (NYSE:DOCN)DigitalOcean Holdings, Inc is a cloud infrastructure provider that focuses on simplicity, performance and developer experience. The company offers a range of cloud services designed to help software developers, startups and small- to medium-sized businesses deploy, manage and scale applications. Its flagship offering, Droplets, provides virtual private servers that can be configured with various CPU, memory and storage options. In addition to compute instances, DigitalOcean's platform includes managed Kubernetes, scalable object and block storage, managed databases, load balancers and networking capabilities such as Virtual Private Cloud (VPC) and Floating IPs.

Founded in 2011 and headquartered in New York City, DigitalOcean was created with the goal of making cloud computing more accessible to individual developers and smaller teams.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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DigitalOcean Holdings, Inc. (DOCN) Q2 2026 Earnings Call August 4, 2026 8:00 AM EDT

Company Participants

Radu Patrichi
Padmanabhan Srinivasan - CEO & Director
Matt Steinfort - Chief Financial Officer

Conference Call Participants

Gabriela Borges - Goldman Sachs Group, Inc., Research Division
Jason Ader - William Blair & Company L.L.C., Research Division
Mark Zhang - Citigroup Inc., Research Division
Wamsi Mohan - BofA Securities, Research Division
Sanjit Singh - Morgan Stanley, Research Division
Thomas Blakey - Cantor Fitzgerald & Co., Research Division
Jackson Ader - KeyBanc Capital Markets Inc., Research Division
Radi Sultan - UBS Investment Bank, Research Division

Presentation

Operator

Hello, everyone. Thank you for joining us, and welcome to the DigitalOcean Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Radu Patrichi, Head of Investor Relations. Radu, please go ahead.

Radu Patrichi

Thank you, and good morning. Thank you all for joining us today to review DigitalOcean's Second Quarter 2026 Results. Joining me on the call today are Paddy Srinivasan, our Chief Executive Officer; and Matt Steinfort, our Chief Financial Officer.

For those of you following along, an accompanying slide presentation is available on the webcast. Before we begin, let me remind you that certain statements made on today's call may be considered forward-looking, which reflect management's best judgment based on currently available information. Our actual results may differ materially from those projected in these forward-looking statements, including our financial outlook. I direct your attention to the risk factors contained in our SEC filings as well as those referenced in today's press release that is posted on our website.

DigitalOcean expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements made today. Additionally, non-GAAP financial measures will be discussed on this conference call. Reconciliations to the most comparable GAAP financial measures can be

Raising 2026 revenue outlook

RPO increased to $894 million, up 12x from a year ago

Q2 2026 Revenue of $281 million grew 29% year-over-year

Million+ Dollar Customer ARR grew 214% year-over-year to $259 million

AI Customer ARR grew 212% year-over-year to $234 million

Record $93 million in incremental ARR

BROOMFIELD, Colo.--(BUSINESS WIRE)--DigitalOcean Holdings, Inc. (NYSE: DOCN), the AI-Native Cloud purpose-built for inference and agentic workloads, today announced results for its second quarter ended June 30, 2026.

"Our growth rate is accelerating, as revenue grew 29% year-over-year, more than double our growth rate a year ago," said Paddy Srinivasan, CEO of DigitalOcean. "The acceleration is coming from our highest spending customers and sophisticated AI Natives, and we are now beginning to land nine-figure annual commitments. Early Inference Engine customers drove their total token consumption up approximately 30x in the last 60-days, and 85% of our AI customer ARR now comes from inference and core cloud rather than bare metal. Just as important is how we are growing: attractive margins, positive free cash flow, capacity delivered on or ahead of schedule, and a stronger balance sheet. Our customer momentum and early product traction give us confidence to raise our 2026 revenue outlook to approximately 30%, reaching 35% or more by Q4 2026, and strengthen our conviction in our ability to exceed 50% growth in 2027."

Second Quarter 2026 Financial Highlights(1):

Revenue was $281 million, an increase of 29%. Annual Run-Rate Revenue (“ARR”) ended the quarter at $1,125 million, an increase of 29%. AI Customer ARR was $234 million, an increase of 212%. Record $93 million of incremental ARR added during the quarter, an increase of 191%. Net income attributable to common stockholders was $35 million, a decrease of 4%, and net income margin was 13%. Operating income was $29 million, a decrease of 18%, and operating income margin was 10%. Adjusted operating income was $67 million, an increase of 9%, and adjusted operating income margin was 24%. Adjusted EBITDA was $114 million, an increase of 27%, and adjusted EBITDA margin was 40%. Diluted net income per share was $0.29 and non-GAAP diluted net income per share was $0.45. Net cash from operating activities increased to $110 million at a 39% margin, from $92 million at a 42% margin in the second quarter of 2025. Adjusted free cash flow increased to $61 million at a 22% margin, from $57 million at a 26% margin in the second quarter of 2025. Cash and cash equivalents was $767 million as of June 30, 2026. Remaining Performance Obligation (“RPO”)(2) was $894 million, of which, $366 million is expected to be recognized over the next 12 months. RPO was $71 million in the second quarter of 2025. Second Quarter 2026 Operational Highlights(1):

Launched Inference Engine as part of AI-Native Cloud. Shipped more than 80 product releases since April. Signed first nine-figure annual customer commitments with leading AI-Natives, extending weighted average contract life from 1.6 years to over 3 years. Secured an incremental 20 MW of committed data center capacity expected to come online in 2027 and 2028, bringing total committed capacity to approximately 155 MW, with additional capacity actively being pursued. Added to the Russell 1000 Index, recognition of a business that has scaled with discipline, pairing durable growth with consistent execution. The number of $100K+ Customers(3) grew 9%, while the revenue from these customers, which now represents 35% of total revenue, grew 98%. The number of $500K+ and $1M+ Customers grew 35% and 73%, respectively. Revenue from these customers, which now represents 26% and 23% of total revenue, grew 160% and 214%, respectively. Recent Developments:

Repurchased approximately $472 million of our 0.00% Convertible Senior Notes due 2030, funded by a concurrent registered direct offering, reducing leverage with minimal cash usage and minimal dilution, with issued shares offset by the retired notes and an intended repurchase of approximately 500,000 shares. Financial Outlook:

DigitalOcean is initiating guidance for the third quarter ending September 30, 2026 as follows:

Total revenue of $304 to $307 million, up 32% to 34% year-over-year. Adjusted EBITDA margin of 38% to 39%. Non-GAAP diluted net income per share of $0.28 to $0.30. Fully diluted weighted average shares outstanding of approximately 126 to 127 million shares. For the full year 2026, we now expect:

Total revenue of $1.170 to $1.180 billion, up 30% to 31% year-over-year. Adjusted EBITDA margin of 38.5% to 39.5%. Adjusted free cash flow margin in the range of 11% to 13% of revenue. Non-GAAP diluted net income per share of $1.35 to $1.40. Fully diluted weighted average shares outstanding of approximately 122 to 123 million shares. A reconciliation of non-GAAP outlook measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. For example, stock-based compensation expense-related charges are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. Accordingly, a reconciliation is not available without unreasonable effort and we are unable to assess the probable significance of the unavailable information, although it is important to note that these factors could be material to our results computed in accordance with GAAP.

The financial guidance presented in this release are estimates based on information available to management as of the date of this release. There can be no assurance that our actual results will not differ from the financial guidance presented in this release.

Conference Call Information:

DigitalOcean will host a conference call today, August 4, 2026, at 8:00 a.m. ET to review its results. The conference call and presentation can be accessed by registering for the webcast at https://events.q4inc.com/attendee/684389800. A live webcast and replay of the conference call in addition to the presentation can be accessed from the DigitalOcean investor relations website at investors.digitalocean.com.

About DigitalOcean

DigitalOcean (NYSE: DOCN) is the AI-Native Cloud, purpose-built for inference and agentic workloads. Its five-layer integrated platform, spanning GPU and CPU infrastructure, core cloud, inference, data, and managed agent orchestration, is open throughout with no vendor lock-in, giving builders everything they need to start fast, scale production AI workloads, and improve unit economics. More than 680,000 customers and millions of developers globally trust DigitalOcean to build, ship, and scale their applications. Learn more at digitalocean.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding our expected future performance, including but not limited to statements in the section titled “Financial Outlook” and the quotations of our CEO. The forward-looking statements contained in this release and the accompanying earnings call referenced in this release are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause actual results or outcomes to be materially different from any future results or outcomes expressed or implied by the forward-looking statements. These risks, uncertainties, assumptions, and other factors include, but are not limited to: (1) fluctuations in our financial results make it difficult to project future results; (2) our ability to sustain profitability in the future; (3) our ability to expand usage of our platform by existing customers and/or attract new customers and/or retain existing customers; (4) the speed at which the market for our platform and solutions develops; (5) the success of the development and use of our artificial intelligence and machine learning (“AI/ML”) product offerings or use of third-party AI/ML-based tools; (6) our ability to release updates and new features to our platform and adapt and respond effectively to rapidly changing technology or customer needs; (7) our ability to control costs, including our operating expenses, and the timing of payment for expenses; (8) the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges; (9) breaches in our security measures allowing unauthorized access to our platform, our data, or our customers’ data; (10) the competitive markets in which we participate; (11) our ability to effectively integrate and retain new members of our executive leadership team and senior management; (12) the effects of acquisitions and their integration; (13) general market, political, economic, and business conditions, including changes in trade policies, such as trade wars, tariffs and other restrictions or the threat of such actions; (14) the impact of new accounting pronouncements; (15) our ability to control fraudulent registrations and usage of our platform, reduce bad debt and lessen capacity constraints on our data centers, servers and equipment; (16) our customers’ ability to have continued and unimpeded access to our platform, including as a result of evolving laws and industry standards; and (17) our plans with respect to accelerating investments in data centers and GPU capacity.

Further information on these and additional risks, uncertainties, assumptions and other factors that could cause actual results or outcomes to differ materially from those included in or contemplated by the forward-looking statements contained in this release are included under the caption “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent filings and reports we make with the SEC.

We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this release. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur. The forward-looking statements made in this release relate only to events as of the date on which the statements are made. We assume no obligation to, and do not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with non-GAAP financial measures including: (i) adjusted operating income and adjusted operating income margin, (ii) adjusted EBITDA and adjusted EBITDA margin and (iii) non-GAAP net income and non-GAAP diluted net income per share. These measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

We believe that adjusted operating income margin and adjusted EBITDA, when taken together with our GAAP financial results, provide meaningful supplemental information regarding our operating performance (including our long-term performance in the case of adjusted operating income) and facilitate internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of adjusted operating income and adjusted EBITDA is helpful to our investors as they are measures used by management in assessing the health of our business, evaluating our operating performance, and for internal planning and forecasting purposes.

We believe non-GAAP net income and non-GAAP diluted net income per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of unusual or non-recurring items from period to period for reasons unrelated to overall operating performance.

Our calculations of each of these measures may differ from the calculations of measures with the same or similar titles by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider each of these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable financial measure calculated in accordance with GAAP and our other GAAP results. A reconciliation of each of our non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP is set forth in the tables in the section “Reconciliation of GAAP to Non-GAAP Data.”

Adjusted Operating Income and Adjusted Operating Income Margin

We define adjusted operating income as operating income, adjusted to exclude stock-based compensation, amortization of acquired intangible assets, acquisition related compensation, acquisition and integration related costs, restructuring and other charges, restructuring related charges, impairment of certain long-lived assets and other charges. We define adjusted operating income margin as adjusted operating income as a percentage of revenue.

Adjusted EBITDA and Adjusted EBITDA Margin

We define adjusted EBITDA as net income attributable to common stockholders, adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, acquisition related compensation, acquisition and integration related costs, income tax expense (benefit), restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, interest income and other income, net, (gain) loss on extinguishment of debt, net, and other charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue.

Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share

We define non-GAAP net income as net income attributable to common stockholders, excluding stock-based compensation, acquisition related compensation, amortization of acquired intangibles, acquisition and integration related costs, restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, (gain) loss on extinguishment of debt, net, and other charges. In addition to these exclusions, we subtract an assumed non-GAAP provision for income taxes to calculate non-GAAP net income that excludes the current period income tax benefit (expense). We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision in order to provide better consistency across reporting periods. We define non-GAAP diluted net income per share as non-GAAP net income divided by the weighted-average diluted shares outstanding, which includes the potentially dilutive effect of our stock options, RSUs, PRSUs, and Convertible Notes and, beginning in the first quarter of 2026, excludes the in-the-money portion of our 2030 Convertible Notes as they are covered by our capped call transactions, which are expected to mitigate the dilutive effect of our 2030 Convertible Notes.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by operating activities less purchases of property and equipment, capitalized internal-use software costs, purchase of intangible assets, and excluding cash paid for restructuring and other charges, acquisition related compensation, restructuring related charges, and acquisition and integration related costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue.

We believe that adjusted free cash flow and adjusted free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our core operations that can be used for strategic initiatives, including investing in our business and selectively pursuing acquisitions and strategic investments. We further believe that historical and future trends in adjusted free cash flow and adjusted free cash flow margin, even if negative, provide useful information about the amount of net cash provided by operating activities that is available (or not available) to be used for strategic initiatives. Adjusted free cash flow and adjusted free cash flow margin exclude acquisitions of equipment under financing arrangements, finance leases, and our future contractual commitments. Additionally, adjusted free cash flow does not represent the residual cash flow available for discretionary expenses given our debt obligations and the total increase or decrease in our cash balance for a given period.

Unlevered Adjusted Free Cash Flow and Unlevered Adjusted Free Cash Flow Margin

Unlevered adjusted free cash flow is a non-GAAP financial measure that we define as adjusted free cash flow excluding cash paid for interest and interest income. Unlevered adjusted free cash flow margin is calculated as unlevered adjusted free cash flow divided by total revenue.

We believe that unlevered adjusted free cash flow and unlevered adjusted free cash flow margin provide additional information to adjusted free cash flow about our liquidity and, measured over time, enable management and investors to monitor the underlying business’ growth pattern and ability to generate cash. We further believe that unlevered adjusted free cash flow is an important metric, as it provides a clear view of our cash generation before the impact of financing decisions and many investors and analysts use unlevered adjusted free cash flow as the basis of their enterprise value calculations as they assess the value of our business. Unlevered adjusted free cash flow and unlevered adjusted free cash flow margin exclude certain charges that will be settled in cash, such as interest paid to service our debt and equipment financing obligations. Additionally, unlevered adjusted free cash flow does not represent the residual cash flow available for discretionary expenses given our debt obligations and the total increase or decrease in our cash balance for a given period.

Key Business Metrics:

We utilize the key metrics set forth below to help us evaluate our business and growth, identify trends, formulate financial projections and make strategic decisions.

Customers

We calculate customer count as the average number of customers as of the last day of the month for each month in the most recent quarter. Customers are classified in the following categories based on the amount of their spend in a given month and individual customers may fall within different categories within a reporting period (customer spend in a month in whole dollars):

Digital Native Enterprise Customers: users that spend more than $500 in a month. $100K+ Customers: users that spend more than $8,333 in a month. $500K+ Customers: users that spend more than $41,667 in a month. $1M+ Customers: users that spend more than $83,333 in a month. ARR

We calculate ARR by multiplying total revenue for the most recent quarter by four.

AI Customer ARR

We calculate AI Customer ARR by multiplying total AI Customer Revenue for the most recent quarter by four. AI Customer Revenue is defined as the total revenue generated from customers who utilize one or more of our AI/ML offerings, inclusive of their revenue from our IaaS and PaaS/SaaS offerings during the period.

Other Metrics:

Remaining Performance Obligation

Remaining performance obligation (“RPO”) represents commitments in customer contracts for future services that have not yet been recognized in the condensed consolidated financial statements. RPO is not necessarily indicative of future revenue growth because it does not account for the timing of customers’ consumption or their usage beyond their contracted capacity. Additionally, RPO may increase when customers transition from usage-based to commitment-based agreements, which does not always reflect incremental revenue growth. RPO is influenced by a number of factors, including the timing and size of renewals, the timing and size of purchases of additional capacity and average contract term. Due to these factors, it is important to review RPO in conjunction with revenue and other financial metrics contained in this release and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent filings and reports we make with the SEC.

  DIGITALOCEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)

  June 30, 2026

December 31, 2025

Current assets:

Cash and cash equivalents

$

767,026

$

254,475

Accounts receivable, less allowance for credit losses of $6,812 and $6,374, respectively

115,000

90,908

Prepaid expenses and other current assets

135,584

81,598

Total current assets

1,017,610

426,981

Property and equipment, net

1,049,332

589,094

Restricted cash

156

158

Goodwill

350,651

348,674

Intangible assets, net

93,373

99,504

Operating lease right-of-use assets, net

505,697

270,854

Deferred tax assets

93,991

90,310

Other assets

12,243

12,130

Total assets

$

3,123,053

$

1,837,705

Current liabilities:

Accounts payable

$

10,387

$

38,836

Accrued other expenses

70,883

42,679

Deferred revenue

53,039

5,882

Debt, current

311,654

325,109

Operating lease liabilities, current

126,233

108,037

Finance lease liabilities and equipment financing obligations, current

129,777

31,411

Other current liabilities

74,139

67,510

Total current liabilities

776,112

619,464

Deferred tax liabilities

3,952

4,092

Debt, long-term

609,399

970,653

Operating lease liabilities, long-term

352,854

166,895

Finance lease liabilities and equipment financing obligations, long-term

447,943

99,103

Other non-current liabilities

2,062

6,188

Total liabilities

2,192,322

1,866,395

Commitments and contingencies (Note 9)

Preferred stock ($0.000025 par value per share; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2026 and December 31, 2025)

—

—

Common stock ($0.000025 par value per share; 750,000,000 shares authorized; 105,002,427 and 91,947,614 issued and outstanding as of June 30, 2026 and December 31, 2025, respectively)

2

2

Additional paid-in capital

925,014

16,005

Accumulated other comprehensive loss

(1,756

)

(960

)

Retained earnings (Accumulated deficit)

7,471

(43,737

)

Total stockholders’ equity (deficit)

930,731

(28,690

)

Total liabilities and stockholders’ equity

$

3,123,053

$

1,837,705

  DIGITALOCEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

  Three Months Ended

Six Months Ended

June 30,

June 30,

2026

2025

2026

2025

Revenue

$

281,184

$

218,700

$

539,089

$

429,403

Cost of revenue

126,522

87,755

239,717

169,014

Gross profit

154,662

130,945

299,372

260,389

Operating expenses:

Research and development

57,515

39,644

106,345

79,238

Sales and marketing

22,568

19,288

44,237

38,689

General and administrative

45,208

36,394

82,848

69,201

Total operating expenses

125,291

95,326

233,430

187,128

Operating income

29,371

35,619

65,942

73,261

Other (expense) income:

Interest expense

(7,463

)

(2,239

)

(18,016

)

(4,447

)

Loss on extinguishment of debt, net

—

(269

)

(2,700

)

(269

)

Interest income and other income, net

5,234

9,337

6,412

15,283

Other (expense) income, net

(2,229

)

6,829

(14,304

)

10,567

Income before income taxes

27,142

42,448

51,638

83,828

Income tax benefit (expense)

8,295

(5,421

)

(430

)

(8,597

)

Net income attributable to common stockholders

$

35,437

$

37,027

$

51,208

$

75,231

Net income per share attributable to common stockholders

Basic

$

0.34

$

0.41

$

0.52

$

0.82

Diluted

$

0.29

$

0.39

$

0.45

$

0.77

Weighted-average shares used to compute net income per share attributable to common stockholders

Basic

104,611

91,097

98,856

91,538

Diluted

126,548

100,617

118,708

101,521

  DIGITALOCEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

  Six Months Ended June 30,

2026

2025

Operating activities

Net income attributable to common stockholders

$

51,208

$

75,231

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

96,629

61,975

Stock-based compensation

55,231

40,513

Provision for expected credit losses

8,078

8,607

Loss on extinguishment of debt

2,700

269

Operating lease right-of-use assets and liabilities, net

(30,810

)

(13,816

)

Non-cash interest expense

2,960

4,005

Other

3,476

(7,853

)

Changes in operating assets and liabilities:

Accounts receivable

(32,230

)

(17,064

)

Prepaid expenses and other current assets

(53,906

)

1,201

Accounts payable and accrued expenses

6,536

(3,029

)

Deferred revenue

47,157

5,867

Other assets and liabilities

(140

)

631

Net cash provided by operating activities

156,889

156,537

Investing activities

Capital expenditures - property and equipment

(81,576

)

(95,160

)

Capital expenditures - internal-use software

(11,785

)

(3,412

)

Acquisition of equipment under financing arrangements

(51,544

)

—

Purchase of intangible assets

(754

)

(1,835

)

Cash paid for acquisition of businesses, net of cash acquired

(4,042

)

—

Net cash used in investing activities

(149,701

)

(100,407

)

Financing activities

Proceeds from follow-on public offering, net of underwriting discounts and issuance costs

887,888

—

Principal repayment of Term Loan Facility

(500,000

)

—

Proceeds from drawdown of Term Loan Facility

120,000

—

Payment of debt issuance costs

—

(4,081

)

Proceeds related to issuance of common stock under equity incentive plan

3,558

2,771

Proceeds from issuance of common stock under employee stock purchase plan

2,494

2,660

Employee payroll taxes paid related to net settlement of equity awards

(38,406

)

(16,294

)

Proceeds from financing arrangements

51,544

—

Principal repayments of finance leases and financing arrangements

(21,651

)

(2,733

)

Repurchase and retirement of common stock including related costs

—

(79,199

)

Net cash provided by (used in) financing activities

505,427

(96,876

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(66

)

45

Increase (decrease) in cash, cash equivalents and restricted cash

512,549

(40,701

)

Cash, cash equivalents and restricted cash - beginning of period

254,633

430,193

Cash, cash equivalents and restricted cash - end of period

$

767,182

$

389,492

  DIGITALOCEAN HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA

(unaudited)

  Adjusted Operating Income and Operating Income Margin

  Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands)

2026

2025

2026

2025

Operating income

$

29,371

$

35,619

$

65,942

$

73,261

Adjustments:

Stock-based compensation

32,724

21,081

55,231

40,513

Amortization of acquired intangible assets

5,070

5,031

10,008

10,228

Impairment of certain long-lived assets

311

—

311

—

Adjusted operating income

$

67,476

$

61,731

$

131,492

$

124,002

As a percentage of revenue:

Operating income margin

10

%

16

%

12

%

17

%

Adjusted operating income margin

24

%

28

%

24

%

29

%

Adjusted EBITDA and Adjusted EBITDA Margin

  Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands)

2026

2025

2026

2025

GAAP Net income attributable to common stockholders

$

35,437

$

37,027

$

51,208

$

75,231

Adjustments:

Depreciation and amortization

51,154

32,765

96,629

61,975

Stock-based compensation

32,724

21,081

55,231

40,513

Interest expense

7,463

2,239

18,016

4,447

Income tax (benefit) expense

(8,295

)

5,421

430

8,597

Loss on extinguishment of debt

—

269

2,700

269

Impairment of certain long-lived assets

311

—

311

—

Interest income and other income, net(1)

(5,234

)

(9,337

)

(6,412

)

(15,283

)

Adjusted EBITDA

$

113,560

$

89,465

$

218,113

$

175,749

As a percentage of revenue:

Net income margin

13

%

17

%

9

%

18

%

Adjusted EBITDA margin

40

%

41

%

40

%

41

%

Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share

  Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands, except per share amounts)

2026

2025

2026

2025

GAAP Net income attributable to common stockholders

$

35,437

$

37,027

$

51,208

$

75,231

Stock-based compensation

32,724

21,081

55,231

40,513

Amortization of acquired intangible assets

5,070

5,031

10,008

10,228

Loss on extinguishment of debt(1)

—

269

2,700

269

Impairment of certain long-lived assets

311

—

311

—

Non-GAAP income tax adjustment(2)

(18,735

)

(5,593

)

(18,752

)

(12,977

)

Non-GAAP Net income

$

54,807

$

57,815

$

100,706

$

113,264

Non-cash charges related to convertible notes(3)

$

1,118

$

1,596

$

2,190

$

3,191

Non-GAAP Net income used to compute net income per share, diluted

$

55,925

$

59,411

$

102,896

$

116,455

GAAP Net income per share attributable to common stockholders, diluted(6)

$

0.29

$

0.39

$

0.45

$

0.77

Stock-based compensation

0.27

0.21

0.48

0.40

Amortization of acquired intangible assets

0.04

0.05

0.09

0.10

Loss on extinguishment of debt(1)

—

—

0.02

—

Impairment of certain long-lived assets

—

—

—

—

Non-cash charges related to convertible notes(3)

0.01

0.02

0.02

0.03

Non-GAAP income tax adjustment(2)

(0.16

)

(0.08

)

(0.17

)

(0.15

)

Non-GAAP Net income per share, diluted(4)

$

0.45

$

0.59

$

0.89

$

1.15

GAAP Weighted-average shares used to compute net income per share, diluted

126,548

100,617

118,708

101,521

Add: Weighted-average dilutive effect of potentially dilutive securities

—

—

1,750

—

Less: Anti-dilutive impact of capped call transaction(5)

(3,227

)

—

(4,388

)

—

Non-GAAP Weighted-average shares used to compute net income per share, diluted(6)

123,321

100,617

116,070

101,521

____________________ (1)

For the three and six months ended June 30, 2026, excludes tax impact which is presented in Non-GAAP income tax adjustment.

(2)

For the periods in fiscal year 2026 and 2025, we used a tax rate of 16%, which we believe is a reasonable estimate of our long-term effective tax rate applicable to non-GAAP pre-tax income for each respective year.

(3)

Consists of non-cash interest expense for amortization of debt issuance costs related to our Convertible Notes.

(4)

May not foot due to rounding.

(5)

Excludes the in-the-money portion of our 2030 Convertible Notes for non-GAAP weighted-average diluted shares as they are covered by our capped call transactions. Our outstanding capped call transactions are antidilutive under GAAP, but are expected to mitigate the dilutive effect of our 2030 Convertible Notes, and therefore are included in the calculation of non-GAAP diluted shares outstanding. The capped calls have an antidilutive impact when the average stock price of our common stock in a given period is higher than their exercise price.

(6)

Includes 1,750 and 15,957 of potentially dilutive securities related to our 2026 and 2030 Convertible Notes, respectively, as if the entire principal amount outstanding were converted into shares for the three and six months ended June 30, 2026. Includes 8,403 of potentially dilutive securities related to our 2026 Convertible Notes as if the entire principal amount outstanding were converted into shares for the three and six months ended June 30, 2025. The Company has the election of settling any conversion in cash, shares of our common stock, or a combination of both. Refer to our Quarterly Report on Form 10-Q for the three months ended June 30, 2026 for further details.

Adjusted Free Cash Flow, Unlevered Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin and Unlevered Adjusted Free Cash Flow Margin

  Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands)

2026

2025

2026

2025

GAAP Net cash provided by operating activities

$

109,968

$

92,447

$

156,889

$

156,537

Adjustments:

Capital expenditures - property and equipment

(41,584

)

(33,197

)

(81,576

)

(95,160

)

Capital expenditures - internal-use software development

(7,045

)

(1,383

)

(11,785

)

(3,412

)

Purchase of intangible assets

(754

)

(852

)

(754

)

(1,835

)

Restructuring and other charges

—

—

—

64

Adjusted free cash flow

$

60,585

$

57,015

$

62,774

$

56,194

Plus: Cash paid for interest

4,820

54

14,349

249

Less: Interest income

(6,390

)

(3,202

)

(9,267

)

(6,859

)

Unlevered adjusted free cash flow

$

59,015

$

53,867

$

67,856

$

49,584

As a percentage of revenue:

GAAP Net cash provided by operating activities

39

%

42

%

29

%

36

%

Adjusted free cash flow margin

22

%

26

%

12

%

13

%

Unlevered adjusted free cash flow margin

21

%

25

%

13

%

12

%

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The $25K Day Trading Barrier is Gone

The long-standing Pattern Day Trader (PDT) rule that required many traders to maintain a $25,000 account balance is no longer standing in the way.

That means more traders can actively pursue short-term opportunities without the barrier that kept so many on the sidelines.

Now it's all about having the right strategy.

Dynamite Day Trading Signals helps you hit the ground running with up 2 options trade alerts per week, built to capture fast-moving opportunities.  

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