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DigitalOcean Holdings, Inc.

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Business Summary

DigitalOcean Holdings, Inc. operates as an agentic inference cloud platform that helps AI and Digital Native Enterprises build, run, and scale intelligent applications with speed, simplicity, and predictable economics. According to International Data Corporation (IDC), the aggregate worldwide IaaS and PaaS markets for individuals and companies with less than 500 employees is estimated to grow from approximately $138 billion in 2025 to $251 billion in 2028, representing a 22% compound annual growth rate. The company's platform combines production-ready GPU infrastructure, a full-stack cloud, model-first inference workflows, and an agentic experience layer to reduce operational complexity and accelerate time to production.

DigitalOcean competes primarily with large, diversified technology companies including Amazon (AWS), Microsoft (Azure), Google (GCP), IBM (IBM Cloud), Alibaba (Alibaba Cloud) and Oracle (Oracle Cloud), as well as smaller or niche cloud service providers such as OVHcloud, Akamai (Linode), Hetzner, Vultr, and Contabo. Its AI/ML offerings compete with providers including Amazon (AWS), Microsoft (Azure), Google (GCP), Coreweave and Lambda Labs, while its Managed Hosting offering competes with Kinsta and WP Engine. The company believes its key differentiators are being simple, scalable and approachable while offering a comprehensive range of integrated cloud and AI products, driving a broad range of customers around the world whose needs are not being fully met by larger cloud providers.

DigitalOcean generates revenue primarily from the usage of its agentic inference cloud platform by customers, with pricing primarily consumption-based and the majority of customers using the platform on a month-to-month basis, though a growing number of customers are opting to enter into committed contracts with minimum spend commitments. Revenue is recognized largely based on customer utilization of offerings, and the company serves a large number of customers ranging from growing or scaled businesses that generate millions of dollars in revenue to individual developers. As of December 31, 2025, the company had approximately 21,000 DNE Customers, collectively comprising 60% of total revenue for the year ended December 31, 2025, and no material customer concentration as the top 25 customers made up 10% of revenue in 2025.

DigitalOcean offers a comprehensive set of cloud platform capabilities spanning Infrastructure-as-a-Service (IaaS), including Droplet virtual machines, storage and networking offerings; Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS), including Managed Hosting, Managed Database, Managed Kubernetes and Marketplace offerings. The IaaS offerings include Droplets as the core compute offering, storage solutions including Spaces Object Storage, Volumes Block Storage, and Backups and Snapshots, and networking offerings including Cloud Firewalls, Managed Load Balancers, Virtual Private Cloud (VPC), IP Address Management, Domain Name System (DNS) Management, and NAT Gateways. The PaaS/SaaS offerings include Managed Hosting for growing technology companies looking to outsource their on-ramp to the internet, Managed Databases including PostgreSQL, MySQL, MongoDB, Managed Caching for Valkey, Managed Kafka, and Managed OpenSearch, Managed Kubernetes and Container Registry, App Platform, Functions, Uptime, and Marketplace with more than 350 preconfigured one-click applications.

DigitalOcean also offers a comprehensive artificial intelligence and machine learning (AI/ML) platform - DigitalOcean Gradient AI Agentic Cloud, which includes Gradient AI Infrastructure with offerings such as GPU Droplets and Bare Metal GPUs, the Gradient AI Platform offering various building block services including Large Language Models (LLMs), and Gradient AI Agents. In 2025, the company released a range of new AI products and platform capabilities including Gradient AI GPUs from AMD and NVIDIA, major enhancements to the Gradient AI Platform such as VPC support, image and video models, and the Agent Development Kit (ADK), expanded core infrastructure with Droplet autoscale pools, enhanced backups with flexible scheduling and usage-based pricing, Network File Storage, and significant improvements to Spaces Object Storage including per-bucket keys, cold storage, and storage autoscaling for all Managed Databases, as well as new managed services including Managed Caching for Valkey, network load balancers, partner network connect for multi-cloud environments, and NAT Gateway.

During the year ended December 31, 2025, DigitalOcean completed several significant capital events. On August 14, 2025, the company issued $625.0 million aggregate principal amount of 0.00% convertible senior notes due 2030 in a private placement, and used approximately $83.9 million of the net proceeds to pay the cost of related capped call transactions, and approximately $1.131 billion , consisting of approximately $606.1 million of the net proceeds from the 2030 Convertible Notes offering, together with $380.0 million of term loans under the Term Loan Facility and cash on hand, to repurchase in cash approximately $1.188 billion aggregate principal amount of its 0.00% Convertible Senior Notes due 2026. The company also entered into equipment financing arrangements with a third-party financial institution for $131.5 million during the year. On August 11, 2025, the company adopted the 2025 Share Buyback Program authorizing the repurchase of up to $100 million of common stock, and during the year ended December 31, 2025, repurchased and retired 2.4 million shares of common stock for an aggregate purchase price of $82.1 million . The company also entered into multiple strategic partnerships in 2025, including with Laravel, fal, an expanded partnership with AMD, and a multi-year, eight figure average per annum strategic partnership with Persistent Systems.

For the year ended December 31, 2025, DigitalOcean reported total revenue of $901.427 million , compared to $780.615 million in 2024, representing a 15% increase. Net income attributable to common stockholders was $259.262 million in 2025, compared to $84.492 million in 2024. Diluted net income per share attributable to common stockholders was $2.52 in 2025 versus $0.89 in 2024. Gross profit margin remained consistent at 60% for both 2025 and 2024. Income from operations was $156.989 million in 2025 compared to $91.007 million in 2024. Adjusted EBITDA was $374.805 million in 2025, representing a 42% adjusted EBITDA margin, compared to $328.499 million and 42% in 2024.

Business Outlook

DigitalOcean is focused on increasing usage by its existing customer base, which represents a significant opportunity for further sales expansion through increased usage of the platform and adoption of additional product offerings. The company closely monitors net dollar retention (NDR), which increased from 98% in 2024 to 100% in 2025, and expects to increase revenue in the future from existing customers through the introduction of new products and features tailored to DNE Customers, expanded customer outreach, and targeted services to support customers in migrating additional workloads from other cloud providers to DigitalOcean. The company is also investing in growing its base of AI Native and Cloud Native DNE Customers through a dedicated AI sales team with deep AI expertise, marketing initiatives that further optimize the self-service revenue funnel, enhanced research and development to build the product roadmap around the needs of DNE Customers, and expansion of the migration services team to support additional migrations from other cloud providers.

DigitalOcean is investing significantly in delivering innovative products, features and functionality for its DNE Customers, with a product strategy anchored in addressing the needs of DNE Customers and other growing technology companies. The company has accelerated the pace of product innovation and made disciplined investments to expand offerings for IaaS and PaaS offerings as well as newer AI/ML offerings. The market opportunity for the company's services continues to expand, and the company expects to make additional investments to offer an enhanced and tailored suite of IaaS, PaaS/SaaS and AI/ML offerings that address the changing needs of customers. The company also intends to drive increased adoption through its community ecosystem by continuing to produce high-quality educational content and hosting developer-focused programs and events around the world, and to augment its platform through strategic partnerships and acquisitions that are complementary to the business, accelerate customer acquisition, increase usage of the platform, and expand product offerings in core markets.

The filing does not contain specific margin trajectory or efficiency targets with exact figures.

DigitalOcean leases data centers in the New York, San Francisco and Atlanta metropolitan areas, and plans to open new facilities in 2026 in Memphis, Richmond and Kansas City, in the United States. The company also leases data centers in Australia, Canada, Germany, India, the Netherlands, Singapore and the United Kingdom. As of December 31, 2025, the company had a total of 1,462 employees, including 848 located outside the United States. The company expects research and development expenses to increase in absolute dollars as it continues to invest in its platform and product offerings, and expects sales and marketing expenses to increase in absolute dollars as it enhances product offerings and implements new marketing and sales strategies.

During the year ended December 31, 2025, the company entered into equipment financing arrangements with a third-party financial institution for $131.5 million . As of December 31, 2025, the company had $420.0 million borrowing capacity available under its 2025 Credit Facility. On August 11, 2025, the company adopted the 2025 Share Buyback Program authorizing the repurchase of up to $100 million of its common stock, which will expire on July 31, 2027. The company has never declared or paid any dividends on its common stock and does not anticipate declaring or paying dividends in the foreseeable future. Capital expenditures for property and equipment were $129.086 million in 2025, and capital expenditures for internal-use software were $10.765 million in 2025.

Unfavorable conditions in the economy both in the United States and abroad, including conditions resulting from trade tension, changes in gross domestic product growth, supply chain disruptions, inflationary pressures, high interest rates, financial and credit market fluctuations, volatility in the capital markets, liquidity concerns at banks and other financial institutions, geopolitical tensions, political turmoil, warfare and terrorist attacks could cause a decrease in business investments in information technology and negatively affect the growth of the business and results of operations. The company faces risks related to its ability to expand usage of its platform by existing customers, attract new customers and retain existing customers, particularly DNE Customers, as the majority of contracts are based on terms of service that do not require customers to commit to a specific contractual period and permit termination without advance notice. The company also faces risks related to the rapid technological change in the AI/ML landscape, as a growing part of its business involves AI/ML products and services, and if the company fails to develop and timely offer the right AI/ML offerings, or if competitors launch AI/ML offerings more quickly or more successfully, the company could lose its competitive position.

Risk Factors

The company faces significant risks related to its ability to expand usage by existing customers and attract new DNE Customers, as the majority of contracts are month-to-month and permit termination without advance notice, with NDR having been 98% in 2024 before improving to 100% in 2025. The AI/ML landscape is rapidly evolving and the company is devoting significant resources to develop AI/ML offerings, but if these offerings fail to meet customer demands or if competitors launch offerings more quickly, the company could lose its competitive position. The company relies on a limited number of suppliers for components of equipment used to operate its platform, including GPUs, exposing it to risks from competition with larger cloud computing companies and potential supply disruptions. As of December 31, 2025, the company had $326.6 million of debt maturing within the next 12 months, consisting of $312.3 million of 2026 Convertible Notes and $14.3 million of principal payments of Term Loan A, and its ability to generate sufficient cash flow to satisfy debt obligations is subject to economic, financial, competitive and other factors beyond its control. The company's international operations expose it to risks including more stringent data privacy regulations, particularly in Europe, and potential adverse tax consequences from changes in tax laws or challenges to intercompany pricing methodologies.

Management Priorities

Management's message emphasizes the company's mission to empower AI-driven and digital-native businesses to build, run, and scale intelligent applications through an agentic inference cloud platform that reduces operational complexity and accelerates time to production. The key strategic priorities emphasized for the period ahead include increasing usage by existing customers, growing the base of AI Native and Cloud Native DNE Customers, investing in the platform and product offerings, driving increased adoption through the community ecosystem, and augmenting the platform through strategic partnerships and acquisitions. Management highlights that NDR increased from 98% in 2024 to 100% in 2025, and that ARR increased from $723 million in 2023 to $820 million in 2024 to $970 million in 2025, reflecting the company's ability to retain and grow revenue from existing customers.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 7 — Debt
  2. [2] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 7 — Debt
  3. [3] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 7 — Debt
  4. [4] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 7 — Debt
  5. [5] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 7 — Debt
  6. [6] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 7 — Debt
  7. [7] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 9 — Finance Leases and Equipment Financing Obligations
  8. [8] Item 5, Market for Registrant's Common Equity; Item 8, Note 11 — Stockholders' Equity
  9. [9] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 11 — Stockholders' Equity
  10. [10] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 11 — Stockholders' Equity
  11. [11] Item 8, Consolidated Statements of Operations
  12. [12] Item 8, Consolidated Statements of Operations
  13. [13] Item 8, Consolidated Statements of Operations
  14. [14] Item 8, Consolidated Statements of Operations
  15. [15] Item 8, Consolidated Statements of Operations
  16. [16] Item 8, Consolidated Statements of Operations
  17. [17] Item 7, MD&A — Results of Operations
  18. [18] Item 8, Consolidated Statements of Operations
  19. [19] Item 8, Consolidated Statements of Operations
  20. [20] Item 7, MD&A — Non-GAAP Financial Measures
  21. [21] Item 7, MD&A — Non-GAAP Financial Measures
  22. [22] Item 7, MD&A — Non-GAAP Financial Measures
  23. [23] Item 7, MD&A — Non-GAAP Financial Measures
  24. [24] Item 7, MD&A — Key Business Metrics
  25. [25] Item 7, MD&A — Key Business Metrics
  26. [26] Item 1, Business — Human Capital Management
  27. [27] Item 1, Business — Human Capital Management
  28. [28] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 9 — Finance Leases and Equipment Financing Obligations
  29. [29] Item 7, MD&A — Liquidity and Capital Resources
  30. [30] Item 5, Market for Registrant's Common Equity; Item 8, Note 11 — Stockholders' Equity
  31. [31] Item 8, Consolidated Statements of Cash Flows
  32. [32] Item 8, Consolidated Statements of Cash Flows
  33. [33] Item 7, MD&A — Key Business Metrics
  34. [34] Item 7, MD&A — Key Business Metrics
  35. [35] Item 7, MD&A — Liquidity and Capital Resources
  36. [36] Item 7, MD&A — Liquidity and Capital Resources
  37. [37] Item 7, MD&A — Liquidity and Capital Resources
  38. [38] Item 7, MD&A — Key Business Metrics
  39. [39] Item 7, MD&A — Key Business Metrics
  40. [40] Item 7, MD&A — Key Business Metrics
  41. [41] Item 7, MD&A — Key Business Metrics
  42. [42] Item 7, MD&A — Key Business Metrics
  43. [43] Item 8, Consolidated Statements of Operations
  44. [44] Item 8, Consolidated Statements of Operations
  45. [45] Item 8, Consolidated Statements of Operations
  46. [46] Item 8, Consolidated Statements of Operations
  47. [47] Item 8, Consolidated Statements of Operations
  48. [48] Item 8, Consolidated Statements of Operations
  49. [49] Item 8, Consolidated Statements of Operations
  50. [50] Item 8, Consolidated Statements of Operations
  51. [51] Item 7, MD&A — Results of Operations
  52. [52] Item 7, MD&A — Non-GAAP Financial Measures
  53. [53] Item 7, MD&A — Non-GAAP Financial Measures
  54. [54] Item 7, MD&A — Non-GAAP Financial Measures
  55. [55] Item 8, Consolidated Statements of Cash Flows
  56. [56] Item 8, Consolidated Statements of Cash Flows
  57. [57] Item 8, Consolidated Statements of Cash Flows
  58. [58] Item 8, Consolidated Balance Sheets
  59. [59] Item 8, Consolidated Balance Sheets
  60. [60] Item 8, Note 7 — Debt
  61. [61] Item 8, Note 7 — Debt
  62. [62] Item 8, Note 7 — Debt
  63. [63] Item 8, Note 7 — Debt
  64. [64] Item 8, Consolidated Statements of Operations
  65. [65] Item 7, MD&A — Results of Operations
  66. [66] Item 7, MD&A — Results of Operations
  67. [67] Item 8, Consolidated Statements of Operations
  68. [68] Item 7, MD&A — Results of Operations; Item 8, Note 14 — Income Taxes
  69. [69] Item 7, MD&A — Results of Operations
  70. [70] Item 7, MD&A — Results of Operations

Analysis on 6/9/2026