DigitalOcean Announces Third Quarter 2025 Financial Results
- DigitalOcean’s unified agentic cloud gaining momentum, Company raises 2025 revenue and profitability outlook
-
Revenue of
$230 million 16% year-over-year; Raised full year revenue guidance to$896 $897 million -
Net Income was
$158 million 381% year-over-year and Adjusted EBITDA was$100 million 15% year-over-year; Raised full year Adjusted EBITDA margin guidance to41% -
Incremental ARR of
$44 million $1 million $110 million 72% year over year
“DigitalOcean’s unified agentic cloud is driving accelerated momentum in Q3. Revenue increased
Third Quarter 2025 Financial Highlights:
-
Revenue was
$230 million 16% year-over-year. -
Annual Run-Rate Revenue (ARR)(1) ended the quarter at
$919 million 16% year-over-year. -
Gross profit(2) was
$137 million 17% year-over-year, and gross profit margin was60% . -
Net income attributable to common stockholders was
$158 million 381% year-over-year, and net income margin was69% . Net income included a one-time income tax benefit from the release of a valuation allowance (“VA”) of$70 million $48 million -
Adjusted EBITDA was
$100 million 15% year-over-year, and adjusted EBITDA margin was43% . -
Diluted net income per share was
$1.51 $0.54 $0.66 $0.44 -
Net cash from operating activities was
$96 million 42% margin, compared to$73 million 37% margin. -
Adjusted free cash flow was
$85 million 37% margin, compared to$26 million 13% margin adjusted free cash flow generated in the third quarter 2024. -
Unlevered adjusted free cash flow, a new non-GAAP financial measure, was
$85 million 37% margin, compared to$21 million 11% margin unlevered adjusted free cash flow generated in the third quarter of 2024. -
Cash and cash equivalents was
$237 million -
Remaining Performance Obligation was
$47 million $10 million -
Repurchased approximately
$1,188 million $56 million
Third Quarter 2025 Operational Highlights:
-
The number of customers with greater than
$100 thousand 26% , while the revenue from these customers, which now represents26% of total revenue, grew41% year-over-year. -
Net Dollar Retention Rate (NDR) increased to
99% from97% in the third quarter 2024. - Delivered a number of new product features during the quarter, including Spaces Cold Storage, Network File Storage, and Managed Databases Storage Autoscaling.
- Announced the availability of Multi-Modal AI Model support, Function Calling, and Guardrails on our DigitalOcean Gradient™ AI Platform, advancing the evolution into a full-feature inference platform.
-
Repurchased 0.1 million shares during the quarter; our cumulative share repurchases since IPO are
$1.6 billion
___________________
(1) Beginning in the fourth quarter of 2024, we changed our methodology for calculating customer count and ARR, and changed our customer categories. Prior periods have been recast to reflect the effects of the changes. Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for further details.
(2) Certain prior period amounts have been reclassified to conform with current period presentation. Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for further details.
Financial Outlook:
DigitalOcean is initiating guidance for the fourth quarter ending December 31, 2025 as follows:
-
Total revenue of
$237 $238 million -
Adjusted EBITDA margin of
38.5% to39.5% . -
Non-GAAP diluted net income per share of
$0.35 $0.40 - Fully diluted weighted average shares outstanding of approximately 111 to 112 million shares.
For the full year 2025, we expect:
-
Total revenue of
$896 $897 million -
Adjusted EBITDA margin of
40.7% to41.0% . -
Adjusted free cash flow margin in the range of
18% to19% of revenue. -
Non-GAAP diluted net income per share of
$2.00 $2.05 - Fully diluted weighted average shares outstanding of approximately 106 to 107 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.
Conference Call Information:
DigitalOcean will host a conference call today, November 5, 2025, 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/652647103. A live webcast and replay of the conference call in addition to the presentation can be accessed from the DigitalOcean investor relations website at http://investors.digitalocean.com.
About DigitalOcean
DigitalOcean is the comprehensive agentic cloud, empowering developers at AI-native businesses and digital native enterprises to build full-stack AI applications with straightforward tools. Our mission is to simplify cloud computing and AI to allow builders to spend more time creating software that changes the world. More than 640,000 customers trust DigitalOcean to deliver the cloud, AI, and ML infrastructure they need to build and scale their organizations. To learn more about DigitalOcean, visit www.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 performance, including but not limited to statements in the section titled “Financial Outlook.” 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; and (16) our customers’ ability to have continued and unimpeded access to our platform, including as a result of evolving laws and industry standards.
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, 2024 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.
About Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in
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, revaluation of warrants, (gain) loss on extinguishment of debt, net, release of a VAT reserve, and other charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We believe that adjusted EBITDA, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance and facilitates 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 EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business, evaluating our operating performance, and for internal planning and forecasting purposes.
Our calculation of adjusted EBITDA and adjusted EBITDA margin may differ from the calculations of adjusted EBITDA and adjusted EBITDA margin by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, including our net income attributable to common stockholders and other GAAP results.
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, revaluation of warrants, release of a VAT reserve, 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.
We believe 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.
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 new non-GAAP financial measure used for the first time in this release 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:
-
Testers: users that both (i) spend less than or equal to
$50 -
Learners: users that both (i) spend less than or equal to
$50 -
Builders: users that spend more than
$50 $500 -
Scalers: users that spend more than
$500 $8,333 -
Scalers+: users that spend more than
$8,333
We refer to our Builders, Scalers and Scalers+ customers collectively as our Higher Spend Customers.
ARR
We calculate ARR by multiplying the revenue for the most recent quarter by four. For our ARR calculations, we include the total revenue from all customers, including Testers, Learners, Builders, Scalers, and Scalers+.
Net Dollar Retention Rate
We calculate net dollar retention rate monthly by starting with the revenue from all customers, including Testers, Learners, Builders, Scalers and Scalers+ for our IaaS and PaaS/SaaS offerings during the corresponding month 12 months prior, or the Prior Period Revenue. We then calculate the revenue from these same customers as of the current month, or the Current Period Revenue, including any expansion and net of any contraction or attrition from these customers over the last 12 months. The calculation also includes revenue from customers that generated revenue before, but not in, the corresponding month 12 months prior, but subsequently generated revenue in the current month and are therefore reflected in the Current Period Revenue. We include this group of re-engaged customers in this calculation because some of our customers use our platform for projects that stop and start over time. We then divide the total Current Period Revenue by the total Prior Period Revenue to arrive at the net dollar retention rate for the relevant month. For a quarterly or annual period, the net dollar retention rate is determined as the average monthly net dollar retention rates over such three or 12-month period.
___________________ |
(1) We also refer to our Scalers+ customers as customers with greater than
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. We have applied the optional exemption to exclude contracts with an original expected term of one year or less from this amount. 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, 2024 and subsequent filings and reports we make with the SEC.
Organic ARR
We define Organic Annual Run-Rate revenue (“Organic ARR”) as ARR excluding the impacts of (i) revenue from acquisitions that closed in the prior 12 months, and (ii) incremental revenue from broad-based pricing increases that occurred on July 1, 2022 for our IaaS and PaaS/ SaaS offerings and April 1, 2023 for our Managed Hosting offerings, in each case until the beginning of the first full quarter following the one-year anniversary of the closing date of such acquisition or date pricing changes were effective.
Customers with Greater than
Customers within our Scalers+ category with more than
DIGITALOCEAN HOLDINGS, INC. |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(in thousands, except share amounts) |
|||||||
(unaudited) |
|||||||
|
September 30, 2025 |
|
December 31, 2024 |
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
236,561 |
|
|
$ |
428,446 |
|
Accounts receivable, less allowance for credit losses of |
|
84,379 |
|
|
|
72,486 |
|
Prepaid expenses and other current assets |
|
46,685 |
|
|
|
40,786 |
|
Total current assets |
|
367,625 |
|
|
|
541,718 |
|
|
|
|
|
||||
Property and equipment, net |
|
520,510 |
|
|
|
432,544 |
|
Restricted cash |
|
— |
|
|
|
1,747 |
|
Goodwill |
|
348,674 |
|
|
|
348,674 |
|
Intangible assets, net |
|
104,418 |
|
|
|
117,718 |
|
Operating lease right-of-use assets, net |
|
280,075 |
|
|
|
187,877 |
|
Deferred tax assets |
|
92,040 |
|
|
|
200 |
|
Other assets |
|
12,364 |
|
|
|
8,537 |
|
Total assets |
$ |
1,725,706 |
|
|
$ |
1,639,015 |
|
|
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
67,599 |
|
|
$ |
54,565 |
|
Accrued other expenses |
|
46,595 |
|
|
|
38,156 |
|
Deferred revenue |
|
8,587 |
|
|
|
5,397 |
|
Debt, current |
|
9,500 |
|
|
|
— |
|
Operating lease liabilities, current |
|
131,207 |
|
|
|
75,785 |
|
Finance lease liabilities and equipment financing obligations, current |
|
8,234 |
|
|
|
3,550 |
|
Other current liabilities |
|
53,276 |
|
|
|
43,502 |
|
Total current liabilities |
|
324,998 |
|
|
|
220,955 |
|
|
|
|
|
||||
Deferred tax liabilities |
|
4,496 |
|
|
|
4,123 |
|
Debt, long-term |
|
1,284,315 |
|
|
|
1,485,366 |
|
Operating lease liabilities, long-term |
|
160,243 |
|
|
|
130,431 |
|
Finance lease liabilities and equipment financing obligations, long-term |
|
21,272 |
|
|
|
1,095 |
|
Total liabilities |
|
1,795,324 |
|
|
|
1,841,970 |
|
|
|
|
|
||||
|
|
|
|
||||
Preferred stock ( |
|
— |
|
|
|
— |
|
Common stock ( |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
720 |
|
|
|
57,282 |
|
Accumulated other comprehensive loss |
|
(943 |
) |
|
|
(1,497 |
) |
Accumulated deficit |
|
(69,397 |
) |
|
|
(258,742 |
) |
Total stockholders’ deficit |
|
(69,618 |
) |
|
|
(202,955 |
) |
|
|
|
|
||||
Total liabilities and stockholders’ deficit |
$ |
1,725,706 |
|
|
$ |
1,639,015 |
|
DIGITALOCEAN HOLDINGS, INC. |
|||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(in thousands, except per share amounts) |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30, |
|
September 30, |
||||||||||||
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
Revenue |
$ |
229,634 |
|
|
$ |
198,484 |
|
|
$ |
659,037 |
|
|
$ |
575,690 |
|
Cost of revenue |
|
92,701 |
|
|
|
81,920 |
|
|
|
261,715 |
|
|
|
235,830 |
|
Gross profit |
|
136,933 |
|
|
|
116,564 |
|
|
|
397,322 |
|
|
|
339,860 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Research and development |
|
38,119 |
|
|
|
36,278 |
|
|
|
117,357 |
|
|
|
102,189 |
|
Sales and marketing |
|
21,228 |
|
|
|
15,258 |
|
|
|
59,917 |
|
|
|
52,165 |
|
General and administrative |
|
32,654 |
|
|
|
40,422 |
|
|
|
101,855 |
|
|
|
127,034 |
|
Total operating expenses |
|
92,001 |
|
|
|
91,958 |
|
|
|
279,129 |
|
|
|
281,388 |
|
|
|
|
|
|
|
|
|
||||||||
Income from operations |
|
44,932 |
|
|
|
24,606 |
|
|
|
118,193 |
|
|
|
58,472 |
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
(5,042 |
) |
|
|
(2,262 |
) |
|
|
(9,489 |
) |
|
|
(6,887 |
) |
Gain on extinguishment of debt, net |
|
48,373 |
|
|
|
— |
|
|
|
48,104 |
|
|
|
— |
|
Interest income and other income, net |
|
2,051 |
|
|
|
7,297 |
|
|
|
17,334 |
|
|
|
17,120 |
|
Other income, net |
|
45,382 |
|
|
|
5,035 |
|
|
|
55,949 |
|
|
|
10,233 |
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes |
|
90,314 |
|
|
|
29,641 |
|
|
|
174,142 |
|
|
|
68,705 |
|
Income tax benefit (expense) |
|
68,057 |
|
|
|
3,308 |
|
|
|
59,460 |
|
|
|
(2,479 |
) |
Net income attributable to common stockholders |
$ |
158,371 |
|
|
$ |
32,949 |
|
|
$ |
233,602 |
|
|
$ |
66,226 |
|
Net income per share attributable to common stockholders |
|||||||||||||||
Basic |
$ |
1.74 |
|
|
$ |
0.36 |
|
|
$ |
2.56 |
|
|
$ |
0.72 |
|
Diluted |
$ |
1.51 |
|
|
$ |
0.33 |
|
|
$ |
2.31 |
|
|
$ |
0.70 |
|
Weighted-average shares used to compute net income per share attributable to common stockholders |
|||||||||||||||
Basic |
|
91,191 |
|
|
|
92,145 |
|
|
|
91,421 |
|
|
|
91,413 |
|
Diluted |
|
105,520 |
|
|
|
102,591 |
|
|
|
103,036 |
|
|
|
102,678 |
|
DIGITALOCEAN HOLDINGS, INC. |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
|
Nine Months Ended September 30, |
||||||
|
2025 |
|
2024 |
||||
Operating activities |
|
|
|
||||
Net income attributable to common stockholders |
$ |
233,602 |
|
|
$ |
66,226 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
97,035 |
|
|
|
100,825 |
|
Stock-based compensation |
|
60,313 |
|
|
|
67,659 |
|
Provision for expected credit losses |
|
13,337 |
|
|
|
12,018 |
|
Gain on extinguishment of debt, net |
|
(48,104 |
) |
|
|
— |
|
Deferred income taxes |
|
(72,522 |
) |
|
|
— |
|
Operating lease right-of-use assets and liabilities, net |
|
(7,746 |
) |
|
|
2,861 |
|
Non-cash interest expense |
|
5,451 |
|
|
|
5,987 |
|
Net accretion of discounts and amortization of premiums on investments |
|
— |
|
|
|
2,569 |
|
Impairment of certain long-lived assets |
|
— |
|
|
|
356 |
|
Other |
|
(7,652 |
) |
|
|
(2,572 |
) |
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(25,060 |
) |
|
|
(18,768 |
) |
Prepaid expenses and other current assets |
|
(4,875 |
) |
|
|
(13,594 |
) |
Accounts payable and accrued expenses |
|
18 |
|
|
|
1,136 |
|
Deferred revenue |
|
3,190 |
|
|
|
235 |
|
Other assets and liabilities |
|
5,337 |
|
|
|
(13,552 |
) |
Net cash provided by operating activities |
|
252,324 |
|
|
|
211,386 |
|
|
|
|
|
||||
Investing activities |
|
|
|
||||
Capital expenditures - property and equipment |
|
(102,931 |
) |
|
|
(132,886 |
) |
Capital expenditures - internal-use software development |
|
(6,541 |
) |
|
|
(6,492 |
) |
Acquisition of equipment under financing arrangement |
|
(27,622 |
) |
|
|
— |
|
Purchase of intangible assets |
|
(1,835 |
) |
|
|
— |
|
Maturities of marketable securities |
|
— |
|
|
|
91,675 |
|
Proceeds from sale of equipment |
|
157 |
|
|
|
42 |
|
Net cash used in investing activities |
|
(138,772 |
) |
|
|
(47,661 |
) |
|
|
|
|
||||
Financing activities |
|
|
|
||||
Proceeds related to issuance of common stock under equity incentive plan |
|
3,628 |
|
|
|
11,890 |
|
Proceeds from issuance of common stock under employee stock purchase plan |
|
2,660 |
|
|
|
2,231 |
|
Employee payroll taxes paid related to net settlement of equity awards |
|
(22,222 |
) |
|
|
(21,166 |
) |
Proceeds from issuance of 2030 Convertible Notes, net of issuance costs |
|
606,827 |
|
|
|
— |
|
Purchases of capped calls related to 2030 Convertible Notes |
|
(83,875 |
) |
|
|
— |
|
Proceeds from 2025 Credit Facility, net of issuance costs |
|
375,919 |
|
|
|
— |
|
Repayments of 2026 Convertible Notes including related costs |
|
(1,131,458 |
) |
|
|
— |
|
Proceeds from financing arrangement |
|
27,622 |
|
|
|
— |
|
Principal repayments of finance leases |
|
(4,154 |
) |
|
|
(4,097 |
) |
Repurchase and retirement of common stock including related costs |
|
(82,124 |
) |
|
|
(29,878 |
) |
Net cash used in financing activities |
|
(307,177 |
) |
|
|
(41,020 |
) |
|
|
|
|
||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(7 |
) |
|
|
(69 |
) |
(Decrease) increase in cash, cash equivalents and restricted cash |
|
(193,632 |
) |
|
|
122,636 |
|
Cash, cash equivalents and restricted cash - beginning of period |
|
430,193 |
|
|
|
318,983 |
|
Cash, cash equivalents and restricted cash - end of period |
$ |
236,561 |
|
|
$ |
441,619 |
|
DIGITALOCEAN HOLDINGS, INC. |
|||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP DATA |
|||||||||||||||
(unaudited) |
|||||||||||||||
Adjusted EBITDA and Adjusted EBITDA Margin |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30, |
|
September 30, |
||||||||||||
(In thousands) |
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
GAAP Net income attributable to common stockholders |
$ |
158,371 |
|
|
$ |
32,949 |
|
|
$ |
233,602 |
|
|
$ |
66,226 |
|
|
|
|
|
|
|
|
|
||||||||
Adjustments: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
35,060 |
|
|
|
35,810 |
|
|
|
97,035 |
|
|
|
100,825 |
|
Stock-based compensation(1) |
|
19,800 |
|
|
|
22,949 |
|
|
|
60,313 |
|
|
|
67,512 |
|
Interest expense |
|
5,042 |
|
|
|
2,262 |
|
|
|
9,489 |
|
|
|
6,887 |
|
Acquisition related compensation |
|
— |
|
|
|
3,193 |
|
|
|
— |
|
|
|
11,439 |
|
Income tax (benefit) expense |
|
(68,057 |
) |
|
|
(3,308 |
) |
|
|
(59,460 |
) |
|
|
2,479 |
|
Gain on extinguishment of debt, net |
|
(48,373 |
) |
|
|
— |
|
|
|
(48,104 |
) |
|
|
— |
|
Restructuring related charges(1)(2) |
|
— |
|
|
|
162 |
|
|
|
— |
|
|
|
4,025 |
|
Impairment of certain long-lived assets |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
356 |
|
Interest income and other income, net(3) |
|
(2,051 |
) |
|
|
(7,297 |
) |
|
|
(17,334 |
) |
|
|
(17,120 |
) |
Adjusted EBITDA |
$ |
99,792 |
|
|
$ |
86,720 |
|
|
$ |
275,541 |
|
|
$ |
242,629 |
|
As a percentage of revenue: |
|
|
|
|
|
|
|
||||||||
Net income margin |
|
69 |
% |
|
|
17 |
% |
|
|
35 |
% |
|
|
12 |
% |
Adjusted EBITDA margin |
|
43 |
% |
|
|
44 |
% |
|
|
42 |
% |
|
|
42 |
% |
___________________ |
|||
(1) |
For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes |
||
(2) |
For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges. |
||
(3) |
For the three and nine months ended September 30, 2025, primarily consists of interest income from our cash and cash equivalents. For the three and nine months ended September 30, 2024, primarily consists of interest and accretion income from our cash and cash equivalents and marketable securities. |
||
Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share |
|||||||||||||||
|
|
|
|
|
|
||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30, |
|
September 30, |
||||||||||||
(In thousands, except per share amounts) |
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
GAAP Net income attributable to common stockholders |
$ |
158,371 |
|
|
$ |
32,949 |
|
|
$ |
233,602 |
|
|
$ |
66,226 |
|
Stock-based compensation(1) |
|
19,800 |
|
|
|
22,949 |
|
|
|
60,313 |
|
|
|
67,512 |
|
Acquisition related compensation |
|
— |
|
|
|
3,193 |
|
|
|
— |
|
|
|
11,439 |
|
Amortization of acquired intangible assets |
|
4,914 |
|
|
|
5,571 |
|
|
|
15,142 |
|
|
|
17,041 |
|
Gain on extinguishment of debt, net |
|
(48,373 |
) |
|
|
— |
|
|
|
(48,104 |
) |
|
|
— |
|
Restructuring related charges(1)(2) |
|
— |
|
|
|
162 |
|
|
|
— |
|
|
|
4,025 |
|
Impairment of certain long-lived assets |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
356 |
|
Non-GAAP income tax adjustment(3) |
|
(78,722 |
) |
|
|
(13,150 |
) |
|
|
(91,699 |
) |
|
|
(24,573 |
) |
Non-GAAP Net income |
$ |
55,990 |
|
|
$ |
51,674 |
|
|
$ |
169,254 |
|
|
$ |
142,026 |
|
|
|
|
|
|
|
|
|
||||||||
Non-cash charges related to convertible notes(4) |
$ |
1,320 |
|
|
$ |
1,590 |
|
|
$ |
4,511 |
|
|
$ |
4,764 |
|
Non-GAAP Net income used to compute net income per share, diluted |
$ |
57,310 |
|
|
$ |
53,264 |
|
|
$ |
173,765 |
|
|
$ |
146,790 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP Net income per share attributable to common stockholders, diluted |
$ |
1.51 |
|
|
$ |
0.33 |
|
|
$ |
2.31 |
|
|
$ |
0.70 |
|
Stock-based compensation(1) |
|
0.19 |
|
|
|
0.22 |
|
|
|
0.59 |
|
|
|
0.66 |
|
Acquisition related compensation |
|
— |
|
|
|
0.03 |
|
|
|
— |
|
|
|
0.11 |
|
Amortization of acquired intangible assets |
|
0.05 |
|
|
|
0.05 |
|
|
|
0.15 |
|
|
|
0.16 |
|
Gain on extinguishment of debt, net(5) |
|
(0.46 |
) |
|
|
— |
|
|
|
(0.47 |
) |
|
|
— |
|
Restructuring related charges(1)(2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.03 |
|
Impairment of certain long-lived assets |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-cash charges related to convertible notes(4) |
|
0.01 |
|
|
|
0.02 |
|
|
|
0.04 |
|
|
|
0.04 |
|
Non-GAAP income tax adjustment(3) |
|
(0.76 |
) |
|
|
(0.13 |
) |
|
|
(0.93 |
) |
|
|
(0.27 |
) |
Non-GAAP Net income per share, diluted(6) |
$ |
0.54 |
|
|
$ |
0.52 |
|
|
$ |
1.69 |
|
|
$ |
1.43 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP Weighted-average shares used to compute net income per share, diluted |
|
105,520 |
|
|
|
102,591 |
|
|
|
103,036 |
|
|
|
102,678 |
|
Weighted-average dilutive effect of potentially dilutive securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-GAAP Weighted-average shares used to compute net income per share, diluted |
|
105,520 |
|
|
|
102,591 |
|
|
|
103,036 |
|
|
|
102,678 |
|
______________ |
|||
(1) |
For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes |
||
(2) |
For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges. |
||
(3) |
For the periods in fiscal year 2025 and 2024, we used a tax rate of |
||
(4) |
Consists of non-cash interest expense for amortization of debt issuance costs related to the 2026 and 2030 Convertible Notes. |
||
(5) |
For the three and nine months ended September 30, 2025, excludes tax impact which is presented in Non-GAAP income tax adjustment. |
||
(6) |
May not foot due to rounding. |
||
Adjusted Free Cash Flow, Unlevered Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin and Unlevered Adjusted Free Cash Flow Margin |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30, |
|
September 30, |
||||||||||||
(In thousands) |
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
GAAP Net cash provided by operating activities |
$ |
95,787 |
|
|
$ |
73,353 |
|
|
$ |
252,324 |
|
|
$ |
211,386 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Capital expenditures - property and equipment |
|
(7,771 |
) |
|
|
(57,352 |
) |
|
|
(102,931 |
) |
|
|
(132,886 |
) |
Capital expenditures - internal-use software development |
|
(3,128 |
) |
|
|
(2,446 |
) |
|
|
(6,541 |
) |
|
|
(6,492 |
) |
Purchase of intangible assets |
|
— |
|
|
|
— |
|
|
|
(1,835 |
) |
|
|
— |
|
Restructuring and other charges |
|
— |
|
|
|
— |
|
|
|
64 |
|
|
|
61 |
|
Restructuring related charges(1) |
|
— |
|
|
|
289 |
|
|
|
— |
|
|
|
4,919 |
|
Acquisition related compensation |
|
— |
|
|
|
12,386 |
|
|
|
— |
|
|
|
20,712 |
|
Acquisition and integration related costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
302 |
|
Adjusted free cash flow |
$ |
84,888 |
|
|
$ |
26,230 |
|
|
$ |
141,081 |
|
|
$ |
98,002 |
|
Plus: Cash paid for interest |
|
2,473 |
|
|
|
253 |
|
|
|
2,722 |
|
|
|
824 |
|
Less: Interest income |
|
(2,630 |
) |
|
|
(4,991 |
) |
|
|
(9,489 |
) |
|
|
(15,393 |
) |
Unlevered adjusted free cash flow |
$ |
84,731 |
|
|
$ |
21,492 |
|
|
$ |
134,314 |
|
|
$ |
83,433 |
|
As a percentage of revenue: |
|
|
|
|
|
|
|
||||||||
GAAP Net cash provided by operating activities |
|
42 |
% |
|
|
37 |
% |
|
|
38 |
% |
|
|
37 |
% |
Adjusted free cash flow margin |
|
37 |
% |
|
|
13 |
% |
|
|
21 |
% |
|
|
17 |
% |
Unlevered adjusted free cash flow margin |
|
37 |
% |
|
|
11 |
% |
|
|
20 |
% |
|
|
14 |
% |
___________________ |
|||
(1) |
For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges. |
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20251105851388/en/
Investor
Melanie Strate
investors@digitalocean.com
Media
Julie Wolf
press@digitalocean.com
Source: DigitalOcean Holdings, Inc.
