Digitalocean Holdings, Inc. ( (DOCN) ) has released its Q3 earnings. Here is a breakdown of the information Digitalocean Holdings, Inc. presented to its investors.
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DigitalOcean Holdings, Inc. is a comprehensive cloud service provider that empowers developers at AI-native and digital native enterprises to build full-stack AI applications with straightforward tools. The company operates in the cloud computing industry, focusing on simplifying cloud and AI infrastructure for over 640,000 customers globally.
In its third quarter of 2025, DigitalOcean reported a significant financial performance with a revenue of $230 million, marking a 16% increase compared to the previous year. The company also raised its full-year revenue guidance to between $896 million and $897 million, reflecting its strong market position and growth trajectory.
Key financial highlights include a net income of $158 million, a remarkable 381% increase year-over-year, driven by a one-time income tax benefit and gain on extinguishment of debt. The adjusted EBITDA reached $100 million, up 15% from the previous year, with a margin of 43%. The company also reported an impressive incremental annual run-rate revenue (ARR) of $44 million, the highest in its history, with customers generating over $1 million annually contributing significantly to this growth.
DigitalOcean’s strategic focus on AI and digital native enterprises is evident as direct AI revenue more than doubled for the fifth consecutive quarter. The company is also seeing substantial traction with larger enterprises, with customers exceeding $100,000 in annual run-rate growing their revenue by 41% year-over-year. The company’s operational discipline and healthy cash flow margins have led to an increased revenue and free cash flow margin guidance for 2025.
Looking ahead, DigitalOcean remains optimistic about its growth prospects, aiming to achieve its 2027 growth targets a year earlier by 2026. The company plans to continue investing in product innovation and market execution to sustain its momentum in the competitive cloud computing landscape.