Beyond the headline.
Inside the numbers.
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DigitalOcean supplies cloud computing, data and AI services to developers and growing businesses. Revenue growth accelerated in Q3 and management raised its forecasts, while equipment financing expanded sharply alongside equity-funded debt repayment.
DigitalOcean Holdings, Inc. (NYSE: DOCN) provides cloud computing, storage, data and AI services to developers and growing businesses. Customers pay to run applications and use its infrastructure and platform services.
Three months ended September 30. USD millions, except per-share figures.
| Metric | 2026 | 2025 |
|---|---|---|
| Revenue, GAAP | 321.2 | 229.6 |
| Operating income, GAAP | 33.0 | 44.9 |
| Net income (loss), GAAP | (42.6) | 158.4 |
| Diluted EPS, GAAP | (0.37) | 1.51 |
| Adjusted operating income | 74.1 | 69.6 |
| Adjusted EBITDA | 144.2 | 99.8 |
| Operating cash flow, GAAP | 161.2 | 95.8 |
| Adjusted free cash flow | 130.2 | 84.9 |
Adjusted operating income removes stock compensation and acquired-intangible amortization. Adjusted EBITDA also removes depreciation, interest, taxes and selected financing items. Depreciation and amortization rose to $75.1 million from $35.1 million as the equipment base expanded.
The latest net loss includes a $57.1 million expense from inducing conversion of notes. The prior-year net income included a $48.4 million debt-extinguishment gain and a $68.1 million net tax benefit. Adjusted diluted EPS was $0.45 versus $0.54; it uses different share counts from GAAP, including treatment of convertible notes and related capped-call hedges.
Q3 revenue exceeded August's $304 million to $307 million forecast. Adjusted diluted EPS exceeded the earlier $0.28 to $0.30 range.
For Q4 2026, DigitalOcean expects revenue of $348 million to $351 million, up 44% to 45%. August's exit-growth expectation was at least 35%. Q4 adjusted EBITDA margin is forecast at 42% to 43%, and adjusted diluted EPS at $0.30 to $0.32.
The 2026 revenue forecast is now $1.208 billion to $1.211 billion, versus $1.170 billion to $1.180 billion in August. The adjusted free cash flow margin forecast rises to 20% to 22% from 11% to 13%. Adjusted diluted EPS is expected at $1.60 to $1.62, versus $1.35 to $1.40.
Management now expects at least 60% revenue growth in 2027, versus more than 50% in August. These forecasts depend on converting the larger computing-capacity base into customer usage.
Balance-sheet amounts at September 30, 2026 and December 31, 2025. USD millions.
| Recorded balance | September | December |
|---|---|---|
| Cash and marketable securities | 844.7 | 254.5 |
| Debt, carrying value | 461.6 | 1,295.8 |
| Finance leases and equipment financing | 923.6 | 130.5 |
| Debt plus equipment obligations | 1,385.2 | 1,426.3 |
| Operating lease liabilities, separate | 666.6 | 274.9 |
The combined debt-and-equipment row is our sum of the two recorded balances before cash, excluding operating leases and undrawn financing. Equipment obligations rose as DigitalOcean added servers through leases and financing arrangements.
Q3 adjusted free cash flow subtracts $23.5 million of equipment purchases and $7.5 million of software spending from $161.2 million of operating cash. It excludes equipment-financing and finance-lease principal repayments. Those repayments totaled $39.9 million over the first nine months. Nine-month operating cash flow was $318.1 million, and adjusted free cash flow was $193 million.
In September, DigitalOcean signed a $725 million equipment lease facility, expanded to $785 million in October. It was undrawn at September 30 and is separate from existing recorded equipment obligations.
Separately, co-location leases that had not yet begun at September 30 carried about $2.96 billion of undiscounted future payments, outside the recorded balances above.
A March stock offering helped fund the full repayment of a $500 million term loan. A July stock offering helped retire $471.8 million of 2030 convertible-note principal for approximately $1.47 billion of consideration, reflecting the notes' conversion value.
At September 30, $153.2 million of 2030 note principal and $312.3 million of notes maturing on December 1, 2026 remained outstanding. Management plans to repay the December maturity in cash.
Shares outstanding were 117.9 million at September 30, versus 91.9 million at year-end. On November 2, DigitalOcean signed a new program allowing up to $1 billion of stock sales over time. The company controls whether and when to sell shares.
Remaining performance obligations were about $800 million at September 30, with $345.1 million expected to become revenue over the next 12 months. The June balances were $894 million and $366 million. The measure depends on contract timing and terms and differs from revenue or bookings.
Customer and contract definitions changed in late 2025, and comparative figures have been recast. DigitalOcean's AI Customer ARR includes all cloud revenue from customers using its AI offerings, rather than only revenue from AI products.
The next results can test the 44% to 45% Q4 growth forecast, the pace of equipment payments and the use of new financing capacity.
Analysis DOCN
DigitalOcean raised its growth forecast and cut debt. Our balance-sheet comparison shows how equipment leases, a stronger cash position and new share-sale capacity fit together.