DigitalOcean (NYSE:DOCN) Issues Quarterly Earnings Results

DigitalOcean (NYSE:DOCN) announced its quarterly earnings data on Tuesday. The company reported $0.45 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.26 by $0.19, Briefing.com reports. The firm had revenue of $281.18 million for the quarter, compared to analysts’ expectations of $279.03 million. DigitalOcean had a return on equity of 88.86% and a net margin of 24.97%.The company’s revenue for the quarter was up 28.6% compared to the same quarter last year. During the same period last year, the firm earned $0.39 earnings per share. DigitalOcean updated its FY 2026 guidance to 1.350-1.400 EPS and its Q3 2026 guidance to 0.280-0.300 EPS.

Here are the key takeaways from DigitalOcean’s conference call:

• Revenue growth accelerated to 29% year over year in Q2 2026, with $281 million in revenue and record $93 million incremental ARR. DigitalOcean raised its full-year outlook to approximately 30.5% growth and expects at least 35% growth exiting Q4.
• AI customer ARR reached $234 million, up 212%, while inference services grew nearly 800% year over year. The Inference Engine surpassed 6,000 customers, and open-weight models increased to roughly 75% of token volume, supporting management’s AI-Native Cloud strategy.
• Management cited early evidence of a platform “flywheel,” with more than 70% of sizable AI customers attaching core cloud products. This broader adoption could improve customer retention, margins, and revenue generated per megawatt compared with bare-metal AI infrastructure providers.
• Capacity expansion remains on schedule or ahead of schedule, with 15 megawatts still expected to launch during the remainder of 2026 and approximately 20 megawatts of additional capacity secured for late 2027 through 2028. The company also signed its first nine-figure annual revenue commitments, lifting remaining performance obligations to $894 million.
• Profitability and financial flexibility remained strong, including a 40% adjusted EBITDA margin, $61 million of quarterly adjusted free cash flow, and an 11%–13% full-year adjusted free cash flow margin outlook. DigitalOcean retired approximately $472 million of convertible notes, reducing pro forma net leverage to about 0.7 times and preserving funding capacity for growth.

DigitalOcean Stock Down 2.4%

Shares of NYSE:DOCN traded down $3.04 during trading on Wednesday, hitting $125.85. The stock had a trading volume of 1,889,048 shares, compared to its average volume of 3,885,638. The company has a market capitalization of $13.13 billion, a PE ratio of 55.02 and a beta of 1.61. The company has a quick ratio of 1.46, a current ratio of 1.46 and a debt-to-equity ratio of 0.92. The firm’s fifty day moving average is $145.98 and its 200 day moving average is $107.48. DigitalOcean has a 12 month low of $28.79 and a 12 month high of $187.50.

Analyst Ratings Changes

Several research firms recently issued reports on DOCN. Citigroup restated a “buy” rating on shares of DigitalOcean in a research report on Wednesday. Piper Sandler increased their price objective on DigitalOcean from $98.00 to $155.00 and gave the company a “neutral” rating in a research note on Tuesday, May 5th. Oppenheimer set a $190.00 target price on shares of DigitalOcean in a report on Wednesday, May 6th. UBS Group reiterated a “neutral” rating on shares of DigitalOcean in a report on Wednesday. Finally, The Goldman Sachs Group increased their price target on shares of DigitalOcean from $78.00 to $179.00 and gave the company a “buy” rating in a research report on Wednesday, May 6th. Two investment analysts have rated the stock with a Strong Buy rating, eleven have issued a Buy rating and three have given a Hold rating to the company’s stock. Based on data from MarketBeat.com, DigitalOcean currently has an average rating of “Moderate Buy” and an average price target of $151.00.

Insider Buying and Selling at DigitalOcean

In other news, Director Hilary Schneider sold 4,338 shares of the business’s stock in a transaction on Friday, May 15th. The shares were sold at an average price of $156.38, for a total transaction of $678,376.44. Following the sale, the director owned 24,323 shares in the company, valued at approximately $3,803,630.74. The trade was a 15.14% decrease in their position. The sale was disclosed in a filing with the SEC, which is accessible through the SEC website. Also, CFO Matt Steinfort sold 25,000 shares of the stock in a transaction dated Friday, May 15th. The stock was sold at an average price of $152.50, for a total transaction of $3,812,500.00. Following the completion of the transaction, the chief financial officer owned 573,272 shares of the company’s stock, valued at approximately $87,423,980. The trade was a 4.18% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders have sold 39,338 shares of company stock valued at $6,191,576 in the last three months. Insiders own 0.96% of the company’s stock.

Hedge Funds Weigh In On DigitalOcean

A number of institutional investors and hedge funds have recently made changes to their positions in the business. Allworth Financial LP lifted its position in shares of DigitalOcean by 54.4% during the 3rd quarter. Allworth Financial LP now owns 724 shares of the company’s stock valued at $25,000 after buying an additional 255 shares in the last quarter. Transamerica Financial Advisors LLC raised its holdings in shares of DigitalOcean by 417.9% during the 4th quarter. Transamerica Financial Advisors LLC now owns 782 shares of the company’s stock worth $38,000 after acquiring an additional 631 shares in the last quarter. UMB Bank n.a. increased its holdings in shares of DigitalOcean by 242.1% in the 4th quarter. UMB Bank n.a. now owns 821 shares of the company’s stock worth $40,000 after buying an additional 581 shares during the last quarter. Wilmington Savings Fund Society FSB purchased a new position in shares of DigitalOcean in the 3rd quarter worth approximately $37,000. Finally, Advisory Services Network LLC purchased a new stake in DigitalOcean during the 3rd quarter valued at $54,000. Hedge funds and other institutional investors own 49.77% of the company’s stock.

DigitalOcean News Roundup

Here are the key news stories impacting DigitalOcean this week:

• Positive Sentiment: Q2 results exceeded expectations: DigitalOcean reported adjusted earnings of $0.45 per share versus the $0.26 consensus estimate, while revenue rose 28.6% year over year to $281.2 million, slightly ahead of estimates. DigitalOcean Beats Q2 Earnings and Revenue Estimates
• Positive Sentiment: Guidance was raised substantially: The company now expects approximately $1.2 billion of fiscal 2026 revenue, representing about 30.5% growth, and $1.35-$1.40 of EPS. Both outlooks are above analyst expectations. Third-quarter revenue guidance of $304-$307 million and EPS guidance of $0.28-$0.30 also topped consensus. DigitalOcean Forecasts 2026 Revenue Growth
• Positive Sentiment: AI demand is accelerating: Management highlighted AI-native cloud adoption, expanding inference services and enterprise momentum. Analysts characterized DigitalOcean as well positioned for the AI infrastructure boom, with recurring revenue and approximately $1.1 billion in annual recurring revenue supporting the growth outlook. DigitalOcean Upgrade for AI Boom
• Neutral Sentiment: Margins remain a key focus: DigitalOcean posted a 24.97% net margin and 88.86% return on equity, but investors will monitor whether platform expansion and AI infrastructure spending can sustain profitability as growth accelerates. DOCN Q2 Deep Dive
• Negative Sentiment: Profit-taking and valuation pressure are weighing on the shares: Even after the beat-and-raise, the stock has pulled back from its highs. With a price-to-earnings ratio near 55 and shares below the 50-day moving average, investors appear to be demanding evidence that AI growth can justify the premium valuation. DigitalOcean Q2 Expectations and Stock Reaction

About DigitalOcean

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.