DigitalOcean Raises 2027 Growth Target to 60% or More

The Tip Desk · November 3, 2026 · 3 min read

Third-quarter revenue reached $321 million, up 40% year over year, as the company lifted fourth-quarter exit growth to 44-45%.

DigitalOcean Holdings (DOCN), the AI-native cloud built for inference and agentic workloads, reported third-quarter revenue of $321 million, up 40% year over year, its fifth consecutive quarter of accelerating growth.

The company raised its fourth-quarter 2026 exit revenue growth outlook to 44-45% and increased expected full-year 2027 revenue growth to 60% or more. Chief executive Paddy Srinivasan said the center of gravity in AI has shifted from people chatting with models to agents doing work, and that DigitalOcean built a cloud where inference, agent runtime, data and learning operate as a single loop.

Annual run-rate revenue ended the quarter at $1,285 million, up 40% from a year earlier. The company added a record $160 million of ARR in the quarter, up 266% from a year earlier. AI customer ARR was $376 million, up 288% year over year.

Customers spending more than $100,000 a year now represent 41% of revenue, up from 35% in the second quarter. Revenue from those customers grew 133% year over year. The number of $100K-plus customers grew 11%. Revenue from $500K-plus customers, now 33% of the total, grew 214% year over year. Revenue from $1M-plus customers, now 30% of the total, grew 273% year over year.

Srinivasan said Inference Engine token volume grew roughly 10 times quarter over quarter. The company launched Managed Agents, Agent Droplets, Agent Learning Services and Agent Data Services at its inaugural Open Intelligence Summit on October 13.

Net income attributable to common stockholders of $158 million in the third quarter of 2025 became a net loss of $43 million in the third quarter of 2026, with a 13% net loss margin. The loss included a $57 million induced conversion expense related to the partial repurchase of 2030 convertible notes. Diluted net loss was $0.37 a share. Non-GAAP diluted net income was $0.45 a share, which excludes a $0.46 decrease related to that conversion expense.

Operating income was $33 million, a 27% decrease, with a 10% operating margin. Adjusted operating income was $74 million, up 6%, with a 23% adjusted operating margin. Adjusted EBITDA was $144 million, up 45%, with a 45% adjusted EBITDA margin.

Net cash from operating activities was $161 million at a 50% margin. Adjusted free cash flow was $130 million at a 41% margin. Cash and cash equivalents were $666 million as of September 30, 2026.

Remaining performance obligation was $800 million, of which $345 million is expected to be recognized over the next 12 months. RPO was $61 million in the third quarter of 2025.

The company repurchased approximately $472 million of its 2030 convertible notes, funded by a concurrent registered direct offering. It secured a $785 million equipment lease facility to fund capacity expansion.

DigitalOcean launched the Memphis data center ahead of schedule, delivering all three 2026 data centers on time or early. It secured an incremental 20 megawatts of committed capacity expected to come online in 2028, bringing total committed capacity to approximately 180 megawatts. The company shipped more than 70 releases in 65 business days in the quarter, including 21 new models and 49 product and platform releases.

For the fourth quarter ending December 31, 2026, DigitalOcean expects total revenue of $348 million to $351 million, up 44% to 45% year over year, adjusted EBITDA margin of 42% to 43%, and non-GAAP diluted net income of $0.30 to $0.32 a share. For full-year 2026, it now expects total revenue of $1.208 billion to $1.211 billion, up approximately 34% year over year, adjusted EBITDA margin of 41% to 42%, adjusted free cash flow margin of 20% to 22%, and non-GAAP diluted net income of $1.60 to $1.62 a share.