DigitalOcean Holdings Inc
Q1 2026 Earnings
Non-GAAP EPS excludes $22.5 million stock-based compensation, $4.9 million amortization of acquired intangible assets, $2.7 million loss on extinguishment of debt, $1.1 million non-cash charges related to convertible notes, and a non-GAAP income tax adjustment
Market Reaction
S&P 500 over the same 30 days: +1.90%.
Did DOCN Beat Earnings? Q1 2026 Results
DigitalOcean delivered a blowout first quarter for fiscal 2026, posting revenue of $257.90 million, up 22.4% year-over-year and ahead of the $249.76 million consensus, while adjusted diluted EPS of $0.44 beat the $0.26 estimate by 67.68%, extending the company's streak of consensus EPS beats to four consecutive quarters. The standout driver was explosive AI-related demand, with AI Customer ARR surging 221% year-over-year to $170.00 million and Million+ Dollar Customer ARR jumping 179% to $183.00 million, reflecting a meaningful shift toward larger, higher-value commitments. Adjusted EBITDA rose 21% to $104.55 million at a 41% margin, even as GAAP net income declined to $15.77 million, pressured by a $2.70 million debt extinguishment charge and sharply higher interest expense tied to the company's capital restructuring. Management raised full-year 2026 revenue guidance to $1.13 billion to $1.15 billion and projected 2027 revenue growth exceeding 50%, supported by roughly 60 MW of incremental data center capacity; shares have gained approximately 398% over the past year, drawing notable institutional interest alongside some insider selling near recent highs.
- AI Customer ARR grew 221% YoY to $170 million
- Million+ Dollar Customer ARR grew 179% YoY to $183 million
- Record $62 million in incremental organic ARR
- $100K+ customers grew 12% with revenue from these customers growing 73% YoY, representing 30% of total revenue
- $500K+ customers grew 54% with revenue growing 132% YoY, representing 21% of total revenue
- $1M+ customers grew 78% with revenue growing 179% YoY, representing 18% of total revenue
- ARR reached $1,032 million, up 22% YoY
- RPO grew to $243 million from $14 million a year ago, with $167 million expected to be recognized in next 12 months
“The Inference and agentic era needs its own cloud. DigitalOcean built it, and our record Q1 results demonstrate the strength of our platform. We drove 22% top-line growth with our Million+ Dollar Customer ARR growing 179% and our AI Customer ARR growing 221%, and we exceeded our revenue and profitability guidance. We launched the DigitalOcean AI-Native Cloud - the first cloud built end-to-end for the inference and agentic era - with more than 15 new product releases across five fully integrated layers, further differentiating us from bare-metal focused neo-clouds and inference wrappers that lack cloud platforms. We continue to invest in what we believe is a generational market opportunity, adding approximately 60 MW of incremental committed data center capacity that will come online throughout 2027 to support growing customer demand. With this strong momentum, we are raising our 2026 revenue growth outlook to 26% and our 2027 revenue growth outlook to over 50%.”
DigitalOcean CEO, on the earnings call
Forward Guidance & Outlook
Q2 2026: Revenue of $272–$274 million (24–25% YoY growth), adjusted EBITDA margin of 37–38%, non-GAAP diluted EPS of $0.20–$0.23, with fully diluted weighted average shares of approximately 121–122 million. Full Year 2026: Revenue of $1.130–$1.145 billion (25–27% YoY growth), adjusted EBITDA margin of 37–39%, adjusted free cash flow margin of 9–12%, non-GAAP diluted EPS of $1.10–$1.20, with fully diluted weighted average shares of approximately 118–119 million. The company also indicated 2027 revenue growth is now expected to exceed 50%, supported by approximately 60 MW of incremental committed data center capacity coming online throughout 2027.
DOCN YoY Financials
Figures from SEC filings and company reports. Not investment advice.