DigitalOcean Holdings, Inc. (DOCN)

Price$139.75Cached quoteAs of 2026-09-27 07:53 UTC

AI: Overvalued

Price checkThe stock looks expensive unless rapid artificial-intelligence growth persists for several years.

Using about 117.6 million shares outstanding after the July transaction, the equity is valued near $13.5 billion. That is roughly 84 times management's midpoint for adjusted 2026 earnings per share and about 88 to 105 times guided adjusted free cash flow, meaning cash left after running and investing in the business. After the July debt retirement, enterprise value is roughly $13.2 billion, or about eleven times 2026 revenue guidance. Those multiples leave little margin of safety if exceptional growth slows.

Big pictureThe balance sheet is much safer, but shareholders have absorbed substantial new share issuance.

Cash reached $767 million and reported debt fell to $921 million by June, versus more than $1.0 billion of net debt at year-end 2025. The July note retirement subsequently removed about $472 million more principal. However, shares outstanding rose from 91.9 million at year-end to 105.0 million in June and 117.6 million by July 30. Most July shares replaced conversion exposure already attached to the retired notes, limiting effective dilution. Capital allocation is still mixed because DigitalOcean spent roughly $1.1 billion on buybacks during 2022 and 2023.

Business strengthGrowth has accelerated sharply, while cash generation remains healthy but increasingly investment-heavy.

Revenue rose from $318 million in 2020 to $901 million in 2025, while operating cash flow increased from $58 million to $310 million. Second-quarter 2026 revenue then grew 29% to $281 million, and artificial-intelligence customer annualized revenue reached $234 million. Yet gross margin fell to about 55% from about 60% a year earlier, and operating income declined 18%. Adjusted free cash flow was $61 million in the quarter, but only about $2 million in the first quarter, showing how capacity spending can make cash results uneven.

What could change the storyThe valuation works only if large customer commitments become durable, profitable revenue quickly.

The strongest bull evidence is $894 million of contracted future service commitments, including $366 million expected within twelve months, plus several nine-figure annual customer commitments and roughly 155 megawatts of committed data-center capacity. Management expects 30% to 31% revenue growth in 2026 and believes growth can exceed 50% in 2027. The bear case is that contracted commitments do not guarantee equivalent revenue growth while infrastructure costs arrive early. Sustained growth near management's targets and materially higher cash margins are therefore required to justify today's valuation.

AI: News

Q2 growth acceleratesRevenue growth accelerated and guidance rose, but investors initially reacted cautiously despite strong reported results.

On August 4, DigitalOcean reported second-quarter revenue of $281.2 million, up 29% year over year, and raised full-year revenue guidance to $1.17 billion to $1.18 billion. Artificial-intelligence customer annualized revenue reached $234 million, while contracted future service commitments reached $894 million. Shares fell nearly 10% before the market opened, according to MT Newswires, before recovering later. The initial reaction may reflect demanding expectations and valuation concerns; timing alone does not prove the earnings release caused every price move.

Debt-for-stock transactionDigitalOcean retired convertible debt with newly issued shares, strengthening finances while changing the share count.

The transaction closed July 23. DigitalOcean issued about 12.5 million shares and used the proceeds, plus limited cash, to repurchase approximately $471.8 million principal amount of zero-interest convertible notes for about $1.47 billion. The company said 96% of issued shares corresponded to conversion exposure already embedded in the retired notes, while about 4% represented the transaction premium. Roughly $153 million of those notes remained afterward. The deal reduced leverage and financing risk but made the capital structure more complex for shareholders.

Contract backlog jumpsA surge in signed customer commitments gave investors stronger evidence that rapid cloud growth could continue.

On July 7, DigitalOcean said second-quarter contracted future service commitments were expected to exceed $800 million, more than ten times the year-earlier level and over $550 million above the first quarter. The company also disclosed multiple nine-figure annual customer commitments and another 20 megawatts of planned data-center capacity. Shares jumped about 7% that morning. The timing is consistent with investors rewarding improved demand visibility, although the stock movement cannot establish that the announcement was the sole cause.

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Revenue

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2025

Net income

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Free cash flow

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Total cash / debt

CashTotal debt

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Financial statements

	2025	2024	2023	2022	2021	2020	2019
Revenue	$901.4M	$780.6M	$692.9M	$576.3M	$428.6M	$318.4M	$254.8M
Gross profit	$539.6M	$465.9M	$397.5M	$364.4M	$258.0M	$172.8M	$132.6M
Gross margin	59.86%	59.69%	57.37%	63.23%	60.19%	54.29%	52.02%
Research & development	$161.6M	$142.5M	$136.9M	$143.9M	$115.7M	$75.0M	$60.0M
Operating expenses	$382.6M	$374.9M	$385.6M	$390.1M	$269.2M	$188.6M	$162.5M
Operating income	$157.0M	$91.0M	$11.9M	−$25.7M	−$11.2M	−$15.8M	−$29.9M
Operating margin	17.42%	11.66%	1.72%	−4.46%	−2.61%	−4.96%	−11.74%
EBITDA	$294.4M	$221.1M	$129.8M	$76.5M	$77.2M	$59.8M	$33.2M
EBITDA margin	32.66%	28.32%	18.73%	13.28%	18.01%	18.78%	13.02%
Net income	$259.3M	$84.5M	$19.4M	−$27.8M	−$19.5M	−$43.6M	−$40.4M
Net profit margin	28.76%	10.82%	2.80%	−4.82%	−4.55%	−13.68%	−15.85%
Basic EPSper basic share	$2.83	$0.92	$0.22	-$0.28	-$0.21	-$1.05	-$1.06
Diluted EPSper diluted share	$2.52	$0.89	$0.20	-$0.28	-$0.21	-$1.05	-$1.06

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

13.19%of listed shares

JPMORGAN CHASE & CO13.85M shares · Jun 30, 2026

View holders

Top 20 reported holders of DOCN
Holder	% owned
JPMORGAN CHASE & CO	13.19%13.85M shares
BlackRock, Inc.	8.37%8.79M shares
VANGUARD PORTFOLIO MANAGEMENT LLC	4.34%4.55M shares
Hood River Capital Management LLC	4.00%4.2M shares
VANGUARD CAPITAL MANAGEMENT LLC	3.56%3.74M shares
FULLER & THALER ASSET MANAGEMENT, INC.	2.51%2.63M shares
STATE STREET CORP	2.39%2.51M shares
TWO SIGMA INVESTMENTS, LP	1.80%1.89M shares
GEODE CAPITAL MANAGEMENT, LLC	1.80%1.89M shares
PRICE T ROWE ASSOCIATES INC /MD/	1.78%1.87M shares
CITADEL ADVISORS LLC	1.68%1.77M shares
GOLDMAN SACHS GROUP INC	1.60%1.68M shares
AMERIPRISE FINANCIAL INC	1.53%1.6M shares
FMR LLC	1.51%1.58M shares
WELLINGTON MANAGEMENT GROUP LLP	1.50%1.57M shares
BANK OF AMERICA CORP /DE/	1.47%1.54M shares
DIMENSIONAL FUND ADVISORS LP	1.12%1.17M shares
NEUBERGER BERMAN GROUP LLC	1.12%1.17M shares
ROYAL BANK OF CANADA	1.04%1.09M shares
FRANKLIN RESOURCES INC	1.02%1.07M shares

Percentages use 105M shares of this listed class outstanding on Jun 30, 2026.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)44$673.69M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 2, 2026Form 4 · 10b5-1	Steinfort MattChief Financial Officer	SellCommon Stock	10.0K	$170.07	$1.70M	538.4K
May 19, 2026Form 4	JENSON WARRENDirector	SellCommon Stock	20.0K	$147.62	$2.95M	32.5K
May 15, 2026Form 4	Steinfort MattChief Financial Officer	SellCommon Stock	25.0K	$152.50	$3.81M	573.3K
May 15, 2026Form 4	SCHNEIDER HILARYDirector	SellCommon Stock	4.3K	$156.38	$678.4K	24.3K
May 13, 2026Form 4	Blavatnik Len +5Other	SellCommon Stock · indirect	21.0K	$150.30	$3.16M	119.6K