Digitalocean Holdings, Inc. ((DOCN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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DigitalOcean Holdings, Inc. recently held its earnings call, revealing a strong quarter characterized by significant revenue growth and an expanding high-spending customer base. The company also reported robust AI revenue growth, although it faced some challenges with net dollar retention and the impact of recent debt restructuring.
Record Revenue Growth
DigitalOcean achieved a remarkable 16% year-over-year revenue growth in Q3 2025, reaching $230 million. This marks the highest growth since Q3 2023, underscoring the company’s strong market position and successful strategies.
Increase in High-Spending Customers
The company reported a substantial increase in revenue from high-spending customers, with those contributing more than $1 million in annualized run rate reaching $110 million in ARR. This represents a 72% growth year-over-year, highlighting DigitalOcean’s ability to attract and retain large-scale clients.
Strong Free Cash Flow Margins
DigitalOcean delivered a 21% trailing 12-month adjusted free cash flow margin, showcasing its strong financial performance and efficient cash management practices.
AI Revenue Momentum
AI revenue more than doubled year-over-year for the fifth consecutive quarter, indicating a strong demand for AI solutions and DigitalOcean’s successful penetration into this rapidly growing market.
Commitment to Future Growth
To support its future growth, DigitalOcean secured around 30 megawatts of incremental data center capacity and increased investments in data centers and GPU capacity. These strategic moves are aimed at sustaining growth in 2026 and beyond.
New Strategic Partnerships
The company signed multiple 8-figure committed contracts after Q3, including a major customer for its AI platform, further strengthening its market position and growth prospects.
Net Dollar Retention Challenges
Despite the positive growth, DigitalOcean faced challenges with net dollar retention, which remained at 99% in Q3. This indicates some difficulties in expanding existing customer revenue.
Impact of Debt Restructuring
The refinancing actions in Q3 led to a reduction of $0.05 in non-GAAP net income per share, impacting the company’s financial results. This highlights the cost of financial restructuring efforts.
Forward-Looking Guidance
Looking ahead, DigitalOcean exceeded its Q3 guidance and reported strong financial performance and growth prospects. The company increased its 2025 and 2026 revenue and adjusted free cash flow outlooks, driven by strong demand for its cloud services, particularly from AI-native customers. DigitalOcean plans to invest in additional data centers and GPU capacity, projecting revenue growth of 18% to 20% in 2026, achieving its 2027 target a year earlier than expected.
In summary, DigitalOcean’s earnings call reflected a positive sentiment with strong revenue growth and strategic initiatives aimed at sustaining future growth. Despite some challenges, the company’s robust performance and forward-looking guidance indicate a promising outlook for investors and stakeholders.