DigitalOcean Holdings (DOCN) AI Stock Analysis

• Market Cap: $2.57B
• Dividend Yield: N/A
• Average Volume (3M): 1.63M
• Price to Earnings (P/E): 24.5
• Beta (1Y): 1.85
• Revenue Growth: 13.21%
• EPS Growth: 109.61%
• Country: US
• Employees: 1,210
• Sector: Technology
• Sector Strength: 78
• Industry: Software - Infrastructure
• EPS (TTM): 0.56
• Shares Outstanding: 91,033,530
• 10 Day Avg. Volume: 1,629,340
• 30 Day Avg. Volume: 1,625,395
• PEG Ratio: -3.17
• Price to Book (P/B): 50.26
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 34.26
• Enterprise Value/Market Cap: 1.58
• Enterprise Value/Revenue: 1.32
• Enterprise Value/Gross Profit: 8.41
• Enterprise Value/Ebitda: 4.29
• 1Y Price Target: $38.42
• Price Target Upside: 43.47% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

• Rating: 66 Neutral
• Price Target: $30.00 ▲(12.02%Upside)

DigitalOcean's strong financial performance and strategic initiatives in AI and customer expansion drive a positive outlook. However, the negative equity and technical indicators suggest caution. Corporate events and earnings call insights provide a balanced view, supporting a moderately positive score.

Positive Factors

Customer Expansion

Increased product velocity is driving expansionary growth in large customers while raising the spend ceiling well over $1M.

Revenue Performance

DOCN reported F1Q25 revenue of $210.7 million, showing a 14% increase year-over-year, with earnings exceeding expectations.

Negative Factors

Free Cash Flow Concerns

Free Cash Flow miss raises caution about the company's ability to meet growth targets and manage investments effectively.

Funding and Investment Uncertainty

Uncertainties regarding funding methods for growth capital raise concerns about the need for additional investments.

DigitalOcean Holdings Business Overview & Revenue Model

Company Description

DigitalOcean Holdings, Inc. is a cloud infrastructure provider that offers a comprehensive suite of cloud services aimed primarily at developers, startups, and small to medium-sized businesses. The company provides scalable computing, storage, and networking solutions, enabling its users to deploy and manage applications quickly and efficiently. DigitalOcean's core products include Droplets (virtual machines), Spaces (object storage), Kubernetes (container orchestration), and Databases (managed database services), emphasizing simplicity and cost-effectiveness.

How the Company Makes Money

DigitalOcean generates revenue primarily through a subscription-based model where customers pay for the cloud infrastructure services they use. The company's key revenue streams include virtual machines (Droplets), managed databases, and other cloud services such as object storage and networking. Customers select from various pricing plans based on their specific computing and storage needs, with pricing determined by factors like the number of virtual machines or the amount of storage utilized. Additionally, DigitalOcean benefits from partnerships and integrations within the developer and open-source community, enhancing its platform's value proposition and driving user adoption.

DigitalOcean Holdings Financial Statement Overview

Summary

DigitalOcean Holdings exhibits strong revenue and profit growth with improving margins, but the negative stockholders' equity and high leverage pose significant risks. Cash flow generation remains robust, supporting ongoing operations and investments.

Income Statement

DigitalOcean Holdings has shown a strong revenue growth trajectory, with revenue increasing from $318M in 2020 to $806M in TTM (Trailing-Twelve-Months) 2025. Gross profit margin is healthy at 60% in TTM, and both EBIT and EBITDA margins have improved significantly, indicating operational efficiency. The net profit margin also increased to 13.5% in TTM, reflecting profitability enhancements. However, growth rates have started to moderate compared to earlier periods.

Balance Sheet

The balance sheet reflects a negative stockholders' equity position of -$210M in TTM, raising concerns about financial stability. The debt-to-equity ratio is not calculable due to negative equity, indicating high leverage. Despite a high total debt level, the company has managed to maintain cash and short-term investments, but the negative equity ratio of -12.8% is a significant risk factor.

Cash Flow

Operating cash flow is robust at $280M in TTM, supporting healthy free cash flow of $73.9M. The operating cash flow to net income ratio is strong, suggesting good cash conversion. However, free cash flow growth has slowed, and capital expenditures remain substantial, potentially impacting future cash flow flexibility.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
806.59M	780.62M	692.88M	576.32M	428.56M	318.38M
	Gross Profit
483.30M	465.94M	408.92M	364.39M	257.97M	172.85M
	EBIT
117.09M	91.01M	11.90M	-15.60M	-11.02M	-28.79M
	EBITDA
261.22M	236.86M	153.59M	86.74M	73.92M	46.22M
	Net Income Common Stockholders
108.56M	84.49M	19.41M	-24.28M	-19.50M	-43.57M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
360.42M	428.45M	411.77M	864.23M	1.71B	100.31M
	Total Assets
1.64B	1.64B	1.46B	1.82B	2.10B	430.25M
	Total Debt
1.74B	1.70B	1.66B	1.64B	1.46B	259.68M
	Net Debt
1.38B	1.27B	1.34B	1.50B	-250.71M	159.37M
	Total Liabilities
1.85B	1.84B	1.77B	1.76B	1.52B	502.35M
	Stockholders Equity
-210.75M	-202.96M	-313.70M	51.09M	578.20M	-72.09M
Cash Flow		Free Cash Flow
73.85M	96.20M	110.13M	74.94M	24.02M	-57.55M
	Operating Cash Flow
280.12M	282.73M	234.94M	195.15M	133.11M	58.12M
	Investing Cash Flow
-206.23M	-94.81M	401.15M	-1.15B	-113.61M	-115.49M
	Financing Cash Flow
-132.38M	-76.45M	-468.90M	-610.36M	1.59B	124.03M

DigitalOcean Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 26.78
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DOCN, the sentiment is Negative. The current price of 26.78 is below the 20-day moving average (MA) of 28.90, below the 50-day MA of 29.24, and below the 200-day MA of 36.64, indicating a bearish trend. The MACD of -0.58 indicates Positive momentum. The RSI at 39.06 is Neutral, neither overbought nor oversold. The STOCH value of 31.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DOCN.

DigitalOcean Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATEN	74 Outperform	$1.29B	26.55	24.36%	1.36%	4.90%	9.91%
DOCN	66 Neutral	$2.57B	24.52	-41.63%	―	13.21%	109.61%
AVPT	65 Neutral	$3.85B	―	-8.39%	―	21.70%	-67.95%
VRNS	64 Neutral	$5.52B	―	-22.21%	―	13.34%	13.71%
DAVA	63 Neutral	$925.02M	40.16	2.85%	―	7.58%	-57.13%
TENB	63 Neutral	$3.89B	―	-12.09%	―	11.79%	35.35%
Sector *	62 Neutral	$11.80B	10.08	-7.46%	2.99%	7.37%	-8.21%

DigitalOcean Holdings Corporate Events

DigitalOcean Holdings Annual Meeting Highlights Key Decisions

DigitalOcean Holdings recently held its Annual Meeting where stockholders voted on several key proposals. Padmanabhan Srinivasan was elected as a Class I director until 2028. The selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025, was ratified. Additionally, stockholders approved the compensation of the company’s named executive officers and an amendment to the Certificate of Incorporation to limit the liability of certain officers as permitted by Delaware law.

The most recent analyst rating on (DOCN) stock is a Buy with a $41.00 price target. To see the full list of analyst forecasts on DigitalOcean Holdings stock, see the DOCN Stock Forecast page.

DigitalOcean Enters New $500M Credit Agreement

On May 5, 2025, DigitalOcean Holdings, Inc. entered into a new credit agreement, replacing its previous 2022 facility, which includes a $500 million senior secured delayed draw term loan and a $300 million revolving credit facility. The term loan proceeds are designated for repurchasing existing Convertible Notes, while the revolving facility supports general corporate purposes. This financial move is part of DigitalOcean’s strategy to strengthen its financial position and support its growth initiatives. In the first quarter of 2025, DigitalOcean reported a 14% increase in revenue year-over-year, reaching $211 million, and a significant 170% rise in net income. The company also launched over 50 new products and features, highlighting its focus on innovation and expanding its market presence.

DigitalOcean Board Member Christopher Merritt to Step Down

On March 26, 2025, Christopher Merritt, a member of the Board of Directors of DigitalOcean Holdings, Inc., announced his decision not to stand for reelection at the company’s 2025 Annual Meeting of Stockholders. His decision was not due to any disagreements with the company, and he will continue to serve on the Board until the Annual Meeting.