DigitalOcean Holdings (DOCN) AI Stock Analysis

• Market Cap: $3.59B
• Dividend Yield: N/A
• Average Volume (3M): 2.86M
• Price to Earnings (P/E): 31.7
• Beta (1Y): 1.96
• Revenue Growth: 13.29%
• EPS Growth: 79.98%
• Country: US
• Employees: 1,210
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.59
• Shares Outstanding: 91,037,500
• 10 Day Avg. Volume: 3,148,112
• 30 Day Avg. Volume: 2,861,909
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 5.10
• Enterprise Value/Gross Profit: 8.55
• Enterprise Value/Ebitda: 15.26
• 1Y Price Target: $43.63
• Price Target Upside: 8.05% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

• Rating: 70 Outperform
• Price Target: $33.00 ▼(-18.28% Downside)

DigitalOcean Holdings demonstrates strong financial performance with robust revenue growth and cash flow generation, supported by positive earnings call sentiment. However, high leverage and valuation concerns pose risks. The technical analysis indicates a bullish trend, further supporting the stock's potential.

Positive Factors

Revenue Growth

Consistent revenue growth demonstrates DigitalOcean's expanding market reach and product adoption, particularly in the AI/ML segment.

Product Innovation

Continuous product innovation enhances DigitalOcean's competitive edge, attracting new customers and retaining existing ones.

Cash Flow Generation

Strong cash flow generation supports DigitalOcean's ability to reinvest in growth opportunities and maintain financial flexibility.

Negative Factors

High Leverage

High leverage poses financial risks, potentially limiting DigitalOcean's ability to invest in growth and respond to market changes.

Net Dollar Retention Challenges

Lower-than-expected retention rates indicate challenges in maintaining customer loyalty and maximizing revenue from existing clients.

Capacity Constraints

Capacity constraints could hinder growth in the AI segment, affecting DigitalOcean's ability to capitalize on this high-demand market.

DigitalOcean Holdings Business Overview & Revenue Model

Company Description

DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. Its platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and medium size businesses. The company offers infrastructure solutions across compute, storage, and networking, as well as enables developers to extend the native capabilities of its cloud with fully managed application, container, and database offerings. Its users include software engineers, researchers, data scientists, system administrators, students, and hobbyists. The company's customers use its platform in various industry verticals and for a range of use cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, managed services, and others. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in New York, New York.

How the Company Makes Money

DigitalOcean generates revenue primarily through a subscription-based model, where customers pay for cloud services on a usage basis. Key revenue streams include payments for Droplets, Kubernetes services, managed databases, and object storage. The company also offers additional services such as monitoring and networking solutions, which further contribute to its earnings. DigitalOcean's pricing is designed to be transparent and predictable, appealing to developers and businesses looking for cost-effective solutions. Significant partnerships with educational platforms and developer communities enhance its outreach and customer acquisition, driving recurring revenue and customer loyalty.

DigitalOcean Holdings Financial Statement Overview

Summary

DigitalOcean Holdings shows strong revenue growth and profitability, with impressive cash flow generation. However, the balance sheet's high leverage and negative equity pose financial risks. The company should focus on improving its capital structure to enhance financial stability.

Income Statement

DigitalOcean Holdings has demonstrated consistent revenue growth, with a TTM revenue increase of 3.25%. The company maintains a strong gross profit margin of approximately 59.67% and a net profit margin of 15.18% in the TTM, indicating effective cost management and profitability. However, the EBIT margin has slightly decreased, suggesting potential operational cost challenges.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio due to negative stockholders' equity, posing a significant financial risk. The negative return on equity indicates that the company is not generating profit from shareholders' investments. Despite these challenges, the equity ratio is improving, showing a gradual increase in asset financing through equity.

Cash Flow

The cash flow statement is strong, with a significant free cash flow growth rate of 163.08% in the TTM, indicating robust cash generation capabilities. The operating cash flow to net income ratio of 1.34 suggests efficient conversion of net income into cash. However, the high free cash flow to net income ratio highlights reliance on cash flow for profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	832.81M	780.62M	692.88M	576.32M	428.56M	318.38M
Gross Profit	496.91M	465.94M	408.92M	364.39M	257.97M	172.85M
EBITDA	278.41M	236.86M	153.59M	86.74M	73.92M	46.22M
Net Income	126.45M	84.49M	19.41M	-24.28M	-19.50M	-43.57M
Balance Sheet
Total Assets	1.72B	1.64B	1.46B	1.82B	2.10B	430.25M
Cash, Cash Equivalents and Short-Term Investments	387.75M	428.45M	411.77M	864.23M	1.71B	100.31M
Total Debt	1.76B	1.70B	1.66B	1.64B	1.46B	259.68M
Total Liabilities	1.90B	1.84B	1.77B	1.76B	1.52B	502.35M
Stockholders Equity	-175.22M	-202.96M	-313.70M	51.09M	578.20M	-72.09M
Cash Flow
Free Cash Flow	93.88M	96.20M	110.13M	74.94M	24.02M	-57.55M
Operating Cash Flow	301.23M	282.73M	234.94M	195.15M	133.11M	58.12M
Investing Cash Flow	-207.31M	-94.81M	401.15M	-1.15B	-113.61M	-115.49M
Financing Cash Flow	-149.13M	-76.45M	-468.90M	-610.36M	1.59B	124.03M

DigitalOcean Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 40.38
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 40.38 is above the 20-day moving average (MA) of 39.23, above the 50-day MA of 36.04, and above the 200-day MA of 33.80, indicating a bullish trend. The MACD of 1.22 indicates Positive momentum. The RSI at 56.78 is Neutral, neither overbought nor oversold. The STOCH value of 29.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DOCN.

DigitalOcean Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLO	―	$4.52B	29.80	32.78%	―	22.02%	12.42%
ATEN	―	$1.30B	26.36	24.39%	1.35%	11.04%	18.70%
DOCN	―	$3.59B	31.72	―	―	13.29%	79.98%
TENB	―	$3.67B	―	-12.60%	―	11.41%	33.76%
AVPT	―	$3.16B	―	-2.60%	―	24.41%	40.20%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BASE	―	―	―	―	―	10.98%	11.62%

DigitalOcean Holdings Corporate Events

DigitalOcean Holdings Completes $625M Convertible Notes Offering

On August 14, 2025, DigitalOcean Holdings, Inc. completed a private offering of $625 million in 0.00% Convertible Senior Notes due 2030, including an additional $75 million from initial purchasers. The proceeds are intended for capped call transactions to mitigate stock dilution and repurchase existing 2026 notes. The company also initiated a $100 million stock repurchase program, set to expire in 2027, to optimize market conditions and shareholder value.

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 Reports Strong Q2 2025 Financial Growth

DigitalOcean Holdings, Inc. is a cloud computing company that provides a scalable platform for digital native enterprises, focusing on simplifying cloud and AI solutions for its customers. In its second quarter of 2025, DigitalOcean reported a revenue of $219 million, marking a 14% increase compared to the previous year. The company also raised its full-year revenue guidance to between $888 million and $892 million, reflecting strong growth and strategic focus on AI and core cloud services.

DigitalOcean Earnings Call: AI/ML Growth Fuels Optimism

DigitalOcean Holdings, Inc. recently held its earnings call, revealing a positive outlook driven by robust revenue growth, particularly in the AI/ML segment, and improved profitability. Despite some challenges with net dollar retention and constraints on share repurchases due to debt priorities, the company’s performance and future outlook remain strong.