DigitalOcean Holdings (DOCN)
NYSE:DOCN
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DigitalOcean Holdings
(NYSE:DOCN)
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Rating:65Neutral
Price Target:
$97.00
▲(12.02% Upside)
Action:ReiteratedDate:03/27/26
The score is driven primarily by improved profitability but constrained by balance-sheet risk (negative equity) and weaker recent free-cash-flow conversion. Technicals are strong but stretched, valuation is high (P/E ~42.9), while the latest earnings call provides a meaningful offset with upgraded growth and cash-flow guidance backed by accelerating ARR and capacity expansion.
Positive Factors
Margins & cash generation
DigitalOcean exhibits durable profitability and strong gross margins (~60%) that support high adjusted EBITDA conversion. Sustained EBITDA and meaningful trailing free cash flow margins improve the company's ability to fund growth, invest in platform capacity, and reduce reliance on short-term external financing over the medium term.
Negative Factors
Negative stockholders' equity
A negative equity position constrains financial flexibility and raises refinancing and covenant risks in stress scenarios. Even with improving operating results, negative equity makes leverage metrics unstable, limiting the company's ability to absorb shocks or pursue opportunistic investments without further capital raises.
Read all positive and negative factors
Positive Factors
Negative Factors
Margins & cash generation
DigitalOcean exhibits durable profitability and strong gross margins (~60%) that support high adjusted EBITDA conversion. Sustained EBITDA and meaningful trailing free cash flow margins improve the company's ability to fund growth, invest in platform capacity, and reduce reliance on short-term external financing over the medium term.
Read all positive factors
DigitalOcean Holdings (DOCN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.97B
Dividend YieldN/A
Average Volume (3M)4.24M
Price to Earnings (P/E)42.9
Beta (1Y)1.42
Revenue Growth14.20%
EPS Growth204.86%
CountryUS
Employees1,210
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.44
Shares Outstanding91,996,090
10 Day Avg. Volume4,994,125
30 Day Avg. Volume4,235,367
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)-153.44
Price to Sales (P/S)4.88
P/FCF Ratio25.93
Enterprise Value/Market Cap1.09
Enterprise Value/Revenue9.65
Enterprise Value/Gross Profit16.12
Enterprise Value/Ebitda21.26
Forecast
1Y Price Target
$83.67Price Target Upside-3.37% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)0.99
Revenue Forecast (FY)$1.09B
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 ...
How the Company Makes Money
DigitalOcean primarily generates revenue by selling cloud infrastructure and platform services on a subscription and usage-based basis. Its core revenue stream is customer spend on infrastructure products (e.g., compute/virtual machines, storage, ...
DigitalOcean Holdings Key Performance Indicators (KPIs)
Any
Dollar-Based Net Retention Rate
Indicates how much revenue is retained from existing customers, reflecting customer satisfaction and the potential for upselling.
Indicates how much revenue is retained from existing customers, reflecting customer satisfaction and the potential for upselling.
Data provided by:
The Fly
The FlyDigitalOcean Holdings Earnings Call Summary
Earnings Call Date:Feb 24, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call presents a strongly positive outlook driven by accelerating revenue growth, record organic ARR additions, strong customer expansion (notably AI-native and large accounts), robust profitability (42% adjusted EBITDA margin) and healthy cash generation. Management provided upgraded guidance (21% growth target for 2026 midpoint, exit 25%+, and a path to 30% in 2027) and committed incremental capacity (31 MW) to support that growth. Key near-term risks include margin compression and higher reported leverage as new data center and GPU capacity is brought online (timing and supply-chain risks), a $13M ARR legacy product wind-down, and remaining 2026 convertible note actions. On balance, the highlights materially outweigh the lowlights given growth acceleration, strong margins, product traction, and a plan to finance capacity responsibly.Positive Updates
Revenue Growth and Run Rate Milestone
Full-year 2025 revenue reached $901,000,000 with Q4 revenue of $242,000,000, up 18% year-over-year. Company crossed a $1 billion revenue run rate in December 2025.
Negative Updates
Near-Term Margin Pressure from Capacity Ramp
Bringing 31 MW online in 2026 will front-load data center lease expense and GPU depreciation months before associated revenue ramps, causing near-term gross margin and adjusted EBITDA compression; company explicitly forecasts some margin pressure during the ramp.
Read all updates
Q4-2025 Updates
Positive
Negative
Revenue Growth and Run Rate Milestone
Full-year 2025 revenue reached $901,000,000 with Q4 revenue of $242,000,000, up 18% year-over-year. Company crossed a $1 billion revenue run rate in December 2025.
Read all positive updates
Company Guidance
DigitalOcean guided Q1 2026 revenue of $249–250M (~18–19% YoY), Q1 adjusted EBITDA margin of 36–37% and non‑GAAP diluted EPS of $0.22–0.27 on ~111–112M diluted shares; for full‑year 2026 it expects revenue growth of 19–23% (21% midpoint; 21–24% excluding a ~$13M ARR legacy bare‑metal CPU roll‑off), adjusted EBITDA margin of 36–38%, unlevered adjusted free cash flow margin of 18–20% (≈$207M at midpoint), non‑GAAP diluted EPS of $0.75–1.00 (111–112M shares), and to exit Q4 2026 at 25%+ growth. Management is bringing 31 MW of incremental capacity online (6 MW beginning to ramp in Q2, the remainder ramping in H2), noted Q4 RPO of $134M (up 121% sequentially, ~500% YoY), warned of near‑term gross‑margin and EBITDA pressure and short‑term net leverage above 4× from lease/depreciation timing, and reiterated a path to 30% revenue growth in 2027 with 20%+ unlevered adjusted free cash flow margins (a “rule of 50+” outcome).DigitalOcean Holdings Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
32
Negative
Cash Flow
56
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 901.43M | 780.62M | 692.88M | 576.32M | 428.56M |
| Gross Profit | 539.59M | 465.94M | 408.92M | 364.39M | 257.97M |
| EBITDA | 362.05M | 236.86M | 153.59M | 86.74M | 73.92M |
| Net Income | 259.26M | 84.49M | 19.41M | -27.80M | -19.50M |
Balance Sheet | |||||
| Total Assets | 1.84B | 1.64B | 1.46B | 1.82B | 2.10B |
| Cash, Cash Equivalents and Short-Term Investments | 254.47M | 428.45M | 411.77M | 864.23M | 1.71B |
| Total Debt | 730.55M | 1.70B | 1.66B | 1.64B | 1.46B |
| Total Liabilities | 1.87B | 1.84B | 1.77B | 1.77B | 1.52B |
| Stockholders Equity | -28.69M | -202.96M | -313.70M | 47.57M | 578.20M |
Cash Flow | |||||
| Free Cash Flow | 169.75M | 96.20M | 110.13M | 74.94M | 24.02M |
| Operating Cash Flow | 309.60M | 282.73M | 234.94M | 195.15M | 133.11M |
| Investing Cash Flow | -268.29M | -94.81M | 401.15M | -1.15B | -113.61M |
| Financing Cash Flow | -216.91M | -76.45M | -468.90M | -610.36M | 1.59B |
DigitalOcean Holdings Technical Analysis
Positive
86.59
Price Trends
68.15
Positive
58.33
Positive
46.20
Positive
Market Momentum
6.31
Negative
62.52
Neutral
73.13
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 86.59 is above the 20-day moving average (MA) of 80.30, above the 50-day MA of 68.15, and above the 200-day MA of 46.20, indicating a bullish trend. The MACD of 6.31 indicates Negative momentum. The RSI at 62.52 is Neutral, neither overbought nor oversold. The STOCH value of 73.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DOCN.
DigitalOcean Holdings Risk Analysis
DigitalOcean Holdings disclosed 58 risk factors in its most recent earnings report. DigitalOcean Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
DigitalOcean Holdings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $3.76B | 18.77 | 38.09% | ― | 22.02% | 12.42% | |
70 Outperform | $1.77B | 32.09 | 20.61% | 1.33% | 10.27% | 3.52% | |
66 Neutral | $2.16B | 82.10 | 7.96% | ― | 24.71% | 99.52% | |
65 Neutral | $7.97B | 42.89 | -214.15% | ― | 14.20% | 204.86% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $2.09B | -949.46 | -10.29% | ― | 11.05% | 45.23% |
* Technology Sector Average
DOCN
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55.92
182.33%
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DigitalOcean Holdings Corporate Events
Business Operations and StrategyPrivate Placements and Financing
DigitalOcean Announces Equity Offering to Fund Growth Initiatives
Positive
Mar 26, 2026
On March 24, 2026, DigitalOcean Holdings, Inc. entered into an underwriting agreement with J.P. Morgan Securities LLC and other underwriters to sell 10,389,611 shares of common stock at $74.40125 per share, with an additional 1,558,441 shares avai...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.