Digitalocean Holdings, Inc. (DOCN)
NYSE:DOCN
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DigitalOcean Holdings
(NYSE:DOCN)
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Rating:68Neutral
Price Target:
$179.00
▲(109.04% Upside)
Action:Downgraded
Date:05/09/26
The score is driven primarily by strong earnings-call momentum and improved profitability/margins. It is tempered by balance-sheet leverage and weak recent free-cash-flow conversion, plus a stretched valuation (P/E ~60) and technically overbought signals despite a strong uptrend.
Positive Factors
Sustained high margins
Consistently strong TTM margins indicate durable unit economics and operating leverage across core cloud services. High gross and EBITDA margins support reinvestment in product and capacity, improving long-term cash generation potential even as revenue growth moderates.
Negative Factors
Meaningful leverage remains
Debt roughly in line with equity leaves the capital structure exposed if growth or cash generation slows. Meaningful leverage constrains discretionary spend and increases sensitivity to execution risks during the multi‑year capacity ramp and AI commercialization.
Read all positive and negative factors
Positive Factors
Negative Factors
Sustained high margins
Consistently strong TTM margins indicate durable unit economics and operating leverage across core cloud services. High gross and EBITDA margins support reinvestment in product and capacity, improving long-term cash generation potential even as revenue growth moderates.
Read all positive factors
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 (DOCN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$15.39B
Dividend YieldN/A
Average Volume (3M)4.90M
Price to Earnings (P/E)126.5
Beta (1Y)1.52
Revenue Growth17.61%
EPS Growth119.62%
CountryUS
Employees1,210
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)2.59
Shares Outstanding104,364,180
10 Day Avg. Volume5,273,429
30 Day Avg. Volume4,897,088
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 Cap1.03
Enterprise Value/Revenue16.67
Enterprise Value/Gross Profit28.50
Enterprise Value/Ebitda37.79
Forecast
1Y Price Target
$170.75Price Target Upside99.40% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)1.21
Revenue Forecast (FY)$1.13B
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 makes money by selling cloud infrastructure and platform services on a subscription and usage-based basis to customers who run applications and workloads on its platform. Revenue is largely generated from recurring customer ...
DigitalOcean Holdings Earnings Call Summary
Earnings Call Date:May 05, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 12, 2026
Earnings Call Sentiment Positive
The call communicated strong operational and financial momentum: meaningful top-line acceleration (Q1 revenue +22% YoY), explosive AI customer ARR growth (+221% YoY), record organic ARR additions, high profitability (41% adjusted EBITDA margin), a substantial $888M equity raise, and launch of a comprehensive AI native cloud with marquee customer wins and independent benchmarking wins. Management also flagged near-term trade-offs — higher CapEx per MW, ~$100M in 2026 start-up costs for new capacity, and the timing/ramp uncertainty of the incremental 60 MW (no 2026 revenue benefit). Competitive and early-market risks remain, but the positive growth, profitability, balance sheet strengthening, product differentiation and customer validation dominate the discussion.Positive Updates
Strong Top-Line Growth and Raised Guidance
Q1 revenue of $258 million, up 22% year-over-year and above guidance; Q2 guidance of $272–$274 million (24%–25% YoY). Full-year 2026 revenue guidance raised to $1.13–$1.145 billion (25%–27% YoY) with Q4 exit growth approaching ~30%. 2027 revenue now expected to exceed $1.7 billion (50%+ YoY), up from prior 30% guidance.
Negative Updates
Higher CapEx per Megawatt and Rising Component Costs
Management noted that CapEx per megawatt for the newly committed capacity is expected to be higher than prior orders due to rising component costs and the higher token-capacity equipment being installed, which will increase near-term capital intensity.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Top-Line Growth and Raised Guidance
Q1 revenue of $258 million, up 22% year-over-year and above guidance; Q2 guidance of $272–$274 million (24%–25% YoY). Full-year 2026 revenue guidance raised to $1.13–$1.145 billion (25%–27% YoY) with Q4 exit growth approaching ~30%. 2027 revenue now expected to exceed $1.7 billion (50%+ YoY), up from prior 30% guidance.
Read all positive updates
Company Guidance
DigitalOcean materially raised its outlook after a strong Q1 (revenue $258M, +22% YoY; adj. EBITDA $105M, 41% margin; trailing‑12m adj. FCF $171M, 18% of revenue): it expects Q2 revenue of $272–274M (+24–25% YoY) with adj. EBITDA margins of 37–38% (≈$102M) and non‑GAAP diluted EPS $0.20–0.23 on ~121–122M diluted shares. For full‑year 2026 it now guides revenue of $1.13–1.145B (+25–27% YoY) with an exit growth rate approaching 30%, adj. EBITDA margins of 37–39% (~$432M midpoint), adj. FCF margins of 9–12% (including roughly $100M of one‑time start‑up costs; ~18–21% ex‑those costs), adj. FCF less equipment finance principal slightly positive, and non‑GAAP EPS $1.10–1.20 on ~118–119M shares; it raised $888M in equity, repaid a $500M term loan, expects ~3x net leverage exiting 2026 and no material maturities until 2030. Looking to 2027, with total committed capacity ≈135MW (including ~60MW incremental ramping through 2027), management now expects revenue >$1.7B (>50% YoY) with ~40% adj. EBITDA margins and high‑teens adj. FCF margins.DigitalOcean Holdings Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
46
Neutral
Cash Flow
61
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 948.63M | 901.43M | 780.62M | 692.88M | 576.32M | 428.56M |
| Gross Profit | 554.86M | 539.59M | 465.94M | 408.92M | 364.39M | 257.97M |
| EBITDA | 418.48M | 362.05M | 236.86M | 153.59M | 86.74M | 73.92M |
| Net Income | 236.83M | 259.26M | 84.49M | 19.41M | -27.80M | -19.50M |
Balance Sheet | ||||||
| Total Assets | 2.57B | 1.84B | 1.64B | 1.46B | 1.82B | 2.10B |
| Cash, Cash Equivalents and Short-Term Investments | 741.36M | 254.47M | 428.45M | 411.77M | 864.23M | 1.71B |
| Total Debt | 899.59M | 730.55M | 1.70B | 1.66B | 1.64B | 1.46B |
| Total Liabilities | 1.68B | 1.87B | 1.84B | 1.77B | 1.77B | 1.52B |
| Stockholders Equity | 887.38M | -28.69M | -202.96M | -313.70M | 47.57M | 578.20M |
Cash Flow | ||||||
| Free Cash Flow | 40.07M | 169.75M | 96.20M | 110.13M | 74.94M | 24.02M |
| Operating Cash Flow | 296.52M | 309.60M | 282.73M | 234.94M | 195.15M | 133.11M |
| Investing Cash Flow | -263.89M | -268.29M | -94.81M | 401.15M | -1.15B | -113.61M |
| Financing Cash Flow | 346.81M | -216.91M | -76.45M | -468.90M | -610.36M | 1.59B |
DigitalOcean Holdings Technical Analysis
Positive
85.63
Price Trends
100.98
Positive
78.85
Positive
59.14
Positive
Market Momentum
17.96
Negative
65.25
Neutral
45.45
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 85.63 is below the 20-day moving average (MA) of 130.07, below the 50-day MA of 100.98, and above the 200-day MA of 59.14, indicating a bullish trend. The MACD of 17.96 indicates Negative momentum. The RSI at 65.25 is Neutral, neither overbought nor oversold. The STOCH value of 45.45 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | $2.15B | 33.25 | 10.20% | ― | 27.12% | ― | |
71 Outperform | $2.02B | 34.43 | 21.19% | 1.33% | 12.08% | -8.14% | |
69 Neutral | $3.40B | 18.77 | 37.04% | ― | 46.60% | 66.04% | |
68 Neutral | $15.39B | 126.51 | 154.32% | ― | 17.61% | 119.62% | |
68 Neutral | $2.55B | 346.71 | -3.71% | ― | 10.74% | 74.22% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
DOCN
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DigitalOcean Holdings Corporate Events
Business Operations and StrategyFinancial DisclosuresM&A TransactionsPrivate Placements and FinancingProduct-Related Announcements
DigitalOcean Posts Strong Q1 Growth, Expands AI Cloud
Positive
May 5, 2026
DigitalOcean reported first-quarter 2026 results on May 5, posting revenue of $258 million, up 22% year over year, and annual run-rate revenue of $1.03 billion, while AI customer ARR surged 221% to $170 million and million-dollar customer ARR jump...
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.