DigitalOcean Holdings (DOCN) AI Stock Analysis

• Market Cap: $4.11B
• Dividend Yield: N/A
• Average Volume (3M): 3.02M
• Price to Earnings (P/E): 18.2
• Beta (1Y): 1.69
• Revenue Growth: 14.20%
• EPS Growth: 204.86%
• Country: US
• Employees: 1,210
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.54
• Shares Outstanding: 91,492,140
• 10 Day Avg. Volume: 2,014,307
• 30 Day Avg. Volume: 3,023,470
• PEG Ratio: 0.12
• Price to Book (P/B): -15.38
• Price to Sales (P/S): 4.00
• P/FCF Ratio: 32.45
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: 5.77
• Enterprise Value/Gross Profit: 9.69
• Enterprise Value/Ebitda: 14.61
• 1Y Price Target: $54.50
• Price Target Upside: 20.76% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): 2.05
• Revenue Forecast (FY): $896.76M

• Rating: 73 Outperform
• Price Target: $51.00 ▲(13.01% Upside)

DigitalOcean Holdings' overall stock score is driven by strong earnings call results and positive technical indicators, suggesting a bullish outlook. However, financial performance is hindered by high leverage and negative equity, and the valuation appears stretched. The company’s focus on AI and strategic growth initiatives provides a positive long-term perspective, but immediate financial risks need addressing.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term expansion and stability.

AI Revenue Momentum

Sustained AI revenue growth highlights DigitalOcean's successful positioning in a rapidly expanding market, ensuring future competitiveness.

Cash Flow Management

Strong cash flow margins reflect efficient financial management, providing resources for reinvestment and debt reduction, enhancing long-term resilience.

Negative Factors

High Leverage

High leverage can limit financial flexibility and increase risk, potentially impacting the company's ability to invest in growth opportunities.

Net Dollar Retention Challenges

Stagnant net dollar retention suggests difficulties in upselling to existing customers, which could hinder revenue growth and customer lifetime value.

Impact of Debt Restructuring

Debt restructuring impacts profitability, indicating potential challenges in managing financial obligations, affecting short-term earnings stability.

DigitalOcean Holdings Business Overview & Revenue Model

Company Description

DigitalOcean Holdings (DOCN) is a cloud infrastructure provider that primarily focuses on delivering cloud services to developers, startups, and small to medium-sized businesses. Founded in 2011, the company is headquartered in New York City and operates data centers worldwide. DigitalOcean's core products include Droplets (virtual machines), Kubernetes, databases, object storage, and a range of developer tools designed to simplify the deployment and management of applications in the cloud.

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 exhibits strong revenue growth and improved profitability, with robust cash flow metrics. However, the balance sheet reveals high leverage and negative equity, posing potential financial risks. The company needs to focus on improving operational efficiency and addressing balance sheet weaknesses to sustain long-term growth.

Income Statement

DigitalOcean Holdings shows a solid revenue growth trajectory with a TTM revenue growth rate of 3.74%. The company has improved its profitability significantly, with a TTM net profit margin of 29.15% compared to 10.82% in the previous year. Gross profit margin remains stable around 59.5%, indicating efficient cost management. However, the EBIT margin is relatively low at 13.83%, suggesting room for operational efficiency improvements.

Balance Sheet

The balance sheet reflects high leverage, with a negative debt-to-equity ratio due to negative stockholders' equity, indicating financial instability. The return on equity is negative, highlighting inefficiencies in generating returns from equity. Despite these challenges, the company has managed to maintain a stable asset base.

Cash Flow

The cash flow statement is strong, with a significant increase in free cash flow growth rate at 194.55% TTM. The operating cash flow to net income ratio is nearly 1, indicating robust cash generation relative to net income. The free cash flow to net income ratio is also high at 85.43%, suggesting effective cash management and potential for reinvestment or debt reduction.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	863.96M	780.62M	692.88M	576.32M	428.56M	318.38M
Gross Profit	514.40M	465.94M	408.92M	364.39M	257.97M	172.85M
EBITDA	341.11M	236.86M	153.59M	86.74M	73.92M	46.53M
Net Income	251.87M	84.49M	19.41M	-27.80M	-19.50M	-43.57M
Balance Sheet
Total Assets	1.73B	1.64B	1.46B	1.82B	2.10B	430.25M
Cash, Cash Equivalents and Short-Term Investments	236.56M	428.45M	411.77M	864.23M	1.71B	100.31M
Total Debt	330.46M	1.70B	1.66B	1.64B	1.46B	259.68M
Total Liabilities	1.80B	1.84B	1.77B	1.77B	1.52B	502.35M
Stockholders Equity	-69.62M	-202.96M	-313.70M	47.57M	578.20M	-72.09M
Cash Flow
Free Cash Flow	169.29M	96.20M	110.13M	74.94M	24.02M	-57.35M
Operating Cash Flow	327.74M	282.73M	234.94M	195.15M	133.11M	58.46M
Investing Cash Flow	-185.92M	-94.81M	401.15M	-1.15B	-113.61M	-115.63M
Financing Cash Flow	-346.68M	-76.45M	-468.90M	-610.36M	1.59B	124.03M

DigitalOcean Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 45.13
• 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 45.13 is above the 20-day moving average (MA) of 44.86, above the 50-day MA of 41.03, and above the 200-day MA of 34.32, indicating a bullish trend. The MACD of 1.09 indicates Positive momentum. The RSI at 54.80 is Neutral, neither overbought nor oversold. The STOCH value of 48.35 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
ATEN	77 Outperform	$1.22B	24.89	23.88%	1.41%	10.27%	3.52%
DOCN	73 Outperform	$4.11B	18.22	―	―	14.20%	204.86%
DLO	73 Outperform	$3.86B	25.47	32.78%	―	22.02%	12.42%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TENB	61 Neutral	$3.17B	―	-8.95%	―	11.05%	45.23%
AVPT	61 Neutral	$2.78B	―	0.58%	―	24.71%	99.52%
BASE	60 Neutral	―	―	―	―	10.98%	11.62%

DigitalOcean Holdings Corporate Events

DigitalOcean Reports Strong Q3 2025 Financial Results

DigitalOcean Holdings, Inc. is a comprehensive cloud service provider that empowers developers at AI-native and digital native enterprises to build full-stack AI applications with straightforward tools. The company operates in the cloud computing industry, focusing on simplifying cloud and AI infrastructure for over 640,000 customers globally.

DigitalOcean’s Earnings Call Highlights Robust Growth and Strategic Initiatives

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.

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.