DigitalOcean Reports Strong Third Quarter 2025 Results, Boosts Guidance

DigitalOcean reported a revenue of $230 million, marking a 16% increase year-over-year. This growth reflects the company’s strategic focus on providing tailored cloud solutions, particularly to AI and digital-native enterprises. The company also achieved an Annual Run-Rate Revenue (ARR) of $919 million, which also represents a 16% year-over-year growth.

CEO Paddy Srinivasan highlighted the momentum within the company, stating, “DigitalOcean’s unified agentic cloud is driving accelerated momentum in Q3. Our unified platform is emerging as a preferred destination for AI and digital native enterprises building and scaling AI workloads.”

DigitalOcean's net income attributable to common stockholders surged to $158 million, representing a staggering 381% increase year-over-year. This impressive figure benefitted from a one-time income tax benefit of $70 million and a one-time gain of $48 million from the partial extinguishment of its 2026 Convertible Notes.

The company also reported an adjusted EBITDA of $100 million, a 15% increase year-over-year, with an adjusted EBITDA margin of 43%. The net cash from operating activities stood at $96 million, reflecting a 42% margin, up from $73 million (37% margin) in the same quarter last year.

DigitalOcean's growth has been significantly bolstered by its larger clientele. Customers with annual run-rate revenue exceeding $100,000 increased by 26%, with their revenue accounting for 26% of total revenue and growing at 41% year-over-year. Notably, customers with a $1 million-plus run rate have generated over $100 million in ARR, growing at an extraordinary 72%.

The company’s direct AI revenue also showed remarkable growth, more than doubling year-over-year for the fifth consecutive quarter.

DigitalOcean has also made strides in product innovation during the third quarter. New features introduced included Spaces Cold Storage, Network File Storage, and Managed Databases Storage Autoscaling. The company announced advancements in its DigitalOcean Gradient™ AI Platform, including the support of Multi-Modal AI Model, Function Calling, and Guardrails, enhancing its capabilities as a full-feature inference platform.

Looking ahead, DigitalOcean has raised its financial guidance for the remainder of 2025. For the fourth quarter, the company expects total revenue between $237 million and $238 million and an adjusted EBITDA margin of 38.5% to 39.5%. For the full year 2025, projected total revenue is set between $896 million and $897 million, with an adjusted free cash flow margin anticipated to be in the range of 18% to 19% of revenue.

In addition to solid financial performance, DigitalOcean repurchased approximately $1.188 billion in aggregate principal of its 2026 Convertible Notes at a discount of $56 million to par, showcasing its commitment to enhancing shareholder value. The company has repurchased a total of 34.9 million shares since its IPO, totaling $1.6 billion in share repurchases.

DigitalOcean's third quarter results reflect a robust performance underpinned by significant product advancements and a growing customer base. With a strengthened balance sheet and increased guidance, the company is well-positioned to continue its growth trajectory, particularly in the rapidly evolving AI landscape.

DigitalOcean will discuss these results further in a conference call scheduled for today at 8:00 a.m. ET, accessible via its investor relations website.

As DigitalOcean continues to empower developers and businesses with its innovative cloud solutions, the future looks promising for both the company and its stakeholders.