DigitalOcean Holdings, Inc. (NYSE: DOCN) has announced its financial results for the fourth quarter and fiscal year ended December 31, 2025. CEO Paddy Srinivasan highlighted the company's formidable growth trajectory, driven by an increasing demand for AI solutions and cloud services, particularly through its Agentic Inference Cloud platform.

2. Robust Fourth Quarter Performance

Financial Highlights

DigitalOcean reported an impressive $242 million in revenue for Q4 2025, marking an 18% year-over-year increase. The company achieved an annualized revenue run-rate of $1 billion in December, underscoring its momentum in the cloud and AI sectors. Key financial metrics from the quarter include:

Annual Run-Rate Revenue (ARR): $970 million, up 18% year-over-year

Gross Profit: $142 million, a 13% increase, with a gross margin of 59%

Net Income: $26 million, reflecting a 40% year-over-year growth and an 11% net income margin

Adjusted EBITDA: $99 million, up 16% year-over-year, with an adjusted EBITDA margin of 41%

Diluted Net Income per Share: $0.24 (GAAP) and $0.44 (non-GAAP)

Despite strong growth, net cash from operating activities decreased to $57 million at a 24% margin, down from $71 million at a 35% margin in Q4 2024.

Operational Highlights

DigitalOcean's operational performance also reflected its growth strategy. The number of customers contributing over $100,000 in ARR increased by 26%, with revenue from these customers now accounting for 28% of total revenue. Notably, the number of $1 million+ customers grew by a staggering 71%, contributing to a 123% year-over-year revenue increase from this segment.

Additionally, the company launched new core cloud and AI-native capabilities, such as Remote MCP support and enhanced GPU observability features, further solidifying its competitive edge in the market.

3. Fiscal Year 2025 Overview

Financial Performance

For the fiscal year 2025, DigitalOcean reported total revenue of $901 million, a 15% increase from the previous year. Key highlights include:

Gross Profit: $540 million, with a gross margin of 60%

Net Income: $259 million, soaring 207% year-over-year, resulting in a 29% net income margin

Adjusted EBITDA: $375 million, a 14% increase with an adjusted EBITDA margin of 42%

Adjusted Free Cash Flow: $168 million, up from $135 million in FY 2024, yielding a 19% margin

The company also repurchased approximately $1.2 billion in Convertible Notes at a discount, showcasing its commitment to returning value to shareholders.

Customer Growth

The customer base showed significant expansion, particularly among high-value customers. Revenue from customers contributing over $100,000 grew by 46%, while those contributing over $500,000 and $1 million increased by 76% and 106%, respectively.

4. Increased Financial Outlook for 2026

In light of its recent performance, DigitalOcean has updated its financial outlook for 2026 and 2027. The company now anticipates:

2026 Revenue: $1.075 to $1.105 billion

Adjusted EBITDA Margin: 36% to 38%

Non-GAAP Diluted Net Income per Share: $0.75 to $1.00

DigitalOcean aims for continued growth, projecting a 21% revenue increase for 2026, with expectations to accelerate to 30% growth by 2027. Srinivasan emphasized that the company is on track to achieve profitable growth, positioning itself as a "weighted Rule of 50 company" by 2027.

5. Conclusion

DigitalOcean's Q4 and fiscal year 2025 results underscore its robust growth trajectory amid a rapidly evolving cloud and AI landscape. With a strong financial performance and a clear outlook for future growth, the company is well-poised to capitalize on the increasing demand for AI-driven cloud solutions. As it navigates the competitive landscape, DigitalOcean continues to innovate and expand its capabilities, making it a company to watch in the coming years.

Original press release