DigitalOcean surges on earnings beat and raised outlook

Investing.com -- DigitalOcean Holdings, Inc. (NYSE: DOCN) reported fourth quarter results that exceeded analyst expectations and raised its revenue outlook for 2026 and 2027, sending shares up 10% premarket.

The cloud infrastructure provider posted adjusted earnings per share of $0.44, beating the consensus estimate of $0.38. Revenue reached $242 million, surpassing the $237.73 million estimate and representing an 18% increase YoY. The company added a record $51 million in incremental organic annual recurring revenue during the quarter, with million-dollar-plus customers driving $133 million in ARR, up 123% YoY.

DigitalOcean raised its full-year 2026 revenue guidance to a range of $1.075 billion to $1.105 billion, representing 21% growth at the midpoint of $1.09 billion. The company also provided first quarter 2026 revenue guidance of $249 million to $250 million, with the midpoint of $249.5 million above typical sequential patterns.

"AI is reshaping entire industries, and we are built for this shift," said Paddy Srinivasan, CEO of DigitalOcean. "We delivered 18% top-line growth in Q4 and reached $1 billion in annualized monthly run-rate revenue in December."

The company reported AI customer ARR of $120 million, growing 150% YoY, with more than 70% coming from inference services and core cloud products rather than bare metal offerings. Net dollar retention rate improved to 101% from 99% in the fourth quarter of 2024.

For the first quarter of 2026, DigitalOcean expects adjusted EBITDA margin of 36% to 37% and adjusted earnings per share of $0.22 to $0.27. Full-year 2026 adjusted EBITDA margin is projected at 36% to 38%.

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