25402DAB8 Filings — Digitalocean Holdings, Inc. - FilingSpy
25402DAB8
Digitalocean Holdings, Inc.
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A cloud platform that sells simple, affordable virtual servers and managed services—like Droplet virtual machines, managed databases and Kubernetes, plus AI tools with GPU options—aimed mainly at small and growing tech companies. It was founded in 2011 by five former colleagues from the hosting firm ServerStack, who built it around ease of use after dealing with clunky cloud providers. The ocean theme runs through the brand: just as an ocean is made of countless drops, its virtual servers are called "Droplets."
Revenue rose 28.6% to $281.2M but gross margin fell 4.9pt to 55.0% on data center build-out costs
fell to 55.0% as data center build-out costs outpaced gains. Revenue rose 28.6% to $281.2M and was $0.29, driven by a 45% increase in DNE Customer revenue and AI Customer of $234M, while of $35.4M included an $8.3M non-cash tax benefit. The company has cash of $767.0M and a lower debt load, but margin pressure from expansion spending persists.
Key takeaways
declined to 55.0% from 59.9% a year earlier and 56.1% in Q1, as cost of rose 44% with $17.2M higher and $12.4M from data center expansions.
rose 28.6% to $281.2M, fueled by a 45% increase in DNE Customer revenue and AI Customer rising to $234M from $75M a year earlier.
was $35.4M, down 4.3% , but included an $8.3M income tax benefit from excess tax benefits, a non-cash item that offset higher .
Section summaries
Management's Discussion and Analysis
Revenue grew 29% YoY to $281M driven by DNE and AI customer expansion, but gross margin fell to 55% on data center build-out costs.
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Total rose 29% to $281.2M, fueled by a 45% increase in DNE Customer revenue and AI Customer surging to $234M from $75M.
declined to 55% from 60% as cost of jumped 44% due to $17.2M in higher and $12.4M in co-location costs from data center expansions.
Operating expenses grew 31% to $125.3M, with R&D up 45% on headcount and , while sales and marketing stayed at 8% of .
An $887.9M equity offering repaid $500M of term loan debt, leaving $767.0M in cash and $406.7M in ; the company repurchased $471.8M of 2030 in July 2026.
reached $1.125B and was $110.0M, up 19.0% , with of $68.4M, up 15.4% from a year earlier.
What changed
Q2 2026 : flagged to watch if 56.1% recovered; it fell further to 55.0% as data center and did not normalize.
Net dollar retention: FY2025 ended at 100%; this 10-Q does not report the metric for Q2, leaving prior-year contraction recovery unconfirmed.
Remaining $500M Term Loan Facility: Q1 used $120M draw and repaid $500M; this filing shows $609.4M , little changed from $608.5M, with no new draw stated.
margin: flagged to see if Q1's $6.9M rebounds; Q2 free cash flow was $68.4M, up 15.4% and 886.9% from Q1.
Risk factors: no material changes from the FY2025 10-K; the new C-suite transition and tax control weakness items carry over unaltered.
What to watch
Q3 2026 to see if 55.0% recovers as data center and normalize
Q3 net dollar retention to confirm whether the FY2025 100% level holds or slips
Drawdowns or terms of any remaining Term Loan Facility against $609.4M
margin in Q3 to confirm the $68.4M quarterly figure sustains toward the prior above-20% target
Operating expenses grew 31% to $125.3M, with R&D up 45% on headcount and , while sales and marketing remained efficient at 8% of .
fell slightly to $35.4M, but an $8.3M income tax benefit from excess tax benefits offset higher interest and lower foreign currency gains.
Liquidity was bolstered by an $887.9M equity offering; proceeds were used to repay $500M of term loan debt, leaving $767M in cash and $406.7M in capacity.
reached $1.125B, and the company repurchased $471.8M of 2030 in July 2026 to manage its debt maturity profile.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in market risk from the information provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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There have been no material changes in market risk from the information provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any litigation the outcome of which, if determined adversely to us, would in our estimation, have a material adverse effect on o…
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From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any litigation the outcome of which, if determined adversely to us, would in our estimation, have a material adverse effect on our business, operating results, cash flows or financial condition. Defending such proceedings can be costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Please refer to Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 for a description of certain significant risks and uncertainties to which our business, financial condition and results of operations are subject. There have be…
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Please refer to Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 for a description of certain significant risks and uncertainties to which our business, financial condition and results of operations are subject. There have been no material changes to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.