DigitalOcean Holdings, Inc. reported first‑quarter 2026 results that surpassed consensus expectations, with revenue of $257.9 million and adjusted earnings per share of $0.44, beating estimates of $249.7 million and $0.27 respectively. The company’s adjusted EPS beat analysts’ forecast by $0.17, a 63% over‑performance that underscores the strength of its high‑margin AI‑native cloud platform.
Revenue grew 22% year‑over‑year, driven by a 179% jump in $1 million‑plus customer annual recurring revenue to $183 million and a 221% increase in AI customer ARR to $170 million. These gains reflect robust demand for DigitalOcean’s AI‑native services and its ability to attract and retain high‑value customers, offsetting any headwinds in legacy segments.
Compared with prior periods, Q1 2025 revenue was $211 million and adjusted EPS was $0.56, while Q4 2025 revenue was $242 million and adjusted EPS was $0.44. Net income attributable to common stockholders fell 59% year‑over‑year, and operating income declined, largely due to capital expenditures for additional data‑center capacity and other strategic investments.
The company’s margin profile reflects a mix of strong top‑line growth and increased cost outlays. Net income and operating income decreased as DigitalOcean accelerated capacity expansion, adding approximately 60 MW of committed data‑center capacity slated to come online in 2027. This investment is intended to support the growing demand for its AI‑native cloud services, even as it temporarily compresses profitability.
Management raised its fiscal‑year 2026 guidance, projecting adjusted EPS of $1.10–$1.20 and revenue of $1.13–$1.14 billion, up from prior guidance. The upward revision signals confidence in sustained demand and margin resilience, despite the near‑term investment outlays.
CEO Paddy Srinivasan said, "The Inference and agentic era needs its own cloud. DigitalOcean built it, and our record Q1 results demonstrate the strength of our platform." He added, "We drove 22% top‑line growth with our Million+ Dollar Customer ARR growing 179% and our AI Customer ARR growing 221%, and we exceeded our revenue and profitability guidance." Srinivasan also noted, "We launched the DigitalOcean AI‑Native Cloud – the first cloud built end‑to‑end for the inference and agentic era – with more than 15 new product releases across five fully integrated layers, further differentiating us from bare‑metal focused neo‑clouds and inference wrappers that lack cloud platforms." He concluded, "We continue to invest in what we believe is a generational market opportunity, adding approximately 60 MW of incremental committed data‑center capacity that will come online throughout 2027 to support growing customer demand."
Investors reacted positively to the results, citing the strong earnings beat, the raised full‑year guidance, and the rapid growth in AI and high‑value customer segments as key drivers of confidence in DigitalOcean’s future performance.
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