DigitalOcean (DOCN) investor relations material

Executive summary

• Q3 revenue was $321.2M, up 40% YoY, the fifth consecutive quarter of accelerating growth; record incremental ARR of $160M was added.

• ARR reached $1.285B, up 40% YoY; AI Customer ARR rose 288% to $376M.

• Q4 revenue growth guidance rose to 44%–45%, and FY 2027 revenue growth is projected at 60%+.

• Data-center expansion costs and a $57.1M induced-conversion expense weighed on GAAP profitability; adjusted EBITDA was $144.2M.

Financial highlights

• Q3 revenue was $321.2M, up 40% YoY and more than $14M above the high end of guidance; gross profit was $161.1M.

• Adjusted EBITDA was $144.2M, up 45% YoY, at a 45% margin; adjusted operating income was $74.1M at a 23% margin.

• GAAP net loss was $42.6M, or $0.37 per diluted share; adjusted net income was $54.8M and non-GAAP diluted EPS was $0.45.

• Q3 net cash from operations was $161M and adjusted free cash flow was $130M, versus $96M and $85M, respectively, in Q3 2025.

• TTM adjusted free cash flow was $219.9M at a 20% margin, versus $178M and a 21% margin in the prior-year quarter.

Outlook and guidance

• Q4 2026 revenue guidance is $348M–$351M, up 44%–45% YoY; adjusted EBITDA margin is 42%–43% and non-GAAP diluted EPS is $0.30–$0.32.

• FY 2026 revenue guidance is $1.208B–$1.211B, up ~34% YoY; adjusted EBITDA margin is 41%–42%, adjusted FCF margin 20%–22%, and non-GAAP diluted EPS $1.60–$1.62.

• FY 2027 revenue growth outlook increased to 60%+ from 30%+; the projection uses a higher FY 2026 base.

• FY 2027 growth is expected to accelerate through the year, with the second half growing faster as capacity comes online.

• Outlook confidence reflects higher yield per megawatt, greater product attach, and token and agent workloads that can increase consumption without additional data-center capacity.