DigitalOcean Posts $321 Million in Revenue, Up 40% in Third Quarter

Key Facts

DigitalOcean reported on Nov. 3 results for the third quarter ended Sept. 30, 2026, with revenue of $321 million, up 40% year over year. Revenue topped analysts’ estimate of $306.66 million, while diluted non-GAAP earnings per share were $0.45, above the consensus estimate of $0.32. But the stock fell more than 8% in premarket trading on the day results were announced, according to Reuters via Investing.com. On operating metrics, the company ended the quarter with annualized run-rate revenue of $1.285 billion, up 40% year over year. It also issued higher fourth-quarter revenue guidance as markets monitor growth in its AI-related business and expansion plans.

Growth among AI-related customers stood out among the quarter’s metrics, with annualized run-rate revenue for this group reaching $376 million, up 288% year over year, according to the company’s statement. The metric refers to the annualized run rate of revenue from AI customers and does not mean the entire amount comes exclusively from AI services. The company posted a record quarterly addition to ARR of $160 million, up 266% from the same period a year earlier. Annualized run-rate revenue from customers spending more than $1 million a year reached $386 million, up 273% year over year. These figures show continued expansion in run-rate metrics among higher-spending customer segments alongside accelerating quarterly revenue.

The CEO said customers spending more than $100,000 a year account for 41% of the company’s revenue. He added that the volume of tokens processed by the inference engine grew about 10-fold from the previous quarter, saying these customers “are not renting capacity; they are relying on the platform.” Against the backdrop of expanding AI products, the company announced Managed Agents, Agent Learning Services and Agent Data Services at the Open Intelligence Summit on Oct. 13. It also said it launched its Memphis data center ahead of schedule and that all three data centers planned for 2026 were delivered on or ahead of schedule. The company frames this expansion of products and data centers in the context of rising customer use of its platform.

On commercial commitments, remaining performance obligations totaled $800 million in the third quarter, of which the company expects to recognize $345 million over the next twelve months. The restated comparable balance was $61 million in the third quarter of 2025. Cash from operating activities also rose to $161 million, with a 50% margin, compared with $96 million and a 42% margin a year earlier. Adjusted free cash flow climbed to $130 million, with a 41% margin, from $85 million and a 37% margin in the third quarter of 2025. These metrics reflect an improvement in reported cash flows alongside an increase in commitments that the company expects to convert partly into revenue over the following year.

On infrastructure expansion, DigitalOcean said it secured an additional 20 megawatts of data-center capacity, expected to come online in 2028, lifting total committed capacity to about 180 megawatts. This follows the announcement that its Memphis center launched ahead of schedule, among the three centers planned for delivery in 2026. The announced timelines show that some of the new capacity will not come online before 2028, as the company moves to increase committed capacity to keep pace with usage growth. The statement did not provide a figure for equipment financing or lease contracts in the information available here, so the disclosed expansion details focus on capacity and timing.

The company raised its fourth-quarter revenue outlook to a range of $348 million to $351 million, equivalent to year-over-year growth of 44% to 45%. It expects diluted non-GAAP net income of $0.30 to $0.32 per share and an adjusted EBITDA margin of 42% to 43%. For fiscal 2026, it forecast revenue of $1.208 billion to $1.211 billion, growth of about 34%. August guidance had pointed to year-over-year growth of 30% to 31% in 2026 and the company’s confidence that growth in 2027 would exceed 50%; the current guidance included in the evidence did not provide a new figure for 2027 growth. The earnings call was scheduled for Nov. 3 at 8:00 a.m. Eastern time.