DigitalOcean Revenue Jumps 40% to $321 Million in Third Quarter
Key Facts
DigitalOcean said on November 3, 2026, that revenue for the third quarter ended September 30 reached $321 million, up 40% year over year. The company said revenue growth accelerated for a fifth consecutive quarter, signaling continued expansion in demand for its cloud services. The result topped the outlook it issued in August, when it forecast revenue of $304 million to $307 million and growth of 32% to 34%. Annualized revenue run rate also rose to $1.285 billion, up 40%, a measure of the revenue pace at quarter-end. The results put artificial intelligence at the center of the company’s expansion, with AI customers’ annualized revenue run rate reaching $376 million, up 288% from a year earlier.
Chief Executive Officer Paddy Srinivasan said revenue growth reached 40% year over year, calling it "the fifth consecutive quarter of accelerating growth." He added that the volume of tokens processed through the company’s inference engine grew nearly tenfold from the previous quarter. These figures link accelerating revenue with increased use of AI services, although the company did not break out how much each service contributed to revenue in this statement. During the quarter, DigitalOcean added a record $160 million to its annualized revenue run rate, up 266% from the comparable period. That flow points to an expansion in the base of contracted or recurring revenue during the reporting period, alongside the increase in the overall rate at quarter-end.
Growth in AI activity extended to future contractual commitments, with remaining performance obligations reaching $800 million in the third quarter. The company expects to recognize $345 million of that balance over the next twelve months. It said the recast comparison for the third quarter of 2025 was $61 million. The balance indicates revenue tied to existing commitments, while some of it will be recognized across future periods. In the second quarter of 2026, revenue had reached $281 million, up 29% year over year, while revenue from customers spending more than $100,000 annually accounted for 35% of the total and grew 98%—a backdrop to the third-quarter acceleration.
Adjusted profitability and cash flow metrics improved alongside revenue growth. Adjusted EBITDA was $144 million, with a 45% margin. Adjusted free cash flow reached $130 million, with a 41% margin, compared with $85 million and a 37% margin in the third quarter of 2025. By contrast, the company reported a $43 million net loss attributable to common shareholders. It said the loss included a $57 million inducement expense related to the partial repurchase of its 2030 convertible notes, showing that a financing item materially affected the period’s net result.
At the product level, DigitalOcean said it announced the launch of Managed Agents, Agent Learning Services and Agent Data Services at the Open Intelligence Summit on October 13. The announcements are part of the company’s efforts to expand its offerings for developing and operating AI applications. In infrastructure, the company launched its Memphis data center ahead of schedule, according to the earnings statement. It also secured an additional 20 megawatts of data center capacity, expected to come online in 2028. The addition would raise total committed capacity to about 180 megawatts, linking product expansion plans with the provision of new computing capacity.
The company raised its fiscal 2026 revenue outlook to a range of $1.208 billion to $1.211 billion, equivalent to year-over-year growth of about 34%. Its previous third-quarter outlook, issued in August, had pointed to slower growth and lower revenue than the result it later reported. For the fourth quarter, DigitalOcean expects revenue of $348 million to $351 million, with year-over-year growth of 44% to 45%. It also expects non-GAAP diluted earnings of $0.30 to $0.32 per share. The company forecast revenue growth of more than 60% in fiscal 2027, raising the bar for its outlook for the following year.
DigitalOcean shares closed at $89.79 on November 2, according to EL7 data, a day before the results were announced. The closing price alone does not establish the market’s reaction to the figures published on November 3. The company scheduled an earnings review call for November 3 at 8:00 a.m. Eastern Time. The call is taking place on the day the results are announced, while the company’s new outlook covers the fourth quarter and fiscal 2026 and 2027. Those forecasts, along with the capacity expansion scheduled for 2028, are the main milestones the company cited after its third-quarter results.