DigitalOcean raises 2026 revenue outlook to $1.211 billion after quarterly growth reaches 40%
Key Facts
DigitalOcean raised its 2026 revenue outlook to a range of $1.208 billion to $1.211 billion, equivalent to growth of about 34% year over year, after reporting third-quarter revenue of $321 million. The company reported the results on November 3 and said revenue growth accelerated to 40% year over year, marking the fifth consecutive quarter of accelerating growth. Revenue in the same period a year earlier was $229 million, according to the earnings call transcript. The figures put third-quarter performance and the revised annual outlook at the center of the company’s announcement as its AI-related business continues to grow. The new full-year outlook remains forward-looking financial guidance, while third-quarter revenue reflects the period that has ended.
The outlook increase followed DigitalOcean’s August forecast for annual revenue of between $1.170 billion and $1.180 billion, with growth of between 30% and 31%. The company therefore raised its expected revenue range for the year and increased the annual growth rate it is targeting compared with its previous guidance. In the second quarter, revenue was $281 million, up 29% year over year. The company said at the time that growth accelerated on the back of large customers and specialized AI companies. In the third quarter, it reported revenue growth of 40% year over year, following growth of 29% in the second quarter, extending the acceleration it said had continued for five consecutive quarters.
The company added $160 million to annual recurring revenue in the third quarter, a record for DigitalOcean and a 266% increase year over year. Total annual recurring revenue was $1.285 billion at the end of the quarter, up 40% from a year earlier. Annual recurring revenue from AI customers reached $376 million, growing 288% year over year. The figures show the quarter’s additions alongside the annual recurring revenue balance at quarter-end, and break out AI customers’ contribution from the total. Chief Executive Officer Paddy Srinivasan said customers spending more than $100,000 a year now account for 41% of the company’s revenue.
For its AI products, DigitalOcean said the volume of tokens processed through Inference Engine grew about tenfold from the previous quarter. The figure reflects a quarterly change in use of the engine, while annual recurring revenue from AI customers grew 288% year over year. The company did not provide a separate financial value for Inference Engine revenue in these figures; the reported financial figures cover company revenue and annual recurring revenue. Srinivasan linked the outlook increase to continued growth acceleration and broader platform use, according to the statement. The company also said it had secured an additional 20 megawatts of data center capacity, which it expects to come online in 2028, bringing total committed capacity to about 180 megawatts.
For the fourth quarter of 2026, the company expects revenue of between $348 million and $351 million, representing year-over-year growth of between 44% and 45%. The range puts the next quarter’s expected annual growth rate above the rate reported in the third quarter, according to the company’s figures. The announcement coincided with a 0.65% rise in the stock to $90.37 in premarket trading on November 3. The stock had closed at $89.79 in the previous session, on November 2. The company said it would provide further details on its 2027 guidance, including margins and cash flow, during its fourth-quarter earnings call in February.