Revenue growth accelerated to 22.4% in 2026Q1, though gross margins compressed to 56.1% as the company shifted toward more complex, hardware-intensive service offerings.
| Sales/Revenue | 948.63M | 901.43M | 780.62M | 692.88M | 576.32M | 428.56M | 318.38M | 254.82M | 203.14M |
| Revenue Growth % | 17.61% | 15.48% | 12.66% | 20.23% | 34.48% | 34.61% | 24.94% | 25.44% | - |
| Cost of Goods Sold | 393.77M | 361.83M | 314.67M | 283.97M | 211.93M | 170.59M | 145.53M | 122.26M | 97.04M |
| COGS % of Revenue | - | 40.14% | 40.31% | 40.98% | 36.77% | 39.81% | 45.71% | 47.98% | 47.77% |
| Gross Profit | 554.86M | 539.59M | 465.94M | 408.92M | 364.39M | 257.97M | 172.85M | 132.56M | 106.09M |
| Gross Margin % | 58.49% | 59.86% | 59.69% | 59.02% | 63.23% | 60.19% | 54.29% | 52.02% | 52.23% |
| Gross Profit Growth % | - | 15.81% | 13.95% | 12.22% | 41.26% | 49.24% | 30.39% | 24.95% | - |
| Operating Expenses | 398.94M | 382.6M | 374.94M | 397.02M | 390.09M | 269.15M | 188.64M | 162.47M | 133.39M |
| OpEx % of Revenue | - | 42.44% | 48.03% | 57.3% | 67.69% | 62.8% | 59.25% | 63.76% | 65.66% |
| Selling, General & Admin | 228.08M | 220.98M | 232.44M | 235.77M | 246.21M | 153.47M | 113.67M | 102.5M | 88.45M |
| SG&A % of Revenue | - | 24.51% | 29.78% | 34.03% | 42.72% | 35.81% | 35.7% | 40.22% | 43.54% |
| Research & Development | 170.86M | 161.62M | 142.5M | 140.37M | 143.88M | 115.68M | 74.97M | 59.97M | 44.93M |
| R&D % of Revenue | - | 17.93% | 18.25% | 20.26% | 24.97% | 26.99% | 23.55% | 23.54% | 22.12% |
| Other Operating Expenses | 0 | 0 | 0 | 20.89M | 0 | 0 | 0 | 0 | -622K |
| Operating Income | 155.92M | 156.99M | 91.01M | 11.9M | -25.7M | -11.19M | -15.79M | -29.91M | -27.29M |
| Operating Margin % | 16.44% | 17.42% | 11.66% | 1.72% | -4.46% | -2.61% | -4.96% | -11.74% | -13.44% |
| Operating Income Growth % | - | 72.5% | 665.02% | 146.29% | -129.72% | 29.16% | 47.2% | -9.57% | - |
| EBITDA | 314.93M | 294.44M | 221.06M | 129.76M | 76.53M | 77.19M | 59.78M | 33.18M | 25.12M |
| EBITDA Margin % | 33.2% | 32.66% | 28.32% | 18.73% | 13.28% | 18.01% | 18.78% | 13.02% | 12.37% |
| EBITDA Growth % | 28.81% | 33.19% | 70.36% | 69.55% | -0.84% | 29.11% | 80.2% | 32.06% | - |
| D&A (Non-Cash Add-back) | 159.01M | 137.45M | 130.05M | 117.87M | 102.23M | 88.37M | 75.57M | 63.08M | 52.41M |
| EBIT | 213.99M | 224.6M | 106.81M | 35.72M | -15.49M | -14.46M | -29.05M | -30.24M | -28.47M |
| Net Interest Income | 18.43M | -17.94M | 6.69M | 14.88M | 2.22M | -3.58M | -13.61M | -9.36M | -6.31M |
| Interest Income | 30.57M | 0 | 15.8M | 23.82M | 10.62M | 164K | 0 | 0 | 0 |
| Interest Expense | 1.59M | 17.94M | 9.11M | 8.95M | 8.4M | 3.74M | 13.61M | 9.36M | 6.31M |
| Other Income/Expense | 33.86M | 49.67M | 6.69M | 14.88M | 1.81M | -7.01M | -26.87M | -9.69M | -7.48M |
| Pretax Income | 189.78M | 206.66M | 97.7M | 26.78M | -23.89M | -18.2M | -42.66M | -39.6M | -34.78M |
| Pretax Margin % | 20.01% | 22.93% | 12.52% | 3.86% | -4.14% | -4.25% | -13.4% | -15.54% | -17.12% |
| Income Tax | -64.5M | -52.6M | 13.21M | 7.37M | 3.92M | 1.3M | 911K | 793K | 1.22M |
| Effective Tax Rate % | -33.99% | -25.45% | 13.52% | 27.51% | -16.41% | -7.15% | -2.14% | -2% | -3.51% |
| Net Income | 254.28M | 259.26M | 84.49M | 19.41M | -27.8M | -19.5M | -43.57M | -40.39M | -36M |
| Net Margin % | 26.8% | 28.76% | 10.82% | 2.8% | -4.82% | -4.55% | -13.68% | -15.85% | -17.72% |
| Net Income Growth % | 134.24% | 206.85% | 335.32% | 169.81% | -42.56% | 55.24% | -7.87% | -12.2% | - |
| Net Income (Continuing) | 254.28M | 259.26M | 84.49M | 19.41M | -27.8M | -19.5M | -43.57M | -40.39M | -36M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 2.27 | 2.52 | 0.89 | 0.20 | -0.24 | -0.18 | -0.41 | -0.38 | -0.41 |
| EPS Growth % | 112.96% | 183.15% | 345% | 183.33% | -33.33% | 56.1% | -7.89% | 7.32% | - |
| EPS (Basic) | - | 2.83 | 0.92 | 0.22 | -0.24 | -0.18 | -0.41 | -0.38 | -0.41 |
| Diluted Shares Outstanding | 111.92M | 105.34M | 94.5M | 96.42M | 100.81M | 107.21M | 105.3M | 105.3M | 87.13M |
| Basic Shares Outstanding | 93.04M | 91.48M | 91.63M | 90.14M | 100.81M | 107.21M | 105.3M | 105.3M | 87.13M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - |
SMB ecosystem demand sensitivity
According to the latest quarterly income statement, DigitalOcean's revenue growth has accelerated to 22.4% in 2026Q1, marking a notable departure from the mid-teens growth rates observed throughout 2024 and 2025, suggesting that recent strategic pivots into AI-optimized infrastructure may be beginning to yield tangible top-line results.
The recent uptick in year-over-year growth suggests that the integration of Paperspace and the expansion into GPU-intensive workloads are successfully capturing new demand segments. Investors should monitor whether this acceleration is sustainable or merely a temporary spike driven by initial AI-infrastructure adoption cycles.
As reported in recent financial filings, DigitalOcean's gross margin contracted to 56.1% in 2026Q1, representing a multi-quarter low compared to the 59-61% range maintained throughout 2024 and 2025, which may indicate rising infrastructure costs associated with the company's shift toward more complex, hardware-intensive AI service offerings.
The compression in gross margins suggests that the company's transition into higher-value managed services and AI infrastructure is currently incurring higher incremental costs than the legacy Droplet business. This trend warrants further investigation into whether the company can achieve sufficient pricing power to offset the increased depreciation and power requirements of its evolving data center footprint.
Based on the provided income statement data, operating margins have fluctuated significantly, reaching 14.2% in 2026Q1, which remains below the 19.6% peak observed in 2025Q3, indicating that the company has yet to demonstrate consistent operating leverage as it scales its specialized service offerings alongside core compute.
The inability to consistently expand operating margins despite revenue growth suggests that SG&A and R&D expenses are scaling in tandem with, or faster than, gross profit. This may imply that the company is currently in a heavy investment phase, prioritizing market share in the AI segment over immediate bottom-line expansion.
Analysis of the income statement reveals that net income has exhibited extreme volatility, highlighted by a 69% net margin in 2025Q3 followed by a sharp decline, suggesting that headline earnings are heavily influenced by non-operating items or tax-related accounting adjustments rather than pure operational performance.
The significant discrepancy between operating income and net income in specific periods suggests that investors should focus on normalized profitability metrics rather than reported EPS. The inconsistent nature of these bottom-line results makes it difficult to assess the underlying earnings power of the business without adjusting for non-recurring items.
Data from recent quarters indicates that DigitalOcean faces a challenging competitive landscape, as evidenced by the recent gross margin decline to 56.1%, which may support the bearish view that the company's core SMB market is becoming increasingly commoditized by hyperscaler 'Lite' offerings and aggressive pricing strategies.
Short-sellers might argue that the company's pivot to AI infrastructure is a defensive move to mask slowing growth in its core business, potentially exposing the firm to higher CapEx requirements without a guaranteed moat. The market should monitor whether the company's simplicity-focused value proposition remains sufficient to prevent churn as competitors continue to lower the barrier to entry for enterprise-grade cloud services.
Quick answers to the most common questions about buying DOCN stock.
For fiscal year 2025, DigitalOcean Holdings, Inc. (DOCN) reported total revenue of $901.4M. This represents a 343.8% increase compared to $203.1M in 2018.
DigitalOcean Holdings, Inc. (DOCN) is profitable, generating $259.3M in net income for the fiscal year ending 2025 with a net profit margin of 28.8%.
DigitalOcean Holdings, Inc. (DOCN) reported an operating income of $157.0M, resulting in an operating profit margin of 17.4%. This margin reflects the operational efficiency of the business before interest and taxes.
DigitalOcean Holdings, Inc. (DOCN) generated $539.6M in gross profit for the year, representing a gross profit margin of 59.9%. This demonstrates the company's core pricing power and production efficiency.