$DOCN · DigitalOcean Holdings, Inc.
DigitalOcean reported Q3 FY2026 results with revenue of $321.2M (+40% YoY), a GAAP net loss of $42.6M ($0.37/share), and non-GAAP diluted EPS of $0.45. The company raised Q4 2026 revenue growth guidance to 44-45% and projected 60%+ revenue growth for FY2027. Simultaneously, DigitalOcean disclosed a $1.0 billion at-the-market equity offering program with eight banks, creating a significant potential dilution overhang.
- Revenue of $321.2M grew 40% YoY, the fifth consecutive quarter of acceleration.
- GAAP net loss of $42.6M ($0.37/share) included a $57.1M induced conversion charge from convertible note repurchases.
- Non-GAAP diluted EPS of $0.45; adjusted EBITDA of $144M at 45% margin, up from 42% a year ago.
- AI Customer ARR hit $376M, up 288% YoY; $100K+ customers now represent 41% of total revenue.
- Company entered a $1.0B at-the-market equity offering program with Goldman Sachs, J.P. Morgan, and others.
Extended-hours trading shows DOCN at $87.00, down 3.11% from the regular close of $89.79, suggesting the $1B ATM dilution overhang is outweighing the strong revenue acceleration and raised guidance.
A rare combination: accelerating 40% growth with raised guidance alongside a $1B ATM that could dilute shareholders by nearly 10% — the market must weigh AI-fueled momentum against the capital demands of scaling GPU infrastructure.
DigitalOcean's pivot to an "AI-Native Cloud" for inference and agentic workloads is driving accelerating growth that outpaces traditional cloud peers, but the simultaneous $1B ATM raise signals capital-intensive scaling needs typical of GPU-heavy infrastructure plays.
The $1.0B ATM offering creates ongoing dilution risk for existing shareholders. The company's heavy reliance on AI/ML workloads and GPU infrastructure exposes it to supply-chain and capacity risks, including the ability to secure power and data center capacity on schedule.