Q4 2025 DigitalOcean Holdings Inc Earnings Call Transcript
Key Points
- DigitalOcean Holdings Inc (DOCN) achieved 18% revenue growth in Q4 2025, reaching $901 million for the full year.
- The company delivered $51 million in incremental organic ARR, the highest in its history.
- Top customers are now the growth engine, with $1 million customers growing at 123% year-over-year.
- DigitalOcean Holdings Inc (DOCN) maintained strong profitability with 42% adjusted EBITDA margins and 19% adjusted free cash flow margins for the year.
- The company surpassed a $1 billion revenue run rate, marking a significant milestone since its founding in 2012.
- There is near-term pressure on gross margin and adjusted EBITDA due to the ramp-up of new data center capacity.
- The company faces competition from Neoclouds and other AI infrastructure providers, which could impact pricing and market share.
- DigitalOcean Holdings Inc (DOCN) is sunsetting a small legacy dedicated Bare Metal CPU offering, resulting in approximately $13 million of ARR rolling off by Q1 2026.
- The company is experiencing increased component costs, which could affect profitability.
- Net leverage is projected to be above 4 times in the short term as the company adds finance lease obligations to fund GPU and CPU investments.
Good morning, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the DigitalOcean fourth-quarter earnings conference call. (Operator Instructions)
I would now like to turn the conference over to Melanie Strate, Head of Investor Relations.
Please go ahead.
Thank you, and good morning. Thank you all for joining us today to review DigitalOcean's fourth quarter and full-year 2025 financial results and an investor update.
Joining me on the call today are Paddy Srinivasan, our Chief Executive Officer; and Matt Steinfort, our Chief Financial Officer. Before we begin, let me remind you that certain statements made on the call today may be considered forward-looking statements, which reflect management's best judgment based on currently available information.
Our actual results may differ materially from those projected in these forward-looking statements, including our
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