• Revenue: $211 million, up 14% year-over-year.

• Annual Run Rate Revenue (ARR): $843 million, up 14% year-over-year.

• Net Dollar Retention Rate (NDR): Improved to 100%.

• Revenue from $100,000+ Customers: Increased 41% year-over-year, representing 23% of total revenue.

• Gross Margin: 61%, 200 basis points higher than the prior year.

• Adjusted EBITDA: $86 million, with a margin of 41%.

• Non-GAAP Diluted Net Income per Share: $0.56, a 30% increase year-over-year.

• GAAP Diluted Net Income per Share: $0.39, a 160% increase year-over-year.

• Adjusted Free Cash Flow: Effectively breakeven for Q1.

• Cash and Cash Equivalents: $360 million at the end of Q1.

• Share Repurchases: $59 million in Q1, totaling $1.6 billion since IPO.

• New Credit Facility: $800 million secured five-year credit facility, including a $500 million Term Loan A.

• Q2 2025 Revenue Guidance: $215.5 million to $217.5 million.

• Full Year 2025 Revenue Guidance: $870 million to $890 million.

• Q2 2025 Adjusted EBITDA Margin Guidance: 38% to 40%.

• Full Year 2025 Adjusted EBITDA Margin Guidance: 37% to 40%.

• Q2 2025 Non-GAAP Diluted EPS Guidance: $0.42 to $0.47.

• Full Year 2025 Non-GAAP Diluted EPS Guidance: $1.85 to $1.95.

• Full Year 2025 Adjusted Free Cash Flow Margin Guidance: 16% to 18%.

• Warning! GuruFocus has detected 4 Warning Signs with DOCN.

Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DigitalOcean Holdings Inc (NYSE:DOCN) reported a 14% year-over-year revenue growth in Q1 2025, reaching $211 million.

• The company's AI annual recurring revenue (ARR) grew over 160% year-over-year, indicating strong momentum in AI initiatives.

• Revenue from customers with an annual run rate of over $100,000 increased by 41% year-over-year, now representing 23% of total revenue.

• DigitalOcean Holdings Inc (NYSE:DOCN) achieved a 61% gross margin and a 41% EBITDA margin in Q1, reflecting healthy profitability.

• The company released over 50 new products and features in Q1, significantly enhancing its cloud and AI platforms without increasing R&D spend as a percentage of revenue.

Negative Points

• The company's Q1 adjusted free cash flow was effectively breakeven due to front-loaded capital expenditures.

• DigitalOcean Holdings Inc (NYSE:DOCN) faces challenges in maintaining free cash flow while pursuing larger deals that require significant upfront capacity investment.

• The company is exploring additional funding strategies to support growth, indicating potential financial constraints.

• There is uncertainty in the economic and geopolitical environment, which could impact customer buying behavior and growth projections.

• DigitalOcean Holdings Inc (NYSE:DOCN) needs to address its outstanding 2026 convertible debt, which may affect its financial flexibility.