DigitalOcean Holdings Inc. (NYSE:DOCN) shares are trading higher on Tuesday after the company reported strong second-quarter 2025 financial results and raised its full-year guidance.
See DOCN real-time price here.
What To Know: The cloud infrastructure provider posted solid growth across both core cloud and AI services, exceeding expectations on revenue, profitability, and customer expansion.
For the second quarter, DigitalOcean reported $219 million in revenue, a 14% year-over-year increase. Net income surged 93% to $37 million, with a net income margin of 17%.
Adjusted EBITDA rose to $89 million, representing a 41% margin. These results were accompanied by $92 million in operating cash flow and $57 million in adjusted free cash flow, a 26% margin.
The company ended the quarter with $388 million in cash and cash equivalents.
The performance was driven by strength in high-spending customers, referred to as Scalers+, whose revenue rose 35% year-over-year and now accounts for nearly a quarter of total revenue. DigitalOcean reported $32 million in incremental annual recurring revenue (ARR), its best figure since the fourth quarter of 2022. Overall ARR now stands at $875 million, also up 14% from last year. Net Dollar Retention improved to 99%, and average revenue per customer climbed 12% to $111.70.
DigitalOcean highlighted ongoing expansion in its AI offerings, including the general availability of its Gradient AI Platform and a new partnership with AMD to deliver GPU-based infrastructure for AI workloads. The Gradient platform allows customers to integrate their data with foundation models from Anthropic, Meta, Mistral and OpenAI, enabling fast deployment of customized generative AI agents without managing infrastructure. The company also released more than 60 new products and features in the quarter, reflecting aggressive product development in key areas.
Looking ahead, DigitalOcean raised its full-year revenue forecast to between $888 and $892 million and increased its adjusted EBITDA margin guidance to 39%–40%. It also guided for full-year non-GAAP diluted earnings per share of $2.05 to $2.10. For the company expects revenue between $226 and $227 million, with EPS in the range of 45 cents to 50 cents.
Investors are reacting positively to both the current results and the stronger guidance, particularly in a market where profitability and free cash flow margins are increasingly in focus. The surge in share price reflects renewed confidence in DigitalOcean's ability to scale profitably, especially as it deepens its presence in the AI infrastructure space.
DOCN Price Action: DigitalOcean shares were up 28.88% at $34.81 at market close on Tuesday, according to Benzinga Pro.
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