DigitalOcean Holdings, Inc.
For the period ended Sep 30, 2025. Filed Nov 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 5, 2025
DOCN$72.48+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0001582961-25-000138
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0001582961-25-000150
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 132 current paragraphs.
72 unchanged; 42 reworded; 18 added; 13 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Income Tax Expense
Current report
Our income tax benefit consists primarily of the release of a $69,939 valuation allowance related to our U.S. deferred tax assets. We regularly assess the need for a valuation allowance on our deferred tax assets. In making this assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized. As of September 30, 2025, based on all available positive and negative evidence, having demonstrated sustained U.S. profitability, which is objective and verifiable, and taking into account anticipated future earnings, we have concluded it is more likely than not that our U.S. federal and states deferred tax assets will be realizable.
Current report
Sales and marketing expenses increased $6.0 million, or 39%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The change is primarily due to increases of $3.6 million in personnel costs mainly driven by higher headcount, $2.1 million in advertising expenses, and $0.1 million in other costs, net.
Current report
The gain on partial extinguishment of our 2026 Convertible Notes increased basic net income per share attributable to common stockholders by $0.51 and diluted net income per share attributable to common stockholders by $0.44 during the three months ended September 30, 2025.
Current report
Income Tax Benefit
Current report
Income tax benefit increased $64.7 million, or 1,957%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily as a result of the $69.9 million release of our valuation allowance related to our U.S. deferred tax assets as a discrete deferred tax benefit during the three months ended September 30, 2025, partially offset by the increase of current tax expense from higher taxable income.
Current report
The tax benefit related to the release of the valuation allowance increased basic net income per share attributable to common stockholders by $0.77 and diluted net income per share attributable to common stockholders by $0.66 during the three months ended September 30, 2025.
Current report
Comparison of the Nine Months Ended September 30, 2025 and 2024
Current report
Sales and marketing expenses increased $7.8 million, or 15%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The change is primarily due to increases of $4.6 million in personnel costs mainly driven by increased headcount, $2.4 million in advertising expenses, and $1.0 million in professional services costs, partially offset by $0.2 million in other costs, net.
Current report
The gain on partial extinguishment of our 2026 Convertible Notes increased basic net income per share attributable to common stockholders by $0.50 and diluted net income per share attributable to common stockholders by $0.45 during the nine months ended September 30, 2025.
Current report
Income Tax Benefit (Expense)
Current report
Income tax benefit (expense) increased $61.9 million, or 2,499%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily as a result of the $69.9 million release of our valuation allowance related to our U.S. deferred tax assets as a discrete deferred tax benefit during the nine months ended September 30, 2025, partially offset by the increase of current tax expense from higher taxable income.
Current report
The tax benefit related to the release of the valuation allowance increased basic net income per share attributable to common stockholders by $0.77 and diluted net income per share attributable to common stockholders by $0.68 during the nine months ended September 30, 2025.
Current report
In August 2025, we completed a private offering of our 2030 Convertible Notes with an aggregate principal amount of $625.0 million. The total net proceeds from the offering, after deducting issuance costs, were $606.1 million. The 2030 Convertible Notes mature on August 15, 2030, unless earlier converted, redeemed or repurchased by us. In connection with the 2030 Convertible Notes, we entered into capped call transactions, which are expected to reduce the potential dilution of our common stock upon any conversion of the 2030 Convertible Notes and/or offset any cash payments we could be required to make in excess of the principal amount of the converted notes, with such reduction and/or offset subject to a cap based on a cap price initially equal to $66.51 per share, which is subject to certain adjustments under the terms of the capped call transactions. In August 2025, we drew down $380.0 million on Term Loan A under our 2025 Credit Facility, which we entered into on May 5, 2025.
Current report
We used the proceeds from our 2030 Convertible Notes and Term Loan A along with cash on hand to repurchase $1,187.7 million of principal outstanding of our 2026 Convertible Notes for an aggregate amount of $1,131.5 million, and to purchase the 2030 Capped Calls for an aggregate purchase price of $83.9 million. For further information refer to Note 6. Debt in our condensed consolidated financial statements.
Current report
As of September 30, 2025, we had $1,317.3 million aggregate principal amount outstanding under our 2030 Convertible Notes, 2026 Convertible Notes and our Term Loan A, with $420.0 million of borrowing capacity available under our 2025 Credit Facility.
Current report
Recently Issued and Adopted Accounting Pronouncements
Current report
(5)For the three and nine months ended September 30, 2025, excludes tax impact which is presented in Non-GAAP income tax adjustment.
Removed paragraphs (13)
Previous report
Income tax expense is attributable to the mix of income in the jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred assets will not be realized. We regularly assess all available evidence, including cumulative historic losses and forecasted earnings. Given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that sufficient positive evidence may become available in a future period to reach a conclusion that the U.S. valuation allowance will no longer be needed. Release of all, or a portion of, the valuation allowance would result in the recognition of U.S. federal and state deferred tax assets and a corresponding decrease to income tax expense in the period the release is recorded.
Previous report
Prior Period Reclassification
Previous report
As indicated in Note 2. in our condensed consolidated financial statements, beginning in the fourth quarter of 2024, we reclassified personnel costs including salaries, bonuses, benefits, and stock-based compensation related to our customer support employees, and certain other costs from sales and marketing and research and development to cost of revenue in order to better reflect the cost of supporting our growing customer base, and to improve comparability with peers.
Previous report
As a result, the condensed consolidated statements of operations for the three and six months ended June 30, 2024 have been recast to reflect the effects of the changes in cost of revenue, gross profit, sales and marketing, research and development and total operating expenses. There was no change in income from operations, net income attributable to common stockholders or net income per share attributable to common stockholders for the three and six months ended June 30, 2024 as a result of these reclassifications. The condensed consolidated balance sheets, condensed consolidated statements of comprehensive income, condensed consolidated statements of stockholders’ deficit, and the condensed consolidated statements of cash flows were not affected by changes in the presentation of these costs.
Previous report
(1) Amounts have been recast to reflect the effects of the changes in cost of revenue, research and development and sales and marketing for the three and six months ended June 30, 2024. Refer to Note 2. Summary of Significant Accounting Policies, Prior Period Reclassification, in our condensed consolidated financial statements for further details.
Previous report
(1) Amounts have been recast to reflect the effects of the changes in cost of revenue, research and development and sales and marketing for the three and six months ended June 30, 2024. Refer to Note 2. Summary of Significant Accounting Policies, Prior Period Reclassification, in our condensed consolidated financial statements for further details.
Previous report
(1)Amounts have been recast to reflect the effects of the changes in cost of revenue, research and development and sales and marketing for the three and six months ended June 30, 2024. Refer to Note 2. Summary of Significant Accounting Policies, Prior Period Reclassification, in our condensed consolidated financial statements for further details.
Previous report
Research and development expenses increased $6.7 million, or 20%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The change is primarily due to an increase of $5.0 million in personnel costs mainly driven by increased headcount, as well as annual merit-based salary increases and lower capitalized internal-use software development costs of $1.7 million.
Previous report
Sales and marketing expenses increased $1.3 million, or 7%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The change is primarily due to an increase of $0.9 million in personnel costs mainly driven by increased headcount, and a net increase of $0.4 million in other costs.
Previous report
Income tax expense decreased $0.3 million, or 4%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily as a result lower net operating loss (“NOL”) utilization in 2025 compared to 2024.
Previous report
Comparison of the Six Months Ended June 30, 2025 and 2024
Previous report
Income tax expense increased $2.8 million, or 49%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily as a result of higher pretax income and lower NOL utilization taken in 2025.
Previous report
Recently Issued Accounting Pronouncements
Reworded paragraphs (42)
Previous wording
We offer a comprehensive set of cloud platform capabilities which spans across Infrastructure-as-a-Service (“IaaS”), including Droplet virtual machines, storage and networking offerings; Platform-as-a-Service (“PaaS”) and Software-as-a-Service (“SaaS”), including Managed Hosting, Managed Database, Managed Kubernetes and Marketplace offerings. We also offer a comprehensive artificial intelligence and machine learning (“AI/ML”) platform - DigitalOcean Gradient™ AI Agentic Cloud which includes Gradient AI Infrastructure with offerings such as GPU Droplets and Bare
Current wording
We offer a comprehensive set of cloud platform capabilities which spans across Infrastructure-as-a-Service (“IaaS”), including Droplet virtual machines, storage and networking offerings; Platform-as-a-Service (“PaaS”) and Software-as-a-Service (“SaaS”), including Managed Hosting, Managed Database, Managed Kubernetes and Marketplace offerings. We also offer a comprehensive artificial intelligence and machine learning (“AI/ML”) platform - DigitalOcean Gradient™ AI Agentic Cloud which includes Gradient AI Infrastructure with offerings such as GPU Droplets and Bare Metal GPUs; the Gradient AI Platform which offers various building block services including Large Language Models (“LLMs”); and Gradient AI Agents. We continue to invest in our platform to further penetrate the growing markets in which we operate.
Previous wording
We refer to our Builders, Scalers and Scalers+ customers collectively as our Higher Spend Customers (as further described in "Higher Spend Customers" below). Growing our Higher Spend Customers is a critical focus for us, and we have successfully increased the number of these customers and their percentage of our total revenue. Revenue from our Higher Spend Customers as a percentage of total revenue was 89% in the three months ended June 30, 2025, up from approximately 87% in the three months ended June 30, 2024. We had approximately 174,000 Higher Spend Customers using our platform to build, deploy and scale applications as of June 30, 2025, up from approximately 160,000 as of June 30, 2024.
Current wording
We refer to our Builders, Scalers and Scalers+ customers collectively as our Higher Spend Customers (as further described in "Higher Spend Customers" below). Growing our Higher Spend Customers is a critical focus for us, and we have successfully increased the number of these customers and their percentage of our total revenue. Revenue from our Higher Spend Customers as a percentage of total revenue was 89% in the three months ended September 30, 2025, up from approximately 88% in the three months ended September 30, 2024. We had approximately 177,000 Higher Spend Customers using our platform to build, deploy and scale applications as of September 30, 2025, up from approximately 163,000 as of September 30, 2024.
Previous wording
Our average revenue per customer (ARPU, as further described in “ARPU” below), has increased from $99.45 in the three months ended June 30, 2024 to $111.70 in the three months ended June 30, 2025. We had no material customer concentration as our top 25 customers made up approximately 9% and 8% of our revenue in the three months ended June 30, 2025 and 2024, respectively.
Current wording
Our average revenue per customer (ARPU, as further described in “ARPU” below), has increased from $102.51 in the three months ended September 30, 2024 to $116.20 in the three months ended September 30, 2025. We had no material customer concentration as our top 25 customers made up approximately 11% and 9% of our revenue in the three months ended September 30, 2025 and 2024, respectively.
Previous wording
Our annual run-rate (ARR, as further described in “ARR” below), as of June 30, 2025 was $875 million, up from $770 million as of June 30, 2024.
Current wording
Our annual run-rate (ARR, as further described in “ARR” below), as of September 30, 2025 was $919 million, up from $794 million as of September 30, 2024.
Previous wording
We have a highly efficient self-service customer acquisition model, which we complement with a sales force focused on inside sales, targeted outside sales and partnership opportunities to drive revenue growth. The efficiency of our go-to-market model and our focus on the needs of digital native enterprises have enabled us to drive organic growth and establish a truly global customer base across a broad range of industries. We focus on customer acquisition, our self-service acquisition funnel, customer support and success, community education, inside sales, targeted outside sales, and partnership and channel development. For each of the three months ended June 30, 2025 and 2024 our sales and marketing expense was approximately 9% of our revenue.
Current wording
We have a highly efficient self-service customer acquisition model, which we complement with a sales force focused on inside sales, targeted outside sales and partnership opportunities to drive revenue growth. The efficiency of our go-to-market model and our focus on the needs of digital native enterprises have enabled us to drive organic growth and establish a truly global customer base across a broad range of industries. We focus on customer acquisition, our self-service acquisition funnel, customer support and success, community education, inside sales, targeted outside sales, and partnership and channel development. For each of the three months ended September 30, 2025 and 2024 our sales and marketing expense was approximately 9% and 8% of our revenue, respectively.
Previous wording
Our customers are spread across approximately 190 countries and around two-thirds of our revenue has historically come from customers located outside the United States. For the three months ended June 30, 2025, 37% of our revenue was generated from North America, 27% from Europe, 23% from Asia and 13% from the rest of the world.
Current wording
Our customers are spread across approximately 190 countries and around two-thirds of our revenue has historically come from customers located outside the United States. For the three months ended September 30, 2025, 40% of our revenue was generated from North America, 27% from Europe, 23% from Asia and 10% from the rest of the world.
Previous wording
Sales and marketing expenses consist primarily of personnel costs of our sales and marketing and customer success employees, including salaries, bonuses, benefits, commissions and stock-based compensation. Sales and marketing expenses also include costs for marketing programs, advertising, amortization of acquired customer relationships and professional services. We expect sales and marketing expenses to increase in absolute dollars as we enhance our product offerings and implement new marketing and sales strategies.
Current wording
Sales and marketing expenses consist primarily of personnel costs of our sales and marketing and customer success employees, including salaries, bonuses, benefits, commissions and stock-based compensation. Sales and marketing expenses also include costs for marketing programs, advertising, amortization of acquired customer relationships, professional services and software. We expect sales and marketing expenses to increase in absolute dollars as we enhance our product offerings and implement new marketing and sales strategies.
Previous wording
General and administrative expenses consist primarily of personnel costs of our human resources, legal, finance and other administrative functions, including salaries, bonuses, benefits, and stock-based compensation. General and administrative expenses also include payment processing fees, provision for expected credit losses, professional services, software, business insurance, depreciation and amortization expenses, rent and facilities costs, acquisition-related compensation, and other administrative costs. General and administrative expenses may increase in absolute dollars as we continue to grow our business.
Current wording
General and administrative expenses consist primarily of personnel costs of our human resources, legal, finance and other administrative functions, including salaries, bonuses, benefits, and stock-based compensation. General and administrative expenses also include payment processing fees, provision for expected credit losses, professional services, software, business insurance, rent and facilities costs, acquisition-related compensation, and other administrative costs. General and administrative expenses may increase in absolute dollars as we continue to grow our business.
Previous wording
Other income, net consists primarily of interest income on our money market funds, amortization of deferred financing fees on our Convertible Notes, and gains or losses on foreign currency exchange.
Current wording
Other income, net consists primarily of gain on partial extinguishment of our 2026 Convertible Notes, interest income on our money market funds, amortization of debt issuance costs and cash interest expense on our convertible notes and credit facilities, and gains or losses on foreign currency exchange.
Previous wording
(2)May not foot due to rounding.
Current wording
(2) May not foot due to rounding.
Previous wording
Revenue increased $26.2 million, or 14%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily driven by a 12% increase in ARPU to $111.70 from $99.45, and a 16% increase in revenue from our Higher Spend Customers. The increase in ARPU was primarily driven by continued adoption of our products by our existing customers leading to higher average usage on our platform.
Current wording
Revenue increased $31.2 million, or 16%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily driven by a 13% increase in ARPU to $116.20 from $102.51, and an 18% increase in revenue from our Higher Spend Customers. The increase in ARPU was primarily driven by continued adoption of our products by our existing customers leading to higher average usage on our platform.
Previous wording
Cost of revenue increased $9.4 million, or 12%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The change is primarily due to increases of $8.6 million in co-location costs as a result of our data center expansion and $1.1 million in costs related to our revenue share programs, partially offset by a net decrease of $0.4 million in other costs. Gross profit increased to 60% for the three months ended June 30, 2025 from 59% for the three months ended June 30, 2024 primarily due to higher revenue, offset by an increase in co-location costs driven by our data center expansion.
Current wording
Cost of revenue increased $10.8 million, or 13%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The change is primarily due to increases of $8.3 million in co-location costs as a result of our data center expansion, $1.2 million in costs related to our revenue share programs, and $1.2 million in other costs, net. Gross profit increased to 60% for the three months ended September 30, 2025 from 59% for the three months ended September 30, 2024 primarily due to higher revenue, offset by an increase in co-location costs driven by our data center expansion.
Previous wording
Sales and marketing expenses increased $1.8 million, or 5%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The change is primarily due to an increase of $1.0 million in personnel costs mainly driven by increased headcount, and a net increase of $0.8 million in other costs.
Current wording
Research and development expenses increased $1.8 million, or 5%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The change is primarily due to an increase of $1.9 million in personnel costs mainly driven by higher headcount, offset by a decrease of $0.1 million in other costs, net.
Previous wording
General and administrative expenses decreased $4.4 million, or 11%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The change is primarily due to decreases of $9.1 million in personnel and recruiting costs, primarily due to costs incurred in the second quarter of 2024 related to acquisition-related deferred compensation and reorganization, including the reversal of stock-based compensation from forfeited RSUs and other related costs, partially offset by increases of $1.7 million in professional services costs, $1.3 million in digital services tax expenses, $1.0 million in payment processing fees and provision for expected credit losses due to higher revenue, and $0.7 million in other costs.
Current wording
General and administrative expenses decreased $7.8 million, or 19%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The change is primarily due to decreases of $7.9 million in personnel costs, primarily due to costs incurred in the third quarter of 2024 related to acquisition-related deferred compensation and lower share-based compensation due to forfeited or fully vested RSUs, and $0.7 million in other costs, net, partially offset by increases of $1.0 million in professional services costs.
Previous wording
Other income, net increased $4.3 million, or 175%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to an increase of $6.0 million in unrealized gains from foreign currency fluctuations from our operations, partially offset by a decrease of $1.9 million due to reduced interest income from our investments.
Current wording
Other income, net increased $40.3 million, or 801%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to a $48.4 million gain on partial extinguishment of our 2026 Convertible Notes, partially offset by decreases of $3.4 million in unrealized losses from foreign currency fluctuations from our operations, $2.8 million higher interest expense mostly due to accrued interest on Term Loan A and issuance cost amortization of our Convertible Notes, and $1.8 million lower interest income from our investments and other income.
Previous wording
Revenue increased $52.2 million, or 14%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase in revenue was primarily driven by a 13% increase in ARPU to $110.14 from $97.28; and a 16% increase in revenue from Higher Spend Customers. The increase in ARPU was primarily driven by continued adoption of our products by our existing customers leading to higher average usage of our platform.
Current wording
Revenue increased $83.3 million, or 14%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in revenue was primarily driven by a 13% increase in ARPU to $112.18 from $99.02; and a 17% increase in revenue from Higher Spend Customers. The increase in ARPU was primarily driven by continued adoption of our products by our existing customers leading to higher average usage of our platform.
Previous wording
Cost of revenue increased $15.1 million, or 10%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The change is primarily due to increases of $14.3 million in co-location costs as a result of our data center expansion, $2.1 million in costs related to our revenue share programs, and $1.8 million in third-party license fees, partially offset by a decrease of $2.9 million in depreciation and amortization as lower depreciation expense resulting from our change in useful life of servers and related equipment from five years to six years effective October 1, 2024 partially offset by depreciation associated with equipment placed in service in the past year. Gross profit increased to 61% for the six months ended June 30, 2025 from 59% for the six months ended June 30, 2024, primarily due to an increase in revenue, offset by co-location costs and a net decrease in depreciation and amortization, resulting from the change in useful life of servers and related equipment, somewhat offset by our continued investment in AI/ML offerings and our data center expansion.
Current wording
Cost of revenue increased $25.9 million, or 11%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The change is primarily due to increases of $22.6 million in co-location costs as a result of our data center expansion, $3.4 million in costs related to our revenue share programs, $2.3 million in third-party license fees and $1.0 million in personnel costs, partially offset by decreases of $2.7 million in depreciation and amortization and $0.7 million in other costs, net. Depreciation and amortization decreased primarily due to our change in useful life of servers and related equipment from five to six years effective October 1, 2024, partially offset by additional depreciation of equipment placed in service in the past year. Gross profit increased to 60% for the nine months ended September 30, 2025 from 59% for the nine months ended September 30, 2024, primarily due to higher revenue, offset by an increase in co-location costs driven by our data center expansion.
Previous wording
Research and development expenses increased $13.3 million, or 20%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The change is primarily due to increases of $8.2 million in personnel costs mainly driven by increased headcount as well as annual merit-based salary increases, $1.8 million in professional services costs, lower capitalized internal-use software development costs of $1.6 million, and increases of $1.0 million in software costs and $0.7 million in other costs.
Current wording
Research and development expenses increased $15.2 million, or 15%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The change is primarily due to increases of $10.1 million in personnel costs mainly driven by increased headcount, $2.4 million in professional services and other costs, $1.4 million in software costs, and lower capitalized internal-use software costs of $1.3 million.
Previous wording
General and administrative expenses decreased $17.4 million, or 20%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The change is primarily due to a decrease of $19.4 million in personnel costs, primarily due to costs incurred in the first half of 2024 related to acquisition-related deferred compensation and executive reorganization, including the reversal of stock-based compensation from forfeited RSUs and other related costs, partially offset by increases of $1.6 million in payment processing costs and provision for expected credit losses due to higher revenue, and a net increase of $0.4 million in other costs.
Current wording
General and administrative expenses decreased $25.2 million, or 20%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The change is primarily due to a decreases of $27.3 million in personnel costs, primarily due to costs incurred in the first half of 2024 related to acquisition-related deferred compensation and executive reorganization, including the reversal of stock-based compensation from forfeited RSUs and other related costs, and $2.7 million in other costs, partially offset by increases of $2.9 million in payment processing costs and provision for expected credit losses due to higher revenue and $1.9 million in professional services costs.
Previous wording
Other income, net increased $5.4 million, or 103%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to an increase of $8.7 million in unrealized gains from foreign currency fluctuations from our operations, partially offset by a decrease of $3.5 million due to lower interest income from our investments.
Current wording
Other income, net increased $45.7 million, or 447%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to a $48.1 million net gain on partial extinguishment of our 2026 Convertible Notes and termination of our 2022 Credit Facility, an increase of $6.1 million in unrealized gains from foreign currency fluctuations from our operations and other income, partially offset by decreases of $5.9 million of lower interest income from our investments and $2.6 million higher interest expense mostly due to accrued interest on Term Loan A and issuance cost amortization of our Convertible Notes.
Previous wording
We have funded our operations since inception primarily with cash flow generated by operations, private offerings of our equity and debt securities, borrowings under our 2022 Credit Facility and capital expenditure financings. Cash provided from these sources is used primarily for operating expenses, such as personnel and co-location costs, and capital expenditures, including our investments in AI/ML and other core product offerings. From time to time, we may also use excess cash and/or debt for share repurchases and investments in marketable securities and cash equivalents.
Current wording
We have funded our operations since inception primarily with cash flow generated by operations, offerings of our equity and debt securities, borrowings under our credit facilities, and equipment financing arrangements. Cash provided from these sources is used primarily for operating expenses, such as personnel and co-location costs, and capital expenditures, including our investments in AI/ML and other core product offerings. From time to time, we may also use excess cash and/or debt for share repurchases and investments in marketable securities and cash equivalents.
Previous wording
We believe our existing cash and cash equivalents, cash flow from operations and availability under our 2025 Credit Facility will be sufficient to support working capital and capital expenditure requirements and our outstanding contractual commitments for at least the next 12 months and in the long term. See Note 6. Debt in our condensed consolidated financial statements for a discussion of our new 2025 Credit Facility that we entered into on May 5, 2025, as well as the concurrent termination of our existing 2022 Credit Facility.
Current wording
We believe our existing cash and cash equivalents, cash flow from operations and availability under our 2025 Credit Facility will be sufficient to support working capital and capital expenditure requirements and our outstanding contractual commitments for at least the next 12 months and in the long term.
Previous wording
We have historically repurchased our common stock pursuant to repurchase programs approved by our Board of Directors. In February 2024, our Board of Directors approved an additional repurchase program of up to an aggregate of $140 million of our common stock through fiscal year 2025. For the six months ended June 30, 2025, we repurchased and retired 2,255,544 shares of common stock for an aggregate purchase price of $79 million.
Current wording
We have historically repurchased our common stock pursuant to repurchase programs approved by our Board of Directors. In February 2024, our Board of Directors approved additional repurchase program of up to an aggregate of $140 million of our common stock which we completed in July 2025. In August 2025, we adopted the 2025 Share Buyback Program which authorizes the repurchase of up to $100 million of our common stock. The 2025 Share Buyback Program will expire on July 31, 2027. For the nine months ended September 30, 2025, we repurchased and retired 2.4 million shares of common stock for an aggregate purchase price of $82.1 million.
Previous wording
As of June 30, 2025, we had $3.2 million of estimated undiscounted fixed payment obligations for leases of co-location space at data center facilities that have not yet commenced and were not included on the condensed consolidated balance sheets. These leases are expected to commence between July 2025 and September 2025, and have a weighted-average lease term of 3.6 years.
Current wording
As of September 30, 2025, we had $84.6 million of estimated undiscounted fixed payment obligations for leases of co-location space at data center facilities that have not yet commenced and were not included on the condensed consolidated balance sheets. These leases are expected to commence between October 2025 and December 2025, and have a weighted-average lease term of 7.2 years.
Previous wording
As of June 30, 2025, we had $387.7 million in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash and money market funds.
Current wording
As of September 30, 2025, we had $236.6 million in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash and money market funds.
Previous wording
From time to time, we may seek to retire or purchase our outstanding equity or debt, including the repurchase of our common stock or the Convertible Notes, through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, any such purchases or exchanges may result in us acquiring and retiring a substantial amount of such indebtedness, which could impact the trading liquidity of such indebtedness. We plan to use a portion of the proceeds from our currently undrawn 2025 Credit Facility to repurchase, repay, acquire or otherwise settle a portion of our Convertible Notes.
Current wording
From time to time, we may seek to retire or purchase our outstanding equity or debt, including the repurchase of our common stock or outstanding convertible notes, through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, any such purchases or exchanges may result in us acquiring and retiring a substantial amount of such indebtedness, which could impact the trading liquidity of such indebtedness. We plan to repurchase, repay, acquire or otherwise settle the remaining outstanding principal of our 2026 Convertible Notes by drawing on the remaining capacity under our 2025 Credit Facility, in whole or in part, and using cash on hand or generated from our operations.
Previous wording
Our largest source of operating cash is cash collections from sales to our customers. Our primary uses of cash from operating activities are for personnel costs, co-location costs, payment processing fees, bandwidth and connectivity, server maintenance, software licensing fees, and taxes.
Current wording
Our largest source of operating cash is cash collections from sales to our customers. Our primary uses of cash from operating activities are for personnel costs, data center co-location costs, payment processing fees, bandwidth and connectivity, server maintenance, software licensing fees, and taxes.
Previous wording
Net cash provided by operating activities was $156.5 million and $138.0 million for the six months ended June 30, 2025 and 2024, respectively. The change was primarily driven by an increase in cash collections from higher revenues, partially offset by higher co-location costs as a result of our data center expansion and higher personnel costs due to increased headcount, as well as annual merit-based salary increases.
Current wording
Net cash provided by operating activities was $252.3 million and $211.4 million for the nine months ended September 30, 2025 and 2024, respectively. The change was primarily driven by an increase in cash collections from higher revenues, partially offset by higher co-location costs as a result of our data center expansion and higher personnel costs due to increased headcount, as well as annual merit-based salary increases.
Previous wording
Net cash used in investing activities was $100.4 million for the six months ended June 30, 2025 compared to $12.1 million provided by investing activities for the six months ended June 30, 2024. The change in cash used in investing activities was primarily driven by a $91.7 million reallocation of our marketable securities portfolio to cash equivalents, and increases of $19.0 million in cash payments for capital expenditures and $1.8 million in purchases of intangible assets.
Current wording
Net cash used in investing activities was $138.8 million and $47.7 million for the nine months ended September 30, 2025 and 2024, respectively. The change in cash used in investing activities was primarily driven by a $91.7 million reallocation of our marketable securities portfolio to cash equivalents and increases of $27.6 million in cash payments for the acquisition of equipment under financing arrangement and $1.8 million in purchases of intangible assets, partially offset by a decrease of $29.9 million in cash payments for capital expenditures.
Previous wording
Net cash used in financing activities of $96.9 million and $24.2 million for the six months ended June 30, 2025 and 2024, respectively. The change was primarily due to an increase of $61.0 million in repurchases and retirement of our common stock, an increase $2.8 million in employee payroll taxes paid related to net settlement of equity awards and a decrease of $4.7 million in proceeds related to the issuance of common stock under our 2021 Plan.
Current wording
Net cash used in financing activities of $307.2 million and $41.0 million for the nine months ended September 30, 2025 and 2024, respectively. The change was primarily due to $1,131.5 million in repurchases of our 2026 Convertible Notes, $83.9 million in purchases of capped calls relating to our 2030 Convertible Notes, and an increases of $52.2 million in repurchases and retirement of our common stock and $1.1 million in employee payroll taxes paid related to net settlement of equity awards, partially offset by $606.8 million in proceeds from our 2030 Convertible Notes, $375.9 million in proceeds from the drawdown of our 2025 Credit Facility, $27.6 million in proceeds from a financing arrangement, and a decrease of $7.8 million in proceeds related to the issuance of common stock under our 2021 Plan and ESPP.
Previous wording
There have been no material changes to our contractual obligations and commitments as compared to those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 other than that disclosed under Note 6. Debt, in our condensed consolidated financial statements.
Current wording
There have been no material changes to our contractual obligations and commitments as compared to those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 other than that disclosed under Note 6. Debt and Note 7. Commitments and Contingencies, in our condensed consolidated financial statements.
Previous wording
For information on recently issued accounting pronouncements see Note 2. Summary of Significant Accounting Policies, in our notes to condensed consolidated financial statements included in Part I, Item 1. “Financial Statements and Supplementary Data” included in this Form 10-Q.
Current wording
For information on recently issued and adopted accounting pronouncements see Note 2. Summary of Significant Accounting Policies, in our notes to condensed consolidated financial statements included in Part I, Item 1. “Financial Statements and Supplementary Data” included in this Form 10-Q.
Previous wording
GAAP diluted net income per share. These measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Our calculations of each of these measures may differ from the calculations of measures with the same or similar titles by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider each of these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable financial measure calculated in accordance with GAAP and our other GAAP results. A reconciliation of each of our non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP is set forth below.
Current wording
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with non-GAAP financial measures including: (i) adjusted EBITDA and adjusted EBITDA margin and (ii) non-GAAP net income and non-GAAP diluted net income per share. These measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Our calculations of each of these measures may differ from the calculations of measures with the same or similar titles by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider each of these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable financial measure calculated in accordance with GAAP and our other GAAP results. A reconciliation of each of our non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP is set forth below.
Previous wording
We define adjusted EBITDA as net income attributable to common stockholders, adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, acquisition related compensation, acquisition and integration related costs, income tax expense (benefit), restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, interest income and other income, net, revaluation of warrants, loss on extinguishment of debt, release of a VAT reserve, and other charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We believe that adjusted EBITDA, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business, evaluating our operating performance, and for internal planning and forecasting purposes.
Current wording
We define adjusted EBITDA as net income attributable to common stockholders, adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, acquisition related compensation, acquisition and integration related costs, income tax expense (benefit), restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, interest income and other income, net, revaluation of warrants, (gain) loss on extinguishment of debt, net, release of a VAT reserve, and other charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We believe that adjusted EBITDA, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business, evaluating our operating performance, and for internal planning and forecasting purposes.
Previous wording
(1)For the six months ended June 30, 2024, non-GAAP stock-based compensation excludes $0.1 million as it is presented in restructuring related charges.
Current wording
(1)For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes $0.1 million as it is presented in restructuring related charges.
Previous wording
(2)For the three and six months ended June 30, 2024, primarily consists of executive reorganization charges.
Current wording
(2)For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges.
Previous wording
(3)For the three and six months ended June 30, 2025, primarily consists of interest income from our cash and cash equivalents. For the three and six months ended June 30, 2024, primarily consists of interest and accretion income from our cash and cash equivalents and marketable securities.
Current wording
(3)For the three and nine months ended September 30, 2025, primarily consists of interest income from our cash and cash equivalents. For the three and nine months ended September 30, 2024, primarily consists of interest and accretion income from our cash and cash equivalents and marketable securities.
Previous wording
We define non-GAAP net income as net income attributable to common stockholders, excluding stock-based compensation, acquisition related compensation, amortization of acquired intangibles, acquisition and integration related costs, restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, loss on extinguishment of debt, revaluation of warrants, release of a VAT reserve, and other charges. We define non-GAAP diluted net income per share as non-GAAP net income divided by the weighted-average diluted shares outstanding, which includes the potentially dilutive effect of our stock options, RSUs, PRSUs, and Convertible Notes.
Current wording
We define non-GAAP net income as net income attributable to common stockholders, excluding stock-based compensation, acquisition related compensation, amortization of acquired intangibles, acquisition and integration related costs, restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, (gain) loss on extinguishment of debt, net, revaluation of warrants, release of a VAT reserve, and other charges. In addition to these exclusions, we subtract an assumed non-GAAP provision for income taxes to calculate non-GAAP net income that excludes the current period income tax benefit (expense). We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision in order to provide better consistency across reporting periods. We define non-GAAP diluted net income per share as non-GAAP net income divided by the weighted-average diluted shares outstanding, which includes the potentially dilutive effect of our stock options, RSUs, PRSUs, and Convertible Notes.
Previous wording
(1)For the six months ended June 30, 2024, non-GAAP stock-based compensation excludes $0.1 million as it is presented in restructuring related charges.
Current wording
(1)For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes $0.1 million as it is presented in restructuring related charges.
Previous wording
(2)For the three and six months ended June 30, 2024, primarily consists of executive reorganization charges.
Current wording
(2)For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges.
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Previous report — wording carried elsewhere
Metal GPUs; the Gradient AI Platform which offers various building block services including Large Language Models (“LLMs”); and Gradient AI Agents. We continue to invest in our platform to further penetrate the growing markets in which we operate.
Previous report — wording carried elsewhere
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with non-GAAP financial measures including: (i) adjusted EBITDA and adjusted EBITDA margin and (ii) non-GAAP net income and non-