DigitalOcean Holdings, Inc.
For the period ended Mar 31, 2026. Filed May 5, 2026.
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.
Mar 31, 2026 · Filed May 5, 2026
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 2025-09-30; filed 2025-11-05.
0001582961-25-000150
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0001582961-26-000049
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 132 previous paragraphs and 131 current paragraphs.
48 unchanged; 48 reworded; 31 added; 34 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 17 previous and 13 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 (31)
Current report
Our total customer count is represented by the number of Digital Native Enterprise (“DNE”) Customers, which are users that spend more than $500 in a month. We further disaggregate our DNE customers into the following categories - $100K+ Customers, $500K+ Customers and $1M+ Customers. See further discussion in “Digital Native Enterprise Customers” below.
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Digital Native Enterprise Customers
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•DNE Customers: users that spend more than $500 in a month.
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•$500K+ Customers: users that spend more than $41,667 in a month.
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•$1M+ Customers: users that spend more than $83,333 in a month.
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ARR and AI Customer ARR
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We view AI Customer ARR as an important indicator of our growth in customers using AI-related products across our AI-Native Cloud and a key driver of our revenue targets and projected growth rate going forward.
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We calculate AI Customer ARR by multiplying total AI Customer Revenue for the most recent quarter by four. AI Customer Revenue is defined as the total revenue generated from customers who utilize one or more of our AI/ML offerings, inclusive of their revenue from our IaaS and PaaS/SaaS offerings during the period.
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Cost of Revenue
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Operating Expenses
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Other (Expense) Income, net
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Income tax expense consists primarily of income taxes in foreign jurisdictions and U.S. federal and state income taxes.
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Cost of Revenue
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Cost of revenue increased for the three months ended March 31, 2026 compared to 2025 primarily due to data center expansions which drove increases of $15.6 million in depreciation and amortization related to data center infrastructure additions, $9.0 million in co-location costs, $3.6 million in ancillary equipment costs and $3.7 million in other costs, net. Gross profit decreased to 56% for the three months ended March 31, 2026 from 61% for the three months ended March 31, 2025. The decline in gross margin resulted from incurrence of costs for data center expansions in advance of the ramp in revenue from new data centers.
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Operating Expenses
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Research and development expenses increased for the three months ended March 31, 2026 compared to 2025 due to an increase of$9.2 million in personnel costs driven by higher headcount and annual merit-based salary raises.
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General and administrative expenses increased for the three months ended March 31, 2026 compared to 2025 due to increases of $3.2 million in professional services costs and $1.6 million in personnel costs driven by higher headcount and annual merit-based salary raises.
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Other (Expense) Income, net
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Other expense, net was $12.1 million for the three months ended March 31, 2026, compared to other income, net of $3.7 million for the three months ended March 31, 2025. The change is primarily due to an $8.3 million increase in interest expense mostly driven by interest on our Term Loan Facility and equipment financing arrangements, a $4.1 million increase in unrealized losses related to foreign currency fluctuations from our operations, a $2.7 million loss incurred on extinguishment of our Term Loan Facility, and a $0.8 million decrease in interest income resulting from lower average interest rates.
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Income Tax Expense
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Income tax expense increased $5.5 million, or 175%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The Company’s current quarter provision reflects a normalized statutory rate applied to our pre-tax income, plus permanent items, whereas the prior period provision was characterized by a much lower effective tax rate due to the valuation allowance.
Current report
In February 2026, we borrowed an additional $120.0 million under our Term Loan Facility.
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In March 2026, we completed a public equity offering in which we issued and sold 11,948,052 shares of common stock, inclusive of the exercised over-allotment option, at a public offering price of $77.00 per share (“2026 Follow-on
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Offering”). We received net proceeds of $887.9 million after deducting underwriting discounts and commissions of $31.1 million and other issuance costs of $1.1 million paid and payable.
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On May 4, 2026, the Company entered into an amendment to our Credit Agreement (the "First Amendment"). The First Amendment amends the Credit Agreement to, among other modifications, (i) provide for a $112.5 million increase in the Revolving Facility thereunder, (ii) provide for a $50.0 million increase in the letter of credit sublimit thereunder and (iii) amend the definition of “Indebtedness” therein to provide that capitalized leases shall be deemed to be an amount equal to 25% of the capitalized amount thereof.
Current report
Net cash provided by financing activities was $500.6 million for the three months ended March 31, 2026, compared to net cash used in financing activities of $67.2 million for the three months ended March 31, 2025. The change was primarily driven by proceeds of $888.8 million from our equity follow-on offering, $120.0 million drawdown on our Term Loan Facility and $11.8 million from equipment financing arrangements, partially offset by a $500.0 million repayment of our Term Loan Facility, $11.1 million payments of employee payroll taxes related to net share settlement of equity awards and $9.9 million of principal repayments for finance leases and financing arrangements for data center equipment.
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Adjusted Operating Income and Adjusted Operating Income Margin
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We define adjusted operating income as operating income, adjusted to exclude stock-based compensation, amortization of acquired intangible assets, acquisition related compensation, acquisition and integration related costs, restructuring and other charges, restructuring related charges, impairment of certain long-lived assets and other charges. We define adjusted operating income margin as adjusted operating income as a percentage of revenue.
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The following table presents a reconciliation of operating income, the most directly comparable financial measure stated in accordance with GAAP, to adjusted operating income for each of the periods presented:
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(5)Excludes the in-the-money portion of our 2030 Convertible Notes for non-GAAP weighted-average diluted shares as they are covered by our capped call transactions. Our outstanding capped call transactions are antidilutive under GAAP, but are expected to mitigate the dilutive effect of our 2030 Convertible Notes, and therefore are included in the calculation of non-GAAP diluted shares outstanding. The capped calls have an antidilutive impact when the average stock price of our common stock in a given period is higher than their exercise price.
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(6)Includes 15,957 of potentially dilutive securities related to our 2030 Convertible Notes as if the entire principal amount outstanding were converted into shares for the three months ended March 31, 2026. Includes 8,403 of potentially dilutive securities related to our 2026 Convertible Notes as if the entire principal amount outstanding were converted into shares for the three months ended March 31, 2025. The Company has the election of settling any conversion in cash, shares of our common stock, or a combination of both. For further information refer to Note 10. Net Income per Share Attributable to Common Stockholders in our condensed consolidated financial statements.
Removed paragraphs (34)
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Higher Spend Customers
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•Builders: users that spend more than $50 and less than or equal to $500 in a month.
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•Scalers: users that spend more than $500 and less than or equal to $8,333 in a month.
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Users that spend less than or equal to $50 in a given month and have been on our platform for three months or less are considered “Testers.” Users that spend less than or equal to $50 in a given month and have been on our platform for more than three months are considered “Learners.” We have not disclosed the number of Testers and Learners on our platform in our regular disclosures since the second quarter of 2022 and fourth quarter of 2024, respectively, since we do not consider these customers to comprise a meaningful part of our customer base or be a good predictor of future growth.
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ARPU
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We believe that our average revenue per customer, which we refer to as ARPU, is a strong indication of our ability to acquire new customers with higher spending levels and expand usage of our platform by our existing customers. We calculate ARPU on a monthly basis as our total revenue from Learners, Builders, Scalers and Scalers+ in that period divided by the total number of Learners, Builders, Scalers and Scalers+ customers determined as of the last day of that month. For a quarterly or annual period, ARPU is determined as the weighted-average monthly ARPU over such three or 12-month period.
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ARR
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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.
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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.
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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.
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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.
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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.
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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.
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Income Tax Benefit
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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.
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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.
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Comparison of the Nine Months Ended September 30, 2025 and 2024
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Revenue
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Income Tax Benefit (Expense)
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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.
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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.
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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.
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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.
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(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.
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(2)For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges.
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(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.
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(2)For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges.
Reworded paragraphs (48)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be considered together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024. This discussion, particularly information with respect to our outlook, key trends and uncertainties, our plans and strategy for our business, and our performance and future success, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Actual results could differ materially from those discussed below.
Current wording
The following discussion and analysis of our financial condition and results of operations should be considered together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025. This discussion, particularly information with respect to our outlook, key trends and uncertainties, our plans and strategy for our business, and our performance and future success, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Actual results could differ materially from those discussed below.
Previous wording
DigitalOcean is a leading cloud computing platform, offering simple, scalable and approachable on-demand cloud and AI services for digital native enterprises around the world. Our platform simplifies cloud computing, enabling our customers to rapidly accelerate innovation and productivity. Our customers include digital native enterprises across numerous industry verticals ranging from gaming to fintech to cybersecurity, among many others, and leverage our platform for a wide variety of use cases, such as building and hosting websites, developing new web and mobile applications, integrating AI into their businesses, and building AI products and applications, among many others. We believe that being simple, scalable and approachable are our key differentiators, driving a broad range of customers around the world whose needs are not being fully met by larger cloud providers to build and grow their businesses on our platform.
Current wording
DigitalOcean is an AI-Native Cloud, purpose-built for inference and agentic workloads that brings infrastructure, core cloud services, inference, data, and agents together in one integrated stack that is open throughout, giving builders the best of the AI ecosystem in one place. The platform combines production-ready GPU infrastructure, a full-stack cloud, model-first inference workflows, and an agentic experience layer to reduce operational complexity and accelerate time to production. Our customers include growing technology companies across numerous industry verticals ranging from online gaming to fintech to cybersecurity, among many others, and leverage our platform for a wide variety of use cases, such as building and hosting websites, developing new web and mobile applications, integrating AI into their businesses, and building AI products and applications, among many others. We believe that being simple, scalable and approachable, while offering a comprehensive range of integrated cloud and AI products, are our key differentiators, driving a broad range of customers around the world whose needs are not being fully met by larger cloud providers to build and grow their businesses on our platform.
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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.
Current wording
We offer a comprehensive set of cloud platform capabilities which span 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.
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We generate revenue primarily from the usage of our cloud computing platform by our customers. We recognize revenue largely based on the customer utilization of our offerings. While our pricing is primarily consumption-based and the majority of our customers use our platform on a month-to-month basis, a growing number of customers are using our platform for larger workloads and some of these customers are opting to enter into committed contracts, committing to a minimum spend on our platform.
Current wording
We generate revenue primarily from the usage of our agentic inference cloud platform by our customers. We recognize revenue largely based on the customer utilization of our offerings. While our pricing is primarily consumption-based and the majority of our customers use our platform on a month-to-month basis, a growing number of customers are using our platform for larger workloads and some of these customers are opting to enter into committed contracts, committing to a minimum spend on our platform.
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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.
Current wording
Growing our DNE 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 DNE Customers as a percentage of total revenue was 64% in the three months ended March 31, 2026, up from approximately 57% in the three months ended March 31, 2025. As of March 31, 2026, we had approximately 22,000 DNE Customers using our platform to build, deploy and scale applications. The number of DNE Customers increased from approximately 20,000 as of March 31, 2025 to 22,000 as of March 31, 2026.
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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.
Current wording
We had no material customer concentration as our top 25 customers made up approximately 16% and 9% of our revenue in the three months ended March 31, 2026 and 2025, respectively.
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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.
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Our annual run-rate revenue (“ARR”) as of March 31, 2026 was $1,032 million, up from $843 million as of March 31, 2025. Our AI Customer ARR as of March 31, 2026 was $170 million, up from $53 million as of March 31, 2025. See further discussion in “ARR and AI Customer ARR” below.
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 September 30, 2025 and 2024 our sales and marketing expense was approximately 9% and 8% of our revenue, respectively.
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 growing technology enterprises have enabled us to drive organic growth and establish a truly global customer base across a broad range of industries. For the three months ended March 31, 2026 and 2025, our sales and marketing expense was approximately 8% of our revenue.
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 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.
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 March 31, 2026, 44% of our revenue was generated from North America, 24% from Europe, 22% from Asia and 10% from the rest of the world.
Previous wording
Our existing customer base represents a significant opportunity for further sales expansion through increased usage of our platform and adoption of additional product offerings. We are highly focused on gaining a better understanding of the needs and growth plans of our existing customers, increasing our feature velocity and shaping our product roadmap around the needs of Higher Spend Customers, and introducing an account management function to provide more direct coverage of our top spending accounts. This deeper relationship with our customers will help us identify opportunities to educate our customer base on ways to utilize the platform more effectively for their individual use cases, as well as provide a feedback loop to inform our product roadmap, in order to build trust with customers and encourage them to run more of their critical cloud workloads on our platform. We closely monitor our net dollar retention (“NDR”), which reflects our ability to retain and grow revenue from our existing customers. NDR increased from 97% during the three months ended September 30, 2024 to 99% during the three months ended September 30, 2025 driven by improved net expansion. We expect to increase our revenue in the future from existing customers through the introduction of new products and features tailored to our Higher Spend Customers through expanded customer outreach, and targeted services to support our customers in migrating additional workloads from other cloud providers to DigitalOcean.
Current wording
Our existing customer base represents a significant opportunity for further sales expansion through increased usage of our platform and adoption of additional product offerings. We are highly focused on gaining a better understanding of the needs and growth plans of our existing customers, increasing our feature velocity and shaping our product roadmap around the needs of DNE Customers, and leveraging our account management function to provide more direct coverage of our top spending accounts. This deeper relationship with our customers is helping us to identify opportunities to educate our customer base on ways to utilize the platform more effectively for their individual use cases, as well as provide a feedback loop to inform our product roadmap, in order to build trust with customers and encourage them to run more of their critical cloud workloads on our platform. We closely monitor our net dollar retention (“NDR”), which reflects our ability to retain and grow revenue from our existing customers. NDR increased from 100% during the three months ended March 31, 2025 to 101% during the three months ended March 31, 2026 driven by improved net expansion. We expect to increase our revenue in the future from existing customers through the introduction of new products and features tailored to our DNE Customers through expanded customer outreach, and targeted services to support our customers in migrating additional workloads from other cloud providers to DigitalOcean.
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Growing Our Base of Higher Spend Customers
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Growing Our Base of AI-Native and Cloud-Native DNE Customers
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We believe there is a substantial opportunity to further expand our customer base. We are investing in strategies that we believe will drive adoption by new Higher Spend Customers, including new marketing initiatives that further optimize our self-service revenue funnel to identify potential Higher Spend Customers, enhanced research and development to build our product roadmap around the needs of Higher Spend Customers, the creation of a new migration services team to support migration to our platform from other cloud providers, and a dedicated AI sales team with deep AI expertise to help prospective customers understand our offerings and the process to onboard onto our platform.
Current wording
We believe there is a substantial opportunity to further expand our customer base. We are investing in strategies that we believe will drive adoption by new AI-Native and Cloud-Native DNE Customers, a dedicated AI sales team with deep AI expertise to help prospective customers understand our offerings and the process to onboard onto our platform, marketing initiatives that further optimize our self-service revenue funnel to identify potential DNE Customers, enhanced research and development to build our product roadmap around the needs of DNE Customers, and the expansion of our migration services team to support additional migrations to our platform from other cloud providers.
Previous wording
We have a history of, and will continue to invest significantly in, delivering innovative products, features and functionality for our Higher Spend Customers. Our product strategy is anchored in addressing the needs of our Higher Spend Customers and other digital native enterprises and on continuously innovating to meet those needs in a simple, scalable and approachable way. We have accelerated the pace of product innovation and made disciplined investments to expand our offerings for our IaaS and PaaS offerings, as well as our newer AI/ML offerings.
Current wording
We have a history of, and will continue to invest significantly in, delivering innovative products, features and functionality for our DNE Customers. Our product strategy is anchored in addressing the needs of our DNE Customers and other digital native enterprises and on continuously innovating to meet those needs in a simple, scalable and approachable way. We have accelerated the pace of product innovation and made disciplined investments to expand our offerings for our IaaS and PaaS offerings, as well as our newer AI/ML offerings.
Previous wording
Augmenting our Platform though Strategic Partnerships and Acquisitions
Current wording
Augmenting our Platform through Strategic Partnerships and Acquisitions
Previous wording
In addition to organic growth, we believe that strategic partnerships and acquisitions will allow us to accelerate our key platform, product and marketing initiatives. In recent years, we completed acquisitions of Paperspace, which launched our AI/ML offerings, and Cloudways, which added our Managed Hosting offering to our platform. In addition, we have entered into partnerships to augment our product offerings. For example, in 2024, we announced a partnership with Hugging Face, which allows customers to quickly and easily deploy the most popular third-party models on GPU Droplets and significantly simplifies the model deployment process for our customers. We intend to actively pursue both strategic partnerships and acquisitions that we believe will be complementary to our business, accelerate customer acquisition, increase usage of our platform and/or expand our product offerings in our core markets.
Current wording
In addition to organic growth, we believe that strategic partnerships and acquisitions will allow us to accelerate our key platform, product and marketing initiatives. In recent years, we completed acquisitions of Paperspace, which launched our AI/ML offerings, and Cloudways, which added our Managed Hosting offering to our platform. In addition, we have entered into partnerships to augment our product offerings. We intend to actively pursue both strategic partnerships and acquisitions that we believe will be complementary to our business, accelerate customer acquisition, increase usage of our platform and/or expand our product offerings in our core markets.
Previous wording
Unfavorable conditions in the economy both in the United States and abroad, including conditions resulting from trade tension and/or the imposition of trade restrictions (including recent U.S. tariffs imposed and/or threatened to be imposed and any retaliatory actions taken by other countries), changes in gross domestic product growth, supply chain disruptions, inflationary pressures, high interest rates, financial and credit market fluctuations, volatility in the capital markets, liquidity concerns at, and failures of, banks and other financial institutions, geopolitical tensions, political turmoil, political instability and transitions of power in regions where we operate, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, the Middle East or elsewhere, could cause a decrease in business investments in information technology and negatively affect the growth of our business and our results of operations.
Current wording
Unfavorable conditions in the economy both in the United States and abroad, including conditions resulting from trade tension and/or the imposition and enforceability of trade restrictions or other changes in trade policies and related uncertainties (including recent U.S. tariffs imposed and/or threatened to be imposed, any retaliatory actions taken by other countries, and uncertainties regarding the ability to obtain refunds for previously paid tariffs that have subsequently been invalidated), changes in gross domestic product growth, supply chain disruptions, inflationary pressures, high interest rates, financial and credit market fluctuations, volatility in the capital markets, liquidity concerns at, and failures of, banks and other financial institutions, geopolitical tensions, political turmoil, political instability and transitions of power in regions where we operate, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, the Middle East or elsewhere, could cause a decrease in business investments in information technology and negatively affect the growth of our business and our results of operations.
Previous wording
(1)Customer count. Beginning in the fourth quarter of 2024, we changed our methodology for calculating customer count and our customer categories. Prior periods have been recast to reflect the effects of the changes.
Current wording
(1)Customer count. Beginning in the fourth quarter of 2025, we redefined our total customer count, customer categories naming and disaggregation, and excluded the number of customers using certain legacy Bare Metal CPU offerings. Prior periods have been recast to reflect the effects of such changes.
Previous wording
We refer to our Builders, Scalers and Scalers+ customers collectively as our Higher Spend Customers. We believe the total number of our Higher Spend Customers is an important indicator of the growth of our business and future revenue opportunity, and the trends relating to our Builders, Scalers and Scalers+ is of particular importance to us as these customers comprise a significant majority of our revenue and revenue growth, and are representative of growing digital native enterprises that scale on our platform and use multiple products. We calculate customer count as the average number of customers as of the last day of the month for each month in the most recent quarter.
Current wording
We refer to customers spending more than $500 in a given month collectively as our Digital Native Enterprise (“DNE”) Customers. We believe the total number of our DNE Customers is an important indicator of the growth of our business and future revenue opportunity, and the trends relating to our $100K+ Customers, $500K+ Customers and $1M+ Customers are of particular importance to us as these customers comprise a significant majority of our revenue and revenue growth, and are representative of the Cloud-Native and AI-Native DNEs that have scaled on our platform.
Previous wording
Customers are classified in the following categories based on the amount of their spend in a given month and individual customers may fall within different categories within a reporting period:
Current wording
We calculate customer count as the average number of customers as of the last day of the month for each month in the most recent quarter. Customers are classified in the following categories based on the amount of their spend in a given month and individual customers may fall within different categories within a reporting period (customer spend in a month in whole dollars):
Previous wording
•Scalers+: users that spend more than $8,333 in a month.
Current wording
•$100K+ Customers: users that spend more than $8,333 in a month.
Previous wording
Given the recurring nature of our business, we view annual run-rate revenue as an important indicator of our current progress towards meeting our revenue targets and projected growth rate going forward. We calculate ARR by multiplying the revenue for the most recent quarter by four. For our ARR calculations, we include the total revenue from all customers, including Testers, Learners, Builders, Scalers, and Scalers+.
Current wording
Given the recurring nature of our business, we view annual run-rate revenue as an important indicator of our current progress towards meeting our revenue targets and projected growth rate going forward. We calculate ARR by multiplying total revenue for the most recent quarter by four.
Previous wording
Our ability to maintain long-term revenue growth and achieve profitability is dependent on our ability to retain and grow revenue from our existing customers. We have a history of retaining customers for multiple years and in many cases increasing their spend with us over time. To help us measure our performance in this area, we monitor our net dollar retention rate. We calculate net dollar retention rate monthly by starting with the revenue from all customers, including Testers, Learners, Builders, Scalers and Scalers+ for our IaaS and PaaS/SaaS offerings during the corresponding month 12 months prior, or the Prior Period Revenue. We then calculate the revenue from these same customers as of the current month, or the Current Period Revenue, including any expansion and net of any contraction or attrition from these customers over the last 12 months. The calculation also includes revenue from customers that generated revenue before, but not in, the corresponding month 12 months prior, but subsequently generated revenue in the current month and are therefore reflected in the Current Period Revenue. We include this group of re-engaged customers in this calculation because some of our customers use our platform for projects that stop and start over time. We then divide the total Current Period Revenue by the total Prior Period Revenue to arrive at the net dollar retention rate for the relevant month. For a quarterly or annual period, the net dollar retention rate is determined as the average monthly net dollar retention rates over such three or 12-month period.
Current wording
Our ability to maintain long-term revenue growth and achieve profitability is dependent on our ability to retain and grow revenue from our existing customers. We have a history of retaining customers for multiple years and in many cases increasing their spend with us over time. To help us measure our performance in this area, we monitor our net dollar retention rate. We calculate net dollar retention rate monthly by starting with total revenue for our IaaS and PaaS/SaaS offerings during the corresponding month 12 months prior, or the Prior Period Revenue. We then calculate the revenue from these same customers as of the current month, or the Current Period Revenue, including any expansion and net of any contraction or attrition from these customers over the last 12 months. The calculation also includes revenue from customers that generated revenue before, but not in, the corresponding month 12 months prior, but subsequently generated revenue in the current month and are therefore reflected in the Current Period Revenue. We include this group of re-engaged customers in this calculation because some of our customers use our platform for projects that stop and start over time. We then divide the total Current Period Revenue by the total Prior Period Revenue to arrive at the net dollar retention rate for the relevant month. For a quarterly or annual period, the net dollar retention rate is determined as the average monthly net dollar retention rates over such three or 12-month period.
Previous wording
We offer a comprehensive set of cloud platform capabilities which spans across IaaS, including Droplet virtual machines, storage and networking offerings; PaaS and SaaS, including Managed Hosting, Managed Database, Managed Kubernetes and Marketplace offerings. We also offer a comprehensive 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 LLMs; and Gradient AI Agents. We continue to invest in our platform to further penetrate the growing markets in which we operate.
Current wording
We offer a comprehensive set of cloud platform capabilities which span across IaaS, including Droplet virtual machines, storage and networking offerings; PaaS and SaaS, including Managed Hosting, Managed Database, Managed Kubernetes and Marketplace offerings. We also offer a comprehensive 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 LLMs; and Gradient AI Agents. We continue to invest in our platform to further penetrate the growing markets in which we operate.
Previous wording
Research and development expenses consist primarily of personnel costs including salaries, bonuses, benefits and stock-based compensation. Research and development expenses also include amortization of capitalized internal-use software development costs for research and development activities, which are amortized over three years, professional services, software, as well as costs related to our efforts to add new features to our existing offerings, develop new offerings, and ensure the security, performance, and reliability of our global cloud platform. We expect research and development expenses to increase in absolute dollars as we continue to invest in our platform and product offerings.
Current wording
Research and development expenses consist primarily of personnel costs including salaries, bonuses, benefits and stock-based compensation. Research and development expenses also include amortization of capitalized internal-use software development costs, which are amortized over three years, professional services, software, as well as costs related to our efforts to add new features to our existing offerings, develop new offerings, and ensure the security, performance, and reliability of our global cloud platform. We expect research and development expenses to increase in absolute dollars as we continue to invest in our platform and product offerings.
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, 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.
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 and purchased software used for sales and marketing purposes, 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, 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, depreciation and amortization, 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 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.
Current wording
Other (expense) income, net consists primarily of loss on extinguishment of our Term Loan Facility, cash interest expense on our Term Loan Facility, credit facilities, finance leases and equipment financing obligations, amortization of debt issuance costs, interest income on our money market funds, and gains or losses on foreign currency exchange.
Previous 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.
Current wording
Revenue increased $47.2 million, or 22%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was driven by a 35% increase in revenue from our DNE Customers primarily attributable to the addition of new customers and the continued adoption of our products by our existing customers leading to higher average usage on our platform.
Previous 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.
Current wording
Sales and marketing expenses increased for the three months ended March 31, 2026 compared to 2025 due to an increase of $1.9 million in personnel costs driven by higher headcount and annual merit-based salary raises, and an increase of $0.3 million in other costs, net.
Previous 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.
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, equipment financing arrangements and finance leases. 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 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 wording
We used the proceeds from our 2026 Follow-on Offering to repay $500.0 million of principal outstanding of our Term Loan Facility. For further information refer to Note 6. Debt in our condensed consolidated financial statements.
Previous wording
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 wording
As of March 31, 2026, we had $937.3 million aggregate principal amount outstanding under our 2030 Convertible Notes and 2026 Convertible Notes, with $300.0 million of borrowing capacity available under our Revolving Facility. As of March 31, 2026, the circumstances allowing holders to convert the 2030 Convertible Notes were met (see Note 6. Debt).
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.
Current wording
We believe our existing cash and cash equivalents, cash flow from operations and availability under our Revolving Facility will be sufficient to support our requirements for working capital and capital expenditures, outstanding contractual commitments, debt and finance lease liabilities and equipment financing obligations 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 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.
Current wording
We have historically repurchased our common stock pursuant to repurchase programs approved by our Board of Directors. In August 2025, we adopted the 2025 Share Buyback Program which authorizes the repurchase of up to $100.0 million of our common stock. The 2025 Share Buyback Program will expire on July 31, 2027. No shares have been repurchased during the three months ended March 31, 2026.
Previous 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.
Current wording
As of March 31, 2026, the Company had $668.4 million of estimated undiscounted fixed payment obligations, mostly related to 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 April 2026 and May 2027, and have a weighted-average lease term of 9.8 years.
Previous 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.
Current wording
As of March 31, 2026, we had $741.4 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 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.
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.
Previous 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.
Current wording
Net cash provided by operating activities was $46.9 million and $64.1 million for the three months ended March 31, 2026 and 2025, respectively. The change was primarily driven by higher co-location costs resulting from data center expansions, higher personnel costs due to increased headcount and annual merit-based salary raises, partially offset byincreased cash collections from higher revenues.
Previous 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.
Current wording
Net cash used in investing activities was $60.6 million and $65.0 million for the three months ended March 31, 2026 and 2025, respectively. The change was primarily driven by $19.3 million decrease in cash payments for capital expenditures, partially offset by an increase of $11.8 million in cash payments for the acquisition of equipment under financing arrangements (for which we received an equivalent amount of proceeds discussed below in “Financing Activities”), and a $4.0 million payment for acquisition of an AI-related business.
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, (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.
Current wording
Adjusted operating income is a new non-GAAP financial measure used for the first time in this Form 10-Q. We are introducing this new non-GAAP financial measure because we believe that adjusted operating income margin and adjusted EBITDA, when taken together with our GAAP financial results, provide meaningful supplemental information regarding our operating performance (including our long-term performance in the case of adjusted operating income) and facilitate 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 operating income and adjusted EBITDA is helpful to our investors as they are measures used by management in assessing the health of our business, evaluating our operating performance, and for internal planning and forecasting purposes.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
As of March 31, 2026, we had $312.3 million of our 2026 Convertible Notes maturing within the next 12 months. 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 Revolving Facility, in whole or in part, and using cash on hand or generated from our operations.
Current report — wording carried from elsewhere
Subsequent to March 31, 2026, the Company entered into leases primarily for co-location space at data center facilities with total estimated undiscounted payments of $1,273.1 million. These leases are expected to commence between April 2026 and June 2027, and have a weighted-average lease term of 11.0 years.
Current report — wording carried from elsewhere
To supplement our 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 operating income and adjusted operating income margin, (ii) adjusted EBITDA and adjusted EBITDA margin and (iii) 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.
Current report — wording carried from elsewhere
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, (gain) loss on extinguishment of debt, net, and other charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
(2)Beginning in the fourth quarter of 2024, we changed our methodology for calculating ARR. Prior periods have been recast to reflect the effects of the change.
Previous report — wording carried elsewhere
Our calculation of adjusted EBITDA and adjusted EBITDA margin may differ from the calculations of adjusted EBITDA and adjusted EBITDA margin by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, including our net income attributable to common stockholders and other GAAP results.