DigitalOcean Holdings, Inc.
For the period ended Jun 30, 2026. Filed Aug 4, 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.
Jun 30, 2026 · Filed Aug 4, 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 2026-03-31; filed 2026-05-05.
0001582961-26-000049
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001628280-26-052556
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 131 previous paragraphs and 135 current paragraphs.
87 unchanged; 29 reworded; 15 added; 13 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 13 previous and 18 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 (15)
Current report
Macroeconomic and Geopolitical Conditions
Current report
Income Tax Benefit (Expense)
Current report
Research and development expenses increased for the three months ended June 30, 2026 compared to 2025 due to increases of$17.8 million in personnel costs driven by headcount growth, stock-based compensation for new hire and ongoing grants and annual merit-based salary raises,$2.1 million in third-party development resources and$1.4 million in other costs, net, partially offset by $3.5 million in additional capitalized internal-use software development costs.
Current report
Sales and marketing expenses increased for the three months ended June 30, 2026 compared to 2025 due to increases of $1.3 million in personnel costs driven by headcount growth and annual merit-based salary raises, $1.3 million in depreciation and amortization related to purchased software, and $1.0 million in other costs, net.
Current report
General and administrative expenses increased for the three months ended June 30, 2026 compared to 2025 due to an increase of $9.0 million in personnel costs driven by headcount growth, stock-based compensation for new hire and ongoing grants, and annual merit-based salary raises.
Current report
Other expense, net was $2.2 million for the three months ended June 30, 2026, compared to other income, net of $6.8 million for the three months ended June 30, 2025. The change is primarily due to a net decrease of $7.2 million in unrealized gains related to foreign currency fluctuations from our operations and an increase of $5.2 million in interest expense mostly driven by interest on our finance leases and equipment financing arrangements, offset by $3.2 million higher interest income due to higher investment balance from the proceeds of our public equity offering completed in March 2026.
Current report
Income Tax Benefit (Expense)
Current report
Income tax benefit was $8.3 million for the three months ended June 30, 2026 compared to income tax expense of $5.4 million for the three months ended June 30, 2025, an increase in income tax benefit of $13.7 million, or 253%. The increase in income tax benefit was primarily driven by an increase in excess tax benefits on stock-based compensation.
Current report
Comparison of the Six Months Ended June 30, 2026 and 2025
Current report
Revenue
Current report
Research and deve lopment expenses increased for the six months ended June 30, 2026 compared to 2025 due to increases of $28.2 million in personnel costs driven by headcount growth, annual merit-based salary raises andstock-based compensation for new hire and ongoing grants,$1.6 million in software costs, and$1.1 million in third-party development resources, partially offset by$4.7 million in additional capitalized internal-use software development costs.
Current report
Sales and marketing expenses increased for the six months ended June 30, 2026 compared to 2025 due to increases of $2.4 million in depreciation and amortization related to purchased software and $3.2 million in personnel costs driven by headcount growth and annual merit-based salary raises.
Current report
Income tax expense decreased $8.2 million, or 95%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in income tax expense was primarily driven by an increase in excess tax benefits on stock-based compensation.
Current report
On July 23, 2026, we repurchased $471.8 million in aggregate principal amount of our 2030 Convertible Notes using the net proceeds from a concurrent registered direct offering of 12,543,915 shares of our common stock at $117.54 per share. Cash on hand was used to pay estimated transaction related fees. Upon completion, the repurchased notes were retired. We intend to use our existing share repurchase authorization to repurchase approximately 500,000 shares to offset dilution. Notwithstanding the partial repurchase of our 2030 Convertible Notes, we did not take any action on our 2030 Capped Calls and they continue to remain outstanding. For further information refer to Note 6. Debt in our condensed consolidated financial statements.
Current report
As of June 30, 2026, we expect to receive servers and related equipment under finance leases with total estimated undiscounted payments of $281.6 million that were not included in the condensed consolidated balance sheets. The leases commenced in July 2026 and have a weighted-average lease term of 4.9 years.
Removed paragraphs (13)
Previous report
Macroeconomic Conditions
Previous report
Net Dollar Retention Rate
Previous report
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 report
Cost of Revenue
Previous report
Operating Expenses
Previous report
Other (Expense) Income, net
Previous report
Cost of Revenue
Previous report
Operating Expenses
Previous report
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.
Previous report
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 report
Other (Expense) Income, net
Previous report
Income Tax Expense
Previous report
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.
Reworded paragraphs (29)
Previous 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.
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 67% in the three months ended June 30, 2026, up from approximately 59% in the three months ended June 30, 2025. As of June 30, 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 June 30, 2025 to approximately 22,000 as of June 30, 2026.
Previous 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.
Current wording
We had no material customer concentration as our top 25 customers made up approximately 20% and 9% of our revenue in the three months ended June 30, 2026 and 2025, respectively.
Previous wording
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.
Current wording
Our annual run-rate revenue (“ARR”) as of June 30, 2026 was $1,125 million, up from $875 million as of June 30, 2025. Our AI Customer ARR as of June 30, 2026 was $234 million, up from $75 million as of June 30, 2025. See further discussion in “ARR and AI Customer ARR” below.
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 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.
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 June 30, 2026, 47% of our revenue was generated from North America, 22% from Europe, 22% from Asia and 9% 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 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.
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 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.
Previous 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.
Current wording
Unfavorable conditions in the economy, both in the United States and abroad, could cause a decrease in business investments in information technology and negatively affect the growth of our business and our results of operations. These conditions include: changes in gross domestic product growth; inflationary pressures and high interest rates; supply chain disruptions; financial and credit market fluctuations, volatility in the capital markets, and liquidity concerns at, or failures of, banks and other financial institutions; trade tension and the imposition, enforceability, or threatened imposition of tariffs, export controls, sanctions, and other trade restrictions or retaliatory actions for those measures by other countries; and geopolitical conditions, including ongoing military conflicts involving Russia, Ukraine, Iran, and the Middle East, political turmoil, political instability or transitions of power in regions where we operate, potential shutdowns of the U.S. federal government, natural catastrophes, and outbreaks of contagious diseases.
Previous wording
We will continue to monitor the direct and indirect impacts of these or similar circumstances on our business and our results of operations. The implications of macroeconomic conditions on our business, results of operations, and overall financial position remain uncertain.
Current wording
We will continue to monitor the direct and indirect impacts of these or similar circumstances on our business and our results of operations. The implications of macroeconomic and geopolitical conditions on our business, results of operations, and overall financial position remain uncertain.
Previous 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.
Current wording
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
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.
Current wording
Cost of revenue increased for the three months ended June 30, 2026 compared to 2025 primarily due to data center expansions which drove increases of $17.2 million in depreciation and amortization related to data center infrastructure additions, $12.4 million in co-location costs, $3.4 million in third-party licenses and partnership expenses, $2.9 million in ancillary equipment costs, and $3.2 million in other costs, net. Gross profit decreased to 55% for the three months ended June 30, 2026 from 60% for the three months ended June 30, 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.
Previous 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.
Current wording
Revenue increased $109.7 million, or 26%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was driven by a 40% 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
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.
Current wording
General and administrative expenses increased for the six months ended June 30, 2026 compared to 2025 due to increases of $10.6 million in personnel costs driven by headcount growth, stock-based compensation for new hire and ongoing grants, and annual merit-based salary raises and $4.3 million in professional services costs related to consulting and legal fees, offset by a decrease of $1.2 million in other costs, net.
Previous wording
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.
Current wording
Other expense, net was $14.3 million for the six months ended June 30, 2026, compared to other income, net of $10.6 million for the six months ended June 30, 2025. The change is primarily due to an increase of $13.6 million in interest expense mostly driven by interest on our finance leases and equipment financing arrangements, a decrease of $11.3 million in net unrealized gains related to foreign currency fluctuations from our operations, and an additional $2.4 million loss on extinguishment of debt from our Term Loan Facility, offset by a $2.4 million increase in interest income due to higher investment balance from the proceeds of our public equity offering completed in March 2026.
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, 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.
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, capital expenditures, including our investments in AI/ML and other core product offerings, and principal repayments of finance leases and equipment financing obligations for servers and related equipment. 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
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
Current wording
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 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.
Previous 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.
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 during the three months ended March 31, 2026.
Previous wording
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 wording
On May 4, 2026, we 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” to provide that capitalized leases shall be deemed to be an amount equal to 25% of the capitalized amount. During the three months ended June 30, 2026, we issued a letter of credit under our Revolving Facility for $5.9 million. In July 2026, we issued an additional letter of credit of $9.7 million under our Revolving Facility.
Previous 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).
Current wording
As of June 30, 2026, we had $937.3 million aggregate principal amount outstanding under our 2030 Convertible Notes and 2026 Convertible Notes, with $406.7 million of borrowing capacity available under our Revolving Facility. As of June 30, 2026, the circumstances allowing holders to convert the 2030 Convertible Notes were met. As of June 30, 2026, all of the 2030 Capped Calls remain outstanding and expire on August 15, 2030, unless exercised or called prior to that date.
Previous 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.
Current wording
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 six months ended June 30, 2026.
Previous 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.
Current wording
As of June 30, 2026, we had $2,759.3 million of estimated undiscounted fixed payment obligations primarily for leases of co-location space at data center facilities that have not yet commenced and were not included in the condensed consolidated balance sheets. These leases are scheduled to commence between July 2026 and June 2028, and have a weighted-average lease term of 11.2 years.
Previous 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.
Current wording
As of June 30, 2026, we had $767.0 million in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash and money market funds.
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, data center 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, taxes and interest payments on finance leases, equipment financing obligations and debt.
Previous 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.
Current wording
Net cash provided by operating activities was $156.9 million and $156.5 million for the six months ended June 30, 2026 and 2025, respectively. The change was primarily driven by increased cash collections from higher revenues, partially offset by higher co-location costs resulting from data center expansions and higher personnel costs due to increased headcount and annual merit-based salary raises.
Previous 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.
Current wording
Net cash used in investing activities was $149.7 million and $100.4 million for the six months ended June 30, 2026 and 2025, respectively. The change was primarily driven by a $5.2 million decrease in cash payments for capital expenditures, partially offset by an increase of $51.5 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
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.
Current wording
Net cash provided by financing activities was $505.4 million for the six months ended June 30, 2026, compared to net cash used in financing activities of $96.9 million for the six months ended June 30, 2025. The change was primarily driven by proceeds of $887.9 million from our equity follow-on offering, $120.0 million drawdown on our Term Loan Facility and $51.5 million from equipment financing arrangements, partially offset by a $500.0 million repayment of our Term Loan Facility, $38.4 million payments of employee payroll taxes related to net share settlement of equity awards and $21.7 million of principal repayments for finance leases and financing arrangements for data center equipment.
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, 2025 other than that disclosed under Note 6. Debt and Note 7. Commitments and Contingencies, 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, 2025 other than those disclosed under Note 6. Debt, Note 7. Operating Leases, Note 8. Finance Leases and Equipment Financing Obligations, and Note 9. Commitments and Contingencies, in our condensed consolidated financial statements.
Previous 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.
Current wording
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.
Previous wording
(1)For the three months ended March 31, 2026 and 2025, primarily consists of interest income from our cash and cash equivalents.
Current wording
(1)For the three and six months ended June 30, 2026 and 2025, primarily consists of interest income from our cash and cash equivalents.
Previous wording
(1)For the three months ended March 31, 2026, excludes tax impact which is presented in Non-GAAP income tax adjustment.
Current wording
(1)For the three and six months ended June 30, 2026, excludes tax impact which is presented in Non-GAAP income tax adjustment.
Previous wording
(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.
Current wording
(6)Includes 1,750 and 15,957 of potentially dilutive securities related to our 2026 and 2030 Convertible Notes, respectively, as if the entire principal amount outstanding were converted into shares for the three and six months ended June 30, 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 and six months ended June 30, 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 12. Net Income per Share Attributable to Common Stockholders in our condensed consolidated financial statements.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
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
Current report — wording carried from elsewhere
Revenue increased $62.5 million, or 29%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was driven by a 45% increase in revenue from our DNE Customers primarily attributable to the addition of new customers, including our expanding AI Customer base, and the continued adoption of our products by our existing customers leading to higher average usage on our platform.
Current report — wording carried from elsewhere
Cost of revenue increased for the six months ended June 30, 2026 compared to 2025 primarily due to data center expansions which drove increases of $32.8 million in depreciation and amortization related to data center infrastructure additions, $21.4 million in co-location costs, $6.5 million in ancillary equipment costs, $6.0 million in third party licenses and partnership expenses, $2.9 million in personnel costs driven by headcount growth, and $1.5 million in other costs, net. Gross profit decreased to 56% for the six months ended June 30, 2026 from 61% for the six months ended June 30, 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.
Current report — wording carried from elsewhere
We have historically repurchased our common stock pursuant to repurchase programs approved by our Board of
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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.
Previous report — wording carried 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.