DigitalOcean Holdings, Inc.

(in thousands, except share and per share amounts)

Note 1. Nature of Business

DigitalOcean Holdings, Inc. and its subsidiaries (collectively, “the Company”, “we”, “our”, “us”) 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 Company’s platform is designed to be simple, scalable and approachable by providing a variety of product offerings that were built with the needs of growing technology companies in mind. The Company offers 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. The Company also offers 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. The Company continues to invest in its platform to further penetrate the growing markets in which it operates.

The Company has adopted a holding company structure and the primary operations are performed globally through its wholly owned operating subsidiaries.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include accounts of the Company and all wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of September 30, 2026, results of operations for the three and nine months ended September 30, 2026 and 2025, cash flows for the nine months ended September 30, 2026 and 2025, and stockholders' equity (deficit) for the three and nine months ended September 30, 2026 and 2025.

Reclassifications

Certain prior period amounts have been reclassified to conform with current period presentation.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make, on an ongoing basis, estimates, judgments and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Such estimates include, but are not limited to, those related to revenue recognition, accounts receivable and related reserves, useful lives and realizability of long-lived assets, capitalized internal-use software development costs, accounting for stock-based compensation including estimation of forfeiture rates and the probability of performance vesting conditions, the incremental borrowing rate used to determine lease liabilities, valuation allowances against deferred tax assets, fair value of financial instruments, and the fair value and useful lives of tangible and intangible assets acquired and liabilities assumed resulting from business combinations. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are periodically reviewed to consider changes in circumstances, facts and experience.

Restricted Cash

The following table reconciles cash, cash equivalents and restricted cash per the condensed consolidated statements of cash flows:

(1) Restricted cash as of September 30, 2026 primarily consisted of deposits held with certain government agencies to satisfy local jurisdictional requirements.

Accounts Receivable Net of Allowance for Expected Credit Losses

Accounts receivable primarily represent revenue recognized that was not invoiced at the balance sheet date and is primarily billed and collected in the following month. Trade accounts receivable are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection. Management determines the adequacy of the allowance based on historical loss patterns, the number of days that customer invoices are past due, and an evaluation of the potential risk of loss associated with specific accounts. When management becomes aware of circumstances that may further decrease the likelihood of collection, it records a specific allowance against amounts due, which reduces the receivable to the amount that management reasonably believes will be collected. The Company records changes in the estimate to the allowance for expected credit losses through provision for expected credit losses and reverses the accounts receivable and related allowance after the potential for recovery is considered remote.

The following table presents the changes in the allowance for expected credit losses for the period presented:

Recent Accounting Pronouncements – Adopted

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments - Credit Losses (“Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which amends Topic 326 to provide a practical expedient and an accounting policy election related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Accounting Standards Codification 606. Specifically, in developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company adopted the practical expedient of ASU 2025-05 on January 1, 2026 on a prospective basis. There was no impact on the Company’s condensed consolidated financial statements.

Recent Accounting Pronouncements – Pending Adoption

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“Subtopic 220-40”): Disaggregation of Income Statement Expenses (“ASU 2024-03”). In January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“Subtopic 220-40”): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires that an entity breaks down expenses into specific categories, such as employee compensation and costs related to depreciation and amortization, as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. Further, ASU 2024-03 requires disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. As clarified in ASU 2025-01, the amendments in ASU 2024-03 are required to be adopted for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied on a prospective basis for financial statements issued after the adoption date, although retrospective application is permitted. The Company is currently evaluating the impact of adoption on its financial disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (“Subtopic 350-40”): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 modernizes the accounting for internal-use software costs by increasing the operability of the recognition guidance considering different methods of software development. ASU 2025-06 is effective for the Company for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The amendment can be applied prospectively, retrospectively, or via a modified prospective transition method. The Company is currently evaluating the impact of the new standard on its condensed consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (“Topic 270”): Narrow-scope Improvements (“ASU 2025-11”). ASU 2025-11 enhances GAAP interim reporting by specifying required disclosures, establishing a disclosure principle for material post-year-end events, and clarifying the scope, types, and presentation of interim financial statements. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028 for entities other than public business entities. Early adoption is permitted. The amendment can be applied prospectively or retrospectively for all prior periods presented in the financial statements. The Company is currently evaluating the impact of the new standard; however, it does not expect that the standard will have a material impact on its condensed consolidated financial statements and related disclosures.

Note 3. Revenue

Revenue Disaggregation

Based on the information provided to and reviewed by the Company’s Chief Executive Officer (“CEO”), its chief operating decision maker (“CODM”), the Company believes that the nature, amount, timing and uncertainty of its revenue and cash flows and how they are affected by economic factors is most appropriately depicted based on the category of its customers. Customers are classified in categories based on the amount of their spend in a given month and individual customers may fall within different categories within a reporting period.

The Company classifies its customers into the following annual run-rate revenue (“ARR”) categories (customer spend in a month in whole dollars):

•Digital Native Enterprise (“DNE”) Customers: users that spend more than $500 in a month. DNE Customers include the following categories:

◦Above $6 K and under $100 K Customers: users that spend more than $500 and less than or equal to $8,333 in a month.

◦Above $100 K and under $500 K Customers: users that spend more than $8,333 and less than or equal to $41,667 in a month.

◦Above $500 K and under $1 M Customers: users that spend more than $41,667 and less than or equal to $83,333 in a month.

◦Above $1 M Customers: users that spend more than $83,333 in a month.

•Developers: users that spend less than or equal to $500 in a month, except users that spend less than or equal to $50 in a month and have been on the Company’s platform forthree months or less.

Revenue by customer ARR category, as determined based on the customers’ spend in a given month, was as follows:

(1) Beginning in the fourth quarter of 2025, the Company revised its customer category naming and classification. Prior periods have been recast to reflect the effects of these changes.

(2) May not recalculate due to rounding.

(3) Beginning in the fourth quarter of 2025, Developers and other include revenue from users that spend less than or equal to $500 in a given month, revenue from certain legacy Bare Metal CPU offerings, miscellaneous revenue and other reserve adjustments. Prior periods have been recast to reflect the effect of this change.

Geographical Information

Revenue, as determined based on the Company’s customers’ billing addresses, was as follows:

(1) May not recalculate due to rounding.

Revenue derived from customers in the United States was 45% and 40% of total revenue for the three and nine months ended September 30, 2026, respectively, and 34% and 32% of total revenue for the three and nine months ended September 30, 2025, respectively.

Deferred Revenue

Deferred revenue was $52,707 and $5,882 as of September 30, 2026 and December 31, 2025, respectively. Revenue recognized during the three months ended September 30, 2026 and 2025 was $344 and $325, respectively, and $3,064 and $3,210 during the nine months ended September 30, 2026 and 2025, respectively, which was included in the deferred revenue balances at the beginning of each respective period. Subsequent to September 30, 2026, the Company received $107,433 in cash from a customer that will be recorded as deferred revenue and recognized over the contract term.

Remaining Performance Obligations

The Company has performance obligations associated with commitments in customer contracts for future services that have not yet been recognized in the condensed consolidated financial statements. As of September 30, 2026, the aggregate transaction price allocated to the remaining performance obligations, which includes contracts with expected term of one year or less, was $799,707 with a weighted-average life of 3.7 years. As of September 30, 2026, the Company expects to recognize $345,111 of its remaining performance obligations as revenue over the next 12 months, with the remainder recognized thereafter over the remaining life of the contracts.

Concentration of Credit Risk

The amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, marketable securities, restricted cash, and trade accounts receivable are exposed to concentrations of credit risk. Although the Company maintains cash and cash equivalents with multiple financial institutions, the deposits, at times, may exceed federally insured limits. The Company believes that the financial institutions that hold its cash and cash equivalents are financially sound and, accordingly, minimal credit risk exists with respect to these balances. The Company’s customer base consists of a significant number of geographically dispersed customers.

Note 4. Marketable Securities

The following is a summary of available-for-sale marketable securities, excluding those securities classified within cash and cash equivalents, on the condensed consolidated balance sheets as of September 30, 2026. The Company had no available-for-sale marketable securities as of December 31, 2025.

Interest income from investments was $5,083, and $2,630 for the three months ended September 30, 2026 and 2025, respectively, and $14,350 and $9,489 for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, all of the Company’s available-for-sale short-term investments were due within one year.

As of September 30, 2026, the Company held nine securities that were in an unrealized loss position. The Company does not intend to sell and expects that it is more likely than not that it will not be required to sell these securities until such time as the value recovers or the securities mature. Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates and not credit-related factors based on the Company’s evaluation of available evidence. To determine whether a decline in value is related to credit loss, the Company evaluates, among other factors: the extent to which the fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency and any adverse conditions specifically related to an issuer of a security or its industry. Management does not believe any remaining unrealized losses represent impairments based on our evaluation of available evidence. Unrealized gains and losses on marketable securities are presented net of tax.

Note 5. Fair Value Measurements

The fair value of the Company’s financial assets measured on a recurring basis was as follows:

The Company classifies its highly liquid money market funds and U.S. Treasury securities within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its commercial paper within Level 2 because it is valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded. The Company had no Level 2 financial assets as of December 31, 2025 and no Level 3 financial assets as of September 30, 2026 and December 31, 2025.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

The Company reports financial instruments at fair value, with the exception of its convertible notes. Financial instruments that are not recorded at fair value on a recurring basis are measured at fair value on a quarterly basis for disclosure purposes. Refer to Note 7. Debt for the carrying values and estimated fair values of financial instruments not recorded at fair value.

Note 6. Balance Sheet Details

Property and equipment, net

Property and equipment, net consisted of the following:

Depreciation expense on property and equipment was $66,087, and $28,062 for the three months ended September 30, 2026 and 2025, respectively, and $145,308, and $75,410 for the nine months ended September 30, 2026 and 2025, respectively.

Capitalized costs related to the development of computer software for internal use were $7,056 and $3,881 for the three months ended September 30, 2026 and 2025, respectively, and $16,737 and $8,168 for the nine months ended September 30, 2026 and 2025, respectively, which are included in internal-use software costs within property and equipment, net. Amortization expense related to internal-use and purchased software was $3,984 and $2,084 for the three months ended September 30, 2026 and 2025, respectively, and $11,384 and $6,483 for the nine months ended September 30, 2026 and 2025, respectively.

Note 7. Debt

Debt, Long-term

The net carrying amount of the Company’s debt consisted of the following:

As of September 30, 2026, the total fair value of the 2030 Convertible Notes (as defined below) was $539,674, and the fair value of the 2026 Convertible Notes (as defined below) was $313,807. The fair value was determined based on the closing trading price as of the last day of trading for the period. The Company classifies the fair value to be a Level 2 valuation within the fair value measurement hierarchy due to the limited trading activity.

2030 Convertible Notes

On August 14, 2025, the Company issued $625,000 aggregate principal amount of 0.00% Convertible Senior Notes due 2030 (“2030 Convertible Notes”). The 2030 Convertible Notes are senior unsecured obligations of the Company and do not bear regular interest, and the principal amount of the 2030 Convertible Notes does not accrete. The 2030 Convertible Notes will mature on August 15, 2030, unless earlier converted, redeemed or repurchased.

The following table presents details of the 2030 Convertible Notes:

Holders may convert the 2030 Convertible Notes at their option only in the following circumstances:

(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during thefive consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the trading price per $1,000 principal amount of 2030 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day;

(3) if the Company calls the 2030 Convertible Notes for redemption; and

(4) upon the occurrence of certain corporate events or distributions of the Company’s common stock, as described in the indenture governing the 2030 Convertible Notes.

During the three months ended March 31, 2026 and continuing through the three months ended June 30, 2026 and the three months ended September 30, 2026, the circumstances allowing holders to convert the 2030 Convertible Notes were met since the Company’s last reported sale price per share of the Company’s common stock exceeded 130% of the conversion price of $39.17 for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. Therefore, the 2030 Convertible Notes have been convertible, in whole or in part, at the option of the holders since April 1, 2026 and are convertible until December 31, 2026. Whether the 2030 Convertible Notes will be convertible following such period will depend on the continued satisfaction of this condition or another conversion condition in the future.

The Company has the election of settling any conversion of the 2030 Convertible Notes in cash, shares of its common stock, or a combination of both. The Company continues to classify the 2030 Convertible Notes as a long-term liability in its condensed consolidated balance sheets as of September 30, 2026 because the Company has the option to settle the 2030 Convertible Notes in shares and the maturity date exceedsone year from the balance sheet date.

Partial Repurchase of 2030 Convertible Notes

In July 2026, the Company entered into privately negotiated agreements with certain holders of its 2030 Convertible Notes to repurchase $471,828 aggregate principal amount for aggregate cash consideration of $1,474,414, based on the volume-weighted average price of the Company’s common stock of $117.54 per share. The repurchase closed on July 23, 2026 and was funded by a concurrent registered direct offering. Refer to Note 11. Stockholders’ Equity of the condensed consolidated financial statements for details on the registered direct offering. The note repurchase and the direct offering were cross-conditional. Upon completion, the repurchased notes were retired.

The Company accounted for the repurchase as an induced conversion and recognized a $516,253 increase to additional paid-in capital for $460,231 of the carrying value of the repurchased portion of the 2030 Convertible Notes, $2,601 of related tax impact and $53,422 of the fair value of consideration paid to holders of the 2030 Convertible Notes in excess of the value to which they were entitled to receive pursuant to the original conversion terms (“2030 Notes Induced Conversion Incentive”). The Company recorded the 2030 Notes Induced Conversion Incentive and $3,688 of transaction- related fees paid with cash on hand in other (expense) income, net in the Company’s condensed consolidated statements of operations for a total induced conversion expense of $57,110 during the three months ended September 30, 2026.

As of September 30, 2026, $153,172 aggregate principal amount of the 2030 Convertible Notes remained outstanding with a maturity date of August 15, 2030.

2030 Capped Calls

In connection with the issuance of the 2030 Convertible Notes, the Company entered into capped call transactions with certain financial institutions (“2030 Capped Calls”). The 2030 Capped Calls have an initial strike price of $39.17 per share, which corresponds to the initial conversion price of the 2030 Convertible Notes. The 2030 Capped Calls have an initial cap price of $66.51 per share. At that time, the 2030 Capped Calls were generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the 2030 Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2030 Convertible Notes, with such reduction and/or offset subject to the cap price. The strike price, cap price and other terms of the 2030 Capped Calls are subject to certain adjustments under the terms of the capped call transactions. Notwithstanding the partial repurchase of the 2030 Convertible Notes that closed on July 23, 2026, the Company did not take any actions on the 2030 Capped Calls and they continued to remain outstanding as of September 30, 2026. The 2030 Capped Calls expire on August 15, 2030, unless exercised or called prior to that date.

2025 Credit Facility

On May 5, 2025, the Company entered into a credit agreement (the “Credit Agreement”) by and among the Company, its wholly owned subsidiary, DigitalOcean, LLC, as borrower, Morgan Stanley Senior Funding, Inc., as administrative agent, and the other parties thereto for a $500,000 senior secured delayed draw term loan facility (“Term Loan Facility”, and any loans thereunder “Term Loans”) and a $300,000 senior secured revolving credit facility (“Revolving Facility”, and any loans thereunder “Revolving Loans”) which includes a $30,000 sublimit for the issuance of letters of credit (collectively the “2025 Credit Facility”). On May 4, 2026, the Company entered into an amendment to the Credit Agreement (the “First Amendment”), which, among other modifications, (i) increased the Revolving Facility to $412,500, (ii) increased the letter of credit sublimit to $80,000, and (iii) amended the definition of “Indebtedness” to provide that capitalized leases shall be deemed to be an amount equal to 25% of the capitalized amount. The Term Loan Facility and Revolving Facility mature on May 5, 2030, and are subject to a springing maturity date in the event certain conditions occur as described in the Credit Agreement. Revolving Loans may be borrowed, repaid and reborrowed, until their maturity date. Term Loans may be borrowed until February 5, 2026 and, once borrowed and repaid, cannot be reborrowed.

On February 3, 2026, the Company drew down the remaining $120,000 available principal under its Term Loan Facility resulting in a total outstanding principal amount of $500,000. On March 27, 2026, the Company repaid the $500,000 outstanding principal of its Term Loan Facility in cash from the proceeds of its follow-on offering (see Note 11. Stockholders’ Equity) and wrote-off $2,700 of related unamortized issuance cost as loss on extinguishment of debt in other (expense) income, net on the Company’s condensed consolidated statements of operations during the nine months ended September 30, 2026.

The Credit Agreement includes customary representations, warranties, and affirmative and negative covenants, including financial covenants that require the Company to maintain certain levels of total net leverage ratio and interest coverage ratio. As of September 30, 2026, the Company was in compliance with all covenants under the 2025 Credit Facility.

The Company was issued letters of credit under the letter of credit sublimit of its Revolving Facility of $9,734 and $15,584 during the three and nine months ended September 30, 2026, respectively. No drawdowns have been made under the Company’s letters of credit and the Revolving Facility. The Company’s total available borrowing capacity under the Revolving Facility was $396,916 as of September 30, 2026.

2026 Convertible Notes

In November 2021, the Company issued$1,500,000 aggregate principal amount of convertible notes (“2026 Convertible Notes”). The 2026 Convertible Notes are senior unsecured obligations of the Company and do not bear interest, and the principal amount of the 2026 Convertible Notes does not accrete.

Each $1 of principal of the 2026 Convertible Notes will initially be convertible into 5.6018 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $178.51 per share, subject to adjustment as set forth in the indenture governing the 2026 Convertible Notes. As of June 1, 2026, holders may convert all or any portion of their 2026 Convertible Notes at the option of the holder regardless of the circumstances.

On August 14, 2025, the Company repurchased approximately $1,187,678 aggregate principal amount of the 2026 Convertible Notes. The outstanding $312,322 of aggregate principal amount of 2026 Convertible Notes will mature on December 1, 2026 unless earlier converted, redeemed, or repurchased. Upon conversion of the 2026 Convertible Notes, the Company will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election.

Issuance Costs

Issuance costs are amortized to interest expense over the contractual term of the respective borrowing. Contractual interest expense consists of commitment fees and cash interest expense under the Company’s 2025 Credit Facility and Equipment Lease Facility. Interest expense related to the Company’s convertible notes and credit facilities consisted of the following:

Note 8. Operating Leases

The Company leases co-location space at data center facilities and, to a lesser extent, corporate offices, all of which are classified as operating leases. Operating leases generally have an initial lease term ranging fromtwo tothirteen years, which includes any option to renew or terminate the lease when it is reasonably certain that the option will be exercised.

The components of operating lease expense were as follows:

Weighted-average remaining lease term and discount rate were as follows:

Maturities of operating lease liabilities as of September 30, 2026 were as follows:

As of September 30, 2026, the Company had $2,955,158 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 November 2026 and June 2028, and have a weighted-average lease term of 11.1 years.

Note 9. Finance Leases and Equipment Financing Obligations

The Company enters into finance leases and equipment financing obligations for servers and related equipment. The components of finance lease and equipment financing obligations expense were as follows:

Weighted-average remaining term and discount rate of finance lease liabilities and equipment financing obligations were as follows:

Maturities of finance lease liabilities and equipment financing obligations as of September 30, 2026 were as follows:

In October 2026, the Company entered into agreements to receive servers and related equipment under (i) finance leases with total estimated undiscounted payments of $19,992, commencing between November 2026 and November 2027, with a weighted-average lease term of 5.0 years, and (ii) equipment financing arrangements with total estimated undiscounted payments of $33,018 commencing in November 2026 with a weighted-average lease term of 5.0 years.

Equipment Lease Facility

On September 10, 2026, the Company and its wholly owned subsidiary, DigitalOcean, LLC (the “Lessee”), entered into an agreement with MUFG Americas Capital Leasing & Finance, LLC, as lessor (the “Lessor”), MUFG Bank, Ltd., as administrative agent and collateral agent, and the other parties thereto providing for up to $725,000 of committed financing to fund purchases of data center equipment, including an accordion feature permitting the Company to increase the committed financing by up to an additional $300,000 to $1,025,000 in the aggregate (the “Equipment Lease Facility”). The Company may request advances through September 10, 2027, funding up to 90% of the cost of equipment with the Lessee funding the remaining balance as prepaid rent, and the Lessor will acquire equipment with such funds and lease it to the Lessee. The Equipment Lease Facility matures on September 10, 2030. Each advance drawn under the Equipment Lease Facility will be accounted for as a separate finance lease.

Rent under each equipment lease is payable monthly in arrears and amortizes the applicable advance in full by September 10, 2030. Each equipment lease bears interest at a fixed rate, determined at the time of the applicable drawdown, equal to a term SOFR swap rate plus 2.75% per annum. Undrawn commitments under the Equipment Lease Facility are subject to a commitment fee of 0.20% per annum, increasing to 0.40% per annum six months after closing. The Lessee may prepay and purchase the equipment in whole or in part, subject to a prepayment premium of 5% in the first year and 3% in the second year following the applicable advance. Title to the equipment will transfer to the Lessee for nominal consideration upon payment in full of the amounts under the applicable equipment lease.

The Equipment Lease Facility is guaranteed by the Company and certain of its subsidiaries, is secured by the related equipment and collateral, and contains financial covenants and events of default substantially consistent with those under the 2025 Credit Facility.

In connection with the Equipment Lease Facility, the Company paid customary arrangement, upfront and agency fees of $7,274, which are recognized as deferred financing fees in other assets within the condensed consolidated balance sheets, and are deferred until drawdown and will be amortized through the Equipment Lease Facility maturity on September 10, 2030. As of September 30, 2026, the Company had not drawn advances under the Equipment Lease Facility. The Company’s total available borrowing capacity under the Equipment Lease Facility was $725,000 as of September 30, 2026.

On October 6, 2026, the Company exercised an additional $60,000 of the accordion feature, increasing the total committed financing to $785,000.

Note 10. Commitments and Contingencies

Purchase Commitments

The Company has commitments and purchase orders with various software license, bandwidth, network services and third-party license vendors. The Company’s purchase commitments have not materially changed since December 31, 2025 except for a long-term purchase agreement for a software license with total non-cancelable payments of $128,072 and a contractual term of up to 6.0 years that commenced in July 2026.

Legal Proceedings

The Company may be involved in various legal proceedings and litigation arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate disposition of any such litigation matters, the Company believes that any such legal proceedings will not have a material adverse effect on its condensed consolidated financial position, results of operations, or liquidity.

Letters of Credit

In relation to the execution of data center leases, the Company was issued letters of credit under the letter of credit sublimit of its Revolving Facility of $9,734 and $15,584 during the three and nine months ended September 30, 2026, respectively. There were no outstanding letters of credit as of December 31, 2025. No drawdowns have been made under the Company’s letters of credit as of September 30, 2026. Refer to Note 7. Debt of the condensed consolidated financial statements for further details.

Note 11. Stockholders’ Equity

2026 Follow-on Offering

On March 26, 2026, the Company completed a follow-on public equity offering (“2026 Follow-on Offering”) of 11,948,052 shares of common stock, inclusive of the exercised over-allotment option, at a public offering price of $77.00 per share. The Company received net proceeds of $887,888 after deducting underwriting discounts and commissions of $31,050 and other issuance costs of $1,062.

2026 Direct Offering

On July 23, 2026, the Company completed a registered direct offering of 12,543,915 shares of common stock at a price of $117.54 per share concurrent with the partial repurchase of the 2030 Notes. The Company received net proceeds of $1,473,857 after deducting $557 of transaction-related fees paid and payable that were recognized as a decrease to additional paid-in capital. The proceeds were used to repurchase $471,828 in aggregate principal amount of 2030 Convertible Notes. Cash on hand was used to pay transaction-related fees. Refer to Note 7. Debt of the condensed consolidated financial statements for further details.

Share Buyback Program

On August 11, 2025, the Company adopted a new stock repurchase program authorizing the repurchase of up to $100,000 of its common stock (“2025 Share Buyback Program”). Pursuant to the 2025 Share Buyback Program, repurchases of the Company’s common stock may be made at prevailing market prices through open market purchases, in negotiated transactions off the market or otherwise, including through Rule 10b5-1 plans. The 2025 Share Buyback Program will expire on July 31, 2027; however, the Company is not obligated to acquire any particular amount of common stock and the program may be extended, modified, suspended or discontinued at any time at the Company’s discretion. During the three and nine months ended September 30, 2026, the Company had no repurchases of shares under the 2025 Share Buyback Program.

Note 12. Stock-Based Compensation

Equity Incentive Plan

In March 2021, the Company’s Board of Directors adopted, and the stockholders approved, the 2021 Equity Incentive Plan (“2021 Plan”). The 2021 Plan is a successor to and continuation of the 2013 Stock Plan. The 2021 Plan became effective on the date of the Company’s initial public offering with no further grants being made under the 2013 Stock Plan; however, awards outstanding under the 2013 Stock Plan continued to be governed by their existing terms. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), market-based restricted stock units (“MRSUs”) and other awards to employees, directors, and consultants. Shares issued pursuant to the exercise or settlement of these awards are transferable by the holder. There were 29,402,187 shares available for grant under the 2021 Plan as of September 30, 2026.

RSUs and PRSUs

RSUs granted typically vest over four years. The Company has also issued PRSUs which vest based on the achievement of each award’s established performance targets. Depending on the actual financial metrics achieved relative to the target financial metrics throughout the defined performance period of the award, the number of Long Term Incentive Plan (“LTIP”) PRSUs that vest could range from 0% to 200% of the target amount and are subject to the Compensation Committee’s approval of the level of achievement against the approved performance targets.

Assuming the minimum performance level is achieved, one-third of the aggregate number of the achieved LTIP PRSUs shall vest on the later of (i) March 1 of the year after grant, (ii) the first anniversary of the grant date, or (iii)two trading days following the public release of the Company’s financial results for the year of grant, and the remainder shall vest over the followingtwo years ineight equal quarterly installments subject, in each case, to the individual’s continuous service through the applicable vesting date.

On April 25, 2025, the Company granted an LTIP PRSU award (“2025 LTIP PRSU”). The financial performance level under the PRSUs was equal to the sum of the attainment of certain ARR targets weighted at 75% and adjusted free cash flow margin targets weighted at 25%. On February 13, 2026, the Company determined that the 2025 LTIP PRSU was achieved at 89.0% of the target amount. This resulted in a performance factor reduction of 154,488 shares from the original maximum shares achievable of 278,356, net of forfeiture. The target shares granted under the 2025 LTIP PRSU were 139,178, net of forfeiture.

On March 10, 2026 and June 1, 2026, the Company granted LTIP PRSU awards (“2026 LTIP PRSUs”). The financial performance level under the 2026 LTIP PRSUs can be attained based on the achievement of certain ARR and adjusted free cash flow margin targets. Under the 2026 LTIP PRSUs,75% of the awards can be achieved based on the ARR targets and 25% of the awards can be achieved based on the adjusted free cash flow margin targets. The target shares granted under the 2026 LTIP PRSUs were 427,796. The actual number of shares that are received under the 2026 LTIP PRSUs may be higher or lower than the target shares based on the actual financial metrics achieved relative to the target financial metrics for fiscal year 2026.

As of September 30, 2026, there was $147,974 of unrecognized stock-based compensation, net of estimated forfeitures, related to outstanding RSUs, that is expected to be recognized over a weighted-average period of 3.0 years. As of September 30, 2026, there was $17,660 of unrecognized stock-based compensation, net of estimated forfeitures, related to outstanding PRSUs that is expected to be recognized over a weighted-average period of 2.5 years.

MRSU

On February 12, 2024, Padmanabhan Srinivasan joined the Company in the role of CEO. As part of his compensation package, Mr. Srinivasan received an MRSU with an estimated grant date fair value of approximately $8,000, which vests upon the satisfaction of certain service conditions and the achievement of certain Company stock price goals during a five-year performance period. A cumulative percentage of the MRSU target is earned based on the achievement of stock price goals, measured based on the average of the Company’s closing stock price over a consecutive 60 days trading day period during the performance period as set forth in the table below:

As of September 30, 2026, the conditions related to the Company Stock Price Target applicable to Tranches 1, 2, and 3 of the MRSUs had been met. Subject to Mr. Srinivasan’s continued service through the applicable vesting dates,50% of the Tranche 1, 2, and 3 MRSUs will vest upon the Compensation Committee’s certification of Company Stock Price

Target performance achievement in the first quarter of 2027 and the remaining 50% will vest upon the Compensation Committee’s certification in the first quarter of 2029.

As of September 30, 2026, there was $2,389 of unrecognized stock-based compensation related to the MRSU award that is expected to be recognized over a weighted-average period of 2.4 years.

ESPP

In March 2021, the Company’s Board of Directors adopted, and the stockholders approved, the 2021 Employee Stock Purchase Plan (“ESPP”). Eligible employees enroll in the offering period at the start of each purchase period, whereby they may purchase a number of shares at a price per share equal to 85% of the lesser of (1) the stock price at the employee’s first participation in the offering period or (2) the fair market value of the Company’s common stock on the purchase date. There were 5,918,387 shares available for grant under the ESPP as of September 30, 2026.

Stock-Based Compensation

Stock-based compensation is included in the condensed consolidated statements of operations as follows:

Note 13. Net Income per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net income per share:

We calculate the potential dilutive effect of the convertible senior notes under the if-converted method. Under this method, diluted earnings per share are determined by assuming that outstanding convertible senior notes were converted into shares of our common stock at the beginning of the reporting period.

In connection with the issuance of the convertible senior notes, we entered into the capped call transactions, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. The capped call transactions are expected to partially offset the potential dilution to our common stock upon any conversion of the convertible senior notes.

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

Note 14. Income Taxes

The computation of the provision for, or benefit from, income taxes for an interim period is determined using an estimated annual effective tax rate, adjusted for discrete items, if any. Each quarter, the Company updates the estimated annual effective tax rate and records a year-to-date adjustment to the tax provision, as necessary.

For the three and nine months ended September 30, 2026, the Company recorded income tax expense of $6,184 and $6,614, respectively. The effective tax rate for the three and nine months ended September 30, 2026 was (17.0)% and 43.5%, respectively. The effective tax rate differs from the statutory rate primarily due to the induced conversion expense recognized on the partial repurchase of the Company’s 2030 Convertible Notes, which carries no tax benefit. The mix of income in the foreign jurisdictions in which the Company conducts business, 162(m) limitation and excess tax benefits from stock-based compensation also affected the rates.

For the three and nine months ended September 30, 2025, the Company recorded tax benefit of $68,057 and $59,460, respectively. The effective tax rate for the three and nine months ended September 30, 2025 was (75.4)% and (34.1)%, respectively. The effective tax rate differs from the statutory rate primarily due to the release of the valuation allowance on U.S. and state deferred tax assets.

The Organisation for Economic Co-operation and Development Pillar Two guidelines published to date include transition and safe harbor rules around the implementation of the Pillar Two global minimum tax of 15%. Based on current enacted legislation, the Company is not subject to Pillar Two tax since the Company’s revenue is currently below the threshold. The Company is monitoring developments and evaluating the impacts these new rules will have on its future income tax provision and effective income tax rate.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company applied the provisions related to the international tax framework that became effective in 2026 for the three and nine months ended September 30, 2026. The adoption on January 1, 2026 did not have a material impact on the Company’s condensed consolidated financial statements.

Note 15. Segment and Geographical Information

Segment Information

The Company’s CODM is the CEO. The CODM assesses performance on a monthly basis by reviewing consolidated results against the annual operating plan and ongoing forecasts. Accordingly, the Company has one operating and reporting segment.

The measure of segment profitability used by the CODM is net income, as reported in the condensed consolidated statements of operations. The significant segment expenses reviewed by the CODM on a consolidated basis include cost of revenue, research and development, sales and marketing, and general and administrative as reported in the condensed consolidated statements of operations on a consolidated basis. Other segment expense categories include other (expense) income, net and income tax benefit (expense) as reported in the condensed consolidated statements of operations. Refer to Note 3. Revenue, for revenue by geography.

The measure of segment assets is total assets, which is reported in the condensed consolidated balance sheets. Refer to condensed consolidated statements of cash flows and within Note 6. Balance Sheet Details, for details of capital expenditures and depreciation and amortization, respectively.

Long-lived assets include property and equipment, net and operating lease right-of-use assets, net. The geographic locations of the Company’s long-lived assets, net, based on the physical location of the assets, are as follows: