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Sep 30, 2025
DigitalOcean Q3 2025 Earnings Report
DigitalOcean delivered strong Q3 results, with record incremental ARR and notable growth in high-value enterprise customers.
Key Takeaways
DigitalOcean reported a strong Q3 2025, with $230 million in revenue, $158 million in net income, and the highest incremental organic ARR in company history, driven by AI and larger enterprise customer growth.
Revenue reached $230 million, up from $198.5 million in Q3 2024
Net income surged to $158 million due to one-time tax and debt benefits
DigitalOcean added $44 million in incremental ARR, the highest in its history
Revenue from customers spending over $1M annually grew 72% YoY
Forward Guidance
DigitalOcean raised its full-year 2025 guidance for revenue, Adjusted EBITDA margin, and adjusted free cash flow margin, citing strong customer momentum and AI adoption.
Positive Outlook
- Raised full-year revenue guidance to $896–$897 million
- Raised Adjusted EBITDA margin guidance to 41%
- Raised adjusted free cash flow margin guidance to 18–19%
- Continued strong growth in large enterprise and AI-native customers
- Net income boost supported by one-time tax and debt-related gains
Challenges Ahead
- EPS guidance for Q4 is lower than Q3 actuals ($0.35–$0.40 vs. $0.54)
- Gross margin remains around 60%, suggesting limited short-term expansion
- One-time gains drove a significant portion of net income growth
- Operating expenses continue to rise, especially in sales and marketing
Historical Earnings Impact
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Avg. Return Before/After Earnings
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