DigitalOcean 2025 Q3 Earnings Net Income Surges 380.7% as Revenue Beats Expectations

DigitalOcean (DOCN) reported Q3 2025 results that exceeded expectations, with revenue rising 15.7% to $229.63 million and EPS surging 383.3% to $1.74. The company raised full-year guidance for revenue and EBITDA margins while maintaining a cautious tone on Q4 profit projections.

Revenue

DigitalOcean’s total revenue in Q3 2025 reached $229.63 million, a 15.7% increase from $198.48 million in Q3 2024. This outperformed the $226.53 million FactSet estimate, driven by sustained demand for cloud services and growth in larger customer segments.

Earnings/Net Income

The company’s net income soared 380.7% year-over-year to $158.37 million, with EPS jumping to $1.74 from $0.36. This marked a record high for Q3 net income in six years, reflecting improved profitability and cost discipline. The EPS growth underscores strong operational performance.

Price Action

DigitalOcean’s stock price climbed 1.08% in the latest trading day, surged 15.68% for the week, and gained 19.33% month-to-date. The post-earnings rally reflects investor confidence in the company’s improved financials and strategic direction. The strategy of buying shares on the revenue announcement date and holding for 30 days yielded a cumulative 76.6% return over three years, with a Sharpe ratio of 1.4 and a maximum drawdown of 18.3% during a market correction.

Post-Earnings Price Action Review

The stock’s post-earnings performance highlights its resilience, with a 15.68% weekly gain and 19.33% monthly surge. The historical backtest of a 30-day holding strategy post-announcement delivered robust returns, demonstrating the stock’s ability to navigate volatility. While Q4 profit guidance fell slightly short of estimates, the raised revenue and EBITDA targets bolstered investor optimism.

CEO Commentary

Lyndon F. “Lindo” Johnson, CEO, emphasized the company’s focus on expanding its unified agentic cloud business, which drove the Q3 results. He noted, “Our momentum gives us confidence to increase investment in growth initiatives, positioning us to achieve 18–20% revenue growth by 2026.” The CEO’s tone was optimistic, highlighting the potential for AI-driven services to further accelerate revenue.

Guidance

DigitalOcean raised full-year 2025 revenue guidance to $896–$897 million (up from $888–$892 million) and adjusted EBITDA margin to 40.7–41.0%. For Q4, revenue is projected at $237–$238 million, with EPS guidance of $0.35–$0.40. The guidance reflects management’s confidence in maintaining growth momentum despite near-term profit caution.

Additional News

In the three weeks following the Q3 earnings, DigitalOcean announced a $100 million stock buyback program through 2027, signaling strong capital allocation discipline. The company also launched new AI offerings, including fractional GPU instances and partnerships with AI model providers, to expand its developer-focused cloud platform. Analysts at Morgan Stanley upgraded the stock to Overweight with a $44 price target, citing improved execution and AI growth opportunities.