Key Highlights

  • DigitalOcean reported second-quarter 2026 revenue of $281 million, up 29%, and annual recurring revenue of $1,125 million, also up 29%.
  • ARR from AI customers was $234 million, up 212%, and remaining performance obligations were $894 million.
  • Net income was $35 million, adjusted EBITDA was $114 million, and adjusted free cash flow was $61 million.
  • Full-year 2026 revenue is guided to $1.170 billion to $1.180 billion, growth of 30% to 31%.

DigitalOcean (NYSE:DOCN) built its name on simple cloud servers for developers and small businesses, yet its second-quarter 2026 results, announced on August 4, 2026, put artificial intelligence at the center.

Revenue was $281 million, up 29%, and annual recurring revenue (ARR) was $1,125 million, also up 29%. Within that, ARR from AI customers was $234 million, up 212%.

A Cloud for Developers

DigitalOcean provides cloud infrastructure and platform services, including virtual servers, managed databases, storage and, increasingly, graphics-processing capacity and an inference service for running AI models. It sits in the technology services sector as an alternative to the largest cloud providers, aimed at customers who value simplicity and predictable pricing. Historically its base was many small customers; the newest disclosures emphasize large commitments from AI-focused customers.

The Reported Figures

According to the company, net income was $35 million, a 13% margin, and adjusted EBITDA was $114 million, up 27%, a 40% margin. Operating income was $29 million. Operating cash flow was $110 million and adjusted free cash flow $61 million, a 22% margin. Cash stood at $767 million. The company reported incremental ARR of $93 million, a record, and remaining performance obligations, meaning contracted revenue yet to be recognized, of $894 million, about twelve times the prior-year level. ARR from customers spending $1 million or more was $259 million, up 214%. Figures are in US dollars for the quarter ended June 30, 2026.

Guidance and Ambition

For the third quarter, DigitalOcean guided revenue to $304 million to $307 million, growth of 32% to 34%. For full-year 2026 it guided revenue to $1.170 billion to $1.180 billion, growth of 30% to 31%, adjusted EBITDA margin of 38.5% to 39.5%, adjusted free cash flow margin of 11% to 13% and non-GAAP diluted earnings per share of $1.35 to $1.40. Chief executive Paddy Srinivasan was quoted as expressing confidence in reaching 50% growth in 2027 and said the company is beginning to land nine-figure annual commitments.

Balance Sheet Activity

The company said it repurchased about $472 million of its 0.00% convertible senior notes due 2030, using a concurrent registered direct offering.

DigitalOcean's AI ARR Acceleration and Capacity Build

Returns depend on customers honoring multi-year commitments and on the hardware remaining competitive. The company's own risk language refers to competition, execution on AI and machine-learning products, security breaches, data-center capacity constraints and geopolitical factors such as tariffs.

A further consideration is concentration: growth in million-dollar-plus customers and nine-figure deals means that the loss or delay of one commitment could matter more than it would have in a base of many small accounts.

Next, observers can track, using the company's subsequent quarterly filings, whether ARR growth accelerates as guidance implies, whether AI ARR continues to climb from $234 million, how remaining performance obligations convert into revenue, and how margins hold as capacity expands, including depreciation on newly installed hardware, and the cash balance too.