The earnings call reflects a generally positive sentiment with significant growth in the AI/ML platform, steady revenue growth, and strong product innovation. However, there are challenges with managed hosting headwinds affecting net dollar retention and a decline in free cash flow margin.

Company Guidance

In the third quarter of 2024, DigitalOcean reported a revenue growth of 12% year-over-year, reaching $198.5 million, and an annual run rate revenue (ARR) of $798.3 million. The company increased its full-year revenue guidance, raising the lower end by $5 million and the top end by $2 million, to a range of $775 million to $777 million, reflecting approximately 12% growth. DigitalOcean's adjusted EBITDA margin improved to 44% in Q3, with a full-year guidance now projected between 40% to 41%. The adjusted free cash flow margin for the full year remains at 15% to 17%. The company highlighted its significant progress in AI/ML, with Q3 ARR for AI products growing nearly 200% year-over-year. DigitalOcean's builders and scalers, representing 88% of total revenue, grew 15% year-over-year. The company also announced the general availability of its GPU droplets, expanded its AI platform offerings, and launched strategic partnerships to enhance its product ecosystem. The guidance reflects an optimistic outlook, expecting baseline growth in the low to mid-teens entering 2025.

Steady Revenue Growth

DigitalOcean's revenue grew by 12% year-over-year in Q3 2024, reaching $198.5 million. The annual run rate revenue (ARR) was $798.3 million, also up 12% year-over-year.

AI/ML Platform Momentum

The AI/ML platform saw significant growth, with ARR growing close to 200% year-over-year, showing strong demand and adoption.

Adjusted EBITDA Margins

Adjusted EBITDA for Q3 was $87 million, an increase of 14% year-over-year, with margins at 44%, an improvement of approximately 200 basis points from the previous quarter.

Product Innovation and Customer Growth

DigitalOcean released 42 new product features in Q3, nearly doubling from the previous quarter, and saw a 19% year-over-year growth in the scaler customer cohort, which contributes 58% of total revenue.

Strategic Customer Wins

Key contracts signed include Cyber, a cybersecurity customer, and Traject Data, both committing to multiyear deals due to DigitalOcean's enhanced product offerings.

Gen AI Platform Launch

Launched early availability of a new Gen AI platform, allowing customers to integrate AI without deep expertise, showcasing DigitalOcean's innovation in AI applications.

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DigitalOcean Holdings (DOCN) Earnings, Revenues Date & History

The upcoming earnings date is based on a company’s previous reporting, and may be updated when the actual date is announced

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DOCN Earnings History

Report Date	Fiscal Quarter	Forecast / EPS	Last Year's EPS	EPS YoY Change	Slides	Play Transcript
Feb 20, 2025	2024 (Q4)	0.34 / -	0.44	―	―	―
Nov 04, 2024	2024 (Q3)	0.40 / 0.52	0.44	18.18% (+0.08)
Aug 08, 2024	2024 (Q2)	0.39 / 0.48	0.434	10.60% (+0.05)
May 10, 2024	2024 (Q1)	0.38 / 0.43	0.28	53.57% (+0.15)
Feb 21, 2024	2023 (Q4)	0.36 / 0.44	0.28	57.14% (+0.16)
Nov 02, 2023	2023 (Q3)	0.36 / 0.44	0.38	15.79% (+0.06)
Aug 03, 2023	2023 (Q2)	0.41 / 0.43	0.2	117.00% (+0.23)
May 09, 2023	2023 (Q1)	0.29 / 0.28	0.07	300.00% (+0.21)
Feb 16, 2023	2022 (Q4)	0.20 / 0.28	0.1	180.00% (+0.18)
Nov 07, 2022	2022 (Q3)	0.23 / 0.38	0.12	216.67% (+0.26)

The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.

Beat

Missed

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DOCN Earnings-Related Price Changes

Report Date	Price 1 Day Before	Price 1 Day After	Percentage Change
Nov 04, 2024	$40.83	$35.33	-13.47%
Aug 08, 2024	$29.10	$32.57	+11.92%
May 10, 2024	$32.58	$35.91	+10.22%
Feb 21, 2024	$35.85	$38.96	+8.68%

Earnings announcements can affect a stock’s price. This table shows the stock's price the day before and the day after recent earnings reports, including the percentage change.

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