# DigitalOcean Holdings (DOCN.US)

Canonical: https://gigainvestors.com/s/DOCN

Analysis as of: 2026-10-16T07:28:04.307Z. Financial observations: FY2018–FY2025.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $109.47 per share; close as of 2026-10-15.

Estimated value: low $8.98 per share, central $9.35 per share, high $9.83 per share. Buy at or below the central value $9.35 per share. Valuation as of 2026-10-16T07:28:04.307Z; scenarios are not confidence intervals.

Expected annual return: 3.2% at the stated quote. About 3.2% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 0 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- negative average operating margin

- operating margin variation exceeds 0.35

- Financial history: 8 years

- Years with declining revenue: 0

- Years with a net loss: 5

- Operating margin variation: 12.53×

Chart: Operating margin; fiscal year observations.

- FY2018: -0.13×

- FY2019: -0.12×

- FY2020: -0.05×

- FY2021: -0.03×

- FY2022: -0.04×

- FY2023: 0.02×

- FY2024: 0.12×

- FY2025: 0.17×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: -3.5%

- ROIC, second-lowest year: -14.7%

- Typical minus recent gross margin: -0.3 pp

- Typical gross margin (annual median): 59.4%

- Recent gross margin (lower of latest and 3-year median): 59.7%

- Years with nonpositive capital: 0

- Capital spending / revenue: 26.6%

- ROIC including acquisitions, ten-year median: -4.6%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2018: -43.9%

- FY2019: -11.4%

- FY2020: -14.7%

- FY2021: -3.0%

- FY2022: -4.0%

- FY2023: 1.5%

- FY2024: 11.0%

- FY2025: >100%

### economics: pass

- Owner earnings / net income, 5-yr: 0.87×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $275M

- Net income, five-year total: $316M

- Return on incremental invested capital: 54.1%

- Working capital / revenue, annual change: 1.0 pp

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.00×

- FY2022: 1.00×

- FY2023: 1.00×

- FY2024: 1.00×

- FY2025: 0.84×

### management: pass

- potential debt-funded buybacks (informational)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: -14.7% vs 11.0%

- Per-share earnings: -1.06 to 0.89 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 5-year annual growth: 3.9%

- Diluted shares, 5-year annual growth: 3.9%

- Per-share value change: $1.95

- Per-share value, starting three-year median: -$1.06

- Per-share value, ending three-year median: $0.89

- Buybacks concentrated in cheaper years (correlation): -0.90

- Average buyback yield: 9.4%

- Buyback history: 5 years

- Debt-funded buybacks: Yes

- ROIC, first three-year median: -14.7%

- ROIC, last three-year median: 11.0%

Chart: Earnings per share; fiscal year observations.

- FY2018: -$1.06

- FY2019: -$1.06

- FY2020: -$0.50

- FY2021: -$0.21

- FY2022: -$0.28

- FY2023: $0.20

- FY2024: $0.89

- FY2025: $2.46

### accounting: pass

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -2.7%

- Receivables to sales index (DSRI): 0.86×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 25.9%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.19×

- Accounting red flags: 1

Chart: Sloan accruals; fiscal year observations.

- FY2018: -30.2%

- FY2019: -26.5%

- FY2020: -23.7%

- FY2021: -7.3%

- FY2022: -12.3%

- FY2023: -14.8%

- FY2024: -12.1%

- FY2025: -2.7%

## Holders

- [Dan Davidowitz](https://gigainvestors.com/pcm): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 30% since Jun 2026 · "DigitalOcean (DOCN) Is Up 56.0% After Raising Revenue Outlook And Launching AI-Native Cloud Platform" (finance.yahoo.com, May 2026) · sales +15.5%

Story as of 2026-10-16T09:58:38.925Z; price observation 2026-10-15.

Price needs cash profits to grow 49.1% a year for ten years

- 2025-08-05: DigitalOcean raises full-year revenue guidance to $888M–$892M as AI/ML revenue more than doubles ([seekingalpha.com](https://seekingalpha.com/news/4478998-digitalocean-raises-full-year-revenue-guidance-to-888m-892m-as-ai-ml-revenue-more-than?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2025-11-06: DOCN Q3 Deep Dive: AI Demand Fuels Growth, Investments Set Pace for 2026 ([finance.yahoo.com](https://finance.yahoo.com/news/docn-q3-deep-dive-ai-053502270.html))

- 2026-02-24: DigitalOcean (NYSE:DOCN) Beats Q4 CY2025 Sales Expectations, Growth To Accelerate Next Year ([finance.yahoo.com](https://finance.yahoo.com/news/digitalocean-nyse-docn-beats-q4-122712270.html))

- 2026-05-09: DigitalOcean (DOCN) Is Up 56.0% After Raising Revenue Outlook And Launching AI-Native Cloud Platform ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/digitalocean-docn-56-0-raising-052033405.html))

- 2026-06-07: DigitalOcean AI-Native Cloud Launch Reshapes Growth Outlook And Investor Focus ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/digitalocean-ai-native-cloud-launch-100555829.html))

- 2026-09-18: DigitalOcean’s (DOCN) $725M Bet On AI’s Next Wave ([finance.yahoo.com](https://finance.yahoo.com/technology/ai/articles/digitalocean-docn-725m-bet-ai-050233169.html))

### Sales · FY2024–2025

sales +15.5%; source https://www.sec.gov/Archives/edgar/data/1582961/000158296126000019/docn-20251231.htm; observed 2026-02-24.

- FY2018: $203M 

- FY2019: $255M 

- FY2020: $318M 

- FY2021: $429M 

- FY2022: $576M 

- FY2023: $693M 

- FY2024: $781M 

- FY2025: $901M 

### Gross margin · FY2025

gross margin 59.9%; source https://www.sec.gov/Archives/edgar/data/1582961/000158296126000019/docn-20251231.htm; observed 2026-02-24.

- FY2018: 52.2% 

- FY2019: 52.0% 

- FY2020: 54.3% 

- FY2021: 60.2% 

- FY2022: 63.2% 

- FY2023: 59.0% 

- FY2024: 59.7% 

- FY2025: 59.9% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software infrastructure; annual sales are USD 901.4 million.

- Source: https://www.sec.gov/Archives/edgar/data/1582961/000158296126000019/docn-20251231.htm (filed 2026-02-24); FY2025: revenue 901427000; grossProfit 539592000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); DOCN.US: DigitalOcean Holdings, Inc., through its subsidiaries, operates an agentic inference cloud platform in North America, Europe, Asia, and internationally. The company provides AI and Digital Native Enterprises build, run, and scale intelligent applications for growing technology companies. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute, storage, and networking products, including cloud firewalls, managed load balancers, NAT gateways, and virtual private cloud software, as well as IP address management and domain name system management. In addition, the company provides platform-as-a-service (PaaS) and software-as-a-service (SaaS) solutions, such as managed databases; managed Kubernetes and container registry; application platform to build, deploy, and scale applications; Functions, a serverless compute solution; and Uptime for real-time uptime and latency alerts, as well as managed hosting and DigitalOcean Marketplace, a platform where developers can find pre-configured applications and solutions. Further, it offers artificial intelligence (AI)/machine learning (ML) applications comprising GPU droplets; bare metal GPUS, which provides access to a GPU server without any virtualization layer and gives developers with customizable server for their use case; and Jupyter Notebooks that provides cloud workspace and managed interactive development environment for exploring data and training, and building machine learning models. Its customers use its platform in various industry verticals, such as online gaming, fintech, and cybersecurity, as well as for a range of use cases, including building and hosting websites, web and mobile applications development, AI integration, and building AI products and applications. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in Broomfield, Colorado.

### Why customers stay

Margins ranged from 59% to 59.9% during 2023–25; it lost 3.5% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2023: grossProfit / revenue = 59%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2024: grossProfit / revenue = 59.7%.

- Source: https://www.sec.gov/Archives/edgar/data/1582961/000158296126000019/docn-20251231.htm (filed 2026-02-24); FY2025: grossProfit / revenue = 59.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); 8-year return on capital observations [[2018,-0.4392662008271029],[2019,-0.1144264859733416],[2020,-0.14745035695711786],[2021,-0.02992367497866692],[2022,-0.04031406261791001],[2023,0.014823487563519483],[2024,0.11006762807529742],[2025,1.5903095749422587]]; median -0.03511886879828847. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Spends 41.3% of cash earnings on expansion; earns 54.1% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2023: growth capex 6947000; upkeep 117866000; owner earnings 19409000. Growth capex / owner earnings = 0.3579267350198362.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2024: growth capex 56471000; upkeep 130052000; owner earnings 84492000. Growth capex / owner earnings = 0.6683591345926242.

- Source: https://www.sec.gov/Archives/edgar/data/1582961/000158296126000019/docn-20251231.htm (filed 2026-02-24); FY2025: growth capex 90289782.75476545; upkeep 178225217.24523455; owner earnings 218485782.75476545. Growth capex / owner earnings = 0.41325243966152814.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); Incremental return on capital 0.5407514438612803, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); Dividend observations: [[2018,0],[2019,0],[2020,1403000],[2021,1480564000],[2022,0],[2023,43387000],[2024,0],[2025,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/1582961/000158296126000019/docn-20251231.htm (filed 2026-02-24); FY2025: cash repurchases 82124000 USD.

### Are managers owners

Insiders own 16.6% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); DOCN.US SharesStats.PercentInsiders = 16.631 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 49.1% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); Ten-year compound average after fade. Initial solved rate 0.7218666178972664. Price 109.47; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03.  Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2021-03: $42.13 per share

- 2021-04: $43.57 per share

- 2021-05: $42.04 per share

- 2021-06: $55.59 per share

- 2021-07: $51.50 per share

- 2021-08: $61.68 per share

- 2021-09: $77.63 per share

- 2021-10: $97.59 per share

- 2021-11: $100.81 per share

- 2021-12: $80.33 per share

- 2022-01: $57.34 per share

- 2022-02: $59.32 per share

- 2022-03: $57.85 per share

- 2022-04: $39.43 per share

- 2022-05: $48.85 per share

- 2022-06: $41.36 per share

- 2022-07: $40.98 per share

- 2022-08: $42.09 per share

- 2022-09: $36.17 per share

- 2022-10: $35.92 per share

- 2022-11: $29.83 per share

- 2022-12: $25.47 per share

- 2023-01: $29.35 per share

- 2023-02: $31.98 per share

- 2023-03: $39.17 per share

- 2023-04: $31.54 per share

- 2023-05: $39.15 per share

- 2023-06: $40.14 per share

- 2023-07: $49.52 per share

- 2023-08: $27.05 per share

- 2023-09: $24.03 per share

- 2023-10: $20.46 per share

- 2023-11: $29.62 per share

- 2023-12: $36.69 per share

- 2024-01: $33.72 per share

- 2024-02: $37.92 per share

- 2024-03: $38.18 per share

- 2024-04: $32.86 per share

- 2024-05: $37.05 per share

- 2024-06: $34.75 per share

- 2024-07: $33.13 per share

- 2024-08: $37.43 per share

- 2024-09: $40.39 per share

- 2024-10: $39.58 per share

- 2024-11: $38.08 per share

- 2024-12: $34.07 per share

- 2025-01: $41.48 per share

- 2025-02: $42.85 per share

- 2025-03: $33.39 per share

- 2025-04: $30.90 per share

- 2025-05: $28.30 per share

- 2025-06: $28.56 per share

- 2025-07: $27.86 per share

- 2025-08: $32.62 per share

- 2025-09: $34.16 per share

- 2025-10: $40.66 per share

- 2025-11: $44.52 per share

- 2025-12: $48.12 per share

- 2026-01: $55.25 per share

- 2026-02: $56.06 per share

- 2026-03: $85.78 per share

- 2026-04: $96.43 per share

- 2026-05: $155.95 per share

- 2026-06: $157.03 per share

- 2026-07: $117.50 per share

- 2026-08: $110.69 per share

- 2026-09: $133.39 per share

- 2026-10: $109.47 per share

## Annual estimated value (USD per share)

- FY2025: low $4.86 per share, central $5.23 per share, high $5.71 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1582961/000158296126000019/docn-20251231.htm); period 2025-12-31, filed 2026-02-24.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.