DOCN

DigitalOcean is a profitable, growing cloud platform repositioning itself as an 'agentic inference cloud' for AI and Digital Native Enterprises (DNEs). FY2025 revenue grew 15.5% to $901M, led by 24% growth in DNE-customer revenue (now 60% of total, ~21,000 DNE customers), and the business throws off real cash — $310M of operating cash flow against just $129M of capex and a steady 59.9% gross margin. Operating income rose 72.5% to $157M, a genuine 17.4% operating margin, as G&A fell on the absence of 2024 acquisition/reorg compensation costs.

The catch is that the eye-catching GAAP figures overstate the run-rate. Net income tripled to $259M ($2.52 diluted EPS, +183%), but management's MD&A shows much of that came from non-operating, non-recurring items: a $48.1M net gain on partial extinguishment of the 2026 convertible notes (which added $0.30 to diluted EPS) and a $69.9M release of the U.S. deferred-tax valuation allowance (which added $0.66 to diluted EPS). Together those roughly $0.96 of EPS will not repeat, so normalized earnings are materially lower than the headline 68.8x P/E implies.