DigitalOcean (DOCN) Stock Jumps 16% After Q1 Earnings Smash Estimates

TLDR

• DOCN surged ~16% in pre-market after Q1 results beat on both revenue and earnings
• Revenue hit $257.9M, up 22.4% YoY, beating estimates of $249.7M
• Adjusted EPS of $0.44 crushed the $0.26 consensus by 67.7%
• Full-year 2026 revenue guidance raised to $1.14B midpoint; 2027 growth outlook set above 50%
• AI Customer ARR grew 221% YoY to $170M; Million+ Dollar Customer ARR up 179% to $183M

DigitalOcean (DOCN) stock jumped roughly 16% in pre-market trading on May 5 after the company reported first quarter 2026 results that topped Wall Street expectations across the board.

DigitalOcean Holdings, Inc., DOCN

Revenue came in at $257.9 million, up 22.4% year over year, beating analyst estimates of $249.7 million. Adjusted EPS of $0.44 blew past the $0.26 consensus by 67.7%.

The stock was trading around $127.51 following the results.

Adjusted operating income hit $59.08 million, a 23.1% beat versus the $48 million estimate. Adjusted EBITDA grew 21% to $105 million.

Operating margin came in at 14.2%, down from 17.9% in the same quarter last year. Free cash flow margin also dropped, falling to 0.8% from 11.1% in the prior quarter.

Annual Recurring Revenue reached $1.03 billion, growing 22.4% year over year and beating estimates. Billings also came in at $258.3 million, up 22.4% YoY.

AI Metrics Stand Out

AI Customer ARR surged 221% year over year to $170 million. Million+ Dollar Customer ARR grew 179% to $183 million — two numbers that clearly caught the market’s attention.

Guidance Raised

For Q2 2026, DigitalOcean guided revenue to $272–$274 million, a midpoint of $273 million that sits 4.8% above the $260.9 million analyst consensus.

Q2 adjusted EPS guidance came in at $0.20–$0.23, with the $0.215 midpoint slightly below the $0.23 consensus.

Full-year 2026 revenue guidance was raised to $1.13–$1.145 billion, up from the prior $1.09 billion outlook. The midpoint of $1.1375 billion is still below the analyst consensus of $1.43 billion.

Full-year adjusted EPS guidance was lifted to a midpoint of $1.15, a 31.4% increase from prior guidance and above the $0.99 consensus.

The company also set a 2027 revenue growth target of over 50%.

During the quarter, DigitalOcean completed a follow-on offering of 11.9 million shares, raising net proceeds of $888 million. It used $500 million of that to repay its Term Loan Facility.

Customer acquisition efficiency remained strong, with a CAC payback period of 9.3 months. The company’s self-serve model keeps onboarding costs low.

Sell-side analysts project revenue growth of 23% over the next 12 months, an improvement on the two-year trend.

The five-year compounded annual revenue growth rate stands at 22.8%, with annualized growth of 15.4% over the past two years.

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