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.
$DOCN Q1’26 EARNINGS HIGHLIGHTS
???? Revenue: $258M (Est. $249.68M) ????; +22% YoY
???? Adj. EPS: $0.44 (Est. $0.26) ????
???? ARR: $1.032B; +22% YoY
???? AI Customer ARR: $170M; +221% YoY
???? Million+ Dollar Customer ARR: $183M; +179% YoY
???? Incremental Organic ARR: Record $62MQ2 Guide:… pic.twitter.com/NxthJb4AtK
— Wall St Engine (@wallstengine) May 5, 2026
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.
CEO Paddy Srinivasan credited the platform’s positioning for the shift toward inference and agentic AI workloads. “The Inference and agentic era needs its own cloud. DigitalOcean built it,” he said.
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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