DigitalOcean(DOCN) - 2025 Q4 - Annual Report

Customer Base and Revenue Growth - As of December 31, 2025, DigitalOcean had approximately 21,000 Digital Native Enterprise (DNE) Customers, accounting for 60% of total revenue for the year[30]. - Net dollar retention (NDR) increased from 98% in 2024 to 100% in 2025, indicating strong revenue growth from existing customers[32]. - As of December 31, 2025, the company had approximately 21,000 DNE Customers, an increase from approximately 18,000 as of December 31, 2024[55]. - Annual run-rate revenue (ARR) increased from $723 million in 2023 to $970 million in 2025, reflecting a growth of 34%[55]. - The top 25 customers contributed 10%, 8%, and 7% of total revenue in 2025, 2024, and 2023 respectively, indicating no material customer concentration[55]. - DigitalOcean's existing customer base represents a significant opportunity for further sales expansion through increased usage and adoption of additional product offerings[32]. Product Offerings and Innovations - In 2025, DigitalOcean released new AI products and platform capabilities, including Gradient® AI GPUs from AMD and NVIDIA, and enhancements to the Gradient® AI Platform[36]. - The company completed acquisitions of Paperspace and Cloudways, enhancing its AI/ML offerings and Managed Hosting services[36]. - The company offers a comprehensive Gradient® AI platform for building, testing, and deploying AI applications, enhancing its product portfolio[51]. - The Managed Databases offering provides fully-managed solutions for SQL and NoSQL databases, catering to diverse customer needs[44]. - The company’s Managed Hosting service is designed for growing technology companies, simplifying cloud infrastructure management[44]. - The DigitalOcean Marketplace features over 350 pre-configured applications, streamlining deployment for developers[49]. Sales and Marketing Strategy - The company plans to invest in sales and marketing capabilities while maintaining efficiency in sales and marketing expenses as a percentage of revenue[54]. - The company has invested in a dedicated AI sales team to drive adoption among new AI Native and Cloud Native DNE Customers[33]. - DigitalOcean's pricing model is transparent and predictable, aimed at eliminating surprises for customers and enhancing their development experience[32]. Infrastructure and Expansion Plans - The company plans to open new data center facilities in 2026 in Memphis, Richmond, and Kansas City, expanding its global infrastructure[35]. Security and Compliance - The company emphasizes security with a dedicated team and a cybersecurity risk management program to protect customer data and maintain service availability[39]. - Compliance with existing or future governmental regulations could have a material impact on the company's business in subsequent periods[68]. Financial Position and Capital Management - As of December 31, 2025, the company had cash and cash equivalents of $254.5 million, primarily held for working capital purposes[388]. - The company had $380.0 million outstanding under the 2025 Credit Facility as Term Loan A as of December 31, 2025[389]. - In August 2025, the company issued 2030 Convertible Notes with an aggregate principal amount of $625.0 million[390]. - The company partially repaid its 2026 Convertible Notes with an aggregate outstanding principal amount of $312.3 million as of December 31, 2025[390]. - The company used a tax rate of 16% for the years ended December 31, 2025 and 2024, and 17% for the year ended December 31, 2023[392]. - The company’s sales are primarily denominated in U.S. dollars, reducing significant foreign currency risk[393]. - The company has not entered into any hedging arrangements for foreign currency risk but may consider it in the future[393]. Intellectual Property - The company owns 13 registered trademarks in the U.S. and 24 in various non-U.S. jurisdictions as of December 31, 2025[65]. - The company has six issued patents scheduled to expire in 2039 and 2040[65]. Workforce - The company had a total of 1,462 employees as of December 31, 2025, with 848 located outside the United States[61].