DigitalOcean (DOCN) ☆

DigitalOcean rents cloud computing to developers, smaller technology companies and, increasingly, AI-native companies. Its products are Droplet virtual machines, storage and networking; managed Kubernetes, databases and hosting (the Cloudways business); GPU Droplets and bare-metal GPUs; and an inference and AI-agent platform. The FY2025 10-K says it aims at 'the portion of the cloud market whose needs are not fully met by larger cloud providers'. It sells through a self-service model, with free 24/7 support and 'highly predictable pricing that is the same across regions and usage volumes'. Annual run-rate revenue (ARR) grew from $723 million in 2023 to $820 million in 2024 and $970 million in 2025. About 21,000 Digital Native Enterprise customers, those spending more than $500 a month, supplied 60% of 2025 revenue, and the top 25 customers made up 10%. By mid-2026 the business was turning toward AI. The Q2 2026 earnings presentation (2026-08-04) shows revenue up 29% and AI Customer ARR of $234M, up 212% and equal to 21% of total company ARR. This profile rates no moat: customers can leave without notice, the main rivals are far larger, and the AI growth is too new to show staying power.

Rating: none

Customers can leave easily, and the FY2025 10-K (filed 2026-02-24) says so: 'The majority of our contracts with our customers are based on our terms of service, which do not require our customers to commit to a specific contractual period, and which permit the customer to terminate their contracts or decrease usage of our products and services without advance notice.' The 10-K also reports that net dollar retention, the measure of revenue kept and grown from existing customers, 'increased from 98% in 2024 to 100% in 2025'. It says larger competitors 'have substantial competitive advantages as compared to us', among them 'the ability to bundle products together' and 'larger and more mature intellectual property portfolios'. DigitalOcean itself owned six issued patents at December 31, 2025. The developer community, free support and simple pricing described in the 10-K attract customers but do not lock them in, so the rating is none. Longer AI contracts are new. The Q2 2026 results release (2026-08-04, https://investors.digitalocean.com/news/news-details/2026/DigitalOcean-Announces-Second-Quarter-2026-Financial-Results/default.aspx) reports the 'first nine-figure annual customer commitments with leading AI-Natives, extending weighted average contract life from 1.6 years to over 3 years'. These are too recent to change the call. No independent market-share figure was found.

Type: none

The 10-K shows no durable source of advantage. Contracts give low switching costs, since customers can end or cut usage 'without advance notice'. Scale favours rivals: 'We compete primarily with large, diversified technology companies that focus on large enterprise customers', which the 10-K names as AWS, Azure, GCP, IBM Cloud, Alibaba Cloud and Oracle Cloud. In AI it competes with the same large companies and 'smaller more infrastructure-focused companies such as Coreweave and Lambda Labs'. It also faces 'competition with larger cloud computing companies and other consumers with respect to high demand equipment, such as GPUs'. Its intellectual property is thin: six issued patents, and 'We use open source software in our services.' The nearest thing to an intangible asset is the developer community. Hacktoberfest drew 'over 56,000 developers completing over 87,000 contributions in 2025', and the 10-K presents the community as a way to win customers rather than a barrier that keeps them.

Leadership: at parity

By its own account DigitalOcean is not a leader. The 10-K names AWS, Azure, GCP, IBM Cloud, Alibaba Cloud and Oracle Cloud as its primary competitors. It says larger competitors have 'greater name recognition and longer operating histories, larger sales and marketing and customer support budgets and resources'. Among 'smaller and/or niche cloud service providers' it names 'OVHcloud, Akamai (Linode), Hetzner, Vultr, and Contabo'. Its products cover the same categories as the larger clouds (virtual machines, managed Kubernetes and databases, serverless functions, GPUs and inference), packaged for smaller customers: 'Our goal is to address the core needs of our customer base instead of offering thousands of complex products and services that are more suited to large enterprise companies.' Growth is speeding up: the 2026-08-04 presentation says Q2 2026 revenue grew 29%, 'more than double a year ago'. No third-party share figure was found, and nothing cited places DigitalOcean ahead of the smaller providers or close behind the large ones, so the band is at parity rather than fast follower.

Pricing power: moderate

Gross profit kept pace with revenue from 2023 to 2025 but fell behind in Q2 2026; the 10-Q says 'The decline in gross margin resulted from incurrence of costs for data center expansions in advance of the ramp in revenue from new data centers.' SEC XBRL data carried in TradingPilot fundamentals show gross profit of $397,497 thousand on revenue of $692,884 thousand in 2023, $465,943 thousand on $780,615 thousand in 2024, and $539,592 thousand on $901,427 thousand in 2025. The 10-Q filed 2026-08-04 shows $154,662 thousand on $281,184 thousand for Q2 2026, against $130,945 thousand on $218,700 thousand in Q2 2025. The 10-K warns that 'certain customers may demand substantial price concessions', that 'in the future we may be required to reduce our prices or develop new pricing models', and that customers 'may reduce their usage to lower-cost pricing tiers'.

Curated moat judgment grounded in the cited source. source: sec.gov

Compare with…

Value-chain position

Layer: cloud & hyperscalers

• Upstream (suppliers): AMD, NVIDIA
• Downstream (customers): —
• Competitors: —

Downstream cloud provider: rents CPU and NVIDIA and AMD GPU capacity (H100, H200, HGX B300; MI300X, MI350X, MI355X per the Q2 2026 presentation) from leased data centers to developers, smaller technology companies and AI-native companies.

Derived from this company's mapped supply-chain edges and its industry layer.

Signal contribution editorial prior

The moat prior voted +0.01 on the long (~6-month) horizon at weight 0.20 — the swarm call there is neutral (score -0.12, conviction 0).

Editorial prior — subjective, not backtested. It is bounded (±0.6), low-confidence, and never votes on short/medium. See exactly how it voted →

Product lineup

Products & services with an editorial market-share band and technical barrier band — qualitative judgments tied to a cited basis, never invented figures.

What you're looking at

These charts plot DigitalOcean's reported income statement, cash flow, and balance sheet from its SEC filings through 2026-08-04. Every figure is as-filed XBRL — none of it is an estimate.

Over the reported window, revenue grew 254% to $901.4M (FY2019→FY2025); gross margin moved 52% → 60%; net income at $259.3M in FY2025.

Our model leans Low-confidence · Neutral on the stock over the medium horizon — a market-direction call, not an earnings forecast. See the Signal tab.

Filings

• 2025Q2 · filed 2026-08-04 source: sec.gov
• 2025Q4 · filed 2026-08-04 source: sec.gov
• 2026Q2 · filed 2026-08-04 source: sec.gov
• 2025Q3 · filed 2026-08-04 source: sec.gov
• 2025Q1 · filed 2026-05-05 source: sec.gov

Key ratios vs peers

Comparing against peers…

Institutional holders (13F, 2026Q2)

TradingPilot-computed columns (% of 13F, % shares out) are derived from as-filed 13F values; only name, shares and value are as-filed.