DigitalOcean Holdings, Inc. Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Overall Performance: DigitalOcean delivered strong Q2 2026 results with accelerating growth and robust profitability. Revenue reached $281 million, representing 29% YoY growth (more than double the ~14% growth in Q2 2025). The company reported a record $93 million in incremental ARR (nearly triple the Q2 2025 amount). Profitability remained solid with 40% adjusted EBITDA margin, 24% adjusted operating income margin, and 17% trailing 12-month adjusted free cash flow margin.

Key Growth Metrics (YoY Comparisons)

  • ARR from $100k+ customers: +98% (vs. +37% in Q2 2025)
  • ARR from $500k+ customers: +160% (vs. +64% in Q2 2025)
  • ARR from $1M+ customers: +214% (vs. +92% in Q2 2025)
  • AI customer ARR: $234 million (+212% YoY); 85% from non-bare metal services
  • Inference services: ~800% YoY growth; now >70% of total AI customer ARR
  • Remaining performance obligations (RPO): $894 million (+12x YoY), 3.7-year average life
  • Top 25 customers: 20% of ARR (broad diversification maintained)

AI Native Cloud & Inference Engine Highlights

  • Inference engine launched late April 2026; >6,000 customers added with ~60% average monthly customer growth and 30x token volume increase in 60 days.
  • Open weight models rose from ~15% to ~75% of token volume post-launch.
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Operator: Hello, everyone. Thank you for joining us, and welcome to the DigitalOcean Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Radu Patrichi, Head of Investor Relations. Radu, please go ahead. Radu Patrichi: Thank you, and good morning. Thank you all for joining us today to review DigitalOcean's Second Quarter 2026 Results. Joining me on the call today are Paddy Srinivasan, our Chief Executive Officer; and Matt Steinfort, our Chief Financial Officer. For those of you following along, an accompanying slide presentation is available on the webcast. Before we begin, let me remind you that certain statements made on today's call may be considered forward-looking, which reflect management's best judgment based on currently available information. Our actual results may differ materially from those projected in these forward-looking statements, including our financial outlook. I direct your attention to the risk factors contained in our SEC filings as well as those referenced in today's press release that is posted on our website. DigitalOcean expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements made today. Additionally, non-GAAP financial measures will be discussed on this conference call. Reconciliations to the most comparable GAAP financial measures can be found in today's earnings press release as well as in our investor presentation that
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