DigitalOcean Reports 14% Revenue Growth to $210.7 Million in Q1 2025

DigitalOcean Holdings, Inc. reported a significant increase in financial performance for the first quarter of 2025, with total revenue reaching $210.7 million, a 14% rise from $184.7 million in the same period last year. The company's gross profit also improved, amounting to $129.4 million, compared to $109.1 million in Q1 2024. This growth was primarily driven by a 14% increase in average revenue per user (ARPU), which rose to $108.56 from $95.13, and a 16% increase in revenue from higher spend customers, who now account for 88% of total revenue.

Operating expenses decreased by 6% to $91.8 million, down from $97.6 million in the previous year. Notably, general and administrative expenses saw a substantial decline of 28%, primarily due to reduced personnel costs associated with prior acquisition-related compensation. In contrast, research and development expenses increased by 20% to support ongoing product innovation and expansion. The company reported a net income of $38.2 million, significantly up from $14.1 million in Q1 2024, resulting in a diluted net income per share of $0.39, compared to $0.15 in the prior year.

DigitalOcean's customer base continues to expand, with approximately 171,000 higher spend customers as of March 31, 2025, up from 157,000 a year earlier. The company serves a diverse clientele across 190 countries, with 37% of revenue generated from North America, 28% from Europe, and 24% from Asia. The annual run-rate revenue (ARR) also increased to $843 million, up from $739 million in the previous year, reflecting the company's successful strategy to attract and retain higher spending customers.

In terms of strategic developments, DigitalOcean has focused on enhancing its product offerings, particularly in artificial intelligence and machine learning, following its acquisitions of Paperspace and Cloudways. The company has also launched new products, including GPU Droplets and a GenAI platform, to meet the evolving needs of its customers. Looking ahead, DigitalOcean plans to continue investing in its platform and expanding its market presence, with a strong emphasis on customer acquisition and retention strategies.

The company ended the quarter with $360.4 million in cash and cash equivalents, providing a solid liquidity position to support its operational and capital expenditure needs. DigitalOcean's management remains optimistic about future growth, citing a commitment to innovation and customer engagement as key drivers of its ongoing success in the competitive cloud computing market.