Q4 2025 Earnings and Investor Update Presentation February 24, 2026 2026 DigitalOcean. All rights reserved 1 Safe Harbor This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our financial outlook. These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause actual results or ou ...

Heroku, which was acquired by Salesforce (NYSE: CRM) in 2011, was one of the original platform-as-a-service providers. A PaaS platform like Heroku lets developers develop, deploy, and manage apps without having to fiddle with the underlying infrastructure. PaaS platforms are a dime a dozen today, but Heroku is still a major player. Gartner recently named Heroku a leader among cloud-native application platforms for 2025. Despite that leadership position, Salesforce is pivoting away from Heroku. In an anno ...

Core Viewpoint - Cantor Fitzgerald upgraded DigitalOcean Holdings, Inc. (DOCN) stock to "Overweight" from "Neutral," raising the price target to $68 from $47, reflecting approximately 6 times the updated revenue targets for calendar year 2027 [1]. Group 1: Business Growth and Strategy - DigitalOcean Holdings, Inc. is expected to continue scaling its business, particularly by acquiring large customers, as evidenced by its recent partnership with Character.ai [2]. - The company's digital-native and developer-first approach, which aims to provide hyperscale services to the mass market, positions it well for profitable growth and potential stock re-rating [3]. Group 2: Analyst Insights - BofA analyst Wamsi Mohan raised the price target for DigitalOcean Holdings, Inc. to $72 from $60 while maintaining a "Buy" rating, citing the early adoption of agentic AI and its applications as a reason for the increased valuation [4].

Core Insights - Artificial intelligence presents a significant opportunity for DigitalOcean, which is expanding its portfolio of AI services tailored for small and mid-sized businesses (SMBs) [1][2]. Group 1: Company Overview - DigitalOcean is valued at $5.7 billion and focuses exclusively on serving SMBs, differentiating itself from larger cloud providers like Amazon and Microsoft [2]. - The company has seen its AI revenue double in each of the last five reported quarters, indicating strong growth potential [3][10]. Group 2: AI Services and Market Position - DigitalOcean provides affordable AI services, making advanced technology accessible to even the smallest businesses, and claims to be 75% cheaper than larger competitors [6]. - The company has developed an AI platform called Gradient, which allows SMBs to utilize large language models from third parties like OpenAI, facilitating AI software development [7]. Group 3: Financial Performance - DigitalOcean generated $659 million in total revenue during the first three quarters of 2025, reflecting a 14.5% year-over-year increase, with significant contributions from its AI business [9]. - The company's operating income doubled to $118.2 million during the same period, showcasing effective cost management alongside revenue growth [11]. Group 4: Stock Valuation - Despite a 41% increase in stock price in 2025 and an additional 27% in early 2026, DigitalOcean's price-to-sales (P/S) ratio stands at 7.2, below its historical average [12]. - The stock's price-to-earnings (P/E) ratio of 24.9 is lower than the Nasdaq-100 technology index's P/E ratio of 31.5, indicating attractive valuation relative to larger companies in the cloud and AI sectors [14]. Group 5: Future Outlook - The upcoming fourth-quarter earnings report on February 24 is anticipated to further boost the stock, especially if AI revenue continues to double and management provides positive forward guidance [15].

Core Insights - The article discusses the 14 best cloud computing stocks to buy currently, highlighting the significant growth and potential of the cloud computing industry [1][3]. Industry Overview - Over 95% of enterprise organizations have a cloud footprint, with public cloud workloads increasing from 32% in 2018 to a projected 52% by 2025 [1]. - The cloud sector is identified as one of the 18 future arenas of competition, potentially generating revenues between $29 trillion and $48 trillion by 2040 [2]. - Public cloud consumption has surged from approximately $90 billion in 2019 to an expected $335 billion by 2024, with the industry projected to achieve revenues of $1.6 trillion to $3.4 trillion by 2040 [2]. Company Analysis: DigitalOcean Holdings, Inc. - DigitalOcean Holdings, Inc. (NYSE:DOCN) is recognized as one of the top cloud computing stocks, with 30 hedge fund holders [7]. - Cantor Fitzgerald upgraded DigitalOcean's stock rating to "Overweight" from "Neutral," raising the price target from $47 to $68, reflecting about 6 times the updated revenue targets for CY27 [7][10]. - The company is expected to scale its business effectively, evidenced by its recent acquisition of Character.ai, which is anticipated to enhance traction with its GPU-led platform-as-a-service [8]. - DigitalOcean's focus on a digital-native and developer-first approach positions it well for profitable growth and potential stock re-rating [9]. - BofA analyst raised the price target for DigitalOcean's stock to $72 from $60 while maintaining a "Buy" rating, citing the early adoption of agentic AI and its traction within developer communities [10].

Core Viewpoint - Barclays believes that the current market panic regarding generative AI (GenAI) is based on a "worst-case scenario" assumption, predicting the extinction of traditional software companies, which mirrors the panic seen a decade ago with the rise of Amazon AWS [1][2] Historical Context - The current investor sentiment in the software sector is extremely negative, with a simplistic investment logic of buying AI newcomers and shorting traditional software [2] - This situation is reminiscent of the panic surrounding AWS's growth, where established software companies faced similar doomsday predictions, yet none went bankrupt due to AWS competition [4][5] Market Dynamics - Historical data shows that while AWS gained significant market share, it did not lead to the extinction of mature software companies; instead, these companies evolved and thrived [4][5] - The market's current indiscriminate sell-off of software stocks, with the IGV (software ETF) down approximately 24% year-to-date, is viewed as irrational [6] Mispricing Opportunities - Barclays identifies significant mispricing opportunities in the current market, particularly for companies with strong core record systems and specific domain moats that are being undervalued [1][6] - The panic selling creates an opportunity for investors to identify industry leaders that have been unfairly punished [7] Defensive Sectors - Two defensive sectors highlighted are: 1. Owners of record systems, such as Salesforce and SAP, which hold core enterprise data and are difficult to replace [9] 2. Vertical SaaS companies, like Veeva Systems and Tyler Technologies, which possess deep domain-specific data moats [9] Company Performance - Notable company performances include: - CyberArk's market cap surged from $885 million to $22.516 billion, a 2443% increase [8] - Microsoft and Google also saw significant market cap growth, with increases of 1048% and 871%, respectively [8] - Traditional companies like Teradata experienced a 73% decline, while others like Tableau and Splunk were acquired at high premiums [8]

Core Insights - The article discusses the investment potential of DOCN, highlighting a beneficial long position in its shares by the analyst [1]. Group 1 - The analyst expresses a personal opinion on DOCN's stock without receiving compensation from the company [1]. - There is an emphasis on the uncertainty of financial predictions and projections made by analysts [2]. - The article clarifies that past performance does not guarantee future results, and no specific investment advice is provided [3].

Group 1: Nebius Group Overview - Nebius Group (NASDAQ: NBIS) is expected to report triple-digit revenue growth for both last year and this year, making it an attractive stock option [1] - Despite the anticipated growth, Nebius is currently unprofitable and is not expected to achieve profitability in the near future, with analysts predicting that losses will widen before they contract [2] Group 2: DigitalOcean Overview - DigitalOcean (NYSE: DOCN) is presented as a safer investment alternative, being already profitable and likely to remain so indefinitely [3] - DigitalOcean serves around 640,000 paying customers, including notable clients like video game developer Double Eleven and travel-planning website Framey [4] - The company has successfully tailored its offerings to meet the needs of smaller customers at affordable prices, distinguishing itself from larger competitors like Google and Microsoft [5] Group 3: DigitalOcean's Business Model - DigitalOcean's services are designed to scale, allowing smaller customers to gradually enter the artificial intelligence (AI) space at a low initial cost [6] - Customers can test DigitalOcean's technology for as little as $50 per month, with the majority spending several hundred to a few thousand dollars monthly [7] - There was a significant 72% year-over-year increase in the number of users reporting annual recurring revenue exceeding $1 million as of the third quarter of last year [8]

Core Insights - The article compiles significant research calls from Wall Street that are influencing market movements, highlighting upgrades for various companies based on their recent performance and future potential [1] Group 1: Company Upgrades - B. Riley upgraded Snap (SNAP) to Buy from Neutral with a price target of $10, citing early signs of progress in revenue growth from premium subscribers and higher margin advertising formats [2] - Seaport Research upgraded FuboTV (FUBO) to Buy from Neutral with a price target of $3, viewing the recent drop in shares post-merger with Disney's Hulu Live as an opportunity amidst uncertainty [2] - Wolfe Research upgraded Zoom Communications (ZM) to Outperform from Peer Perform with a price target of $115, believing the company's growth is set to reaccelerate, particularly in its contract center and phone business, along with emerging voice AI [2] - Jefferies upgraded Celanese (CE) to Buy from Hold with a price target of $86, indicating that despite expected choppy earnings in the first half of 2026, it is a good time to buy the dips [2] - Cantor Fitzgerald upgraded DigitalOcean (DOCN) to Overweight from Neutral with a price target of $68, emphasizing the company's developer-first approach to hyperscale services as well positioned for market growth [2]

Group 1 - DigitalOcean Holdings Inc. (NYSE:DOCN) is recognized as one of the best performing new tech stocks, with analysts raising price targets due to the success of its AI assistant, Clawdbot [1] - Bank of America increased its price target for DigitalOcean to $72 from $60, reflecting the company's strong position in the early stages of agentic AI adoption [1] - Barclays also raised its price target for DigitalOcean to $63 from $49, citing a favorable setup for software in 2026 amid stable macro and IT spending [2] Group 2 - Piper Sandler raised DigitalOcean's price target to $50 from $47, indicating a cautious outlook due to limited visibility and the need for the company to exceed growth projections [3] - DigitalOcean operates a cloud computing platform providing on-demand infrastructure and platform tools for developers across various regions, including North America, Europe, and Asia [4]