DigitalOcean Holdings

DOCN

Software - Infrastructure · Technology

Price

$118.91

+1.89 (+1.62%)

Market Cap

$12.41B

Winston Score

Winston is curious

A decent business — some strong pillars, some weaker.

Share count falling — buybacks

−1.7% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 107.2M (2021) → 105.3M (2025)

DigitalOcean is a cloud computing company that helps small businesses, startups, and individual developers build and run apps and websites on the internet. Instead of buying their own servers, customers rent computing power, storage, and networking tools from DigitalOcean's data centers. The company competes in the cloud infrastructure industry, where it focuses specifically on smaller customers rather than large corporations.

DigitalOcean makes money by charging customers based on how much computing power and storage they use each month. It operates data centers across North America, Europe, and Asia, and serves over 600,000 customers worldwide. Its main advantage is offering simpler, more affordable pricing compared to giants like Amazon Web Services, Microsoft Azure, and Google Cloud, which tend to target large enterprises. The key growth driver is expanding its AI and machine learning tools for developers, but the main risk is that larger cloud providers have far more resources and could undercut DigitalOcean's pricing or match its simplicity over time.

Winston Score History

Politician Trades

1 trades / 12mo

0 Congressional buys and 1 sell on DOCN in the last 12 months.

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Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+22.4% YoY

YoY Growth Rate

Steady revenue growth

EPS Growth

-59.5% YoY

YoY Growth Rate

Earnings declining

R&D Spend

$162M/ year

↑ Rising (+13% vs prior year)

17.9% of revenue

In line with sector average (15%)

Investing heavily in future products and technology

Insider Activity

19.6%ownership

→ Flat

Insiders holding steady — not selling despite ability to

Cash Position

Cash flow positive

$741M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Company generates more cash than it spends — no dilution risk from fundraising

Heavy R&D investment

DigitalOcean Holdings is putting 18% of revenue into R&D and that number is rising. And they're generating enough cash to self-fund it.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

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Quality

Gross Margin

56.1%

Premium pricing power — 56.1% gross margin

Operating Margin

14.2%

Healthy — 14.2% operating margin

ROCE

2.0%

Weak — 2.0% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

+17.6%

Fast-growing sales (17.6% YoY)

EPS YoY

+117.6%

Earnings growing fast (117.6% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency

6/8 quarters

Earnings grew in most of the last 8 quarters

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Cash Flow

Cash Conversion

98%

Turns 98% of profit into real cash

FCF Margin

4.0%

Thin free cash flow (4.0%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity

1.01

Elevated debt (1.01)

Interest Cover

98.25x

Comfortably covers interest (98.2x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

45.9x

Expensive — P/E 45.9

P/E over 35. The market is pricing in heavy, sustained growth.

P/E vs Forward

-39.4

SLOWING

Earnings expected to fall — forward P/E higher than today

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Dividends

Not applicable for this business.

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