DigitalOcean Q2 revenue reaches $281M as AI ARR rises 212%

DigitalOcean Q2 revenue 2026 reached $281 million, up 29% from a year earlier, as the cloud provider reported $234 million in annualized recurring revenue from AI customers. The company raised its full-year revenue outlook to $1.17 billion to $1.18 billion, saying demand for AI inference and cloud services is outstripping its currently available capacity.

The result, for the quarter ended June 30, exceeded the available pre-results revenue estimates of $274.73 million from Zacks and $276.9 million from Investing.com. Those published estimates differ, and DigitalOcean did not provide an official analyst-consensus comparison, so the size of the revenue beat cannot be pinned down from the available reporting.

DigitalOcean reported $1.125 billion in total ARR, also up 29% year over year, and a record $93 million of incremental ARR during the quarter. ARR measures the annualized recurring subscription or contracted revenue base, rather than quarterly revenue or profit.

What drove DigitalOcean’s Q2 revenue growth?

The company attributed the acceleration to larger customers and AI workloads. Revenue from customers spending at least $100,000 annually increased 98% and accounted for 35% of quarterly revenue. Revenue from the $1 million-plus customer group rose 214% and represented 23% of revenue, according to DigitalOcean.

Management said 85% of AI customer ARR came from inference services and core cloud offerings, rather than bare-metal infrastructure. On the earnings call, CEO Paddy Srinivasan said inference services grew nearly 800% year over year. He also said more than 6,000 customers had used the company’s Inference Engine since its late-April launch, while more than half of new AI customers added so far this year had also adopted core-cloud services.

DigitalOcean reported $114 million in adjusted EBITDA, up 27% year over year, for a 40% adjusted EBITDA margin. Net income attributable to common stockholders was $35 million, down 4%, while non-GAAP diluted earnings per share were $0.45.

Contracted demand and capacity plans

Remaining performance obligations, a measure of contracted revenue yet to be recognized, rose to $894 million from $71 million a year earlier. DigitalOcean said $366 million of that balance is expected to be recognized in the next 12 months. It also said it signed its first nine-figure annual customer commitments, extending the weighted average contract term from 1.6 years to more than three years.

To serve that demand, the company added 20 megawatts of committed data-center capacity expected to come online in 2027 and 2028, bringing its total committed capacity to about 155 megawatts. DigitalOcean said it is pursuing further capacity to support accelerating customer demand, while noting that customer retention and data-center and GPU investment are among the factors that could affect its forward-looking results.

• Third-quarter guidance: $304 million to $307 million in revenue, a 38% to 39% adjusted EBITDA margin, and $0.28 to $0.30 in non-GAAP diluted EPS.
• Full-year guidance: $1.17 billion to $1.18 billion in revenue, representing 30% to 31% growth, with a 38.5% to 39.5% adjusted EBITDA margin.

Management expects at least 35% year-over-year revenue growth in the fourth quarter and reiterated confidence in a prior estimate of more than 50% growth in 2027. That is not formal 2027 guidance. The investor question is whether capacity delivery, contracted commitments and inference usage convert into the growth rate DigitalOcean projects.

This story draws on original reporting from SiliconANGLE.