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DigitalOcean reported Q3 2025 earnings on Oct. 30 that shocked investors after eight consecutive quarters of beats.
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DOCN posted $0.00 diluted EPS versus the $0.49 consensus estimate, a complete miss that erased all expected profitability for the quarter.
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DigitalOcean (NYSE: DOCN) reported Q3 2025 earnings on Oct. 30 that shocked investors after eight consecutive quarters of beats. The company posted $0.00 diluted EPS versus the $0.49 consensus estimate, a complete miss that erased all expected profitability for the quarter. The stock initially absorbed the blow but has since recovered, trading near $39.20 as of November 4, up 3.3% for the week. The reversal raises critical questions about what derailed a company that had delivered outsized beats consistently and grown revenue 13.6% year over year through Q2.
DigitalOcean’s earnings surprise represents a dramatic reversal. The company had beaten EPS estimates by 25% or more in each of the prior four quarters, conditioning investors to expect continued outperformance. Q2 2025 delivered $0.59 EPS against a $0.47 estimate. Q1 2025 came in at $0.56 versus $0.44 expected. That pattern of consistent execution made the $0.49 miss in Q3 feel like a cliff rather than a stumble.
What makes the miss particularly jarring is the underlying business strength visible through June. Revenue reached $218.7 million in Q2, up 13.6% year over year. Net income hit $37.0 million with a 15.2% profit margin. Operating margin stood at a healthy 16.3%. The company was printing money. Something shifted between the end of Q2 and the close of Q3, but management commentary on the miss has not yet been fully detailed.
Despite the Q3 stumble, DigitalOcean’s fundamental profitability profile remains intact. Through the first nine months of 2025, the company has generated $1.15 in diluted EPS. Full year 2024 delivered $1.92 per share. That means Q3’s $0.00 result represents a one-quarter aberration, not a structural breakdown.
The balance sheet and cash generation tell a similar story. EBITDA for the trailing twelve months stands at $254 million on trailing revenue of $832.8 million. That 30.5% EBITDA margin reflects a business that converts revenue into cash efficiently. Free cash flow remains a strength, even if the earnings line stumbled.
Diluted EPS: $0.00 (vs. $0.49 expected); -100% vs. estimate
Prior Quarter EPS (Q2 2025): $0.59 (beat by 25.5%)
Trailing Twelve Month EPS: $1.23
Trailing Twelve Month Revenue: $832.8M
Trailing EBITDA: $254.0M
Profit Margin (Q2 2025): 15.2%
Operating Margin (Q2 2025): 16.3%
Revenue Growth (YoY through Q2): 13.6%
