DigitalOcean (DOCN) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue grew 13% year-over-year to $205 million, with full-year revenue at $781 million, driven by product innovation and higher-spend customer cohorts.

• Net dollar retention improved to 99% in Q4, up 300 bps year-over-year, with traditional cloud services reaching 100% NDR for the first time since June 2023.

• Adjusted EBITDA margin remained strong at 42% for both Q4 and the full year, with adjusted free cash flow margin at 18% for Q4.

• Scalers Plus customers (>$100K ARR) grew 17% in count and 37% in revenue year-over-year, now representing 22% of total revenue.

• AI/ML platform exceeded growth expectations, with Q4 ARR growth north of 160% and significant customer adoption of new AI products.

Financial highlights

• Q4 revenue: $205 million, up 13% year-over-year; full-year revenue: $781 million; annual run rate revenue (ARR): $820 million.

• Gross margin for Q4 was 62%, up 500 basis points year-over-year; full-year gross margin was 60%, up 300 basis points.

• Adjusted EBITDA for Q4 was $86 million, up 17% year-over-year; margin at 42%.

• Adjusted free cash flow for Q4 was $37 million (18% margin); full-year adjusted free cash flow was $135 million (17% margin).

• Non-GAAP diluted EPS for Q4 was $0.49, up 11% year-over-year; full-year non-GAAP diluted EPS was $1.92, up 21%.

Outlook and guidance

• Q1 2025 revenue expected between $207–209 million, ~13% year-over-year growth.

• Full-year 2025 revenue guidance: $870–890 million, ~13% growth at midpoint.

• Adjusted EBITDA margin for 2025 expected at 37–40%; adjusted free cash flow margin at 16–18%.

• Q1 2025 adjusted free cash flow margin will dip due to front-loaded investments but expected to recover in subsequent quarters.

• Non-GAAP diluted EPS for 2025 expected at $1.85–1.95.