Shares of DigitalOcean Holding Inc. rocketed almost 29% today after the developer-oriented cloud infrastructure provider reported earnings and revenue beats in its fiscal second quarter this morning and also gave an outlook ahead of expectations.

For the quarter that ended on June 30, DigitalOcean reported adjusted earnings per share of 59 cents, up from 48 cents in the same quarter of 2024, on revenue of $219 million, up 14% year-over-year. Both figures were solid beats, as analysts had been expecting earnings of 47 cents on revenue of $216.7 million.

DigitalOcean’s “annual run-rate revenue” in the quarter was $875 million, up 14% year-over-year, gross profit was $131 million, up 15%, and net cash from operating activities was $92 million, up from $71 million in the second quarter of 2024.

Business highlights in the quarter included strong adoption of DigitalOcean’s artificial intelligence offerings and continued growth within its higher-spending customer segments.

Revenue from customers spending more than $500 monthly, what DigitalOcean refers to as “Scalers+” rose 35% year-over-year and now accounts for nearly a quarter of total revenue. The group also saw a net dollar retention rate of 109%, above the 99% overall company rate.

DigitalOcean made the Gradient AI Platform, a new AI platform designed to streamline access to GPU infrastructure and foundational models generally available. Gradient AI Platform is a managed AI platform that enables developers to combine their data with foundation models from Anthropic PBC, Meta Platforms Inc., Mistral AI SAS and OpenAI to add customized Generative AI agents to their applications.

The company also partnered with Advanced Micro Devices Inc. to provide expanded capabilities through GPU Droplets and the AMD Developer Cloud. The company’s AI push helped AI-related revenue to more than double year-over-year, reflecting growing traction among developers and startups building AI-driven applications.

On the general products and features front, DigitalOcean shipped more than 60 new product features and enhancements across its compute, storage, networking and developer experience categories.

“We delivered another quarter of solid performance across both AI and core cloud,” Chief Executive Paddy Srinivasan said in the company’s earnings release. “Total revenue grew 14% year-over-year, we achieved the highest incremental ARR since Q4 of 2022 and we more than doubled our AI/ML revenue year-over-year.”

For its fiscal third quarter, DigitalOcean expects adjusted earnings per share of 45 to 50 cents on revenue of $226 million to $227 million. Both figures at the midpoint were ahead of the 47 cents per share on revenue of $223.19 million expected by analysts.

For the full year, the company expects adjusted earnings of $2.05 to $2.10 per share and revenue of $888 million to $892 million. Once again, both figures were ahead of what analysts had forecast — $1.99 per share and revenue of $880.81 million.

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