Shares of DigitalOcean Holdings Inc. rocketed more than 40% today after the developer-oriented cloud infrastructure provider topped Wall Street targets in its fiscal 2026 first quarter.

It also lifted its revenue outlook for both 2026 and 2027 on what it called accelerating demand for inference and agentic artificial intelligence workloads.

For the quarter that ended on March 31, DigitalOcean reported adjusted earnings per share of 44 cents, down from 56 cents per share in the same quarter of last year, on revenue of $258 million, up 22% year-over-year. Analysts had been expecting earnings of 26 cents per share and revenue of $249.68 million.

The headline numbers were overshadowed by the company’s artificial intelligence metrics. AI customer annual run-rate revenue jumped 221% from a year earlier, to $170 million, while annual recurring revenue from customers spending more than $1 million annually rose 179%, to $183 million.

Total annual recurring revenue ended the quarter at $1.03 billion, also up 22%. The company added a record $62 million in incremental organic annual recurring revenue during the quarter. It ended the quarter with more than 650,000 customers across 20 data centers in five regions.

“The inference and agentic era needs its own cloud,” Chief Executive Officer Paddy Srinivasan said in the company’s earnings release, pointing to the April debut of the DigitalOcean AI-Native Cloud, a platform spanning infrastructure, core cloud services, inference, data and managed agents. The launch was paired with the acquisition of agentic AI infrastructure startup Katanemo Labs Inc. and the rollout of an Inference Engine with a new Inference Router for scaling agentic workloads.

DigitalOcean said it added about 60 megawatts of incremental committed data center capacity during the quarter, set to come online through 2027. Remaining performance obligations jumped to $243 million from $14 million a year earlier, with $167 million expected to be recognized over the next 12 months.

The company raised its full-year 2026 revenue guidance to a range of $1.13 billion to $1.145 billion, growth of 25% to 27% and now expects 2027 revenue to grow more than 50%, up from prior guidance of about 30%. For its fiscal 2026 second quarter, DigitalOcean said it expected adjusted earnings per share of 20 to 23 cents and revenue of $272 million to $274 million.

DigitalOcean also closed a follow-on offering of 11.9 million shares during the quarter, raising net proceeds of $888 million, $500 million of which was used to repay term loan principal. The company’s cash and equivalents stood at $741 million as of March 31.

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