DigitalOcean Issues $1.47B in Stock to Buy Back In-the-Money Converts
Serial Equity Issuance
Company Background
DigitalOcean (NYSE: DOCN) is a cloud infrastructure and AI platform provider that targets developers and digital-native businesses. The company generated $901 million in revenue for fiscal 2025, up 15% year-over-year, and has been repositioning itself as an AI-native cloud, reporting that AI Customer ARR grew 221% year-over-year in the first quarter of 2026 and that revenue grew approximately 29% in the second quarter.
The growth acceleration has been dramatic. Preliminary second-quarter 2026 results announced July 7 showed Remaining Performance Obligations expected to exceed $800 million — a more than 10-fold increase from the year-ago quarter — with more than $550 million of that RPO added in Q2 alone. Management raised its 2027 revenue growth outlook to over 50%, up from a 30% target communicated just a year earlier. The stock has responded accordingly.
To fund that expansion, DigitalOcean has been actively rebuilding its balance sheet. In August 2025 the company issued $625 million of 0.00% Convertible Senior Notes due 2030 with a conversion price of approximately $39.17 per share — and in March 2026 it raised approximately $889 million in a follow-on share offering at $74.40 per share, using a portion to repay its Term Loan A.
What Was Disclosed
On July 23, 2026, DigitalOcean completed a registered direct offering of 12,543,915 shares of common stock at $117.54 per share, raising approximately $1.474 billion. Simultaneously, the company used those proceeds — combined with cash on hand — to repurchase $471,828,000 principal amount of its outstanding 0.00% Convertible Senior Notes due 2030 from a limited number of holders in separate, privately negotiated transactions. The aggregate cash paid for the notes was approximately $1.474 billion, implying a repurchase price of roughly 3.1 times the face value of the debt retired.