DigitalOcean CEO on earnings: Pursuing the AI infrastructure trade but doing it profitably

Summary

DigitalOcean CEO Paddy Srinivasan discusses the company's pivot to AI infrastructure, emphasizing record growth, profitability, and disciplined investment. He highlights 29% cloud revenue growth, 800% AI inference revenue increase, and a 50% revenue growth projection for next year, while maintaining positive cash flow and strong margins. The company targets AI-native startups, positioning itself as a profitable AI play distinct from hyperscalers.

• DigitalOcean reported top- and bottom-line beats, with cloud revenue up 29% year-over-year, doubling its growth rate.
• AI infrastructure is a major driver; AI inference revenue surged 800% YoY and now exceeds a $200M run rate.
• The company pivoted to serve AI-native startups, comparing them to early-stage Netflix or Uber, rather than large enterprises.
• DigitalOcean projects 50% revenue growth next year while delivering positive free cash flow and 24% adjusted operating margins.
• CEO stressed disciplined capital allocation, contrasting with the massive capex of hyperscale cloud providers.
• Shares are up 400% over the past year and rose 6% on the earnings release.