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BROOMFIELD, Colo. - DigitalOcean Holdings, Inc. (NYSE:DOCN), a cloud infrastructure provider with a market capitalization of $2.8 billion and annual revenue of $833 million, announced Monday the closing of its $625 million offering of 0.00% convertible senior notes due 2030, which included the full exercise of the initial purchasers’ option to purchase an additional $75 million in notes.
The cloud services provider generated approximately $605.6 million in net proceeds after deducting discounts, commissions, and estimated offering expenses. The notes will mature on August 15, 2030, unless earlier converted, redeemed, or repurchased.
DigitalOcean plans to use $83.9 million of the proceeds to pay for capped call transactions with financial institutions. The remainder, combined with cash on hand and $380 million in term loans, will fund the repurchase of approximately $1.19 billion aggregate principal amount of its convertible senior notes due 2026 for $1.13 billion in cash.
The company also announced a new stock repurchase program authorizing up to $100 million in common stock buybacks through July 31, 2027. According to InvestingPro, management has been actively buying back shares, and the stock appears undervalued based on their Fair Value analysis. The stock has experienced significant volatility, declining 33.5% over the past six months, potentially presenting an opportunity for investors.
"We are pleased to have successfully raised $625 million in convertible notes - marking a major milestone as we have completed our objective of securing the financing to retire our 2026 convertible notes," said Matt Steinfort, Chief Financial Officer at DigitalOcean.
The notes offering was not registered under the Securities Act and was conducted through private transactions exempt from registration requirements.
DigitalOcean provides cloud infrastructure services to more than 600,000 customers globally, according to the company’s press release statement. The company maintains strong financials with a healthy current ratio of 2.27 and a robust gross profit margin of 60.4%. For deeper insights into DigitalOcean’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks.
In other recent news, DigitalOcean Holdings Inc. reported its second-quarter earnings for 2025, exceeding market expectations. The company achieved an earnings per share of $0.59, surpassing the forecasted $0.47, representing a surprise of 25.53%. Revenue for the quarter reached $219 million, slightly above the anticipated $216.7 million. In a separate development, DigitalOcean has priced a $550 million offering of 0.00% convertible senior notes due 2030, which increased from the initially announced $500 million. The offering is expected to close soon, with net proceeds estimated at approximately $532.4 million, or $605.6 million if additional notes are purchased. Previously, DigitalOcean had announced its intent to offer $500 million in convertible senior notes in a private placement to qualified institutional buyers. These senior unsecured notes will mature on August 15, 2030, with interest payable semi-annually, unless earlier converted, redeemed, or repurchased. Noteholders will have conversion rights under certain circumstances, with the company settling conversions through cash, shares of common stock, or a combination of both.
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