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BROOMFIELD, Colo. - DigitalOcean Holdings, Inc. (NYSE:DOCN), currently trading at $33.05 and showing strong financial health according to InvestingPro analysis, announced Monday its intent to offer $500 million in convertible senior notes due 2030 in a private placement to qualified institutional buyers. The cloud services provider, which has demonstrated robust revenue growth of 13.3% over the last twelve months, appears undervalued based on InvestingPro’s Fair Value calculations. The cloud services provider also plans to grant initial purchasers an option to buy up to an additional $75 million in notes.
The 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 DigitalOcean settling conversions through cash, shares of common stock, or a combination of both.
DigitalOcean intends to use the proceeds to fund capped call transactions and to repurchase a portion of its existing 0.00% convertible senior notes due 2026. The company plans to finance these repurchases using offering proceeds, cash on hand, and up to $500 million in term loans under its credit facility. With a healthy current ratio of 2.27, InvestingPro data shows the company maintains strong liquidity to meet its short-term obligations.
In connection with the offering, DigitalOcean expects to enter into capped call transactions with financial institutions to potentially reduce dilution from note conversions.
Concurrent with the offering, the company plans to adopt a new $100 million stock repurchase program running through July 31, 2027. The repurchases would be conducted through various methods including open market purchases and 10b5-1 plans.
The notes and any shares issuable upon conversion have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption.
The announcement was made in a press release statement from the company. DigitalOcean describes itself as a cloud platform serving over 600,000 customers globally. The company has demonstrated solid financial performance with a gross profit margin of 60.4% and has seen its stock surge by over 22% in the past week. For deeper insights into DigitalOcean’s financial health and growth prospects, including 11 additional exclusive ProTips, check out the comprehensive research available on InvestingPro.
In other recent news, DigitalOcean Holdings Inc. reported its second-quarter earnings for 2025, exceeding market expectations. The company posted an earnings per share (EPS) of $0.59, surpassing the forecasted $0.47, which represents a surprise increase of 25.53%. Revenue for the quarter was $219 million, slightly above the anticipated $216.7 million. These results highlight the company’s strong financial performance, contributing to a boost in investor confidence. Analysts from various firms have noted the positive outlook due to these earnings results. This development is part of a series of recent updates concerning DigitalOcean’s financial activities. The company’s ability to exceed earnings and revenue projections is a crucial indicator for investors.
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