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BROOMFIELD, Colo. - DigitalOcean Holdings, Inc. (NYSE:DOCN), a cloud infrastructure provider with a market capitalization of $2.69 billion, has priced a $550 million offering of 0.00% convertible senior notes due 2030, according to a press release statement. The offering, which was increased from the previously announced $500 million, is expected to close on August 14. According to InvestingPro analysis, the company maintains a strong financial health rating with liquid assets exceeding short-term obligations.
The notes will be senior, unsecured obligations maturing on August 15, 2030, with no regular interest payments. DigitalOcean expects to generate approximately $532.4 million in net proceeds from the offering, or $605.6 million if initial purchasers exercise their option to purchase additional notes. The company’s solid financial position is reflected in its healthy current ratio of 2.27 and revenue growth of 13.29% over the last twelve months.
The company plans to use $73.81 million of the proceeds to fund capped call transactions and the remainder, along with cash on hand and $440 million in term loans, to repurchase approximately $1.19 billion aggregate principal amount of its existing 0.00% convertible senior notes due 2026.
The notes will be convertible at the option of noteholders under specific conditions before May 15, 2030, and at any time thereafter until maturity. The initial conversion rate is 25.5317 shares per $1,000 principal amount, equivalent to a conversion price of approximately $39.17 per share, representing a 32.5% premium to the August 11 closing price.
Concurrent with the offering, DigitalOcean has adopted a new $100 million stock repurchase program set to expire on July 31, 2027. InvestingPro data reveals that management has been actively buying back shares, and the stock currently appears undervalued based on InvestingPro’s Fair Value analysis. For deeper insights into DigitalOcean’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers this and over 1,400 other US stocks.
The notes are being offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The notes and any shares issuable upon conversion have not been registered under the Securities Act and may not be offered or sold without registration or an applicable exemption.
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, and generated a revenue of $219 million, slightly above the anticipated $216.7 million. Additionally, DigitalOcean announced plans to offer $500 million in convertible senior notes due in 2030, with an option for initial purchasers to buy an additional $75 million in notes. These notes are intended for qualified institutional buyers and will mature on August 15, 2030, with interest payable semi-annually. Noteholders will have the right to convert under certain circumstances, with conversions settled in cash, shares, or a combination. These developments highlight the company’s strategic financial maneuvers and robust financial performance.
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