DigitalOcean Announces Third Quarter 2025 Financial Results

BROOMFIELD, Colo.--( BUSINESS WIRE)--DigitalOcean Holdings, Inc. (NYSE: DOCN), the comprehensive agentic cloud, today announced results for its third quarter ended September 30, 2025.

“DigitalOcean’s unified agentic cloud is driving accelerated momentum in Q3. Revenue increased 16% year over year and we delivered the strongest incremental organic ARR in our history,” said Paddy Srinivasan, CEO of DigitalOcean. “Our unified agentic cloud platform is emerging as a preferred destination for AI and digital native enterprises building and scaling AI workloads. The combination of rapid product innovation and continued go-to-market execution is driving durable, high-quality growth across our customer base. We are getting material traction with larger digital native enterprises, as our customers with greater than $100,000 in annual run-rate grew revenue 41% year over year, and represent 26% of total revenue, and our $1 million plus run-rate customers by themselves are over $100 million in ARR growing at 72%. Direct AI revenue more than doubled year over year for the fifth consecutive quarter. With healthy adjusted free cash flow margins, a strengthened balance sheet following the refinancing of our 2026 convertible notes, and continued operational discipline, we are raising both our 2025 revenue and adjusted free cash flow margin guidance. Our momentum gives us confidence to increase investment to deliver our 2027 18–20% growth targets a full year earlier in 2026.”

Third Quarter 2025 Financial Highlights:

Third Quarter 2025 Operational Highlights:

___________________

(1) Beginning in the fourth quarter of 2024, we changed our methodology for calculating customer count and ARR, and changed our customer categories. Prior periods have been recast to reflect the effects of the changes. Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for further details.

(2) Certain prior period amounts have been reclassified to conform with current period presentation. Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for further details.

Financial Outlook:

DigitalOcean is initiating guidance for the fourth quarter ending December 31, 2025 as follows:

For the full year 2025, we expect:

A reconciliation of non-GAAP outlook measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. For example, stock-based compensation expense-related charges are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. Accordingly, a reconciliation is not available without unreasonable effort and we are unable to assess the probable significance of the unavailable information, although it is important to note that these factors could be material to our results computed in accordance with GAAP.

Conference Call Information:

DigitalOcean will host a conference call today, November 5, 2025, at 8:00 a.m. ET to review its results. The conference call and presentation can be accessed by registering for the webcast at https://events.q4inc.com/attendee/652647103. A live webcast and replay of the conference call in addition to the presentation can be accessed from the DigitalOcean investor relations website at http://investors.digitalocean.com.

About DigitalOcean

DigitalOcean is the comprehensive agentic cloud, empowering developers at AI-native businesses and digital native enterprises to build full-stack AI applications with straightforward tools. Our mission is to simplify cloud computing and AI to allow builders to spend more time creating software that changes the world. More than 640,000 customers trust DigitalOcean to deliver the cloud, AI, and ML infrastructure they need to build and scale their organizations. To learn more about DigitalOcean, visit www.digitalocean.com.

Forward‑Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding our performance, including but not limited to statements in the section titled “Financial Outlook.” The forward-looking statements contained in this release and the accompanying earnings call referenced in this release are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause actual results or outcomes to be materially different from any future results or outcomes expressed or implied by the forward-looking statements. These risks, uncertainties, assumptions, and other factors include, but are not limited to: (1) fluctuations in our financial results make it difficult to project future results; (2) our ability to sustain profitability in the future; (3) our ability to expand usage of our platform by existing customers and/or attract new customers and/or retain existing customers; (4) the speed at which the market for our platform and solutions develops; (5) the success of the development and use of our artificial intelligence and machine learning (AI/ML) product offerings or use of third-party AI/ML-based tools; (6) our ability to release updates and new features to our platform and adapt and respond effectively to rapidly changing technology or customer needs; (7) our ability to control costs, including our operating expenses, and the timing of payment for expenses; (8) the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges; (9) breaches in our security measures allowing unauthorized access to our platform, our data, or our customers’ data; (10) the competitive markets in which we participate; (11) our ability to effectively integrate and retain new members of our executive leadership team and senior management; (12) the effects of acquisitions and their integration; (13) general market, political, economic, and business conditions, including changes in trade policies, such as trade wars, tariffs and other restrictions or the threat of such actions; (14) the impact of new accounting pronouncements; (15) our ability to control fraudulent registrations and usage of our platform, reduce bad debt and lessen capacity constraints on our data centers, servers and equipment; and (16) our customers’ ability to have continued and unimpeded access to our platform, including as a result of evolving laws and industry standards.

Further information on these and additional risks, uncertainties, assumptions and other factors that could cause actual results or outcomes to differ materially from those included in or contemplated by the forward-looking statements contained in this release are included under the caption “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent filings and reports we make with the SEC.

We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this release. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur. The forward-looking statements made in this release relate only to events as of the date on which the statements are made. We assume no obligation to, and do not currently intend to, update any such forward-looking statements after the date of this release.

About Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with non-GAAP financial measures including: (i) adjusted EBITDA and adjusted EBITDA margin; (ii) non-GAAP net income and non-GAAP diluted net income per share; and (iii) adjusted free cash flow and adjusted free cash flow margin; (iv) unlevered adjusted free cash flow and unlevered adjusted free cash flow margin. These measures are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In particular, adjusted free cash flow and unlevered adjusted free cash flow are not substitutes for cash provided by operating activities. Additionally, the utility of adjusted free cash flow and unlevered adjusted free cash flow as measures of our financial performance and liquidity are further limited as they do not represent the total increase or decrease in our cash balance for a given period. Our calculations of each of these measures may differ from the calculations of measures with the same or similar titles by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider each of these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable financial measure calculated in accordance with GAAP and our other GAAP results. A reconciliation of each of our non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP is set forth in the tables in the section “Reconciliation of GAAP to Non-GAAP Data.”

Adjusted EBITDA and Adjusted EBITDA Margin

We define adjusted EBITDA as net income attributable to common stockholders, adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, acquisition related compensation, acquisition and integration related costs, income tax expense (benefit), restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, interest income and other income, net, revaluation of warrants, (gain) loss on extinguishment of debt, net, release of a VAT reserve, and other charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We believe that adjusted EBITDA, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business, evaluating our operating performance, and for internal planning and forecasting purposes.

Our calculation of adjusted EBITDA and adjusted EBITDA margin may differ from the calculations of adjusted EBITDA and adjusted EBITDA margin by other companies and therefore comparability may be limited. Because of these limitations, when evaluating our performance, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, including our net income attributable to common stockholders and other GAAP results.

Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share

We define non-GAAP net income as net income attributable to common stockholders, excluding stock-based compensation, acquisition related compensation, amortization of acquired intangibles, acquisition and integration related costs, restructuring and other charges, restructuring related charges, impairment of certain long-lived assets, (gain) loss on extinguishment of debt, net, revaluation of warrants, release of a VAT reserve, and other charges. In addition to these exclusions, we subtract an assumed non-GAAP provision for income taxes to calculate non-GAAP net income that excludes the current period income tax benefit (expense). We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision in order to provide better consistency across reporting periods. We define non-GAAP diluted net income per share as non-GAAP net income divided by the weighted-average diluted shares outstanding, which includes the potentially dilutive effect of our stock options, RSUs, PRSUs, and Convertible Notes.

We believe non-GAAP diluted net income per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of unusual or non-recurring items from period to period for reasons unrelated to overall operating performance.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by operating activities less purchases of property and equipment, capitalized internal-use software costs, purchase of intangible assets, and excluding cash paid for restructuring and other charges, acquisition related compensation, restructuring related charges, and acquisition and integration related costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue.

We believe that adjusted free cash flow and adjusted free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our core operations that can be used for strategic initiatives, including investing in our business and selectively pursuing acquisitions and strategic investments. We further believe that historical and future trends in adjusted free cash flow and adjusted free cash flow margin, even if negative, provide useful information about the amount of net cash provided by operating activities that is available (or not available) to be used for strategic initiatives. Adjusted free cash flow and adjusted free cash flow margin exclude acquisitions of equipment under financing arrangements, finance leases, and our future contractual commitments. Additionally, adjusted free cash flow does not represent the residual cash flow available for discretionary expenses given our debt obligations and the total increase or decrease in our cash balance for a given period.

Unlevered Adjusted Free Cash Flow and Unlevered Adjusted Free Cash Flow Margin

Unlevered adjusted free cash flow is a new non-GAAP financial measure used for the first time in this release that we define as adjusted free cash flow excluding cash paid for interest and interest income. Unlevered adjusted free cash flow margin is calculated as unlevered adjusted free cash flow divided by total revenue.

We believe that unlevered adjusted free cash flow and unlevered adjusted free cash flow margin provide additional information to adjusted free cash flow about our liquidity and, measured over time, enable management and investors to monitor the underlying business’ growth pattern and ability to generate cash. We further believe that unlevered adjusted free cash flow is an important metric, as it provides a clear view of our cash generation before the impact of financing decisions and many investors and analysts use unlevered adjusted free cash flow as the basis of their enterprise value calculations as they assess the value of our business. Unlevered adjusted free cash flow and unlevered adjusted free cash flow margin exclude certain charges that will be settled in cash, such as interest paid to service our debt and equipment financing obligations. Additionally, unlevered adjusted free cash flow does not represent the residual cash flow available for discretionary expenses given our debt obligations and the total increase or decrease in our cash balance for a given period.

Key Business Metrics:

We utilize the key metrics set forth below to help us evaluate our business and growth, identify trends, formulate financial projections and make strategic decisions.

Customers

We calculate customer count as the average number of customers as of the last day of the month for each month in the most recent quarter. Customers are classified in the following categories based on the amount of their spend in a given month and individual customers may fall within different categories within a reporting period:

We refer to our Builders, Scalers and Scalers+ customers collectively as our Higher Spend Customers.

ARR

We calculate ARR by multiplying the revenue for the most recent quarter by four. For our ARR calculations, we include the total revenue from all customers, including Testers, Learners, Builders, Scalers, and Scalers+.

Net Dollar Retention Rate

We calculate net dollar retention rate monthly by starting with the revenue from all customers, including Testers, Learners, Builders, Scalers and Scalers+ for our IaaS and PaaS/SaaS offerings during the corresponding month 12 months prior, or the Prior Period Revenue. We then calculate the revenue from these same customers as of the current month, or the Current Period Revenue, including any expansion and net of any contraction or attrition from these customers over the last 12 months. The calculation also includes revenue from customers that generated revenue before, but not in, the corresponding month 12 months prior, but subsequently generated revenue in the current month and are therefore reflected in the Current Period Revenue. We include this group of re-engaged customers in this calculation because some of our customers use our platform for projects that stop and start over time. We then divide the total Current Period Revenue by the total Prior Period Revenue to arrive at the net dollar retention rate for the relevant month. For a quarterly or annual period, the net dollar retention rate is determined as the average monthly net dollar retention rates over such three or 12-month period.

___________________

(1) We also refer to our Scalers+ customers as customers with greater than $100 thousand in ARR.

Other Metrics:

Remaining Performance Obligation

Remaining performance obligation (“RPO”) represents commitments in customer contracts for future services that have not yet been recognized in the condensed consolidated financial statements. We have applied the optional exemption to exclude contracts with an original expected term of one year or less from this amount. RPO is not necessarily indicative of future revenue growth because it does not account for the timing of customers’ consumption or their usage beyond their contracted capacity. Additionally, RPO may increase when customers transition from usage-based to commitment-based agreements, which does not always reflect incremental revenue growth. RPO is influenced by a number of factors, including the timing and size of renewals, the timing and size of purchases of additional capacity and average contract term. Due to these factors, it is important to review RPO in conjunction with revenue and other financial metrics contained in this release and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent filings and reports we make with the SEC.

Organic ARR

We define Organic Annual Run-Rate revenue (“Organic ARR”) as ARR excluding the impacts of (i) revenue from acquisitions that closed in the prior 12 months, and (ii) incremental revenue from broad-based pricing increases that occurred on July 1, 2022 for our IaaS and PaaS/ SaaS offerings and April 1, 2023 for our Managed Hosting offerings, in each case until the beginning of the first full quarter following the one-year anniversary of the closing date of such acquisition or date pricing changes were effective.

Customers with Greater than $1 Million in ARR

Customers within our Scalers+ category with more than $83,333 of spend in a given month. Individual customers may fall within different categories within a reporting period.

DIGITALOCEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)

September 30, 2025

December 31, 2024

Current assets:

Cash and cash equivalents

236,561

428,446

Accounts receivable, less allowance for credit losses of $6,434 and $5,940, respectively

84,379

72,486

Prepaid expenses and other current assets

46,685

40,786

Total current assets

367,625

541,718

Property and equipment, net

520,510

432,544

Restricted cash

—

1,747

Goodwill

348,674

Intangible assets, net

104,418

117,718

Operating lease right-of-use assets, net

280,075

187,877

Deferred tax assets

92,040

200

Other assets

12,364

8,537

Total assets

1,725,706

1,639,015

Current liabilities:

Accounts payable

67,599

54,565

Accrued other expenses

46,595

38,156

Deferred revenue

8,587

5,397

Debt, current

9,500

—

Operating lease liabilities, current

131,207

75,785

Finance lease liabilities and equipment financing obligations, current

8,234

3,550

Other current liabilities

53,276

43,502

Total current liabilities

324,998

220,955

Deferred tax liabilities

4,496

4,123

Debt, long-term

1,284,315

1,485,366

Operating lease liabilities, long-term

160,243

130,431

Finance lease liabilities and equipment financing obligations, long-term

21,272

1,095

Total liabilities

1,795,324

1,841,970

Preferred stock ($0.000025 par value per share; 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2025 and December 31, 2024)

—

Common stock ($0.000025 par value per share; 750,000,000 shares authorized; 91,466,256 and 92,234,517 issued and outstanding as of September 30, 2025 and December 31, 2024, respectively)

Additional paid-in capital

720

57,282

Accumulated other comprehensive loss

(943

)

(1,497

)

Accumulated deficit

(69,397

)

(258,742

)

Total stockholders’ deficit

(69,618

)

(202,955

)

Total liabilities and stockholders’ deficit

1,725,706

1,639,015

DIGITALOCEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

2025

2024

2025

2024

Revenue

229,634

198,484

659,037

575,690

Cost of revenue

92,701

81,920

261,715

235,830

Gross profit

136,933

116,564

397,322

339,860

Operating expenses:

Research and development

38,119

36,278

117,357

102,189

Sales and marketing

21,228

15,258

59,917

52,165

General and administrative

32,654

40,422

101,855

127,034

Total operating expenses

92,001

91,958

279,129

281,388

Income from operations

44,932

24,606

118,193

58,472

Other income (expense):

Interest expense

(5,042

)

(2,262

)

(9,489

)

(6,887

)

Gain on extinguishment of debt, net

48,373

—

48,104

—

Interest income and other income, net

2,051

7,297

17,334

17,120

Other income, net

45,382

5,035

55,949

10,233

Income before income taxes

90,314

29,641

174,142

68,705

Income tax benefit (expense)

68,057

3,308

59,460

(2,479

)

Net income attributable to common stockholders

158,371

32,949

233,602

66,226

Net income per share attributable to common stockholders

Basic

1.74

0.36

2.56

0.72

Diluted

1.51

0.33

2.31

0.70

Weighted-average shares used to compute net income per share attributable to common stockholders

Basic

91,191

92,145

91,421

91,413

Diluted

105,520

102,591

103,036

102,678

DIGITALOCEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended September 30,

2025

2024

Operating activities

Net income attributable to common stockholders

233,602

66,226

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

97,035

100,825

Stock-based compensation

60,313

67,659

Provision for expected credit losses

13,337

12,018

Gain on extinguishment of debt, net

(48,104

)

—

Deferred income taxes

(72,522

)

—

Operating lease right-of-use assets and liabilities, net

(7,746

)

2,861

Non-cash interest expense

5,451

5,987

Net accretion of discounts and amortization of premiums on investments

—

2,569

Impairment of certain long-lived assets

—

356

Other

(7,652

)

(2,572

)

Changes in operating assets and liabilities:

Accounts receivable

(25,060

)

(18,768

)

Prepaid expenses and other current assets

(4,875

)

(13,594

)

Accounts payable and accrued expenses

1,136

Deferred revenue

3,190

235

Other assets and liabilities

5,337

(13,552

)

Net cash provided by operating activities

252,324

211,386

Investing activities

Capital expenditures - property and equipment

(102,931

)

(132,886

)

Capital expenditures - internal-use software development

(6,541

)

(6,492

)

Acquisition of equipment under financing arrangement

(27,622

)

—

Purchase of intangible assets

(1,835

)

—

Maturities of marketable securities

—

91,675

Proceeds from sale of equipment

157

Net cash used in investing activities

(138,772

)

(47,661

)

Financing activities

Proceeds related to issuance of common stock under equity incentive plan

3,628

11,890

Proceeds from issuance of common stock under employee stock purchase plan

2,660

2,231

Employee payroll taxes paid related to net settlement of equity awards

(22,222

)

(21,166

)

Proceeds from issuance of 2030 Convertible Notes, net of issuance costs

606,827

—

Purchases of capped calls related to 2030 Convertible Notes

(83,875

)

—

Proceeds from 2025 Credit Facility, net of issuance costs

375,919

—

Repayments of 2026 Convertible Notes including related costs

(1,131,458

)

—

Proceeds from financing arrangement

27,622

—

Principal repayments of finance leases

(4,154

)

(4,097

)

Repurchase and retirement of common stock including related costs

(82,124

)

(29,878

)

Net cash used in financing activities

(307,177

)

(41,020

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

)

(69

)

(Decrease) increase in cash, cash equivalents and restricted cash

(193,632

)

122,636

Cash, cash equivalents and restricted cash - beginning of period

430,193

318,983

Cash, cash equivalents and restricted cash - end of period

236,561

441,619

DIGITALOCEAN HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA

(unaudited)

Adjusted EBITDA and Adjusted EBITDA Margin

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2025

2024

2025

2024

GAAP Net income attributable to common stockholders

158,371

32,949

233,602

66,226

Adjustments:

Depreciation and amortization

35,060

35,810

97,035

100,825

Stock-based compensation (1)

19,800

22,949

60,313

67,512

Interest expense

5,042

2,262

9,489

6,887

Acquisition related compensation

—

3,193

—

11,439

Income tax (benefit) expense

(68,057

)

(3,308

)

(59,460

)

2,479

Gain on extinguishment of debt, net

(48,373

)

—

(48,104

)

—

Restructuring related charges (1)(2)

—

162

—

4,025

Impairment of certain long-lived assets

—

356

Interest income and other income, net (3)

(2,051

)

(7,297

)

(17,334

)

(17,120

)

Adjusted EBITDA

99,792

86,720

275,541

242,629

As a percentage of revenue:

Net income margin

Adjusted EBITDA margin

___________________

(1)

For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes $0.1 million as it is presented in restructuring related charges.

(2)

For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges.

(3)

For the three and nine months ended September 30, 2025, primarily consists of interest income from our cash and cash equivalents. For the three and nine months ended September 30, 2024, primarily consists of interest and accretion income from our cash and cash equivalents and marketable securities.

Non-GAAP Net Income and Non-GAAP Diluted Net Income Per Share

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

2025

2024

2025

2024

GAAP Net income attributable to common stockholders

158,371

32,949

233,602

66,226

Stock-based compensation (1)

19,800

22,949

60,313

67,512

Acquisition related compensation

—

3,193

—

11,439

Amortization of acquired intangible assets

4,914

5,571

15,142

17,041

Gain on extinguishment of debt, net

(48,373

)

—

(48,104

)

—

Restructuring related charges (1)(2)

—

162

—

4,025

Impairment of certain long-lived assets

—

356

Non-GAAP income tax adjustment (3)

(78,722

)

(13,150

)

(91,699

)

(24,573

)

Non-GAAP Net income

55,990

51,674

169,254

142,026

Non-cash charges related to convertible notes (4)

1,320

1,590

4,511

4,764

Non-GAAP Net income used to compute net income per share, diluted

57,310

53,264

173,765

146,790

GAAP Net income per share attributable to common stockholders, diluted

1.51

0.33

2.31

0.70

Stock-based compensation (1)

0.19

0.22

0.59

0.66

Acquisition related compensation

—

0.03

—

0.11

Amortization of acquired intangible assets

0.05

0.15

0.16

Gain on extinguishment of debt, net (5)

(0.46

)

—

(0.47

)

—

Restructuring related charges (1)(2)

—

0.03

Impairment of certain long-lived assets

—

Non-cash charges related to convertible notes (4)

0.01

0.02

0.04

Non-GAAP income tax adjustment (3)

(0.76

)

(0.13

)

(0.93

)

(0.27

)

Non-GAAP Net income per share, diluted (6)

0.54

0.52

1.69

1.43

GAAP Weighted-average shares used to compute net income per share, diluted

105,520

102,591

103,036

102,678

Weighted-average dilutive effect of potentially dilutive securities

—

Non-GAAP Weighted-average shares used to compute net income per share, diluted

105,520

102,591

103,036

102,678

______________

(1)

For the nine months ended September 30, 2024, non-GAAP stock-based compensation excludes $0.1 million as it is presented in restructuring related charges.

(2)

For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges.

(3)

For the periods in fiscal year 2025 and 2024, we used a tax rate of 16%, which we believe is a reasonable estimate of our long-term effective tax rate applicable to non-GAAP pre-tax income for each respective year.

(4)

Consists of non-cash interest expense for amortization of debt issuance costs related to the 2026 and 2030 Convertible Notes.

(5)

For the three and nine months ended September 30, 2025, excludes tax impact which is presented in Non-GAAP income tax adjustment.

(6)

May not foot due to rounding.

Adjusted Free Cash Flow, Unlevered Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin and Unlevered Adjusted Free Cash Flow Margin

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2025

2024

2025

2024

GAAP Net cash provided by operating activities

95,787

73,353

252,324

211,386

Adjustments:

Capital expenditures - property and equipment

(7,771

)

(57,352

)

(102,931

)

(132,886

)

Capital expenditures - internal-use software development

(3,128

)

(2,446

)

(6,541

)

(6,492

)

Purchase of intangible assets

—

(1,835

)

—

Restructuring and other charges

—

Restructuring related charges (1)

—

289

—

4,919

Acquisition related compensation

—

12,386

—

20,712

Acquisition and integration related costs

—

302

Adjusted free cash flow

84,888

26,230

141,081

98,002

Plus: Cash paid for interest

2,473

253

2,722

824

Less: Interest income

(2,630

)

(4,991

)

(9,489

)

(15,393

)

Unlevered adjusted free cash flow

84,731

21,492

134,314

83,433

As a percentage of revenue:

GAAP Net cash provided by operating activities

Adjusted free cash flow margin

Unlevered adjusted free cash flow margin

___________________

(1)

For the three and nine months ended September 30, 2024, primarily consists of executive reorganization charges.