DigitalOcean Holdings (NYSE:DOCN) shares surged 10% in premarket trading after the cloud infrastructure provider reported fourth-quarter results that exceeded analyst expectations and raised its revenue outlook for 2026 and 2027. The company posted adjusted earnings per share of $0.44, beating the consensus estimate of $0.38, with revenue reaching $242 million, up 18% year-over-year.

DigitalOcean added a record $51 million in incremental organic annual recurring revenue during the quarter, with million-dollar-plus customers driving $133 million in ARR, up 123% from the previous year. The company raised its full-year 2026 revenue guidance to a range of $1.075 billion to $1.105 billion, representing 21% growth at the midpoint of $1.09 billion. First-quarter 2026 revenue guidance of $249 million to $250 million also exceeded typical sequential patterns.

CEO Paddy Srinivasan attributed the strong performance to artificial intelligence reshaping entire industries, with DigitalOcean reporting AI customer ARR of $120 million, growing 150% year-over-year. The company expects first-quarter 2026 adjusted EBITDA margin of 36% to 37% and full-year 2026 adjusted EBITDA margin of 36% to 38%. Net dollar retention rate improved to 101% from 99% in the fourth quarter of 2024.