DigitalOcean Announces Closing of $625 Million Convertible Senior Notes Offering, Including Full Exercise of Initial Purchasers' $75 Million Option to Purchase Additional Notes
DigitalOcean Holdings, Inc. ("DigitalOcean") (NYSE:DOCN), today announced the closing of its previously announced offering of $625 million aggregate principal amount of 0.00% convertible senior notes due 2030, including the full exercise of the initial purchasers' option to purchase an additional $75 million aggregate principal amount of the notes. DigitalOcean estimates that the total net proceeds from the offering are approximately $605.6 million, after deducting the initial purchasers' discounts and commissions and estimated offering expenses payable by DigitalOcean. The notes will mature on August 15, 2030, unless earlier converted, redeemed or repurchased by DigitalOcean. In connection with the pricing of the notes, DigitalOcean entered into privately negotiated capped call transactions with an affiliate of one of the initial purchasers and other financial institutions.
DigitalOcean expects to use the net proceeds from the offering to pay the $83.9 million cost of the capped call transactions and the remainder of the net proceeds from the offering, together with cash on hand and $380 million of term loans under DigitalOcean's credit facility to repurchase for approximately $1,131.3 million in cash approximately $1,187.7 million aggregate principal amount of its 0.00% convertible senior notes due 2026.
DigitalOcean also recently announced that it has adopted a new stock repurchase program authorizing the repurchase of up to $100 million of its common stock from time to time through July 31, 2027.
Matt Steinfort, Chief Financial Officer, DigitalOcean, said:
"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 through a balanced combination of our existing term loan, the recently completed convertible notes, and our cash on hand. Following the completion of this offering, available borrowings remaining under our term loan facility and our cash on hand, together with our anticipated free cash flow, exceeds the outstanding principal balance of our 2026 convertible notes. Having delivered on our commitment to address the 2026 maturity in 2025, we also received board approval to continue our regular share repurchase program with a new $100 million share repurchase authorization through July 31, 2027, which we intend to utilize to mitigate future dilution. These achievements create a strong balance sheet, with low cash interest expense, and protection against future dilution, giving the company tremendous flexibility as we work to deliver on our growth strategy."
The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act, any state securities laws, and unless so registered, may not be offered or sold in the United States, absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.
About DigitalOcean
DigitalOcean is the simplest scalable cloud platform that democratizes cloud and AI for digital native enterprises around the world. Our mission is to simplify cloud and AI so builders can spend more time creating software that changes the world. More than 600,000 customers trust DigitalOcean to deliver the cloud, AI, and ML infrastructure they need to build and scale their organizations.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding, among other things, the capped call transactions, the note repurchase transactions, the intended use of proceeds from the offering, the Repurchase Program, projected cash flows, the Company's ability to deliver on its growth strategy and the potential impact of the foregoing or related transactions on the market price of the common stock, or the trading price of the notes. Forward-looking statements represent DigitalOcean's current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions and risks relating to DigitalOcean's business, including those described under the caption "Risk Factors" and elsewhere in DigitalOcean's filings with the Securities and Exchange Commission (the "SEC"), including in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 25, 2025, in its Quarterly Reports on Form 10-Qs for the fiscal quarters ended March 31, 2025 and June 30, 2025, filed with the SEC on May 6, 2025 and August 5, 2025, respectively, and the future quarterly and current reports that DigitalOcean files with the SEC. The forward-looking statements included in this press release speak only as of the date of this press release, and DigitalOcean does not undertake to update the statements included in this press release for subsequent developments, except as may be required by law.
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