DigitalOcean Holdings (DOCN) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our results of operations, our stock price and the value of your investment could decline
2. 02We may not be able to sustain profitability in the future
3. 03If we are unable to expand usage of our platform by existing customers, attract new customers and/or retain existing customers, we may not achieve the growth we expect, which would adversely affect our results of operations and financial condition
4. 04We are focused on expanding the number of DNE Customers on our platform, both through expanding usage by existing customers and attracting new DNE Customers. Net new sales to DNE Customers involve risks that may not be present or that are present to a lesser extent with sales to smaller customersNew
5. 05The market for our platform and solutions may develop more slowly or differently than we expect25% rewritten
6. 06suitable and appropriately priced services for the initial state of their business, could adversely affect our business, financial condition and results of operationsNew
7. 07Our artificial intelligence and machine learning (“AI/ML”) products and services may not be successful, which could adversely affect our business operating results or financial condition85% rewritten
8. 08We use artificial intelligence-based tools in our business operations that may present risks and challenges to our business
9. 09If we fail to timely release updates and new features to our platform and adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, or customer needs, our platform and products may become less competitive65% rewritten
10. 10we have entered into various agreements for the lease of data center space, equipment, maintenance and other services, the third party could fail to live up to the contractual obligations under those agreementsNew
11. 11products. If our customers or users use our products for the transmission or storage of sensitive information and our security measures are or are believed to have been weak or breached, our reputation could be damaged, our business may suffer, and we could incur significant liabilityNew
12. 12We may not be able to successfully manage our growth, and if we are not able to grow efficiently, our business, financial condition and results of operations could be harmed45% rewritten
13. 13the expansion of and improvements to our internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could harm our business, financial condition and results of operationsNew
14. 14If we underestimate or overestimate our data center capacity requirements and our capital expenditures on data centers, servers and equipment, our results of operations could be adversely affected
15. 15We rely on a limited number of suppliers for certain components of the equipment we use to operate our network and any disruption in the availability of these components could delay our ability to expand or increase the capacity of our platform or replace defective equipment
16. 16If we do not or cannot maintain the compatibility of our platform with third-party applications that our customers use in their businesses, our business will be harmed
17. 17We rely heavily on the reliability, security and performance of our internally developed systems and operations. Any difficulties in maintaining these systems may result in damage to our brand, service interruptions, decreased customer service or increased expenditures
18. 18We rely on our relationships with third-party software providers and other partners for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively
19. 19Performance problems or defects associated with our platform may adversely affect our business, financial condition and results of operations
20. 20The markets in which we participate are competitive, and if we do not compete effectively, our business, financial condition and results of operations could be harmed
21. 21We may be unable to accurately predict the optimal pricing necessary to attract new customers and retain existing customers. Our pricing model subjects us to various challenges that could make it difficult for us to derive sufficient value from our customers
22. 22If we fail to effectively integrate new members of our executive leadership team and senior management or if we fail to retain and motivate members of our executive leadership team and senior management team and other key employees, our business and future growth prospects could be harmed64% rewritten
23. 23If we fail to retain and motivate, or fail to attract qualified personnel to support our operations, our business and future growth prospects would be harmed
24. 24We have in the past and may in the future undertake internal restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition
25. 25We believe our corporate culture has been a key contributor to our success to date. If we do not continue to maintain our corporate culture as we grow or as a result of any reductions in workforce, we may be unable to foster the innovation, creativity and entrepreneurial spirit we believe we need to support our growth
26. 26If we fail to maintain and enhance our brands, our ability to expand our customer base will be impaired and our business, financial condition and results of operations may suffer
27. 27Our ability to maintain customer satisfaction depends in part on the quality of our customer support. Failure to maintain high-quality customer support could have an adverse effect on our business, results of operation, and financial condition
28. 28Unfavorable conditions in our industry or the global economy, or reductions in information technology spending, could limit our ability to grow our business and negatively affect our results of operations23% rewritten
29. 29Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges
30. 30We are exposed to fluctuations in currency exchange rates and interest rates, which could negatively affect our results of operations and our ability to invest and hold our cash43% rewritten
31. 31Our international operations may subject us to potential adverse tax consequences
32. 32We could be required to collect additional taxes or be subject to other tax liabilities or obligations that may increase the costs our clients would have to pay for our products and adversely affect our results of operations
33. 33Our ability to use our net operating losses and other tax credits to offset future taxable income may be subject to certain limitations
34. 34Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations
35. 35Any of these developments could adversely affect our results of operations88% rewritten
36. 36We may enter into other financing arrangements from time to time. For example, during the year ended December 31, 2025, we entered into equipment financing arrangements with a third-party financial institution for $131.5 millionNew
37. 37The capped call transactions entered into in connection with the issuance of the 2030 Convertible Notes subject us to counterparty risk, may not operate as planned and could affect the value of our common stockNew
38. 38Our Credit Agreement currently imposes and any other debt we incur may impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities
39. 39We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all
40. 40Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition and results of operations
41. 41Our business could be disrupted by catastrophic occurrences and similar events31% rewritten

Risks Related to Our Regulatory Environment

1. 42Activities of our customers or the content on their websites could subject us to liability
2. 43Our business could be affected by the enactment of new governmental regulations regarding the internet or the application of additional or different existing governmental regulation to our business, products, or services37% rewritten
3. 44Our increased focus on the development and use of artificial intelligence and machine learning may result in reputational harm, liability or other adverse consequences to our business, results of operations or financial results51% rewritten
4. 45Evolving data privacy and security requirements, including third-party compliance, present regulatory, litigation, and business risksNew
5. 46Our policies regarding user privacy could cause us to experience adverse business and reputational consequences with customers, employees, suppliers, government entities, users, and other third parties90% rewritten
6. 47We are subject to governmental export and import controls, economic sanctions, and foreign investment laws and regulations that could impair our ability to compete in international markets or subject us to liability if we are not in full compliance with applicable laws
7. 48We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations
8. 49We cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international business, our risks under these laws may increase

Risks Related to Our Intellectual Property

1. 50Any failure to obtain, maintain, protect or enforce our intellectual property and proprietary rights could impair our ability to protect our proprietary technology and brand
2. 51We may become subject to intellectual property claims from third parties, which may subject us to significant liability, increased costs, and impede our ability to operate our business
3. 52property disputes regarding our customer’s alleged infringement of third party intellectual property and may be subject to similar claims
4. 53We use open source software in connection with developing, operating, and offering our products, services, and technology, and we expect to continue to incorporate open source software in our products, services, and technology in the future
5. 54Our use of open source software, and participation in open source projects, may also limit our ability to assert certain of our intellectual property and proprietary rights against third parties, including competitors, who access or use software or technology that we have contributed to such open source projects
6. 55Indemnity provisions in various agreements to which we are party potentially expose us to substantial liability for infringement or misappropriation of intellectual property rights, failure to comply with data protection requirements and other losses

Risks Related to Ownership of Our Common Stock and Our Status as a Public Company

1. 56Our stock price may be volatile, and the value of our common stock may decline
2. 57Future sales of our common stock in the public market could cause the market price of our common stock to decline
3. 58Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise, and any conversions of our convertible notes, will dilute all other stockholders or may otherwise depress the price of our common stock
4. 59Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock

Risks Related to our Outstanding Convertible Notes

1. 60In August 2025, we issued $625.0 million aggregate principal amount of the 2030 Convertible Notes in a private placement
2. 61The conditional conversion feature of the 2030 Convertible Notes, if triggered, may adversely affect our financial condition and operating results29% rewritten