DigitalOcean Holdings, Inc. (DOCN) shares plummeted 9% in pre-market trading on Tuesday following the release of its first-quarter 2025 financial results and subsequent guidance. The cloud infrastructure provider's earnings report revealed a mixed performance, with revenue slightly exceeding expectations but profits falling short of estimates.

DigitalOcean reported Q1 revenue of $210.703 million, marginally surpassing the analyst estimate of $208.6 million. However, the company's pretax profit of $41.38 million significantly missed the mark, coming in well below the expected $54.8 million. This profit shortfall appears to be the primary driver behind the stock's pre-market decline.

Adding to investor concerns, DigitalOcean's outlook for the second quarter of 2025 failed to impress. The company forecasted Q2 adjusted earnings per share between $0.42 and $0.47, with total revenue projected to be in the range of $215.5 million to $217.5 million. These figures fell short of analyst expectations, with consensus estimates of $0.47 per share and revenue of $217.0 million for Q2. The company also provided full-year 2025 guidance, projecting total revenue of $870 to $890 million and adjusted EPS of $1.85 to $1.95.

In a separate announcement, DigitalOcean disclosed entering into a new credit agreement on May 5, 2025. The agreement includes a $300 million revolving credit facility and a $500 million delayed draw term loan facility. While this additional financial flexibility could be viewed positively, it did not offset the negative sentiment surrounding the earnings miss and cautious guidance, contributing to the significant drop in the company's stock price.