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DigitalOcean Secures $1.03B Equipment Financing Facility to Expand AI-Native Cloud Capacity

By: IDCNOVARegion: North America
DigitalOcean Holdings, Inc. has entered into a new equipment finance facility providing up to $725 million in committed financing, with an accordion feature of up to $300 million, bringing the aggregate capacity to $1.025 billion. The facility is designed to fund the acquisition of GPU, CPU and other data center equipment to expand capacity for the company's AI-Native Cloud platform, which is purpose-built for inference and agentic workloads.

The transaction, completed on September 10, 2026, was documented through a Transaction Agreement, Master Lease Agreement and related guaranties with MUFG Americas Capital Leasing & Finance, LLC as lessor and MUFG Bank, Ltd. as administrative and collateral agent. MUFG Bank, Ltd. served as sole Administrative Agent and Collateral Agent, while MUFG Bank, Ltd., Axos Bank, BMO Bank N.A. and Wells Fargo Bank, N.A. acted as Joint Lead Arrangers and Joint Bookrunners, with PNC Bank, N.A. serving as Document Agent.

Under the terms of the facility, DigitalOcean's subsidiary may request advances until September 10, 2027, funding up to 90% of equipment cost, with the balance paid as prepaid rent. Each advance amortizes via monthly rent payments through September 10, 2030 and bears a fixed rate set at the term SOFR swap rate plus 2.75% per year. Undrawn commitments incur a commitment fee of 0.20% per year, rising to 0.40% six months after closing. Early prepayment of equipment carries a 5% premium in the first year and 3% in the second year after an advance. The company expects to account for the equipment leases as finance leases, with title to the equipment transferring to the lessee for nominal consideration upon payment in full.

The facility is guaranteed by DigitalOcean and certain of its subsidiaries and secured by the financed equipment and related collateral. The agreements contain covenants and events of default substantially consistent with the company's existing credit agreement dated as of May 5, 2025, along with additional covenants customary for equipment lease financing. The company currently intends to exercise the accordion feature in full, subject to obtaining commitments from new or existing lenders and other conditions.

"We continue to manage our balance sheet from a position of strength, with low leverage and healthy adjusted free cash flow margins. Securing incremental funding at an attractive cost of capital supports our ability to cost effectively add additional capacity to fuel growth in 2027, 2028 and beyond to meet the accelerating demand for our AI Native Cloud," said Matt Steinfort, Chief Financial Officer of DigitalOcean. "We remain highly confident in our guidance for Q3 and the full year 2026 as well as in our outlook for 2027."

The financing arrangement reflects a growing trend among cloud and AI infrastructure providers to secure dedicated equipment financing as demand for AI inference and agentic computing accelerates. By aligning cash outflows with revenue through a fixed-rate, amortizing structure, DigitalOcean aims to manage its capital efficiently while scaling its GPU and CPU infrastructure. The company serves more than 680,000 customers and millions of developers globally, and the expanded capacity is expected to address customer demand anticipated in 2027 and 2028.