The Information · Nov 6, 2026 · 32m · 26m saved
With Paddy Srinivasan, CEO of DigitalOcean
DigitalOcean's stock fell roughly 17% over the prior week even after what its chief executive called the company's best quarter in more than ten years. Everyone else selling cloud capacity to AI companies gets grouped under one label, "neocloud." Paddy Srinivasan, CEO of DigitalOcean, told The Information's TITV that the label doesn't fit his company.
"We had our best quarter in over 10 years, and it's interesting to be bucketized in this concept of neoclouds. We are not Neo, but we are a real cloud." — Paddy Srinivasan
Paddy's case rests on a guide of 60%-plus revenue growth for next year at a billion-dollar-plus scale, while DigitalOcean stays operating-income and cash-flow positive, a bet few of the hardware-renting neoclouds can make the same way.
The full interview is covered here so you can skip it. 32 minutes of audio, 6 minutes of reading.
Here are the 6 numbers that matter.
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Key Takeaways
Microsoft cut capex by about $5 billion after a neocloud partner's Texas data center fell behind schedule
Iren owed Microsoft a campus this year under a roughly $10 billion, five-year deal
Microsoft doesn't start paying for leased capacity until it becomes a tenant
DigitalOcean has 680,000 paying customers, with no single customer above high-single-digit revenue concentration
DigitalOcean's fleet earns $18 million per megawatt, which it says comes from software layered on hardware, not higher prices
DigitalOcean guided to 60%-plus revenue growth next year at a billion-dollar-plus scale while staying profitable
Most of its 2027 data-center capacity is already energized and permitted, insulating it from a harder post-midterm permitting climate
Physical intelligence is the next compute driver after agentic knowledge work, Paddy said, alongside continued growth in cybersecurity token use
1. Microsoft's $5B Pullback
Before Paddy came on, The Information's Microsoft reporter Aaron Holmes explained why Microsoft disclosed a roughly $5 billion cut to its planned capital spending for the quarter. The cause traces to one neocloud partner, Iren, which was supposed to deliver a Texas data-center campus to Microsoft this year under a roughly $10 billion, five-year deal.
A delayed Texas campus is why Microsoft's payment never landed
"Iren has had delays with a data center campus in Texas that they had planned to deliver to Microsoft this year... that campus is running into delays, and as a result Microsoft has not yet spent this money." — Aaron Holmes
Microsoft doesn't start paying for leased capacity until it becomes an actual tenant, so the delay kept the payment out of the September quarter. Aaron said Microsoft separately walked away from an NScale-built data center near London after NScale found it would take until at least 2030 to connect power. He added that the post-midterm permitting climate favors large hyperscalers, who can shift spend across providers, over smaller neoclouds like Iren and NScale.
