DigitalOcean (DOCN) pre-announced Q2 results characterized as better than expected, tied to positive momentum rather than any material business change, UBS said in a note emailed Wednesday.

The sequential revenue jump suggests DigitalOcean's Richmond facility, which came online in March, is now running near full capacity, the note said, adding that getting the newly launched Kansas City data center up to speed will be the key swing factor for Q3 revenue.

A longer-than-expected backlog duration lowers near-term churn risk tied to Cursor, UBS said, though the firm does not view this as a broader shift toward multi-year contracts.

UBS said the scale of upcoming capacity additions remains the biggest driver of long-term earnings potential, with room for adds beyond prior disclosures still possible ahead of the print.

UBS maintained a neutral rating and lowered the price target to $155 from $175.

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