Shares of DigitalOcean Holdings, Inc. (DOCN) tumbled 5.87% in pre-market trading on Wednesday, despite the cloud computing company reporting strong third-quarter results and raising its full-year outlook.

DigitalOcean announced Q3 revenue of $230 million, up 16% year-over-year, while net income surged 381% to $158 million. Adjusted EBITDA grew 15% to $100 million. The company also reported robust customer growth, with revenue from customers spending over $100,000 annually increasing 41% and now representing 26% of total revenue.

"DigitalOcean's unified agentic cloud is driving accelerated momentum in Q3. Revenue increased 16% year over year and we delivered the strongest incremental organic ARR in our history," said CEO Paddy Srinivasan. He noted that customers with over $1 million in annual run rate are now generating over $100 million in ARR, growing at 72% year-over-year.

In light of these results, DigitalOcean raised its full-year 2025 revenue guidance to $896-$897 million and increased its adjusted EBITDA margin guidance to 41%.

Despite these seemingly positive results, the sharp pre-market decline suggests investors may have been expecting even stronger performance or guidance. It's possible that concerns about the competitive landscape in cloud computing or broader market sentiment towards tech stocks could be contributing to the selloff. Investors will likely be closely watching the company's earnings call for more insight into the growth outlook and any potential headwinds.