DigitalOcean Holdings, Inc. (DOCN) saw its stock plunge in pre-market trading on November 4, 2024, despite reporting better-than-expected earnings and revenue for the third quarter of 2024. The cloud infrastructure provider's shares fell by 13.72% in early trading.

While DigitalOcean beat analyst estimates for Q3 2024 with adjusted earnings per share of $0.52 versus the expected $0.40 and revenue of $198.5 million versus the estimated $196.7 million, its pretax profit figure of $29.6 million fell short of the consensus estimate of $48.7 million.

The company's financial statements revealed a mixed picture. While revenue growth remained strong at 12.1% year-over-year, operating expenses increased significantly, with general and administrative expenses doubling from the same period last year. Additionally, the company's net income growth slowed compared to previous quarters, potentially raising concerns about profitability and margin compression.