Can anyone enlighten me on this because cloudflare seems to report similar high margins with no profits.

What are these high margin numbers both DO and CF report? They both report high margins but then do not make any money. Are these margins excluding most expenses - because that makes no sense. Companies have expenses and that affects the bottom line. If digital ocean had real margins of 60% they would show a profit.

It's because they are growing massively, meaning they invest a lot of those margins in capital expenses. At least that's true for CF, not sure about DO

Ok I get it, still seems a bit dumb. DO for example still needs to replace failed components (ssd drives which have the highest failure rate can expect 1 - 3% failure rate per year on the low end), pay datacenter fees, likely power increases in the dc fees built in, replace servers on a 5 - 7 year scale (3 - 5 is better), and networking equipment generally on a 7 - 10 year level. Even if the growth is zero, these don't go away they just are not spending as much because they don't need to add so many new systems for their growth.