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    Docusign Announces Second Quarter Fiscal 2025 Financial Results

    9/5/24 4:05:00 PM ET
    $DOCU
    Computer Software: Prepackaged Software
    Technology
    Get the next $DOCU alert in real time by email

    SAN FRANCISCO, Sept. 5, 2024 /PRNewswire/ -- Docusign, Inc. (NASDAQ:DOCU) today announced results for its fiscal quarter ended July 31, 2024. Prepared remarks and the news release with the financial results will be accessible on Docusign's website at investor.docusign.com prior to its webcast.

    "Docusign continued its evolution with improved business stability and increased efficiency, resulting in record operating profit," said Allan Thygesen, CEO of Docusign. "We're proud that we began shipping our Intelligent Agreement Management platform this quarter and we are encouraged by the early results and customer feedback."

    Second Quarter Financial Highlights

    • Total revenue was $736.0 million, an increase of 7% year-over-year. Subscription revenue was $717.4 million, an increase of 7% year-over-year. Professional services and other revenue was $18.7 million, an increase of 2% year-over-year.
    • Billings were $724.5 million, an increase of 2% year-over-year.
    • GAAP gross margin was 78.9% compared to 78.8% in the same period last year. Non-GAAP gross margin was 82.2% compared to 82.3% in the same period last year.
    • GAAP net income per basic share was $4.34 on 205 million shares outstanding compared to $0.04 on 204 million shares outstanding in the same period last year.
    • GAAP net income per diluted share was $4.26 on 208 million shares outstanding compared to $0.04 on 208 million shares outstanding in the same period last year.
    • Non-GAAP net income per diluted share was $0.97 on 208 million shares outstanding compared to $0.72 on 208 million shares outstanding in the same period last year.
    • Net cash provided by operating activities was $220.2 million compared to $211.0 million in the same period last year.
    • Free cash flow was $197.9 million compared to $183.6 million in the same period last year.
    • Cash, cash equivalents, restricted cash and investments were $1.0 billion at the end of the quarter.
    • Repurchases of common stock were $200.1 million compared to $30.0 million in the same period last year.

    A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures and Other Key Metrics."

    Operational and Other Financial Highlights:

    Docusign Intelligent Agreement Management ("IAM") General Availability: Docusign announced the beginning of general availability for IAM, a new category of AI-powered cloud software that helps streamline and automate agreement processes.

    • IAM Release 1 Availability: IAM applications, which include IAM Core, IAM for Sales, and IAM for CX, are now generally available in the U.S. IAM for CX went live for small and medium-sized commercial customers in North America and Australia. IAM will continue to rollout to enterprise and self-service customers across additional geographies throughout the fiscal year.

    Executive Appointments: Docusign announced the following new leaders:

    • Paula Hansen joined Docusign as President and Chief Revenue Officer, leading enterprise and commercial sales and partnership teams worldwide. Most recently, Hansen served as President and Chief Revenue Officer at Alteryx, where she was responsible for leading the global go-to-market organization, which includes worldwide sales, sales engineering, partners, marketing, customer experience, customer support and revenue operations. Prior to Alteryx, she served in senior sales roles at SAP and Cisco.
    • Sagnik Nandy joined Docusign as Chief Technology Officer, leading all aspects of engineering, research and engineering operations. Most recently, Nandy served as President and Chief Development Officer at Okta, where he led product, engineering and design for the Workforce Identity Cloud, which includes Okta's core identity and access management platform. Prior to Okta, he served as VP of Engineering at Google.

    Guidance

    The company currently expects the following guidance:

    • Quarter ending October 31, 2024 (in millions, except percentages):

    Total revenue

    $743

    to

    $747

    Subscription revenue

    $722

    to

    $726

    Billings

    $710

    to

    $720

    Non-GAAP gross margin

    81.0 %

    to

    82.0 %

    Non-GAAP operating margin

    28.5 %

    to

    29.5 %

    Non-GAAP diluted weighted-average shares outstanding

    206

    to

    211

     

    • Fiscal Year ending January 31, 2025 (in millions, except percentages):

    Total revenue

    $2,940

    to

    $2,952

    Subscription revenue

    $2,864

    to

    $2,876

    Billings

    $2,990

    to

    $3,030

    Non-GAAP gross margin

    81.0 %

    to

    82.0 %

    Non-GAAP operating margin

    29.0 %

    to

    29.5 %

    Non-GAAP diluted weighted-average shares outstanding

    206

    to

    211

    A reconciliation of non-GAAP guidance measures to corresponding GAAP guidance measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation-related charges, including employer payroll tax-related items on employee stock transactions, are impacted by many factors, including the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP financial results included in this release.

    Webcast Conference Call Information

    The company will host a conference call on September 5, 2024 at 2:00 p.m. PT (5:00 p.m. ET) to discuss its financial results. A live webcast of the event will be available on the Docusign Investor Relations website at investor.docusign.com. Prepared remarks and the news release with the financial results will also be accessible on Docusign's website prior to the webcast. A live dial-in will be available domestically at 877-407-0784 or internationally at 201-689-8560. A replay will be available domestically at 844-512-2921 or internationally at 412-317-6671 until midnight (EST) September 19, 2024 using the passcode 13748491.

    About Docusign

    Docusign brings agreements to life. Approximately 1.6 million customers and more than a billion people in over 180 countries use Docusign solutions to accelerate the process of doing business and simplify people's lives. With intelligent agreement management, Docusign unleashes business critical data that is trapped inside of documents. Until now, these were disconnected from business systems of record, costing businesses time, money, and opportunity. Using Docusign IAM, companies can create, commit, and manage agreements with solutions created by the #1 company in e-signature and contract lifecycle management (CLM). Learn more at www.docusign.com.

    Copyright 2024. Docusign, Inc. is the owner of DOCUSIGN® and all its other marks (www.docusign.com/IP).

    Investor Relations:

    Docusign Investor Relations

    [email protected]

    Media Relations:

    Docusign Corporate Communications

    [email protected]

    Forward-Looking Statements

    This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management's beliefs and assumptions and on information currently available to management, and which statements involve substantial risk and uncertainties. All statements contained in this press release other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, objectives for future operations, and the impact of such assumptions on our financial condition and results of operations are forward-looking statements. Forward-looking statements in this press release also include, among other things, statements under "Guidance" above and any other statements about expected financial metrics, such as revenue, billings, non-GAAP gross margin, non-GAAP operating margin, non-GAAP diluted weighted-average shares outstanding, and non-financial metrics, as well as statements related to our expectations regarding the benefits and rollout of the Docusign IAM platform. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions.

    Forward-looking statements contained in this press release include, but are not limited to, statements about: our expectations regarding global macro-economic conditions, including the effects of inflation, volatile interest rates, and market volatility on the global economy; our ability to estimate the size and growth of our total addressable market; our ability to compete effectively in an evolving and competitive market; the impact of any data breaches, cyberattacks or other malicious activity on our technology systems; our ability to effectively sustain and manage our growth and future expenses and maintain or increase future profitability; our ability to attract new customers and maintain and expand our existing customer base; our ability to effectively implement and execute our restructuring plans; our ability to scale and update our platform to respond to customers' needs and rapid technological change, including our ability to successfully incorporate generative artificial intelligence into our existing and future products; our ability to successfully execute our go-to-market and sales strategy for our IAM platform; our ability to expand use cases within existing customers and vertical solutions; our ability to expand our operations and increase adoption of our platform internationally; our ability to strengthen and foster our relationships with developers; our ability to retain our direct sales force, customer success team and strategic partnerships around the world; our ability to identify targets for and execute potential acquisitions and to successfully integrate and realize the anticipated benefits of such acquisitions; our ability to maintain, protect and enhance our brand; the sufficiency of our cash, cash equivalents and capital resources to satisfy our liquidity needs; limitations on us due to obligations we have under our credit facility or other indebtedness; our ability to realize the anticipated benefits of our stock repurchase program; our failure or the failure of our software to comply with applicable industry standards, laws and regulations; our ability to maintain, protect and enhance our intellectual property; our ability to successfully defend litigation against us; our ability to attract large organizations as users; our ability to maintain our corporate culture; our ability to offer high-quality customer support; our ability to hire, retain and motivate qualified personnel, including executive level management; our ability to successfully manage and integrate executive management transitions; uncertainties regarding the impact of general economic and market conditions, including as a result of regional and global conflicts; our ability to successfully implement and maintain new and existing information technology systems, including our ERP system; and our ability to maintain proper and effective internal controls.

    Additional risks and uncertainties that could affect our financial results are included in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K for the fiscal year ended January 31, 2024 filed on March 21, 2024, our quarterly report on Form 10-Q for the quarter ended July 31, 2024, which we expect to file on September 6, 2024 with the Securities and Exchange Commission (the "SEC"), and other filings that we make from time to time with the SEC. The forward-looking statements made in this press release relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this press release or to conform such statements to actual results or revised expectations, except as required by law.

    Non-GAAP Financial Measures and Other Key Metrics

    To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

    We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We present these non-GAAP measures to assist investors in seeing our financial performance using a management view, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. However, these non-GAAP measures are not intended to be considered in isolation from, a substitute for, or superior to our GAAP results.

    Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share: We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs, fair value adjustments to strategic investments, acquisition-related expenses, lease-related impairment and lease-related charges, restructuring and other related charges, as these costs are not reflective of ongoing operations and, as applicable, other special items. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business. When evaluating the performance of our business and making operating plans, we do not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder dilution rather than the accounting charges associated with such grants). We believe it is useful to exclude these expenses in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies and over multiple periods. In addition to these exclusions, we subtract an assumed provision for income taxes to calculate non-GAAP net income. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2024 and fiscal 2025, we have determined the projected non-GAAP tax rate to be 20%.

    Free cash flow: We define free cash flow as net cash provided by operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash that is available (if any), after purchases of property and equipment, for operational expenses, investment in our business, and to make acquisitions. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in excess of our capital investments in property and equipment. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.

    Billings: We define billings as total revenues plus the change in our contract liabilities and refund liability less contract assets and unbilled accounts receivable in a given period. Billings reflects sales to new customers plus subscription renewals and additional sales to existing customers. Only amounts invoiced to a customer in a given period are included in billings. We believe billings can be used to measure our periodic performance, when taking into consideration the timing aspects of customer renewals, which represents a large component of our business. Given that most of our customers pay in annual installments one year in advance, but we typically recognize a majority of the related revenue ratably over time, we use billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers.

    For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see "Reconciliation of GAAP to Non-GAAP Financial Measures" below.

     

    DOCUSIGN, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (Unaudited)





    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands, except per share data)

    2024



    2023



    2024



    2023

    Revenue:















    Subscription

    $    717,366



    $    669,367



    $ 1,408,849



    $ 1,308,674

    Professional services and other

    18,661



    18,320



    36,818



    40,401

    Total revenue

    736,027



    687,687



    1,445,667



    1,349,075

    Cost of revenue:















    Subscription

    132,372



    116,185



    258,974



    225,127

    Professional services and other

    23,093



    29,397



    45,937



    56,942

    Total cost of revenue

    155,465



    145,582



    304,911



    282,069

    Gross profit

    580,562



    542,105



    1,140,756



    1,067,006

    Operating expenses:















    Sales and marketing

    287,464



    294,838



    569,108



    575,443

    Research and development

    147,571



    135,960



    281,891



    251,324

    General and administrative

    87,129



    103,884



    179,607



    208,695

    Restructuring and other related charges

    597



    811



    29,721



    29,583

    Total operating expenses

    522,761



    535,493



    1,060,327



    1,065,045

    Income from operations

    57,801



    6,612



    80,429



    1,961

    Interest expense

    (544)



    (1,592)



    (688)



    (3,558)

    Interest income and other income, net

    14,630



    17,455



    28,739



    29,700

    Income before provision for (benefit from) income taxes

    71,887



    22,475



    108,480



    28,103

    Provision for (benefit from) income taxes

    (816,324)



    15,080



    (813,491)



    20,169

    Net income

    $    888,211



    $       7,395



    $    921,971



    $       7,934

    Net income per share attributable to common stockholders:









    Basic

    $         4.34



    $         0.04



    $         4.49



    $0.04

    Diluted

    $         4.26



    $         0.04



    $         4.40



    $0.04

    Weighted-average shares used in computing net income per share:









    Basic

    204,604



    203,703



    205,231



    203,177

    Diluted

    208,274



    208,192



    209,559



    208,284

















    Stock-based compensation expense included in costs and expenses:









    Cost of revenue—subscription

    $      15,593



    $      13,081



    $      29,774



    $      24,438

    Cost of revenue—professional services and other

    4,998



    7,286



    9,700



    14,016

    Sales and marketing

    58,778



    51,563



    105,049



    96,889

    Research and development

    53,430



    45,151



    97,632



    81,148

    General and administrative

    31,649



    34,592



    60,169



    74,934

    Restructuring and other related charges

    208



    34



    4,836



    4,988

     

    DOCUSIGN, INC.

    CONDENSED CONSOLIDATED BALANCE SHEETS

    (Unaudited)

     









    (in thousands)

    July 31, 2024



    January 31, 2024

    Assets







    Current assets







    Cash and cash equivalents

    $              619,064



    $              797,060

    Investments—current

    319,289



    248,402

    Accounts receivable, net

    309,885



    439,299

    Contract assets—current

    13,449



    15,922

    Prepaid expenses and other current assets

    81,693



    66,984

    Total current assets

    1,343,380



    1,567,667

    Investments—noncurrent

    102,537



    121,977

    Property and equipment, net

    265,544



    245,173

    Operating lease right-of-use assets

    117,877



    123,188

    Goodwill

    455,519



    353,138

    Intangible assets, net

    90,227



    50,905

    Deferred contract acquisition costs—noncurrent

    427,599



    409,627

    Deferred tax assets—noncurrent

    822,026



    2,031

    Other assets—noncurrent

    129,232



    97,584

    Total assets

    $           3,753,941



    $           2,971,290

    Liabilities and Equity







    Current liabilities







    Accounts payable

    $                  8,116



    $                19,029

    Accrued expenses and other current liabilities

    93,251



    104,037

    Accrued compensation

    178,603



    195,266

    Contract liabilities—current

    1,307,565



    1,320,059

    Operating lease liabilities—current

    19,769



    22,230

    Total current liabilities

    1,607,304



    1,660,621

    Contract liabilities—noncurrent

    23,020



    21,980

    Operating lease liabilities—noncurrent

    115,832



    120,823

    Deferred tax liability—noncurrent

    18,122



    16,795

    Other liabilities—noncurrent

    28,257



    21,332

    Total liabilities

    1,792,535



    1,841,551

    Stockholders' equity







    Common stock

    20



    21

    Treasury stock

    (2,670)



    (2,164)

    Additional paid-in capital

    3,087,650



    2,821,461

    Accumulated other comprehensive loss

    (24,548)



    (19,360)

    Accumulated deficit

    (1,099,046)



    (1,670,219)

    Total stockholders' equity

    1,961,406



    1,129,739

    Total liabilities and equity

    $           3,753,941



    $           2,971,290

     

    DOCUSIGN, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (Unaudited)





    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands)

    2024



    2023



    2024



    2023

    Cash flows from operating activities:















    Net income

    $   888,211



    $      7,395



    $   921,971



    $      7,934

    Adjustments to reconcile net income to net cash provided by operating activities:















    Depreciation and amortization

    27,022



    25,238



    51,528



    48,105

    Amortization of deferred contract acquisition and fulfillment costs

    57,255



    50,152



    111,467



    98,382

    Amortization of debt discount and transaction costs

    139



    1,249



    277



    2,495

    Non-cash operating lease costs

    4,984



    5,751



    9,862



    11,731

    Stock-based compensation expense

    164,656



    151,707



    307,160



    296,413

    Deferred income taxes

    (826,038)



    1,797



    (824,561)



    3,420

    Other

    3,851



    49



    5,323



    (782)

    Changes in operating assets and liabilities:















    Accounts receivable

    (7,068)



    (8,478)



    123,571



    99,803

    Prepaid expenses and other current assets

    (6)



    2,383



    (17,067)



    (14,420)

    Deferred contract acquisition and fulfillment costs

    (68,183)



    (56,830)



    (131,255)



    (113,356)

    Other assets

    (16,975)



    (772)



    (15,058)



    (8,433)

    Accounts payable

    (10,412)



    (11,273)



    (11,575)



    (20,294)

    Accrued expenses and other liabilities

    (4,680)



    9,069



    (8,160)



    10,164

    Accrued compensation

    25,146



    18,270



    (19,902)



    (3,312)

    Contract liabilities

    (11,553)



    22,171



    (16,526)



    40,458

    Operating lease liabilities

    (6,141)



    (6,862)



    (12,021)



    (13,657)

    Net cash provided by operating activities

    220,208



    211,016



    475,034



    444,651

    Cash flows from investing activities:















    Cash paid for acquisition, net of acquired cash

    (143,611)



    —



    (143,611)



    —

    Purchases of marketable securities

    (103,603)



    (120,542)



    (223,241)



    (174,372)

    Maturities of marketable securities

    93,509



    83,318



    175,623



    164,017

    Purchases of strategic and other investments

    (125)



    (120)



    (625)



    (120)

    Purchases of property and equipment

    (22,280)



    (27,379)



    (45,033)



    (46,436)

    Net cash used in investing activities

    (176,110)



    (64,723)



    (236,887)



    (56,911)

    Cash flows from financing activities:















    Repurchases of common stock

    (200,076)



    (30,008)



    (349,138)



    (70,480)

    Settlement of capped calls, net of related costs

    —



    —



    —



    23,688

    Payment of tax withholding obligation on net RSU settlement and ESPP purchase

    (39,446)



    (40,044)



    (81,083)



    (62,681)

    Proceeds from exercise of stock options

    454



    705



    1,089



    832

    Proceeds from employee stock purchase plan

    —



    —



    20,190



    18,390

    Net cash used in financing activities

    (239,068)



    (69,347)



    (408,942)



    (90,251)

    Effect of foreign exchange on cash, cash equivalents and restricted cash

    238



    1,279



    (2,677)



    2,290

    Net increase (decrease) in cash, cash equivalents and restricted cash

    (194,732)



    78,225



    (173,472)



    299,779

    Cash, cash equivalents and restricted cash at beginning of period (1)

    822,759



    944,755



    801,499



    723,201

    Cash, cash equivalents and restricted cash at end of period (1)

    $   628,027



    $  1,022,980



    $   628,027



    $  1,022,980

    (1) Cash, cash equivalents and restricted cash included restricted cash of $9.0 million and $4.4 million at July 31, 2024 and January 31, 2024.

     

    DOCUSIGN, INC.

    RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

    (Unaudited)



    Reconciliation of gross profit (loss) and gross margin:



    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands)

    2024



    2023



    2024



    2023

    GAAP gross profit

    $   580,562



    $   542,105



    $  1,140,756



    $  1,067,006

    Add: Stock-based compensation

    20,591



    20,367



    39,474



    38,454

    Add: Amortization of acquisition-related intangibles

    3,067



    2,314



    5,137



    4,717

    Add: Employer payroll tax on employee stock transactions

    816



    713



    1,839



    1,387

    Add: Lease-related impairment and lease-related charges

    —



    292



    —



    721

    Non-GAAP gross profit

    $   605,036



    $   565,791



    $  1,187,206



    $  1,112,285

    GAAP gross margin

    78.9 %



    78.8 %



    78.9 %



    79.1 %

    Non-GAAP adjustments

    3.3 %



    3.5 %



    3.1 %



    3.3 %

    Non-GAAP gross margin

    82.2 %



    82.3 %



    82.0 %



    82.4 %

















    GAAP subscription gross profit

    $   584,994



    $   553,182



    $  1,149,875



    $  1,083,547

    Add: Stock-based compensation

    15,593



    13,081



    29,774



    24,438

    Add: Amortization of acquisition-related intangibles

    3,067



    2,314



    5,137



    4,717

    Add: Employer payroll tax on employee stock transactions

    595



    465



    1,387



    930

    Add: Lease-related impairment and lease-related charges

    —



    206



    —



    505

    Non-GAAP subscription gross profit

    $   604,249



    $   569,248



    $  1,186,173



    $  1,114,137

    GAAP subscription gross margin

    81.5 %



    82.6 %



    81.6 %



    82.8 %

    Non-GAAP adjustments

    2.7 %



    2.4 %



    2.6 %



    2.3 %

    Non-GAAP subscription gross margin

    84.2 %



    85.0 %



    84.2 %



    85.1 %

















    GAAP professional services and other gross loss

    $    (4,432)



    $  (11,077)



    $    (9,119)



    $  (16,541)

    Add: Stock-based compensation

    4,998



    7,286



    9,700



    14,016

    Add: Employer payroll tax on employee stock transactions

    221



    248



    452



    457

    Add: Lease-related impairment and lease-related charges

    —



    86



    —



    216

    Non-GAAP professional services and other gross profit

    $         787



    $    (3,457)



    $      1,033



    $    (1,852)

    GAAP professional services and other gross margin

    (23.8) %



    (60.4) %



    (24.8) %



    (40.9) %

    Non-GAAP adjustments

    28.0 %



    41.5 %



    27.6 %



    36.3 %

    Non-GAAP professional services and other gross margin

    4.2 %



    (18.9) %



    2.8 %



    (4.6) %

     

    Reconciliation of operating expenses:



    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands)

    2024



    2023



    2024



    2023

    GAAP sales and marketing

    $ 287,464



    $ 294,838



    $ 569,108



    $ 575,443

    Less: Stock-based compensation

    (58,778)



    (51,563)



    (105,049)



    (96,889)

    Less: Amortization of acquisition-related intangibles

    (3,113)



    (2,630)



    (5,742)



    (5,259)

    Less: Employer payroll tax on employee stock transactions

    (1,595)



    (1,400)



    (3,733)



    (3,070)

    Less: Lease-related impairment and lease-related charges

    —



    (815)



    —



    (2,171)

    Non-GAAP sales and marketing

    $ 223,978



    $ 238,430



    $ 454,584



    $ 468,054

    GAAP sales and marketing as a percentage of revenue

    39.1 %



    42.9 %



    39.4 %



    42.7 %

    Non-GAAP sales and marketing as a percentage of revenue

    30.4 %



    34.7 %



    31.4 %



    34.7 %

















    GAAP research and development

    $ 147,571



    $ 135,960



    $ 281,891



    $ 251,324

    Less: Stock-based compensation

    (53,430)



    (45,151)



    (97,632)



    (81,148)

    Less: Employer payroll tax on employee stock transactions

    (1,754)



    (1,387)



    (4,319)



    (2,795)

    Less: Lease-related impairment and lease-related charges

    —



    (381)



    —



    (873)

    Non-GAAP research and development

    $   92,387



    $   89,041



    $ 179,940



    $ 166,508

    GAAP research and development as a percentage of revenue

    20.0 %



    19.8 %



    19.5 %



    18.6 %

    Non-GAAP research and development as a percentage of revenue

    12.6 %



    12.9 %



    12.4 %



    12.3 %

















    GAAP general and administrative

    $   87,129



    $ 103,884



    $ 179,607



    $ 208,695

    Less: Stock-based compensation

    (31,649)



    (34,592)



    (60,169)



    (74,934)

    Less: Employer payroll tax on employee stock transactions

    (607)



    (546)



    (1,285)



    (978)

    Less: Acquisition-related expenses

    (3,358)



    —



    (4,716)



    —

    Less: Lease-related impairment and lease-related charges

    —



    (296)



    —



    (695)

    Non-GAAP general and administrative

    $   51,515



    $   68,450



    $ 113,437



    $ 132,088

    GAAP general and administrative as a percentage of revenue

    11.8 %



    15.1 %



    12.4 %



    15.4 %

    Non-GAAP general and administrative as a percentage of revenue

    7.0 %



    10.0 %



    7.8 %



    9.8 %

     

    Reconciliation of income from operations and operating margin:



    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands)

    2024



    2023



    2024



    2023

    GAAP income from operations

    $   57,801



    $    6,612



    $   80,429



    $    1,961

    Add: Stock-based compensation

    164,448



    151,673



    302,324



    291,425

    Add: Amortization of acquisition-related intangibles

    6,180



    4,944



    10,879



    9,976

    Add: Employer payroll tax on employee stock transactions

    4,772



    4,046



    11,176



    8,230

    Add: Acquisition-related expenses

    3,358



    —



    4,716



    —

    Add: Restructuring and other related charges

    597



    811



    29,721



    29,583

    Add: Lease-related impairment and lease-related charges

    —



    1,784



    —



    4,460

    Non-GAAP income from operations

    $ 237,156



    $ 169,870



    $ 439,245



    $ 345,635

    GAAP operating margin

    7.9 %



    1.0 %



    5.6 %



    0.1 %

    Non-GAAP adjustments

    24.3 %



    23.7 %



    24.8 %



    25.5 %

    Non-GAAP operating margin

    32.2 %



    24.7 %



    30.4 %



    25.6 %

     

    Reconciliation of net income and net income per share, basic and diluted:



    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands, except per share data)

    2024



    2023



    2024



    2023

    GAAP net income

    $    888,211



    $       7,395



    $    921,971



    $       7,934

    Add: Stock-based compensation

    164,448



    151,673



    302,324



    291,425

    Add: Amortization of acquisition-related intangibles

    6,180



    4,944



    10,879



    9,976

    Add: Employer payroll tax on employee stock transactions

    4,772



    4,046



    11,176



    8,230

    Add: Acquisition-related expenses

    3,358



    —



    4,716



    —

    Add: Restructuring and other related charges

    597



    811



    29,721



    29,583

    Add: Amortization of debt discount and issuance costs

    —



    1,294



    —



    2,898

    Add: Fair value adjustments to strategic investments

    —



    —



    —



    119

    Add: Lease-related impairment and lease-related charges

    —



    1,784



    —



    4,460

    Add: Income tax and other tax adjustments

    (866,572)



    (22,325)



    (906,950)



    (54,790)

    Non-GAAP net income

    $    200,994



    $    149,622



    $    373,837



    $    299,835

















    Numerator:















    Non-GAAP net income

    $    200,994



    $    149,622



    $    373,837



    $    299,835

    Add: Interest expense on convertible senior notes

    —



    46



    —



    403

    Non-GAAP net income attributable to common stockholders, diluted

    $    200,994



    $    149,668



    $    373,837



    $    300,238

















    Denominator:















    Weighted-average common shares outstanding, basic

    204,604



    203,703



    205,231



    203,177

    Effect of dilutive securities

    3,670



    4,489



    4,328



    5,107

    Non-GAAP weighted-average common shares outstanding, diluted

    208,274



    208,192



    209,559



    208,284

















    GAAP net income per share, basic

    $         4.34



    $         0.04



    $         4.49



    $         0.04

    GAAP net income per share, diluted

    $         4.26



    $         0.04



    $         4.40



    $         0.04

    Non-GAAP net income per share, basic

    $         0.98



    $         0.73



    $         1.82



    $         1.48

    Non-GAAP net income per share, diluted

    $         0.97



    $         0.72



    $         1.78



    $         1.44

     

    Computation of free cash flow:



    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands)

    2024



    2023



    2024



    2023

    Net cash provided by operating activities

    $    220,208



    $    211,016



    $    475,034



    $    444,651

    Less: Purchases of property and equipment

    (22,280)



    (27,379)



    (45,033)



    (46,436)

    Non-GAAP free cash flow

    $    197,928



    $    183,637



    $    430,001



    $    398,215

    Net cash used in investing activities

    $  (176,110)



    $    (64,723)



    $  (236,887)



    $    (56,911)

    Net cash used in financing activities

    $  (239,068)



    $    (69,347)



    $  (408,942)



    $    (90,251)

     

    Computation of billings:



    Three Months Ended

    July 31,



    Six Months Ended

    July 31,

    (in thousands)

    2024



    2023



    2024



    2023

    Revenue

    $    736,027



    $    687,687



    $ 1,445,667



    $ 1,349,075

    Add: Contract liabilities and refund liability, end of period

    1,334,461



    1,233,894



    1,334,461



    1,233,894

    Less: Contract liabilities and refund liability, beginning of period

    (1,340,680)



    (1,210,965)



    (1,343,792)



    (1,191,269)

    Add: Contract assets and unbilled accounts receivable, beginning of period

    17,179



    22,936



    20,189



    16,615

    Less: Contract assets and unbilled accounts receivable, end of period

    (17,461)



    (22,358)



    (17,461)



    (22,358)

    Add: Contract assets and unbilled accounts receivable by acquisitions

    53



    —



    53



    —

    Less: Contract liabilities and refund liability contributed by acquisitions

    (5,071)



    —



    (5,071)



    —

    Non-GAAP billings

    $    724,508



    $    711,194



    $ 1,434,046



    $ 1,385,957

     

     

    Cision View original content:https://www.prnewswire.com/news-releases/docusign-announces-second-quarter-fiscal-2025-financial-results-302238864.html

    SOURCE DocuSign, Inc.

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