Financial Data and Key Metrics Changes - Revenue for Q2 was $801 million, up 9% year-over-year, while billings were $818 million, up 13% year-over-year, marking one of the strongest growth quarters in the past two years [6][14] - Non-GAAP operating margins were 30%, and free cash flow margins improved to 27%, supporting $200 million in share repurchases during the quarter [7][21] - Non-GAAP diluted EPS for Q2 was $0.92 compared to $0.97 last year, while GAAP diluted EPS was $0.30 versus $4.26 last year [22] Business Line Data and Key Metrics Changes - The e-signature and CLM segments showed improved fundamentals, with steady growth in envelopes sent and contract utilization [8][10] - The CLM business experienced strong year-over-year quarterly bookings growth, particularly with large deals like T-Mobile [10][36] - IAM sales maintained strong momentum, with an increase in average deal size and a growing share of direct deal volume [9][17] Market Data and Key Metrics Changes - International revenue represented 29% of total revenue and grew 13% year-over-year, with the Asia-Pacific region being the fastest-growing international market [18] - Total customers grew 9% year-over-year, ending the quarter above 1.7 million, while large customers spending over $300,000 annually increased by 7% [19] Company Strategy and Development Direction - The company focuses on three strategic pillars: strengthening routes to market, accelerating innovation, and improving operational efficiency [7][14] - The IAM platform is positioned to transform business operations with deeper insights and actionability from agreements, leveraging AI capabilities [11][13] - The partnership with the U.S. Federal Government's General Services Administration aims to expand e-signature sales to federal agencies [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall market trend, noting no significant evidence of macro weakness affecting contract volumes or utilization [31] - The company expects total revenue for Q3 to be between $804 to $808 million, reflecting a 7% year-over-year increase at the midpoint [22][23] - Management highlighted the importance of IAM in driving future growth and emphasized the need for continued investment in product innovation and go-to-market strategies [47][75] Other Important Information - The company is actively evaluating potential updates to future top-line reporting, including replacing billings with an alternative measure [16] - The cloud migration continues to impact margins, but the company expects to see a gradual easing of these pressures in fiscal 2027 and beyond [26][76] Q&A Session Summary Question: What is driving improved fundamentals across core e-signature? - Management noted strong growth in specific verticals like financial services and healthcare, with no significant macro weakness observed [29][31] Question: Can you discuss the pipeline for CLM and whether the recent success is sustainable? - Management indicated a positive overall trend but cautioned against overinterpreting the strong quarter as a breakout for the category [36] Question: How has the rollout of IAM in new markets progressed? - Management reported encouraging signs of larger deals with enterprise customers and noted that IAM is becoming a critical part of their growth strategy [39][40] Question: What are the economics when a customer adopts IAM? - Management stated that IAM adoption leads to meaningful expansion for customers, although it is still early to quantify the exact impact [45][46] Question: What are the drivers behind improved gross retention? - Management highlighted operational execution and proactive engagement with customers as key factors in improving gross retention rates [52][54] Question: What does the partnership with the U.S. Federal Government mean for the federal business? - Management expressed optimism about the growth opportunity in the federal sector, although it is still early days for significant contributions [58][59] Question: How have sales reps adapted to the changes made at the beginning of the year? - Management reported positive adaptation among sales reps, with new incentive systems and enablement leading to strong direct sales performance [63][64] Question: How does the company differentiate itself in the competitive AI landscape? - Management emphasized their unique position due to extensive agreement data and integration capabilities, which provide a competitive advantage [87][88]

Financial Data and Key Metrics Changes - Revenue for Q2 was $801 million, up 9% year-over-year, and billings were $818 million, up 13% year-over-year, marking one of the strongest growth quarters in the past two years [5][14] - Non-GAAP operating margins were 30%, with free cash flow margins improving to 27%, supporting $200 million in share repurchases this quarter [5][21] - Non-GAAP diluted EPS for Q2 was $0.92 compared to $0.97 last year, while GAAP diluted EPS was $0.30 versus $4.26 last year [22] Business Line Data and Key Metrics Changes - The e-signature and CLM segments showed improved fundamentals, with strong performance in commercial and enterprise customer segments [5][14] - Dollar net retention increased to 102%, reflecting higher gross retention rates [6][16] - The CLM business grew well into double digits year-over-year in Q2, with significant deals closed, including T-Mobile [9][15] Market Data and Key Metrics Changes - International revenue represented 29% of total revenue and grew 13% year-over-year, with the Asia-Pacific region being the fastest-growing international market [17][18] - Total customers grew 9% year-over-year, ending the quarter above 1.7 million, with large customers spending over $300,000 annually increasing by 7% year-over-year [18] Company Strategy and Development Direction - The company is focused on three strategic pillars: strengthening routes to market, accelerating innovation, and improving operational efficiency [6][14] - The IAM platform is positioned to transform business operations with deeper insights and actionability from agreements, with plans to launch AI agents to expand market opportunities [10][12] - The partnership with the U.S. Federal Government's General Services Administration aims to expand e-signature sales to federal agencies [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for e-signature and IAM, with no significant evidence of macroeconomic weakness impacting contract volumes [30][32] - The company expects total revenue for Q3 to be between $804 to $808 million, reflecting a 7% year-over-year increase at the midpoint [22][23] - Management highlighted the importance of operational execution in improving gross retention rates and the potential for further growth through IAM [52][53] Other Important Information - The company ended Q2 with approximately $1.1 billion in cash and no debt on the balance sheet, indicating a healthy financial position [21] - The cloud migration continues to impact margins, but the company expects to see a gradual easing of these impacts in fiscal 2027 and beyond [25][26] Q&A Session Summary Question: What is driving the improved fundamentals in e-signature? - Management noted strong growth in verticals like financial services and healthcare, with no significant macro weakness observed [29][30] Question: Can you discuss the pipeline for CLM? - Management indicated a positive overall trend but cautioned against overinterpreting Q2 as a breakout quarter [35][36] Question: How is the rollout in new markets progressing? - Management reported encouraging signs of larger deals with enterprise customers and noted that IAM is gaining traction internationally [38][39] Question: What are the economics of adopting IAM? - Management stated that IAM is critical for year-on-year growth and is expected to represent a low double-digit percentage of overall bookings [44][47] Question: What are the drivers behind improved gross retention? - Management highlighted operational execution and proactive engagement with customers as key factors in improving retention rates [52][53] Question: What does the partnership with the U.S. Federal Government mean for the business? - Management expressed optimism about the growth opportunity in the federal sector, although it remains a modest contributor currently [58][59] Question: How have sales reps adapted to the changes made at the beginning of the year? - Management reported positive adaptation among sales reps, with no significant changes planned for the foreseeable future [62][63] Question: How is customer acceptance for AI features progressing? - Management indicated strong customer engagement with AI features, with nearly 100 million agreements ingested for processing [68][70] Question: When will the cloud transition be less of a headwind? - Management expects the peak impact from cloud migration costs to occur this year, with improvements anticipated in FY2027 [75][77]

Q2 FY26 Performance Highlights - Total revenue reached $801 million, demonstrating a 9% year-over-year growth[14] - Billings increased by 13% year-over-year, reaching $818 million[14] - Non-GAAP operating margin was 29.8%, resulting in $218 million[14] - Free cash flow represented 27% of total revenue[14] - International revenue grew by 13% year-over-year and accounted for 29% of total revenue[42] Customer Base and Agreement Management - The company has over 1740000 customers and more than 1 billion users across 180+ countries[14] - 95% of Fortune 500 companies are Docusign customers[14] - Docusign is helping 10000+ organizations advance their agreement maturity with IAM[36] Financial Guidance - Q3 FY26 total revenue is projected to be between $804 million and $808 million, representing a 7% year-over-year change[73] - FY26 total revenue is projected to be between $3189 million and $3201 million, representing a 7% year-over-year change[76]

Core Insights - DocuSign reported strong Q2 results with earnings of 92 cents per share, exceeding the consensus estimate of 84 cents [1] - Quarterly revenue reached $800.64 million, surpassing the Street estimate of $780.24 million and increasing from $736.03 million year-over-year [1][4] - The company raised its fiscal 2026 revenue outlook to between $3.19 billion and $3.2 billion, compared to the previous estimate of $3.16 billion [3] Financial Highlights - Subscription revenue was $784.4 million, reflecting a 9% year-over-year increase [4] - Professional services and other revenue totaled $16.2 million, showing a 13% year-over-year decrease [4] - Billings amounted to $818.0 million, a 13% year-over-year increase, with approximately 1% positive impact from foreign currency exchange rates [4] - Non-GAAP gross margin was 82%, slightly down from 82.2% in the same period last year [4] Management Commentary - CEO Allan Thygesen highlighted that Q2 was an outstanding quarter driven by AI innovation and go-to-market changes, leading to strong performance across eSignature, CLM, and IAM businesses [2] - Thygesen noted that the business results outperformed expectations, marking one of DocuSign's highest growth and profitability quarters in recent years [2]

Group 1 - The second quarter earnings season is concluding with mostly positive results, as 98% of S&P 500 companies have reported, leading to an expected 11.9% increase in earnings per share [1] - Analysts had initially projected a 5% rise in S&P 500 earnings for Q2, marking the slowest growth since Q4 2023, influenced by factors such as President Trump's tariffs and economic uncertainty [2] - A variety of companies have reported earnings this week, including Zscaler, NIO, Salesforce, and others, with particular attention on Nvidia's earnings from the previous week [3] Group 2 - Additional companies reporting include PDD Holdings, Alibaba, Okta, and several others, indicating a broad range of corporate earnings updates from the market [4] - For ongoing updates on earnings reports and analysis, resources are available for the latest financial news [5]

[Executive Summary & Q2 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%20Highlights) Docusign achieved strong Q2 FY2026 performance, driven by AI innovation and go-to-market changes, resulting in high growth and profitability across eSignature, CLM, and IAM businesses [Q2 Fiscal 2026 Performance Overview](index=1&type=section&id=Q2%20Fiscal%202026%20Performance%20Overview) Docusign reported an outstanding second quarter for fiscal year 2026, driven by AI innovation launches and recent go-to-market changes, achieving strong performance across its eSignature, CLM, and IAM businesses, leading to one of its highest growth and profitability quarters in recent years - CEO Allan Thygesen stated Q2 was an **'outstanding quarter'** with strong performance across eSignature, CLM, and IAM businesses, leading to **'one of Docusign's highest growth and profitability quarters in recent years.'**[2](index=2&type=chunk) [Key Business Highlights](index=1&type=section&id=Key%20Business%20Highlights) Docusign launched new AI-powered capabilities for its Intelligent Agreement Management (IAM) platform, enhancing agreement preparation, identity verification, and custom data extraction, while also introducing CLM product releases and receiving recognition as an IDC MarketScape Leader - Docusign launched new AI-powered Intelligent Agreement Management (IAM) capabilities to unlock value across the agreement management lifecycle[3](index=3&type=chunk) - New IAM capabilities include Agreement Preparation (automatic template building, field suggestions), Docusign ID Verification with CLEAR (biometric identity network integration), and Custom Extractions in Docusign Navigator (capturing organization-specific information at scale)[4](index=4&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk) - CLM product releases include System for Cross-domain Identity Management (SCIM) for automated user provisioning and Maestro Workflow Templates for codeless automation of agreement processes; Docusign was recognized as an IDC MarketScape Leader for AI-Enabled Buy-Side CLM Applications[10](index=10&type=chunk) [Second Quarter Financial Highlights](index=1&type=section&id=Second%20Quarter%20Financial%20Highlights) Docusign reported strong financial performance in Q2 FY2026, with total revenue increasing 9% year-over-year to $800.6 million and billings growing 13% to $818.0 million, alongside a non-GAAP diluted EPS of $0.92 and free cash flow of $217.6 million Q2 Fiscal 2026 Key Financial Highlights | Metric | Q2 FY2026 (Millions) | YoY Change | | :-------------------------------- | :------------------- | :--------- | | Revenue | $800.6 | 9% | | Subscription revenue | $784.4 | 9% | | Professional services and other revenue | $16.2 | -13% | | Billings | $818.0 | 13% | | GAAP gross margin | 79.3% | +0.4 pp | | Non-GAAP gross margin | 82.0% | -0.2 pp | | GAAP net income per diluted share | $0.30 | -92.9% | | Non-GAAP net income per diluted share | $0.92 | -5.2% | | Net cash provided by operating activities | $246.1 | +11.8% | | Free cash flow | $217.6 | +10.0% | | Cash, cash equivalents, and investments (end of quarter) | $1.1 billion | NA | | Repurchases of common stock | $201.5 | +0.7% | [Guidance](index=3&type=section&id=Guidance) Docusign provides financial guidance for Q3 and full-year fiscal 2026, projecting continued revenue and billings growth with stable margins [Q3 Fiscal 2026 Outlook](index=3&type=section&id=Q3%20Fiscal%202026%20Outlook) For the third quarter ending October 31, 2025, Docusign projects total revenue between $804 million and $808 million, representing a 7% year-over-year midpoint change, with billings expected to be $785 million to $795 million, a 5% YoY midpoint change Q3 Fiscal 2026 Guidance (Three Months Ended October 31, 2025) | Metric | Range (Millions) | YoY Midpoint Change | | :-------------------------------------- | :------------------- | :------------------ | | Total revenue | $804 to $808 | 7% | | Subscription revenue | $786 to $790 | 7% | | Billings | $785 to $795 | 5% | | Non-GAAP gross margin | 80.3% to 81.3% | NA | | Non-GAAP operating margin | 28.0% to 29.0% | NA | | Non-GAAP diluted weighted-average shares outstanding | 207 to 212 | NA | - Foreign currency exchange rates are expected to have an approximately neutral impact on year-over-year guided revenue growth for Q3 FY2026[11](index=11&type=chunk) [Full Year Fiscal 2026 Outlook](index=3&type=section&id=Full%20Year%20Fiscal%202026%20Outlook) Docusign anticipates full-year fiscal 2026 total revenue to be between $3,189 million and $3,201 million, a 7% year-over-year midpoint increase, with billings projected to be $3,325 million to $3,355 million, reflecting a 7% YoY midpoint change Full Year Fiscal 2026 Guidance (Year Ended January 31, 2026) | Metric | Range (Millions) | YoY Midpoint Change | | :-------------------------------------- | :------------------- | :------------------ | | Total revenue | $3,189 to $3,201 | 7% | | Subscription revenue | $3,121 to $3,133 | 8% | | Billings | $3,325 to $3,355 | 7% | | Non-GAAP gross margin | 81.0% to 82.0% | NA | | Non-GAAP operating margin | 28.6% to 29.6% | NA | | Non-GAAP diluted weighted-average shares outstanding | 207 to 212 | NA | - Foreign currency exchange rates are expected to have an approximately neutral impact on year-over-year guided revenue growth for the full fiscal year 2026[11](index=11&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of Docusign's mission, customer reach, investor relations details, and recent updates to its Board of Directors [About Docusign](index=4&type=section&id=About%20Docusign) Docusign provides solutions for intelligent agreement management, serving over 1.7 million customers and a billion people in over 180 countries, leveraging its leadership in e-signature and CLM to help businesses create, commit, and manage agreements - Docusign serves over **1.7 million customers** and more than a **billion people** in over **180 countries**[14](index=14&type=chunk) - The company's Intelligent Agreement Management (IAM) platform aims to unleash business-critical data trapped in documents, integrating with business systems of record[14](index=14&type=chunk) [Webcast and Investor Relations](index=4&type=section&id=Webcast%20Conference%20Call%20Information) Docusign hosted a conference call on September 4, 2025, to discuss its financial results, with a live webcast available on its investor relations website, and replays also made available - A conference call was held on September 4, 2025, at 2:00 p.m. PT (5:00 p.m. ET) to discuss financial results[13](index=13&type=chunk) - A live webcast and prepared remarks were accessible on Docusign's investor relations website (investor.docusign.com)[13](index=13&type=chunk) [Board of Directors and Governance Updates](index=2&type=section&id=Board%20of%20Directors%20and%20Governance%20Updates) Mike Rosenbaum, CEO of Guidewire, joined Docusign's board, bringing expertise in platform growth, product, and go-to-market strategies, while James Beer was appointed as the next Board Chair, succeeding Maggie Wilderotter at the end of the current fiscal year, leveraging his extensive finance and strategy experience - Mike Rosenbaum, CEO of Guidewire, joined Docusign's board, bringing valuable platform growth, product, and go-to-market experience[10](index=10&type=chunk) - James Beer, a seasoned public company director with CFO experience, was appointed as Docusign's next Board Chair, effective at the end of the current fiscal year[10](index=10&type=chunk) [Non-GAAP Financial Measures and Other Key Metrics](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Other%20Key%20Metrics) This section explains Docusign's non-GAAP financial measures and defines key metrics used to assess core operating performance and liquidity [Explanation of Non-GAAP Measures](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Docusign uses non-GAAP financial measures to supplement GAAP statements, believing they provide useful information for understanding core operating performance, enhancing transparency, and facilitating comparisons, by excluding items not considered reflective of ongoing operations - Non-GAAP measures are used to understand core operating performance, enhance understanding of past performance and future prospects, and allow for greater transparency[21](index=21&type=chunk) - Exclusions from GAAP measures for non-GAAP calculations include stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, acquisition-related expenses, and restructuring charges[22](index=22&type=chunk) [Definitions of Key Metrics](index=6&type=section&id=Definitions%20of%20Key%20Metrics) This section defines key non-GAAP metrics used by Docusign, including gross profit, operating expenses, income from operations, net income, free cash flow, and billings, explaining their calculation and relevance to the company's financial and operational decision-making - **Non-GAAP Gross Profit, Operating Expenses, Income from Operations, Net Income, and Net Income Per Share:** Defined as respective GAAP measures, excluding stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, acquisition-related expenses, and restructuring charges; a fixed long-term projected tax rate (20% for FY2025, 21% for FY2026) is used for non-GAAP net income[22](index=22&type=chunk) - **Free Cash Flow:** Defined as net cash provided by operating activities less purchases of property and equipment, serving as an important liquidity measure for operational expenses, business investment, and acquisitions[23](index=23&type=chunk) - **Billings:** Defined as total revenues plus the change in contract liabilities and refund liability less contract assets and unbilled accounts receivable; it reflects sales to new customers, subscription renewals, and additional sales to existing customers, measuring periodic performance and working capital generated by upfront payments[24](index=24&type=chunk) [Financial Statements (GAAP)](index=7&type=section&id=Financial%20Statements%20(GAAP)) This section presents Docusign's GAAP condensed consolidated statements, including operations, balance sheets, and cash flows for Q2 FY2026 [Condensed Consolidated Statements of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Docusign's GAAP condensed consolidated statements of operations show total revenue of $800.6 million for Q2 FY2026, up from $736.0 million in Q2 FY2025, while net income significantly decreased to $63.0 million in Q2 FY2026 from $888.2 million in Q2 FY2025, primarily due to a large income tax benefit in the prior year Condensed Consolidated Statements of Operations (Three Months Ended July 31) | Metric (in thousands) | Q2 FY2026 | Q2 FY2025 | YoY Change | | :-------------------------------------- | :---------- | :---------- | :--------- | | Total revenue | $800,636 | $736,027 | +8.8% | | Subscription revenue | $784,388 | $717,366 | +9.3% | | Professional services and other revenue | $16,248 | $18,661 | -13.0% | | Gross profit | $635,173 | $580,562 | +9.4% | | Income from operations | $65,227 | $57,801 | +12.8% | | Net income | $62,970 | $888,211 | -92.9% | | Net income per diluted share | $0.30 | $4.26 | -92.9% | [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of July 31, 2025, Docusign's total assets were $3.95 billion, a slight decrease from $4.01 billion at January 31, 2025, with total liabilities also decreasing to $1.96 billion from $2.01 billion, while total stockholders' equity remained relatively stable at $1.99 billion Condensed Consolidated Balance Sheets (as of July 31, 2025 vs. January 31, 2025) | Metric (in thousands) | July 31, 2025 | January 31, 2025 | Change | | :-------------------------------- | :-------------- | :--------------- | :------- | | Total assets | $3,949,923 | $4,012,705 | -1.6% | | Total current assets | $1,319,050 | $1,489,261 | -11.4% | | Cash and cash equivalents | $599,986 | $648,623 | -7.5% | | Total liabilities | $1,961,948 | $2,010,013 | -2.4% | | Total current liabilities | $1,776,445 | $1,831,910 | -3.0% | | Total stockholders' equity | $1,987,975 | $2,002,692 | -0.7% | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For Q2 FY2026, net cash provided by operating activities increased to $246.1 million from $220.2 million in the prior year, while net cash used in investing activities decreased significantly to $30.5 million from $176.1 million, largely due to no acquisitions in the current quarter, and net cash used in financing activities increased to $273.3 million Condensed Consolidated Statements of Cash Flows (Three Months Ended July 31) | Metric (in thousands) | Q2 FY2026 | Q2 FY2025 | YoY Change | | :-------------------------------------- | :---------- | :---------- | :--------- | | Net cash provided by operating activities | $246,073 | $220,208 | +11.8% | | Net cash used in investing activities | $(30,452) | $(176,110) | +82.7% | | Net cash used in financing activities | $(273,340) | $(239,068) | -14.3% | | Net decrease in cash, cash equivalents and restricted cash | $(56,190) | $(194,732) | +71.1% | - The significant decrease in net cash used in investing activities was primarily due to no cash paid for acquisitions in Q2 FY2026, compared to $143.6 million in Q2 FY2025[34](index=34&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) This section reconciles Docusign's GAAP financial results to non-GAAP measures for gross profit, operating expenses, income, net income, free cash flow, and billings [Reconciliation of Gross Profit and Gross Margin](index=10&type=section&id=Reconciliation%20of%20gross%20profit%20(loss)%20and%20gross%20margin) For Q2 FY2026, Docusign's non-GAAP gross profit was $656.9 million, resulting in a non-GAAP gross margin of 82.0%, which compares to a GAAP gross profit of $635.2 million and a GAAP gross margin of 79.3%, with adjustments primarily for stock-based compensation and amortization of acquisition-related intangibles Gross Profit and Gross Margin Reconciliation (Three Months Ended July 31) | Metric (in thousands) | Q2 FY2026 | Q2 FY2025 | YoY Change (Q2 FY26 vs Q2 FY25) | | :-------------------------------------- | :---------- | :---------- | :------------------------------ | | GAAP gross profit | $635,173 | $580,562 | +9.4% | | Non-GAAP gross profit | $656,902 | $605,036 | +8.6% | | GAAP gross margin | 79.3% | 78.9% | +0.4 pp | | Non-GAAP gross margin | 82.0% | 82.2% | -0.2 pp | [Reconciliation of Operating Expenses](index=11&type=section&id=Reconciliation%20of%20operating%20expenses) Non-GAAP operating expenses for Q2 FY2026 were lower than GAAP figures across all categories due to exclusions like stock-based compensation, with non-GAAP sales and marketing expenses at $250.1 million (31.2% of revenue), non-GAAP R&D at $105.2 million (13.1% of revenue), and non-GAAP G&A at $63.0 million (7.9% of revenue) Operating Expenses Reconciliation (Three Months Ended July 31) | Metric (in thousands) | Q2 FY2026 (GAAP) | Q2 FY2026 (Non-GAAP) | Q2 FY2025 (GAAP) | Q2 FY2025 (Non-GAAP) | | :-------------------------------------- | :--------------- | :------------------- | :--------------- | :------------------- | | Sales and marketing | $305,450 | $250,053 | $287,464 | $223,978 | | Sales and marketing as % of revenue | 38.2% | 31.2% | 39.1% | 30.4% | | Research and development | $169,630 | $105,165 | $147,571 | $92,387 | | Research and development as % of revenue | 21.2% | 13.1% | 20.0% | 12.6% | | General and administrative | $94,866 | $62,955 | $87,129 | $51,515 | | General and administrative as % of revenue | 11.8% | 7.9% | 11.8% | 7.0% | [Reconciliation of Income from Operations and Operating Margin](index=11&type=section&id=Reconciliation%20of%20income%20from%20operations%20and%20operating%20margin) Docusign's non-GAAP income from operations for Q2 FY2026 was $238.7 million, significantly higher than the GAAP income from operations of $65.2 million, resulting in a non-GAAP operating margin of 29.8% compared to a GAAP operating margin of 8.1%, after adjusting for stock-based compensation and other non-operating items Income from Operations and Operating Margin Reconciliation (Three Months Ended July 31) | Metric (in thousands) | Q2 FY2026 (GAAP) | Q2 FY2026 (Non-GAAP) | Q2 FY2025 (GAAP) | Q2 FY2025 (Non-GAAP) | | :-------------------------------------- | :--------------- | :------------------- | :--------------- | :------------------- | | Income from operations | $65,227 | $238,729 | $57,801 | $237,156 | | Operating margin | 8.1% | 29.8% | 7.9% | 32.2% | [Reconciliation of Net Income and Net Income Per Share](index=12&type=section&id=Reconciliation%20of%20net%20income%20and%20net%20income%20per%20share,%20basic%20and%20diluted) For Q2 FY2026, non-GAAP net income attributable to common stockholders was $195.1 million, leading to a non-GAAP diluted net income per share of $0.92, which contrasts with GAAP net income of $63.0 million and diluted EPS of $0.30, with significant adjustments for stock-based compensation and income tax Net Income and Net Income Per Share Reconciliation (Three Months Ended July 31) | Metric (in thousands, except per share data) | Q2 FY2026 (GAAP) | Q2 FY2026 (Non-GAAP) | Q2 FY2025 (GAAP) | Q2 FY2025 (Non-GAAP) | | :------------------------------------------------ | :--------------- | :------------------- | :--------------- | :------------------- | | Net income attributable to common stockholders | $62,970 | $195,085 | $888,211 | $200,994 | | Net income per share, diluted | $0.30 | $0.92 | $4.26 | $0.97 | [Computation of Free Cash Flow](index=12&type=section&id=Computation%20of%20free%20cash%20flow) Docusign's non-GAAP free cash flow for Q2 FY2026 was $217.6 million, calculated by subtracting purchases of property and equipment ($28.4 million) from net cash provided by operating activities ($246.1 million), representing a 10.0% increase year-over-year Free Cash Flow Computation (Three Months Ended July 31) | Metric (in thousands) | Q2 FY2026 | Q2 FY2025 | YoY Change | | :-------------------------------------- | :---------- | :---------- | :--------- | | Net cash provided by operating activities | $246,073 | $220,208 | +11.8% | | Less: Purchases of property and equipment | $(28,425) | $(22,280) | -27.6% | | Non-GAAP free cash flow | $217,648 | $197,928 | +10.0% | [Computation of Billings](index=13&type=section&id=Computation%20of%20billings) For Q2 FY2026, Docusign's non-GAAP billings totaled $818.0 million, an increase from $724.5 million in Q2 FY2025, with this calculation including adjustments for changes in contract liabilities and refund liability, as well as contract assets and unbilled accounts receivable Billings Computation (Three Months Ended July 31) | Metric (in thousands) | Q2 FY2026 | Q2 FY2025 | YoY Change | | :-------------------------------------- | :---------- | :---------- | :--------- | | Revenue | $800,636 | $736,027 | +8.8% | | Non-GAAP billings | $818,031 | $724,508 | +12.9% | [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines Docusign's forward-looking statements, highlighting inherent risks and uncertainties, and disclaims any obligation to update them [Forward-Looking Statements Disclaimer](index=5&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section contains forward-looking statements based on management's beliefs and assumptions, involving substantial risks and uncertainties, covering expectations regarding future operating results, financial position, business strategy, market growth, and the impact of various factors, including macroeconomic conditions, competition, technological changes, and the success of new products like the IAM platform, with the company disclaiming any obligation to update these statements - The press release contains forward-looking statements based on management's beliefs and assumptions, involving substantial risks and uncertainties[17](index=17&type=chunk) - These statements cover future operating results, financial position, business strategy, market growth, and trends, including expectations for revenue, billings, free cash flow, and the adoption of the Docusign IAM platform[17](index=17&type=chunk) - Risks include global macroeconomic conditions, market competition, infrastructure interruptions, ability to manage growth, attract customers, scale the platform, successfully develop IAM solutions, and maintain intellectual property[18](index=18&type=chunk) - Docusign undertakes no obligation to update any forward-looking statements after the date of the press release, except as required by law[19](index=19&type=chunk)

Core Insights - Docusign reported strong performance in Q2 2025, driven by AI innovations and go-to-market changes, marking one of its highest growth and profitability quarters in recent years [2][3]. Financial Highlights - Total revenue reached $800.6 million, a 9% year-over-year increase, with subscription revenue at $784.4 million, also a 9% increase. Professional services and other revenue decreased by 13% to $16.2 million [7]. - Billings were $818.0 million, reflecting a 13% year-over-year increase, with a 1% positive impact from foreign currency exchange rates [7]. - GAAP gross margin improved to 79.3% from 78.9% year-over-year, while non-GAAP gross margin slightly decreased to 82.0% from 82.2% [7]. - GAAP net income per basic share was $0.31, down from $4.34 in the same period last year, while non-GAAP net income per diluted share was $0.92, down from $0.97 [7]. - Free cash flow increased to $217.6 million from $197.9 million year-over-year [7]. Guidance - For the quarter ending October 31, 2025, total revenue is expected to be between $804 million and $808 million, representing a 7% year-over-year growth [11]. - Subscription revenue guidance is set between $786 million and $790 million, also indicating a 7% increase [11]. - Billings are projected to be between $785 million and $795 million, reflecting a 5% year-over-year growth [11]. Key Business Developments - Docusign launched new AI-powered capabilities within its Intelligent Agreement Management (IAM) platform, enhancing agreement management across the lifecycle [3][12]. - The integration with CLEAR's biometric identity network allows for faster ID verification [5]. - Custom Extractions feature in Docusign Navigator enables organizations to capture specific information from agreements efficiently [6]. - Docusign was recognized as a leader in IDC's MarketScape for AI-Enabled Buy-Side CLM Applications, emphasizing its strategic focus on IAM [12]. Governance Updates - Mike Rosenbaum, CEO of Guidewire, joined Docusign's board, bringing extensive SaaS experience [12]. - James Beer has been appointed as the next Board Chair, succeeding Maggie Wilderotter [12].

Core Insights - DocuSign, Inc. is set to release its second-quarter earnings results on September 4, with analysts expecting earnings of 85 cents per share, a decrease from 97 cents per share in the same quarter last year [1] - The company is projected to report quarterly revenue of $780.59 million, an increase from $736.03 million a year earlier [1] Financial Performance - In the first quarter, DocuSign reported earnings of 90 cents per share, surpassing the analyst consensus estimate of 81 cents [2] - Quarterly revenue for the first quarter was $763.7 million, exceeding the Street estimate of $748.13 million [2] - Following the first-quarter results, DocuSign shares increased by 2.5%, closing at $75.90 [2] Analyst Ratings and Price Targets - Wedbush analyst Daniel Ives maintained a Neutral rating and reduced the price target from $100 to $85 [7] - Citigroup analyst Tyler Radke kept a Buy rating but lowered the price target from $115 to $100 [7] - B of A Securities analyst Brad Sills maintained a Neutral rating and cut the price target from $88 to $85 [7] - Morgan Stanley analyst Josh Baer maintained an Equal-Weight rating and reduced the price target from $92 to $86 [7] - JP Morgan analyst Mark Murphy maintained a Neutral rating and lowered the price target from $81 to $77 [7]

Core Insights - Docusign has been recognized as a Leader in the IDC MarketScape for AI-Enabled Buy-Side Contract Lifecycle Management Applications 2025, highlighting its strong position in the market [1][3]. Company Overview - Docusign CLM utilizes the Intelligent Agreement Management (IAM) platform to streamline the contract process, offering features such as document generation, collaborative negotiation, workflow automation, and electronic signatures [2][6]. - The platform integrates with existing business systems and includes pre-built templates, clause libraries, and agreement-specific analytics, which enhance contracting speed and reduce compliance risks for enterprises [2][6]. Market Recognition - The IDC MarketScape report emphasizes that Docusign CLM is suitable for organizations seeking a proven, enterprise-grade solution that combines AI-powered contract analytics, eSignature integration, and connectivity with leading business applications [3]. - Docusign CLM is noted for its ability to unify fragmented agreement processes, focusing on procurement and delivering robust analytics, dynamic workflows, and deep enterprise integrations [3][6]. User Experience and Security - Docusign CLM is recognized for its user-friendly experience, strong security controls, and support for collaboration and version control throughout the contract lifecycle, making it a preferred choice for organizations aiming to digitize and optimize contract management [3][6]. - The platform is designed to enhance user adoption through seamless integration with Docusign eSignature and major business systems like Salesforce, SAP Ariba, Microsoft, and Google [6].

Group 1 - The core viewpoint is that electronic signatures, such as those provided by Docusign, enhance convenience for both consumers and businesses [1] - Docusign is expected to benefit from strong tailwinds that could potentially boost its revenue for decades to come [1]