DocuSign(DOCU) - 2026 Q2 - Quarterly Results

Executive Summary & Q2 Highlights 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 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] Key Business Highlights 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] - 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][5][6] - 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] Second Quarter Financial Highlights 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 Docusign provides financial guidance for Q3 and full-year fiscal 2026, projecting continued revenue and billings growth with stable margins Q3 Fiscal 2026 Outlook 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] Full Year Fiscal 2026 Outlook 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] Company Information This section provides an overview of Docusign's mission, customer reach, investor relations details, and recent updates to its Board of Directors About Docusign 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] - The company's Intelligent Agreement Management (IAM) platform aims to unleash business-critical data trapped in documents, integrating with business systems of record[14] Webcast and Investor Relations 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] - A live webcast and prepared remarks were accessible on Docusign's investor relations website (investor.docusign.com)[13] Board of Directors and Governance Updates 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] - 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] Non-GAAP Financial Measures and Other Key Metrics 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 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] - 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] Definitions of Key Metrics 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] - 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] - 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] Financial Statements (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 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 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 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] Reconciliation of GAAP to Non-GAAP Financial Measures 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 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 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 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 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 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 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 This section outlines Docusign's forward-looking statements, highlighting inherent risks and uncertainties, and disclaims any obligation to update them Forward-Looking Statements Disclaimer 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] - 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] - 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] - Docusign undertakes no obligation to update any forward-looking statements after the date of the press release, except as required by law[19]