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Docusign Announces First Quarter Fiscal 2025 Financial Results; Announces $1.0 Billion Increase to Share Repurchase Program

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Docusign (NASDAQ: DOCU) reported its Q1 fiscal 2025 results, showing total revenue of $709.6 million, up 7% year-over-year. Subscription revenue rose by 8% to $691.5 million, while professional services revenue dropped by 18% to $18.2 million. The company achieved a GAAP net income of $0.16 per diluted share, up from $0.00 last year. Non-GAAP net income per diluted share was $0.82, an increase from $0.72.

Operational highlights include the launch of the Docusign Intelligent Agreement Management (IAM) platform and the acquisition of AI agreement technology firm Lexion. Docusign also announced a $1.0 billion increase in its stock repurchase program.

For Q2 fiscal 2025, Docusign expects revenue between $725 million and $729 million, with a non-GAAP gross margin of 80.5% to 81.5%. For the full fiscal year, revenue is projected between $2,920 million and $2,932 million, with a non-GAAP operating margin of 26.5% to 28.0%.

Positive
  • Total revenue for Q1 fiscal 2025 was $709.6 million, a 7% increase year-over-year.
  • Subscription revenue increased by 8% to $691.5 million.
  • GAAP net income per diluted share rose to $0.16 from $0.00.
  • Non-GAAP net income per diluted share increased to $0.82 from $0.72.
  • Net cash from operating activities was $254.8 million, up from $233.6 million.
  • Free cash flow rose to $232.1 million from $214.6 million.
  • Cash and cash equivalents were $1.2 billion at the end of the quarter.
  • Launch of Docusign Intelligent Agreement Management platform to enhance customer experience.
  • Acquisition of Lexion strengthens Docusign's AI capabilities.
  • Board approved a $1.0 billion increase in the stock repurchase program.
Negative
  • Professional services revenue fell by 18% to $18.2 million.
  • GAAP gross margin decreased to 78.9% from 79.4%.
  • Non-GAAP gross margin slipped to 82.0% from 82.6%.
  • Billings growth for Q1 was only 5%, slower than revenue growth.
  • Share dilution increased with 210 million shares outstanding, up from 208 million.

Docusign's latest financial results show a solid performance in the first quarter of fiscal 2025, with total revenue increasing by 7% year-over-year. The subscription revenue, which forms the bulk of the company's income, saw an 8% increase, indicating a healthy growth trend in its core business. It is important to note the slight decline in gross margins, both GAAP and non-GAAP, which could suggest increasing operational costs or price competition. However, the GAAP net income per diluted share rose significantly from $0.00 to $0.16, reflecting improved profitability.

The free cash flow of $232.1 million and a strong cash position of $1.2 billion provide a robust financial foundation for future investments and operations. Investors should closely monitor the company's ability to maintain and improve its margins while increasing its revenue base, as this will be important for long-term growth. The announced increase in the share repurchase program by $1 billion is also noteworthy as it indicates confidence from the management in the company’s future prospects and can potentially enhance shareholder value.

The launch of the Docusign Intelligent Agreement Management (IAM) platform is a strategic move that could significantly enhance the company's competitive edge. This platform's features, such as Maestro and Navigator, aim to streamline and automate agreement processes, transforming how customers manage their agreements. The integration capabilities with third-party applications through the Docusign App Center also provide increased flexibility and efficiency for users. With AI-driven functionalities, the IAM platform aligns well with current industry trends towards automation and data-driven insights.

The recent acquisition of Lexion further underlines Docusign's commitment to strengthening its AI capabilities. Lexion’s AI-based agreement technology is expected to complement the IAM platform, enhancing its ability to automate workflows and extract critical information from contracts. These technological advancements support the company's long-term growth strategy by offering more sophisticated and comprehensive solutions to its customers, thus potentially expanding its market share.

SAN FRANCISCO, June 6, 2024 /PRNewswire/ -- Docusign, Inc. (NASDAQ: DOCU) today announced results for its fiscal quarter ended April 30, 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 is off to a strong start in fiscal 2025. We launched a significant expansion to our company strategy with our announcement of the Docusign Intelligent Agreement Management platform," said Allan Thygesen, CEO of Docusign. "In Q1, we continued to stabilize the business and improve profitability, allowing Docusign to continue investing for long term growth."

First Quarter Financial Highlights

  • Total revenue was $709.6 million, an increase of 7% year-over-year. Subscription revenue was $691.5 million, an increase of 8% year-over-year. Professional services and other revenue was $18.2 million, a decrease of 18% year-over-year.
  • Billings were $709.5 million, an increase of 5% year-over-year.
  • GAAP gross margin was 78.9% compared to 79.4% in the same period last year. Non-GAAP gross margin was 82.0% compared to 82.6% in the same period last year.
  • GAAP net income per basic share was $0.16 on 206 million shares outstanding compared to $0.00 on 203 million shares outstanding in the same period last year.
  • GAAP net income per diluted share was $0.16 on 210 million shares outstanding compared to $0.00 on 208 million shares outstanding in the same period last year.
  • Non-GAAP net income per diluted share was $0.82 on 210 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 $254.8 million compared to $233.6 million in the same period last year.
  • Free cash flow was $232.1 million compared to $214.6 million in the same period last year.
  • Cash, cash equivalents, restricted cash and investments were $1.2 billion at the end of the quarter.

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:

Launches Docusign IAM ("Intelligent Agreement Management"): Docusign announced a significant expansion of its company strategy at its Momentum24 NYC conference. Docusign IAM is a platform with services that transforms how customers create, commit, and manage agreements. Services include:

  • Docusign Maestro: Automate and accelerate agreement creation and processes through flexible, customizable workflows without using code. Maestro integrates Docusign products, including eSignature, ID verification, and data verification, with third-party applications.
  • Docusign Navigator: A smart repository that enables organizations to centrally store, manage, and analyze agreements from any source. Powered by Docusign AI, Navigator transforms unstructured agreements into structured data, making it easy for users to find agreements, access vital information, and gain valuable insights from agreements.
  • Docusign App Center: Customers can discover, install, and connect third-party applications to integrate their existing systems with IAM. At launch, App Center will feature an initial set of commonly used apps, including HubSpot, ServiceNow, Stripe, and document-sharing services like Google Drive, Microsoft OneDrive, and Microsoft Sharepoint.
  • IAM application suites: The IAM platform will be offered through purpose-built applications for specific functions within organizations. With the initial Q2 IAM launch, Docusign will offer IAM for Sales, IAM for Customer Experience, and IAM Core. Future application suites will include IAM for Legal, IAM for Procurement, IAM for Human Resources, and other solutions for functions and industry verticals.

Subsequent to the end of Q1, Docusign announced in late May the general availability of IAM for an initial set of customers. From that point, IAM will gradually roll out across customer segments and geographies.

AI Innovation Leadership:

  • Lexion Acquisition: After Q1, Docusign closed its acquisition of DocuSmart, Inc. d/b/a Lexion ("Lexion"). Lexion is a leader in AI-based agreement technology with solutions designed to automate workflows and extract vital information from contracts. Founded in 2019, Lexion accelerates Docusign's AI-powered IAM roadmap and brings industry leaders into its technology teams.
  • AI Momentum24 Announcements: Docusign announced the launch of AI-powered Agreement Summarization in Docusign CLM, enabling the creation of concise summaries of large amounts of agreement text. Docusign is also one of the first integrations with Microsoft Copilot for Sales, giving sellers using Microsoft Dynamics or Salesforce Sales Cloud the power to surface and instantly access agreement data relevant to a CRM record.

Increase to Stock Repurchase Program

  • Docusign's board of directors has authorized an increase to its existing stock repurchase program for an additional amount of up to $1.0 billion of Docusign's outstanding common stock. The program has no minimum purchase commitment and no mandated end date. The repurchase is expected to be executed, subject to general business and market conditions and other investment opportunities, through open market purchases, and other transactions in accordance with applicable securities laws. The timing and the amount of any repurchased common stock will be determined by Docusign's management based on its evaluation of market conditions and other factors. The repurchase program does not obligate Docusign to acquire any particular amount of common stock and the repurchase program may be suspended or discontinued at any time at Docusign's discretion without prior notice.

Guidance

The company currently expects the following guidance:

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

Total revenue

$725

to

$729

Subscription revenue

$705

to

$709

Billings

$715

to

$725

Non-GAAP gross margin

80.5 %

to

81.5 %

Non-GAAP operating margin

27.0 %

to

28.0 %

Non-GAAP diluted weighted-average shares outstanding

208

to

213

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

Total revenue

$2,920

to

$2,932

Subscription revenue

$2,844

to

$2,856

Billings

$2,980

to

$3,030

Non-GAAP gross margin

81.0 %

to

82.0 %

Non-GAAP operating margin

26.5 %

to

28.0 %

Non-GAAP diluted weighted-average shares outstanding

208

to

213





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 June 6, 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) June 20, 2024 using the passcode 13746695.

About Docusign

Docusign brings agreements to life. Over 1.5 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
investors@docusign.com 

Media Relations:
Docusign Corporate Communications
media@docusign.com 

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 of the Docusign IAM platform and Docusign's utilization of its stock repurchase program, including the expected timing, duration, volume and nature of share repurchase under such program. 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, instability in the global banking sector, 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 achieve and maintain 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 April 30, 2024, which we expect to file on June 7, 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
April 30,

(in thousands, except per share data)

2024


2023

Revenue:




Subscription

$    691,483


$    639,307

Professional services and other

18,157


22,081

Total revenue

709,640


661,388

Cost of revenue:




Subscription

126,602


108,942

Professional services and other

22,844


27,545

Total cost of revenue

149,446


136,487

Gross profit

560,194


524,901

Operating expenses:




Sales and marketing

281,644


280,605

Research and development

134,320


115,364

General and administrative

92,478


104,811

Restructuring and other related charges

29,124


28,772

Total operating expenses

537,566


529,552

Income (loss) from operations

22,628


(4,651)

Interest expense

(144)


(1,966)

Interest income and other income, net

14,109


12,245

Income before provision for income taxes

36,593


5,628

Provision for income taxes

2,833


5,089

Net income

$      33,760


$          539

Net income per share attributable to common stockholders:




Basic

$         0.16


$0.00

Diluted

$         0.16


$0.00

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




Basic

205,870


202,631

Diluted

209,896


208,071





Stock-based compensation expense included in costs and expenses:




Cost of revenue—subscription

$      14,181


$      11,357

Cost of revenue—professional services and other

4,702


6,730

Sales and marketing

46,271


45,326

Research and development

44,202


35,997

General and administrative

28,520


40,342

Restructuring and other related charges

4,628


4,954

 

DOCUSIGN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands)

April 30, 2024


January 31, 2024

Assets




Current assets




Cash and cash equivalents

$              817,388


$              797,060

Investments—current

269,400


248,402

Accounts receivable, net

306,152


439,299

Contract assets—current

12,319


15,922

Prepaid expenses and other current assets

84,540


66,984

Total current assets

1,489,799


1,567,667

Investments—noncurrent

139,108


121,977

Property and equipment, net

255,736


245,173

Operating lease right-of-use assets

119,997


123,188

Goodwill

352,450


353,138

Intangible assets, net

46,206


50,905

Deferred contract acquisition costs—noncurrent

415,739


409,627

Other assets—noncurrent

107,654


99,615

Total assets

$           2,926,689


$           2,971,290

Liabilities and Equity




Current liabilities




Accounts payable

$                17,700


$                19,029

Accrued expenses and other current liabilities

99,177


104,037

Accrued compensation

153,932


195,266

Contract liabilities—current

1,313,227


1,320,059

Operating lease liabilities—current

20,925


22,230

Total current liabilities

1,604,961


1,660,621

Contract liabilities—noncurrent

23,840


21,980

Operating lease liabilities—noncurrent

117,444


120,823

Deferred tax liability—noncurrent

18,037


16,795

Other liabilities—noncurrent

25,407


21,332

Total liabilities

1,789,689


1,841,551

Stockholders' equity




Common stock

20


21

Treasury stock

(2,670)


(2,164)

Additional paid-in capital

2,950,081


2,821,461

Accumulated other comprehensive loss

(24,910)


(19,360)

Accumulated deficit

(1,785,521)


(1,670,219)

Total stockholders' equity

1,137,000


1,129,739

Total liabilities and equity

$           2,926,689


$           2,971,290

 

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended
April 30,

(in thousands)

2024


2023

Cash flows from operating activities:




Net income

$     33,760


$         539

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




Depreciation and amortization

24,506


22,867

Amortization of deferred contract acquisition and fulfillment costs

54,212


48,230

Amortization of debt discount and transaction costs

138


1,246

Non-cash operating lease costs

4,878


5,980

Stock-based compensation expense

142,504


144,706

Deferred income taxes

1,477


1,623

Other

1,472


(831)

Changes in operating assets and liabilities:




Accounts receivable

130,639


108,281

Prepaid expenses and other current assets

(17,061)


(16,803)

Deferred contract acquisition and fulfillment costs<

FAQ

What were Docusign's Q1 fiscal 2025 revenue results?

Docusign reported total revenue of $709.6 million for Q1 fiscal 2025, a 7% increase year-over-year.

How much did Docusign's subscription revenue increase in Q1 fiscal 2025?

Subscription revenue increased by 8% to $691.5 million in Q1 fiscal 2025.

What is Docusign's GAAP net income per diluted share for Q1 fiscal 2025?

Docusign's GAAP net income per diluted share was $0.16 in Q1 fiscal 2025.

How did Docusign's professional services revenue perform in Q1 fiscal 2025?

Professional services revenue decreased by 18% to $18.2 million in Q1 fiscal 2025.

What new platform did Docusign launch recently?

Docusign recently launched the Intelligent Agreement Management (IAM) platform.

How much cash and cash equivalents did Docusign have at the end of Q1 fiscal 2025?

Docusign had $1.2 billion in cash and cash equivalents at the end of Q1 fiscal 2025.

What is Docusign's revenue guidance for Q2 fiscal 2025?

Docusign expects revenue between $725 million and $729 million in Q2 fiscal 2025.

What was the increase in Docusign's stock repurchase program?

Docusign's board authorized an additional $1.0 billion increase to the stock repurchase program.

How did Docusign's non-GAAP gross margin change in Q1 fiscal 2025?

Non-GAAP gross margin decreased to 82.0% from 82.6% in Q1 fiscal 2025.

What were Docusign's billings for Q1 fiscal 2025?

Docusign's billings for Q1 fiscal 2025 were $709.5 million, a 5% increase year-over-year.

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