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Docusign Announces Third Quarter Fiscal 2025 Financial Results

DOCU

SAN FRANCISCO , Dec. 5, 2024 /PRNewswire/ -- Docusign, Inc. (NASDAQ: DOCU) today announced results for its fiscal quarter ended October 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 delivered powerful new innovation for customers highlighted by new capabilities to its Intelligent Agreement Management ("IAM") platform," said Allan Thygesen, CEO of Docusign. "In Q3, early IAM momentum outpaced expectations, and we continued to drive improvement in our core business with strong revenue growth and operating profit."

Third Quarter Financial Highlights

  • Total revenue was $754.8 million, an 8% year-over-year increase. Subscription revenue was $734.7 million, an 8% year-over-year increase. Professional services and other revenue was $20.1 million, an 11% year-over-year increase.

  • Billings were $752.3 million, a 9% year-over-year increase.

  • GAAP gross margin was 79.3% compared to 79.6% in the same period last year. Non-GAAP gross margin was 82.5% compared to 83.0% in the same period last year.

  • GAAP net income per basic share was $0.31 on 204 million shares outstanding compared to $0.19 on 204 million shares outstanding in the same period last year.

  • GAAP net income per diluted share was $0.30 on 209 million shares outstanding compared to $0.19 on 208 million shares outstanding in the same period last year.

  • Non-GAAP net income per diluted share was $0.90 on 209 million shares outstanding compared to $0.79 on 208 million shares outstanding in the same period last year.

  • Net cash provided by operating activities was $234.3 million compared to $264.2 million in the same period last year.

  • Free cash flow was $210.7 million compared to $240.3 million in the same period last year.

  • Cash, cash equivalents, restricted cashand investments were $1.1 billion at the end of the quarter.

  • Repurchases of common stock were $172.7 million compared to $75.0 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."

Key Business Highlights:

IAM Product Releases and Highlights: Docusign announced new product capabilities to its IAM platform. Highlights from recent product releases include:

  • Docusign Navigator: Lexion's AI capabilities were released to the IAM platform, including the ability to surface insights from a more extensive array of agreement types. Additionally, Navigator now includes the ability to import documents from third-party partners including Box, Dropbox, Google Drive, and Microsoft OneDrive. Also, Navigator now has an upgraded search experience that includes predictive type-ahead functionality, more filters, and the ability to export results.

  • Docusign IAM with Maestro and App Center Global Expansion: IAM with Docusign Maestro and IAM App Center availability expanded globally in the third fiscal quarter after the initial launch in the US, Canada, and Australia in May.

Contract Lifecycle Management ("CLM") Product Releases and Highlights:

  • Docusign CLM Connector for SAP Ariba: Docusign Connector for SAP Ariba automates workflows to help businesses accelerate time to value and eliminate friction in source-to-pay agreement processes.

  • AI-assisted Contract Review for CLM: Incorporating Lexion's AI technology, AI-assisted review was launched with availability for Microsoft Word allowing for AI-generated markups, language recommendations, and generative Q&A.

  • 2024 Gartner Magic Quadrant Leader: For the fifth year in a row, Docusign was named a Leader in the 2024 Magic Quadrant for Contract Life Cycle Manager report by Gartner, Inc.

Developer Ecosystem:

  • Docusign Discover 2024: On November 20, Docusign held its first-ever agreement management ecosystem event, connecting customers, partners, and developers. Discover showcased Docusign IAM integrations with Microsoft, SAP, and Workday, and provided workshops and a virtual hackathon for developers to build across the entire agreement lifecycle. Docusign for Developers was also introduced as a suite of developer tools that partners will use to build apps powered by the IAM platform.

  • Copilot for Microsoft 365 Integration: Integration with Microsoft 365 allows agreements to be searchable by Copilot, the AI-powered chatbot available to Microsoft customers. Users across HR, Sales, Procurement, Legal, and more can use the Copilot for M365 integration to ask Copilot for outstanding agreements or agreement status using AI-powered chat experiences.

Guidance

The company currently expects the following guidance:

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

Total revenue

$758

to

$762

Subscription revenue

$741

to

$745

Billings

$870

to

$880

Non-GAAP gross margin

81.0 %

to

82.0 %

Non-GAAP operating margin

27.5 %

to

28.5 %

Non-GAAP diluted weighted-average shares outstanding

209

to

214

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

Total revenue

$2,959

to

$2,963

Subscription revenue

$2,885

to

$2,889

Billings

$3,056

to

$3,066

Non-GAAP gross margin

81.9 %

to

82.1 %

Non-GAAP operating margin

29.5 %

to

29.7 %

Non-GAAP diluted weighted-average shares outstanding

210

to

212

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 December 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) December 19, 2024 using the passcode 13750095.

About Docusign

Docusign brings agreements to life. Over 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's IAM platform, companies can create, commit, and manage agreements with solutions created by the #1 company in e-signature and 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, rollout and customer demand 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 technical developments, 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; 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 October 31, 2024, which we expect to file on December 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


Three Months Ended October 31,


Nine Months Ended October 31,

(in thousands, except per share data)

2024


2023


2024


2023

Revenue:








Subscription

$ 734,693


$ 682,352


$ 2,143,542


$ 1,991,026

Professional services and other

20,127


18,069


56,945


58,470

Total revenue

754,820


700,421


2,200,487


2,049,496

Cost of revenue:








Subscription

134,587


114,227


393,561


339,354

Professional services and other

21,950


28,418


67,887


85,360

Total cost of revenue

156,537


142,645


461,448


424,714

Gross profit

598,283


557,776


1,739,039


1,624,782

Operating expenses:








Sales and marketing

290,597


292,473


859,705


867,916

Research and development

151,101


136,640


432,992


387,964

General and administrative

97,555


108,215


277,162


316,910

Restructuring and other related charges


710


29,721


30,293

Total operating expenses

539,253


538,038


1,599,580


1,603,083

Income from operations

59,030


19,738


139,459


21,699

Interest expense

(462)


(1,577)


(1,150)


(5,135)

Interest income and other income, net

13,006


17,673


41,745


47,373

Income before provision for (benefit from) income taxes

71,574


35,834


180,054


63,937

Provision for (benefit from) income taxes

9,151


(2,971)


(804,340)


17,198

Net income

$ 62,423


$ 38,805


$ 984,394


$ 46,739

Net income per share attributable to common stockholders:





Basic

$ 0.31


$ 0.19


$ 4.81


$ 0.23

Diluted

$ 0.30


$ 0.19


$ 4.69


$ 0.23

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





Basic

203,567


204,456


204,674


203,609

Diluted

208,706


208,054


209,755


208,317









Stock-based compensation expense included in costs and expenses:





Cost of revenue—subscription

$ 14,862


$ 13,705


$ 44,636


$ 38,143

Cost of revenue—professional services and other

4,765


7,343


14,465


21,359

Sales and marketing

49,347


53,715


154,396


150,604

Research and development

53,184


48,310


150,816


129,458

General and administrative

31,070


36,337


91,239


111,271

Restructuring and other related charges


8


4,836


4,996

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in thousands)

October 31, 2024


January 31, 2024

Assets




Current assets




Cash and cash equivalents

$ 610,870


$ 797,060

Investments—current

331,506


248,402

Accounts receivable, net

300,444


439,299

Contract assets—current

13,645


15,922

Prepaid expenses and other current assets

75,412


66,984

Total current assets

1,331,877


1,567,667

Investments—noncurrent

112,805


121,977

Property and equipment, net

278,623


245,173

Operating lease right-of-use assets

113,365


123,188

Goodwill

455,678


353,138

Intangible assets, net

83,307


50,905

Deferred contract acquisition costs—noncurrent

445,987


409,627

Deferred tax assets—noncurrent

816,538


2,031

Other assets—noncurrent

132,028


97,584

Total assets

$ 3,770,208


$ 2,971,290

Liabilities and Equity




Current liabilities




Accounts payable

$ 18,144


$ 19,029

Accrued expenses and other current liabilities

94,591


104,037

Accrued compensation

158,779


195,266

Contract liabilities—current

1,307,749


1,320,059

Operating lease liabilities—current

19,507


22,230

Total current liabilities

1,598,770


1,660,621

Contract liabilities—noncurrent

22,931


21,980

Operating lease liabilities—noncurrent

111,132


120,823

Deferred tax liability—noncurrent

19,303


16,795

Other liabilities—noncurrent

28,695


21,332

Total liabilities

1,780,831


1,841,551

Stockholders' equity




Common stock

20


21

Treasury stock

(2,871)


(2,164)

Additional paid-in capital

3,225,481


2,821,461

Accumulated other comprehensive loss

(23,682)


(19,360)

Accumulated deficit

(1,209,571)


(1,670,219)

Total stockholders' equity

1,989,377


1,129,739

Total liabilities and equity

$ 3,770,208


$ 2,971,290

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2024


2023


2024


2023

Cash flows from operating activities:








Net income

$ 62,423


$ 38,805


$ 984,394


$ 46,739

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








Depreciation and amortization

27,569


23,324


79,097


71,429

Amortization of deferred contract acquisition and fulfillment costs

61,264


49,399


172,731


147,781

Amortization of debt discount and transaction costs

138


1,227


415


3,722

Non-cash operating lease costs

4,601


4,768


14,463


16,499

Stock-based compensation expense

153,228


159,418


460,388


455,831

Deferred income taxes

6,675


3,845


(817,886)


7,265

Other

1,149


(571)


6,472


(1,353)

Changes in operating assets and liabilities:








Accounts receivable

7,120


53,099


130,691


152,902

Prepaid expenses and other current assets

8,767


6,463


(8,300)


(7,957)

Deferred contract acquisition and fulfillment costs

(83,293)


(63,154)


(214,548)


(176,510)

Other assets

(1,060)


(5,586)


(16,118)


(14,019)

Accounts payable

10,061


11,205


(1,514)


(9,089)

Accrued expenses and other liabilities

1,014


(7,792)


(7,146)


2,372

Accrued compensation

(21,226)


(1,056)


(41,128)


(4,368)

Contract liabilities

95


(3,582)


(16,431)


36,876

Operating lease liabilities

(4,199)


(5,635)


(16,220)


(19,292)

Net cash provided by operating activities

234,326


264,177


709,360


708,828

Cash flows from investing activities:








Cash paid for acquisition, net of acquired cash



(143,611)


Purchases of marketable securities

(110,296)


(28,974)


(333,537)


(203,346)

Maturities of marketable securities

90,211


87,500


265,834


251,517

Purchases of strategic and other investments


(400)


(625)


(520)

Purchases of property and equipment

(23,613)


(23,841)


(68,646)


(70,277)

Net cash provided by (used in) investing activities

(43,698)


34,285


(280,585)


(22,626)

Cash flows from financing activities:








Repayments of convertible senior notes


(37,083)



(37,083)

Repurchases of common stock

(172,665)


(75,035)


(521,803)


(145,515)

Settlement of capped calls, net of related costs




23,688

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

(51,051)


(35,615)


(132,134)


(98,296)

Proceeds from exercise of stock options

10,257


12,375


11,346


13,207

Proceeds from employee stock purchase plan

15,124


14,604


35,314


32,994

Net cash used in financing activities

(198,335)


(120,754)


(607,277)


(211,005)

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

438


(7,187)


(2,239)


(4,897)

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

(7,269)


170,521


(180,741)


470,300

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

628,027


1,022,980


801,499


723,201

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

$ 620,758


$ 1,193,501


$ 620,758


$ 1,193,501

(1) Cash, cash equivalents and restricted cash included restricted cash of $9.9 million and $4.4 million at October 31, 2024 and January 31, 2024.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)

Reconciliation of gross profit (loss) and gross margin:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2024


2023


2024


2023

GAAP gross profit

$ 598,283


$ 557,776


$ 1,739,039


$ 1,624,782

Add: Stock-based compensation

19,627


21,048


59,101


59,502

Add: Amortization of acquisition-related intangibles

3,566


2,070


8,703


6,787

Add: Employer payroll tax on employee stock transactions

894


537


2,733


1,925

Add: Lease-related impairment and lease-related charges




721

Non-GAAP gross profit

$ 622,370


$ 581,431


$ 1,809,576


$ 1,693,717

GAAP gross margin

79.3 %


79.6 %


79.0 %


79.3 %

Non-GAAP adjustments

3.2 %


3.4 %


3.2 %


3.3 %

Non-GAAP gross margin

82.5 %


83.0 %


82.2 %


82.6 %









GAAP subscription gross profit

$ 600,106


$ 568,125


$ 1,749,981


$ 1,651,672

Add: Stock-based compensation

14,862


13,705


44,636


38,143

Add: Amortization of acquisition-related intangibles

3,566


2,070


8,703


6,787

Add: Employer payroll tax on employee stock transactions

574


301


1,961


1,232

Add: Lease-related impairment and lease-related charges




505

Non-GAAP subscription gross profit

$ 619,108


$ 584,201


$ 1,805,281


$ 1,698,339

GAAP subscription gross margin

81.7 %


83.3 %


81.6 %


83.0 %

Non-GAAP adjustments

2.6 %


2.3 %


2.6 %


2.3 %

Non-GAAP subscription gross margin

84.3 %


85.6 %


84.2 %


85.3 %









GAAP professional services and other gross loss

$ (1,823)


$ (10,349)


$ (10,942)


$ (26,890)

Add: Stock-based compensation

4,765


7,343


14,465


21,359

Add: Employer payroll tax on employee stock transactions

320


236


772


693

Add: Lease-related impairment and lease-related charges




216

Non-GAAP professional services and other gross profit

$ 3,262


$ (2,770)


$ 4,295


$ (4,622)

GAAP professional services and other gross margin

(9.1) %


(57.3) %


(19.2) %


(46.0) %

Non-GAAP adjustments

25.3 %


42.0 %


26.7 %


38.1 %

Non-GAAP professional services and other gross margin

16.2 %


(15.3) %


7.5 %


(7.9) %

Reconciliation of operating expenses:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2024


2023


2024


2023

GAAP sales and marketing

$ 290,597


$ 292,473


$ 859,705


$ 867,916

Less: Stock-based compensation

(49,347)


(53,715)


(154,396)


(150,604)

Less: Amortization of acquisition-related intangibles

(3,354)


(2,629)


(9,096)


(7,888)

Less: Employer payroll tax on employee stock transactions

(1,618)


(875)


(5,351)


(3,945)

Less: Lease-related impairment and lease-related charges




(2,171)

Non-GAAP sales and marketing

$ 236,278


$ 235,254


$ 690,862


$ 703,308

GAAP sales and marketing as a percentage of revenue

38.4 %


41.8 %


39.1 %


42.3 %

Non-GAAP sales and marketing as a percentage of revenue

31.3 %


33.6 %


31.4 %


34.3 %









GAAP research and development

$ 151,101


$ 136,640


$ 432,992


$ 387,964

Less: Stock-based compensation

(53,184)


(48,310)


(150,816)


(129,458)

Less: Employer payroll tax on employee stock transactions

(1,273)


(876)


(5,592)


(3,671)

Less: Lease-related impairment and lease-related charges




(873)

Non-GAAP research and development

$ 96,644


$ 87,454


$ 276,584


$ 253,962

GAAP research and development as a percentage of revenue

20.0 %


19.5 %


19.7 %


18.9 %

Non-GAAP research and development as a percentage of revenue

12.8 %


12.4 %


12.6 %


12.4 %









GAAP general and administrative

$ 97,555


$ 108,215


$ 277,162


$ 316,910

Less: Stock-based compensation

(31,070)


(36,337)


(91,239)


(111,271)

Less: Employer payroll tax on employee stock transactions

(489)


(564)


(1,774)


(1,541)

Less: Acquisition-related expenses

376



(4,340)


Less: Lease-related impairment and lease-related charges




(695)

Non-GAAP general and administrative

$ 66,372


$ 71,314


$ 179,809


$ 203,403

GAAP general and administrative as a percentage of revenue

12.9 %


15.4 %


12.6 %


15.4 %

Non-GAAP general and administrative as a percentage of revenue

8.8 %


10.2 %


8.1 %


9.9 %

Reconciliation of income from operations and operating margin:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2024


2023


2024


2023

GAAP income from operations

$ 59,030


$ 19,738


$ 139,459


$ 21,699

Add: Stock-based compensation

153,228


159,410


455,552


450,835

Add: Amortization of acquisition-related intangibles

6,920


4,699


17,799


14,675

Add: Employer payroll tax on employee stock transactions

4,274


2,852


15,450


11,082

Add: Acquisition-related expenses

(376)



4,340


Add: Restructuring and other related charges


710


29,721


30,293

Add: Lease-related impairment and lease-related charges




4,460

Non-GAAP income from operations

$ 223,076


$ 187,409


$ 662,321


$ 533,044

GAAP operating margin

7.8 %


2.8 %


6.3 %


1.1 %

Non-GAAP adjustments

21.8 %


24.0 %


23.8 %


24.9 %

Non-GAAP operating margin

29.6 %


26.8 %


30.1 %


26.0 %

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


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands, except per share data)

2024


2023


2024


2023

GAAP net income

$ 62,423


$ 38,805


$ 984,394


$ 46,739

Add: Stock-based compensation

153,228


159,410


455,552


450,835

Add: Amortization of acquisition-related intangibles

6,920


4,699


17,799


14,675

Add: Employer payroll tax on employee stock transactions

4,274


2,852


15,450


11,082

Add: Acquisition-related expenses

(376)



4,340


Add: Restructuring and other related charges


710


29,721


30,293

Add: Amortization of debt discount and issuance costs


1,250



4,149

Add: Fair value adjustments to strategic investments




119

Add: Lease-related impairment and lease-related charges




4,460

Add: Income tax and other tax adjustments

(37,973)


(43,922)


(944,923)


(98,712)

Non-GAAP net income

$ 188,496


$ 163,804


$ 562,333


$ 463,640









Numerator:








Non-GAAP net income

$ 188,496


$ 163,804


$ 562,333


$ 463,640

Add: Interest expense on convertible senior notes


22



425

Non-GAAP net income attributable to common stockholders, diluted

$ 188,496


$ 163,826


$ 562,333


$ 464,065









Denominator:








Weighted-average common shares outstanding, basic

203,567


204,456


204,674


203,609

Effect of dilutive securities

5,139


3,598


5,081


4,708

Non-GAAP weighted-average common shares outstanding, diluted

208,706


208,054


209,755


208,317









GAAP net income per share, basic

$ 0.31


$ 0.19


$ 4.81


$ 0.23

GAAP net income per share, diluted

$ 0.30


$ 0.19


$ 4.69


$ 0.23

Non-GAAP net income per share, basic

$ 0.93


$ 0.80


$ 2.75


$ 2.28

Non-GAAP net income per share, diluted

$ 0.90


$ 0.79


$ 2.68


$ 2.23

Computation of free cash flow:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2024


2023


2024


2023

Net cash provided by operating activities

$ 234,326


$ 264,177


$ 709,360


$ 708,828

Less: Purchases of property and equipment

(23,613)


(23,841)


(68,646)


(70,277)

Non-GAAP free cash flow

$ 210,713


$ 240,336


$ 640,714


$ 638,551

Net cash provided by (used in) investing activities

$ (43,698)


$ 34,285


$ (280,585)


$ (22,626)

Net cash used in financing activities

$ (198,335)


$ (120,754)


$ (607,277)


$ (211,005)

Computation of billings:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2024


2023


2024


2023

Revenue

$ 754,820


$ 700,421


$ 2,200,487


$ 2,049,496

Add: Contract liabilities and refund liability, end of period

1,332,828


1,228,174


1,332,828


1,228,174

Less: Contract liabilities and refund liability, beginning of period

(1,334,461)


(1,233,894)


(1,343,792)


(1,191,269)

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

17,461


22,358


20,189


16,615

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

(18,341)


(25,253)


(18,341)


(25,253)

Add: Contract assets and unbilled accounts receivable by acquisitions



53


Less: Contract liabilities and refund liability contributed by acquisitions



(5,071)


Non-GAAP billings

$ 752,307


$ 691,806


$ 2,186,353


$ 2,077,763

Cision View original content:https://www.prnewswire.com/news-releases/docusign-announces-third-quarter-fiscal-2025-financial-results-302324214.html

SOURCE Docusign, Inc.



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