Docusign Announces Second Quarter Fiscal 2025 Financial Results
DocuSign Announces Second Quarter Results
DocuSign, Inc. (DOCU) released its financial results for the fiscal quarter ending July 31, 2024. These results, along with prepared remarks, were made available on the company's investor website ahead of its scheduled webcast. The company continues to focus on operational efficiency, product innovation, and long-term profitability, highlighted by its latest financial performance.
Financial Highlights
CEO Allan Thygesen expressed confidence in the company’s progress, citing improvements in business stability and operational efficiency. He emphasized the successful launch of the Intelligent Agreement Management (IAM) platform, which contributed to record operating profit. Thygesen also highlighted the positive customer reception and initial results from IAM, reinforcing the company’s strategic direction.
- Total revenue reached $736 million, marking a 7% increase year-over-year. This growth was largely driven by recurring subscription revenue.
- Subscription revenue came in at $717.4 million, up 7% compared to the same period last year, underscoring the continued demand for DocuSign’s core offerings.
- Professional services and other revenue totaled $18.7 million, reflecting a modest 2% increase from the prior year.
- Billings amounted to $724.5 million, a 2% increase year-over-year.
- GAAP gross margin stood at 78.9%, slightly up from 78.8% in the previous year, indicating sustained profitability in core operations.
- Non-GAAP gross margin was 82.2%, compared to 82.3% last year, showing stable performance in adjusted profitability.
- GAAP net income per basic share was $4.34, a significant increase from $0.04 in the same quarter last year.
- GAAP net income per diluted share was $4.26, also up from $0.04 last year, reflecting improved earnings and profitability.
- Non-GAAP net income per diluted share reached $0.97, compared to $0.72 in the same period last year, signaling strong adjusted earnings growth.
- Net cash provided by operating activities was $220.2 million, compared to $211 million a year earlier, demonstrating improved cash flow from operations.
- Free cash flow grew to $197.9 million, compared to $183.6 million in the prior year, driven by higher revenue and operational efficiencies.
- Cash, cash equivalents, restricted cash, and investments were reported at $1 billion at the end of the quarter, ensuring liquidity for future growth and strategic initiatives.
- Stock repurchases totaled $200.1 million during the quarter, a notable increase from the $30 million repurchased in the same period last year, reflecting confidence in the company's future prospects.
The company provided a detailed reconciliation of GAAP to non-GAAP financial measures in the tables accompanying the press release.
Operational and Strategic Developments
Intelligent Agreement Management (IAM)
One of the major milestones for DocuSign this quarter was the general availability of its Intelligent Agreement Management (IAM) platform. This AI-powered cloud software represents a new category in agreement management, designed to automate and streamline complex agreement workflows. The launch of IAM is a significant step in DocuSign’s ongoing effort to expand beyond its core e-signature services.
- IAM Core, IAM for Sales, and IAM for CX are now available in the U.S. market, offering tailored solutions for specific business needs.
- IAM for CX went live for small and medium-sized businesses in North America and Australia, with plans to expand the platform to enterprise and self-service customers in additional regions later this fiscal year.
The introduction of IAM has generated positive feedback from early adopters, and the company is optimistic about the platform's potential to drive long-term growth. By offering a comprehensive solution for managing agreements, DocuSign aims to solidify its position as a leader in contract lifecycle management (CLM) and further enhance customer satisfaction.
Executive Appointments
DocuSign also announced key leadership changes aimed at strengthening its executive team and driving its growth strategy. The new appointments reflect DocuSign’s focus on leadership in technology and sales execution.
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Paula Hansen joined DocuSign as President and Chief Revenue Officer, responsible for leading global enterprise and commercial sales as well as partnership teams. Hansen brings extensive experience from her previous role as President and Chief Revenue Officer at Alteryx, where she led the global go-to-market organization. Her leadership experience at SAP and Cisco will further enhance DocuSign’s ability to execute its growth strategy across multiple geographies.
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Sagnik Nandy was appointed as Chief Technology Officer, where he will oversee all aspects of engineering, research, and operations. Nandy comes from Okta, where he served as President and Chief Development Officer, leading product, engineering, and design for the company’s Workforce Identity Cloud. Prior to his tenure at Okta, Nandy held senior engineering roles at Google, bringing valuable expertise in scaling large technology platforms to his new role at DocuSign.
These executive appointments are expected to support the company’s continued growth and its efforts to strengthen its leadership in both sales and technological innovation.
Financial Outlook
DocuSign provided forward-looking guidance for the upcoming quarter and fiscal year, reflecting continued confidence in its growth trajectory. The company’s expectations for the quarter ending October 31, 2024, include:
- Total revenue: $743 million to $747 million.
- Subscription revenue: $722 million to $726 million.
- Billings: $710 million to $720 million.
- Non-GAAP gross margin: 81% to 82%.
- Non-GAAP operating margin: 28.5% to 29.5%.
- Non-GAAP diluted weighted-average shares outstanding: 206 million to 211 million.
For the fiscal year ending January 31, 2025, the company expects:
- Total revenue: $2.94 billion to $2.952 billion.
- Subscription revenue: $2.864 billion to $2.876 billion.
- Billings: $2.99 billion to $3.03 billion.
- Non-GAAP gross margin: 81% to 82%.
- Non-GAAP operating margin: 29% to 29.5%.
- Non-GAAP diluted weighted-average shares outstanding: 206 million to 211 million.
The company noted that a reconciliation of non-GAAP to GAAP guidance measures is not available on a forward-looking basis due to the unpredictability of future expenses, such as stock-based compensation and payroll taxes. However, a reconciliation of historical non-GAAP financial results is included in the financial tables accompanying the press release.
Webcast Conference Call Information
DocuSign will host a conference call to discuss its financial results on September 5, 2024, at 2:00 p.m. PT (5:00 p.m. ET). A live webcast of the call, as well as prepared remarks, will be available on the DocuSign Investor Relations website. To participate in the call, domestic callers can dial 877-407-0784, while international participants can use 201-689-8560. A replay of the call will be available until September 19, 2024, using the passcode 13748491.
About DocuSign
DocuSign enables businesses to bring agreements to life. With over 1.6 million customers and more than a billion users in 180+ countries, the company simplifies business processes through its intelligent agreement management solutions. By automating the process of creating, managing, and executing agreements, DocuSign helps businesses unlock critical data trapped in documents. With its IAM platform, DocuSign is positioned as a leader in both e-signature and contract lifecycle management (CLM), offering cutting-edge solutions to manage agreements efficiently and securely.
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