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DocuSign Tops Forecasts

September 4, 2020

DocuSign reported results for its fiscal quarter ended July 31, 2020. The firm had reported quarterly earnings of 17 cents per share with only 8 cents a share expected. Revenue also beat forecasts.

"In an accelerating digital world where business can be conducted from anywhere, the need to agree electronically and remotely has never been stronger, as shown in our 61% year-over-year billings growth," said Dan Springer, CEO of DocuSign. "We are just scratching the surface of our Agreement Cloud opportunity and believe we are increasingly becoming an essential cloud-software platform for organizations of all sizes."

Second Quarter Financial Highlights

  • Total revenue was $342.2 million, an increase of 45% year-over-year. Subscription revenue was $323.6 million, an increase of 47% year-over-year. Professional services and other revenue was $18.6 million, an increase of 25% year-over-year.
  • Billings were $405.7 million, an increase of 61% year-over-year.
  • GAAP gross margin was 74% in both comparative periods. Non-GAAP gross margin was 78% in both comparative periods.
  • GAAP net loss per basic and diluted share was $0.35 on 185 million shares outstanding compared to $0.39 on 175 million shares outstanding in the same period last year.
  • Non-GAAP net income per diluted share was $0.17 on 203 million shares outstanding compared to $0.01 on 189 million shares outstanding in the same period last year.
  • Net cash provided by operating activities was $118.1 million compared to $26.4 million in the same period last year.
  • Free cash flow was $99.8 million compared to $11.9 million in the same period last year.
  • Cash, cash equivalents, restricted cash and investments were $740.6 million 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

  • DocuSign Agreement Cloud 2020 Product Release 2. DocuSign introduced several new features and enhancements in the latest release to support customers in their digital transformations: DocuSign eSignature for Workplace from Facebook, which allows access to DocuSign eSignature via a chatbot within Facebook from Work; Workflow Templates for DocuSign CLM, which allows business users to quickly configure common contract processes such as approvals, signature, and routing; and enhancements to DocuSign ID Verification and DocuSign Click.
  • Liveoak Technologies Acquisition. On July 7, 2020, DocuSign announced its acquisition of Liveoak Technologies, Inc. in an all-stock transaction. For agreements that would normally require people to be physically present together, Liveoak enables the transaction to be done remotely via videoconferencing. The company's platform includes several other technologies specific to remote agreements, such as video identity verification, collaborative form-filling, an integration with DocuSign eSignature, and a detailed audit trail. DocuSign plans to leverage Liveoak's technology and expertise to accelerate the launch of DocuSign Notary, a new product for remote online notarization, where signers and the notary public are in different places. The beta release of DocuSign Notary is currently slated for November 2020.
  • CTO appointment. On August 25, 2020, DocuSign announced Kamal Hathi as its new chief technology officer (CTO). Prior to joining DocuSign, Kamal was chief product and technology officer at Trader Interactive, a leading provider of online marketplaces and products serving the lifestyle vehicles and commercial equipment sector. Before that he spent more than two decades at Microsoft, most recently as GM for its SaaS analytics and business intelligence solution, Power BI. As CTO, Kamal will oversee the development and execution of DocuSign's technology roadmap, including the expansion of the DocuSign Agreement Cloud.

Outlook

The company currently expects the following guidance:

▪          Quarter ending October 31, 2020 (in millions, except percentages):


 

Total revenue

$358

to

$362

Subscription revenue

$343

to

$347

Billings

$380

to

$390

Non-GAAP gross margin

78%

to

80%

Non-GAAP sales and marketing

46%

to

48%

Non-GAAP research and development

14%

to

16%

Non-GAAP general and administrative

9%

to

11%

Non-GAAP interest and other income (expense)

$(1)

to

$1

Provision for income taxes

$2

to

$3

Non-GAAP diluted weighted-average shares outstanding

200

to

205


 

▪          Year ending January 31, 2021 (in millions, except percentages):


 

Total revenue

$1,384

to

$1,388

Subscription revenue

$1,315

to

$1,319

Billings

$1,623

to

$1,643

Non-GAAP gross margin

78%

to

80%

Non-GAAP sales and marketing

45%

to

47%

Non-GAAP research and development

14%

to

16%

Non-GAAP general and administrative

9%

to

11%

Non-GAAP interest and other income

$4

to

$6

Provision for income taxes

$7

to

$9

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