Press Release Details

DocuSign Announces Second Quarter Fiscal 2023 Financial Results

September 8, 2022

SAN FRANCISCO, Sept. 8, 2022 /PRNewswire/ -- DocuSign, Inc. (NASDAQ: DOCU), which offers the world's #1 e-signature solution as part of the DocuSign agreement platform, today announced results for its fiscal quarter ended July 31, 2022.

"We delivered solid Q2 results, with a strong finish to the first half of the year. These results reflect the focus and dedication of our team on execution during this transition period, with a stronger foundation in place to deliver in the second half of the year. We enter this next phase with a clear set of vital few deliverables for our people initiatives and product roadmap, while driving sustainable and profitable growth at scale," said Maggie Wilderotter, DocuSign's Interim CEO and Board Chair. "We have a $50 billion market opportunity, an industry leading digital agreement platform, strong market position, and an experienced leadership team. I have total confidence our team will successfully deliver for all stakeholders."

Second Quarter Financial Highlights

  • Total revenue was $622.2 million, an increase of 22% year-over-year. Subscription revenue was $605.2 million, an increase of 23% year-over-year. Professional services and other revenue was $17.0 million, a decrease of 11% year-over-year.
       
  • Billings were $647.7 million, an increase of 9% year-over-year.
       
  • GAAP gross margin was 78% for both periods. Non-GAAP gross margin was 82% for both periods.
       
  • GAAP net loss per basic and diluted share was $0.22 on 201 million shares outstanding compared to $0.13 on 196 million shares outstanding in the same period last year.
       
  • Non-GAAP net income per diluted share was $0.44 on 206 million shares outstanding compared to $0.47 on 208 million shares outstanding in the same period last year.
       
  • Net cash provided by operating activities was $120.9 million compared to $177.7 million in the same period last year.
       
  • Free cash flow was $105.5 million compared to $161.7 million in the same period last year.
       
  • Cash, cash equivalents, restricted cash and investments were $1,129.6 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 2022 Product Release 2. DocuSign announced new product capabilities, including:

  • DocuSign eSignature. Introduced Shared Access, which allows a user to be granted permission to send or manage envelopes on another user's behalf, and announced enhancements to Bulk Send and Agreement Actions.
  • DocuSign eSignature App for Stripe. A new integration that allows account, finance and support teams to view eSignature agreements and Stripe payments side-by-side and launch new agreements right from their Stripe dashboards. Stripe users no longer need to go between the two platforms to complete transactions, support customers, or review transactions.
  • DocuSign CLM. Introduced a new CLM Integration within Slack that enables customers to collaborate and move their agreements forward in a more streamlined way. CLM for Slack allows users to navigate the full agreement processes from redlining, to reviews and approvals, using our leading CLM solution without ever leaving the Slack platform. Other CLM enhancements include CLM AI-assisted data capture and a new integration with DocuSign CLM Connector for Coupa.
  • DocuSign Notary. Introduced support for notaries seated in two additional U.S. states, New Jersey and Oregon, bringing the total number of states supported by DocuSign Notary to 25.

Outlook

The company currently expects the following guidance:

•     Quarter ending October 31, 2022 (in millions, except percentages):

Total revenue

$624

to

$628

Subscription revenue

$609

to

$613

Billings

$584

to

$594

Non-GAAP gross margin

79 %

to

81 %

Non-GAAP operating margin

16 %

to

18 %

Non-GAAP diluted weighted-average shares outstanding

205

to

210

 

•     Year ending  January 31, 2023 (in millions, except percentages):

Total revenue

$2,470

to

$2,482

Subscription revenue

$2,405

to

$2,417

Billings

$2,550

to

$2,570

Non-GAAP gross margin

79 %

to

81 %

Non-GAAP operating margin

16 %

to

18 %

Non-GAAP diluted weighted-average shares outstanding

205

to

210

The company has not reconciled its guidance of non-GAAP financial measures to the corresponding GAAP measures because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation has not been provided.

Webcast Conference Call Information

The company will host a conference call on September 8, 2022 at 1:30 p.m. PT (4:30 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. 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 (ET) September 22, 2022 using the passcode 13732324.

About DocuSign

DocuSign helps organizations connect and automate how they prepare, sign, act on, and manage agreements. As part of the DocuSign Agreement Cloud, DocuSign offers eSignature, the world's #1 way to sign electronically on practically any device, from almost anywhere, at any time. Today, over 1.2 million customers and more than a billion users in over 180 countries use the DocuSign Agreement Cloud to accelerate the process of doing business and simplify people's lives.

For more information, visit www.docusign.com, call +1-877-720-2040, or follow @DocuSign on Twitter, LinkedIn, Facebook and Instagram.

Copyright 2022. 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. Forward-looking statements include all statements that are not historical facts and can be identified by terms 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 in this press release include, among other things, statements under "Outlook" above and any other statements about expected financial metrics, such as revenue, billings, non-GAAP gross margin, non-GAAP diluted weighted-average shares outstanding, and non-financial metrics, such as customer growth, as well as statements related to our expectations regarding our growth. They also include statements about our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations. These statements are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

These risks and uncertainties include, among other things, risks related to our expectations regarding the impact of the coronavirus pandemic (the "COVID-19 pandemic"), including the easing of related regulations and measures as the pandemic and its related effects begin to abate or have abated, on our business, results of operations, financial condition, and future profitability and growth; our expectations regarding the impact of the evolving COVID-19 pandemic on the businesses of our customers, partners and suppliers, and the economy, as well as the macro- and micro-effects of the pandemic and differing levels of demand for our products as our customers' priorities, resources, financial conditions and economic outlook change; global macro-economic conditions, including the effects of inflation, rising interest rates and market volatility on the global economy; our ability to estimate the size of our total addressable market, and the development of the market for our products, which is new and evolving; our ability to effectively sustain and manage our growth and future expenses, achieve and maintain future profitability, attract new customers and maintain and expand our existing customer base; our ability to scale and update our platform to respond to customers' needs and rapid technological change; the effects of increased competition in our market and our ability to compete effectively; 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 expand our direct sales force, customer success team and strategic partnerships around the world; the impact of any data breaches, cyberattacks or other malicious activity on our technology systems; our ability to identify targets for and execute potential acquisitions; our ability to successfully integrate the operations of businesses we may acquire, and to 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 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; our ability to estimate the size and potential growth of our target market; uncertainties regarding the impact of general economic and market conditions, including as a result of regional and global conflicts or related government sanctions; 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, 2022 filed on March 25, 2022, our quarterly report on Form 10-Q for the quarter ended July 31, 2022, which we expect to file on September 8, 2022 with the Securities and Exchange Commission (the "SEC"), and other filings that we make from time to time with the SEC. In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

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, acquisition-related expenses, fair value adjustments to strategic investments, executive transition costs, lease-related impairment and lease-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 2023, we determined the projected non-GAAP tax rate to be 20% tax rate.

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 is a key metric to measure our periodic performance. 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 July 31,


Six Months Ended July 31,

(in thousands, except per share data)

2022


2021


2022


2021

Revenue:








Subscription

$    605,194


$    492,758


$ 1,174,445


$    944,693

Professional services and other

16,990


19,086


36,431


36,230

Total revenue

622,184


511,844


1,210,876


980,923

Cost of revenue:








Subscription

107,931


84,455


213,090


162,526

Professional services and other

28,773


29,325


56,030


56,497

Total cost of revenue

136,704


113,780


269,120


219,023

Gross profit

485,480


398,064


941,756


761,900

Operating expenses:








Sales and marketing

323,582


262,372


624,279


501,491

Research and development

126,532


94,651


238,759


180,067

General and administrative

76,456


63,652


139,034


113,690

Total operating expenses

526,570


420,675


1,002,072


795,248

Loss from operations

(41,090)


(22,611)


(60,316)


(33,348)

Interest expense

(1,632)


(1,669)


(3,281)


(3,341)

Interest income and other income (expense), net

1,003


(1,063)


(3,647)


4,974

Loss before provision for income taxes

(41,719)


(25,343)


(67,244)


(31,715)

Provision for income taxes

3,359


158


5,207


2,140

Net loss

$    (45,078)


$    (25,501)


$    (72,451)


$    (33,855)

Net loss per share attributable to common stockholders, basic and diluted

$        (0.22)


$        (0.13)


$        (0.36)


$        (0.17)

Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted

200,618


195,996


200,150


195,183









Stock-based compensation expense included in costs and expenses








Cost of revenue—subscription

$      12,994


$       7,539


$      23,607


$     13,557

Cost of revenue—professional services and other

6,478


6,446


11,560


11,980

Sales and marketing

61,218


46,921


108,649


85,057

Research and development

40,978


26,275


73,183


46,737

General and administrative

19,539


12,778


34,931


23,764

 

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) 


(in thousands)

July 31, 2022


January 31, 2022

Assets




Current assets




Cash and cash equivalents

$              637,186


$              509,059

Investments—current

357,539


293,763

Accounts receivable, net

339,528


440,950

Contract assets—current

9,387


12,588

Prepaid expenses and other current assets

79,142


63,236

Total current assets

1,422,782


1,319,596

Investments—noncurrent

133,238


94,938

Property and equipment, net

186,229


184,664

Operating lease right-of-use assets

100,481


126,021

Goodwill

353,326


355,058

Intangible assets, net

81,246


98,816

Deferred contract acquisition costs—noncurrent

322,695


311,835

Other assets—noncurrent

67,349


50,337

Total assets

$           2,667,346


$           2,541,265

Liabilities and stockholders' equity




Current liabilities




Accounts payable

$                44,449


$                52,804

Accrued expenses and other current liabilities

90,756


91,377

Accrued compensation

149,761


160,163

Contract liabilities—current

1,073,800


1,029,891

Operating lease liabilities—current

43,479


37,404

Total current liabilities

1,402,245


1,371,639

Convertible senior notes, net—noncurrent

720,677


718,487

Contract liabilities—noncurrent

14,630


16,725

Operating lease liabilities—noncurrent

90,479


126,340

Deferred tax liability—noncurrent

10,323


9,316

Other liabilities—noncurrent

21,861


23,255

Total liabilities

2,260,215


2,265,762

Stockholders' equity




Common stock

20


20

Treasury stock

(1,648)


(1,532)

Additional paid-in capital

1,968,852


1,720,013

Accumulated other comprehensive loss

(24,446)


(4,809)

Accumulated deficit

(1,535,647)


(1,438,189)

Total stockholders' equity

407,131


275,503

Total liabilities and stockholders' equity

$           2,667,346


$           2,541,265

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



Three Months Ended July 31,


Six Months Ended July 31,

(in thousands)

2022


2021


2022


2021

Cash flows from operating activities:








Net loss

$    (45,078)


$    (25,501)


$   (72,451)


$   (33,855)

Adjustments to reconcile net loss to net cash provided by operating activities








Depreciation and amortization

21,143


20,960


42,444


40,997

Amortization of deferred contract acquisition and fulfillment costs

45,585


32,543


89,575


63,476

Amortization of debt discount and transaction costs

1,198


1,274


2,482


2,593

Non-cash operating lease costs

7,024


6,706


13,466


13,649

Stock-based compensation expense

141,207


99,458


251,930


181,095

Deferred income taxes

2,996


(1,514)


3,068


(1,250)

Other

3,192


8,798


8,099


2,439

Changes in operating assets and liabilities:








Accounts receivable

(38,656)


(34,365)


101,422


38,840

Prepaid expenses and other current assets

323


5,303


(16,028)


(10,367)

Deferred contract acquisition and fulfillment costs

(57,803)


(49,264)


(108,315)


(95,418)

Other assets

204


(2,296)


(7,255)


(3,856)

Accounts payable

18,510


12,150


(4,687)


(9,443)

Accrued expenses and other liabilities

(2,181)


5,942


2,967


17,022

Accrued compensation

9,201


21,001


(14,019)


(13,047)

Contract liabilities

23,102


84,976


41,814


136,624

Operating lease liabilities

(9,088)


(8,502)


(17,347)


(16,233)

Net cash provided by operating activities

120,879


177,669


317,165


313,266

Cash flows from investing activities:








Cash paid for acquisition, net of acquired cash


(6,388)



(6,388)

Purchases of marketable securities

(166,558)


(88,703)


(296,293)


(185,628)

Sales of marketable securities


1,000



3,002

Maturities of marketable securities

99,124


75,658


190,179


113,171

Purchases of strategic and other investments

(500)



(2,625)


(500)

Purchases of property and equipment

(15,404)


(15,938)


(37,113)


(28,534)

Net cash used in investing activities

(83,338)


(34,371)


(145,852)


(104,877)

Cash flows from financing activities:








Repayments of convertible senior notes

(16)


(25,030)


(16)


(61,714)

Repurchases of common stock

(25,007)



(25,007)


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

(19,118)


(122,522)


(43,857)


(228,575)

Proceeds from exercise of stock options

8,688


5,202


10,626


11,818

Proceeds from employee stock purchase plan



24,151


23,167

Net cash used in financing activities

(35,453)


(142,350)


(34,103)


(255,304)

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

(2,860)


(1,342)


(8,040)


(563)

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

(772)


(394)


129,170


(47,478)

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

639,621


519,252


509,679


566,336

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

$   638,849


$   518,858


$  638,849


$  518,858

(1) Cash, cash equivalents and restricted cash included restricted cash of $1.7 million and $0.6 million  at July 31, 2022 and January 31, 2022.

 

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


Reconciliation of gross profit and gross margin:



Three Months Ended July 31,


Six Months Ended July 31,

(in thousands)

2022


2021


2022


2021

GAAP gross profit

$  485,480


$  398,064


$  941,756


$  761,900

Add: Stock-based compensation

19,472


13,985


35,167


25,537

Add: Amortization of acquisition-related intangibles

2,403


3,328


4,807


6,500

Add: Employer payroll tax on employee stock transactions

530


2,121


1,321


4,895

Add: Lease-related impairment and lease-related charges

265


$           —


265


$            —

Non-GAAP gross profit

$  508,150


$  417,498


$  983,316


$  798,832

GAAP gross margin

78 %


78 %


78 %


78 %

Non-GAAP adjustments

4 %


4 %


3 %


3 %

Non-GAAP gross margin

82 %


82 %


81 %


81 %









GAAP subscription gross profit

$  497,263


$  408,303


$  961,355


$  782,167

Add: Stock-based compensation

12,994


7,539


23,607


13,557

Add: Amortization of acquisition-related intangibles

2,403


3,328


4,807


6,500

Add: Employer payroll tax on employee stock transactions

332


971


840


2,413

Add: Lease-related impairment and lease-related charges

194



194


Non-GAAP subscription gross profit

$  513,186


$  420,141


$  990,803


$  804,637

GAAP subscription gross margin

82 %


83 %


82 %


83 %

Non-GAAP adjustments

3 %


2 %


2 %


2 %

Non-GAAP subscription gross margin

85 %


85 %


84 %


85 %









GAAP professional services and other gross loss

$ (11,783)


$ (10,239)


$ (19,599)


$ (20,267)

Add: Stock-based compensation

6,478


6,446


11,560


11,980

Add: Employer payroll tax on employee stock transactions

198


1,150


481


2,482

Add: Lease-related impairment and lease-related charges

71



71


Non-GAAP professional services and other gross loss

$   (5,036)


$   (2,643)


$   (7,487)


$   (5,805)

GAAP professional services and other gross margin

(69) %


(54) %


(54) %


(56) %

Non-GAAP adjustments

39 %


40 %


33 %


40 %

Non-GAAP professional services and other gross margin

(30) %


(14) %


(21) %


(16) %

 

Reconciliation  of operating expenses:



Three Months Ended July 31,


Six Months Ended July 31,

(in thousands)

2022


2021


2022


2021

GAAP sales and marketing

$  323,582


$  262,372


$  624,279


$  501,491

Less: Stock-based compensation

(61,218)


(46,921)


(108,649)


(85,057)

Less: Amortization of acquisition-related intangibles

(2,630)


(3,333)


(5,834)


(6,691)

Less: Employer payroll tax on employee stock transactions

(1,683)


(5,706)


(3,973)


(12,484)

Less: Lease-related impairment and lease-related charges

(886)



(886)


Non-GAAP sales and marketing

$  257,165


$  206,412


$  504,937


$  397,259

GAAP sales and marketing as a percentage of revenue

52 %


51 %


52 %


51 %

Non-GAAP sales and marketing as a percentage of revenue

41 %


40 %


42 %


40 %









GAAP research and development

$  126,532


$  94,651


$  238,759


$  180,067

Less: Stock-based compensation

(40,978)


(26,275)


(73,183)


(46,737)

Less: Employer payroll tax on employee stock transactions

(868)


(2,752)


(2,401)


(6,928)

Less: Lease-related impairment and lease-related charges

(385)


$         —


(385)


$           —

Non-GAAP research and development

$  84,301


$  65,624


$  162,790


$  126,402

GAAP research and development as a percentage of revenue

20 %


18 %


20 %


18 %

Non-GAAP research and development as a percentage of revenue

14 %


13 %


13 %


13 %









GAAP general and administrative

$  76,456


$  63,652


$  139,034


$  113,690

Less: Stock-based compensation

(19,539)


(12,778)


(34,931)


(23,764)

Less: Acquisition-related expenses


(221)



(387)

Less: Employer payroll tax on employee stock transactions

(304)


(1,006)


(789)


(3,561)

Less: Executive transition costs

(1,804)



(1,804)


Less: Lease-related impairment and lease-related charges

(292)


(3,892)


(292)


(3,892)

Non-GAAP general and administrative

$  54,517


$  45,755


$  101,218


$  82,086

GAAP general and administrative as a percentage of revenue

13 %


13 %


11 %


12 %

Non-GAAP general and administrative as a percentage of revenue

9 %


9 %


8 %


8 %

 

Reconciliation  of income (loss) from operations and operating margin:



Three Months Ended July 31,


Six Months Ended July 31,

(in thousands)

2022


2021


2022


2021

GAAP loss from operations

$ (41,090)


$ (22,611)


$ (60,316)


$ (33,348)

Add: Stock-based compensation

141,207


99,959


251,930


181,095

Add: Amortization of acquisition-related intangibles

5,033


6,661


10,641


13,191

Add: Employer payroll tax on employee stock transactions

3,385


11,585


8,484


27,868

Add: Acquisition-related expenses


221



387

Add: Executive transition costs

1,804



1,804


Add: Lease-related impairment and lease-related charges

1,828


3,892


1,828


3,892

Non-GAAP income from operations

$  112,167


$  99,707


$  214,371


$  193,085

GAAP operating margin

(7) %


(4) %


(5) %


(3) %

Non-GAAP adjustments

25 %


23 %


23 %


23 %

Non-GAAP operating margin

18 %


19 %


18 %


20 %

 

Reconciliation of net income (loss) and net income (loss) per share, basic and diluted :



Three Months Ended July 31,


Six Months Ended July 31,

(in thousands, except per share data)

2022


2021


2022


2021

GAAP net loss

$   (45,078)


$   (25,501)


$   (72,451)


$   (33,855)

Add: Stock-based compensation

141,207


99,959


251,930


181,095

Add: Amortization of acquisition-related intangibles

5,033


6,661


10,641


13,191

Add: Employer payroll tax on employee stock transactions

3,385


11,585


8,484


27,868

Add: Amortization of debt discount and issuance costs

1,198


1,274


2,482


2,593

Less: Fair value adjustments to strategic investments

(89)


(151)


(429)


(5,270)

Add: Acquisition-related expenses


221



387

Add: Executive transition costs

1,804



1,804


Add: Lease-related impairment and lease-related charges

1,828


3,892


1,828


3,892

Add: Income tax effect of non-GAAP adjustments (1)

$   (19,171)


$            —


(36,692)


Non-GAAP net income

$     90,117


$     97,940


$   167,597


$   189,901









Numerator:








Non-GAAP net income

$     90,117


$     97,940


$   167,597


$   189,901

Add: Interest expense on convertible senior notes

46


61


29


97

Non-GAAP net income attributable to common stockholders, diluted

$     90,163


$     98,001


$   167,626


$   189,998









Denominator:








Weighted-average common shares outstanding, basic

200,618


195,996


200,150


195,183

Effect of dilutive securities

5,024


12,154


5,666


12,811

Non-GAAP weighted-average common shares outstanding, diluted

205,642


208,150


205,816


207,994









GAAP net loss per share, basic and diluted

$       (0.22)


$       (0.13)


$       (0.36)


$       (0.17)

Non-GAAP net income per share, basic

0.45


0.50


0.84


0.97

Non-GAAP net income per share, diluted

0.44


0.47


0.81


0.91

(1) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%. Estimating a non-GAAP tax rate of 20%, the income tax effect of non-GAAP adjustments was $19.5 million for the three months ended July 31, 2021, and $36.3 million for the six months ended July 31, 2021.

 

Computation of free cash flow:



Three Months Ended July 31,


Six Months Ended July 31,

(in thousands)

2022


2021


2022


2021

Net cash provided by operating activities

$   120,879


$   177,669


$   317,165


$   313,266

Less: Purchases of property and equipment

(15,404)


(15,938)


(37,113)


(28,534)

Non-GAAP free cash flow

$   105,475


$   161,731


$   280,052


$   284,732

Net cash used in investing activities

$   (83,338)


$    (34,371)


$  (145,852)


$  (104,877)

Net cash used in financing activities

$   (35,453)


$  (142,350)


$    (34,103)


$  (255,304)

 

Computation of billings:



Three Months Ended July 31,


Six Months Ended July 31,

(in thousands)

2022


2021


2022


2021

Revenue

$   622,184


$   511,844


$  1,210,876


$   980,923

Add: Contract liabilities and refund liability, end of period

1,094,939


939,826


1,094,939


939,826

Less: Contract liabilities and refund liability, beginning of period

(1,074,460)


(857,969)


(1,049,106)


(800,940)

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

18,756


19,737


18,273


21,021

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

(13,695)


(18,067)


(13,695)


(18,067)

Non-GAAP billings

$   647,724


$   595,371


$  1,261,287


$  1,122,763

 

 

 

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SOURCE DocuSign, Inc.