DOCU
$135.09
Docusign
($98.73)
(42.22%)
Earnings Details
3rd Quarter October 2021
Thursday, December 2, 2021 4:05:00 PM
Tweet Share Watch
Summary

Docusign Beats but Guides Lower

Docusign (DOCU) reported 3rd Quarter October 2021 earnings of $0.58 per share on revenue of $545.5 million. The consensus earnings estimate was $0.46 per share on revenue of $530.6 million. The Earnings Whisper number was $0.52 per share. Revenue grew 42.4% on a year-over-year basis.

The company said it expects fourth quarter revenue of $557.0 million to $563.0 million. The current consensus revenue estimate is $573.79 million for the quarter ending January 31, 2022.

DocuSign helps organizations connect and automate how they prepare, sign, act on, and manage agreements.

Results
Reported Earnings
$0.58
Earnings Whisper
$0.52
Consensus Estimate
$0.46
Reported Revenue
$545.5 Mil
Revenue Estimate
$530.6 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

DocuSign Announces Third Quarter Fiscal 2022 Financial Results

SAN FRANCISCO, Dec. 2, 2021 /PRNewswire/ -- DocuSign, Inc. (NASDAQ: DOCU), which offers the world's #1 e-signature solution as part of the DocuSign Agreement Cloud, today announced results for its fiscal quarter ended October 31, 2021.

"Third quarter revenue growth of 42% year-over-year and operating margin of 22% exceeded our expectations. After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth," said Dan Springer, CEO of DocuSign. "With a $50 billion TAM and 1.11 million customers worldwide, we are confident in the value DocuSign delivers in an increasingly digital anywhere economy."

Third Quarter Financial Highlights

  • Total revenue was $545.5 million, an increase of 42% year-over-year. Subscription revenue was $528.6 million, an increase of 44% year-over-year. Professional services and other revenue was $16.9 million, an increase of 4% year-over-year.
  • Billings were $565.2 million, an increase of 28% year-over-year.
  • GAAP gross margin was 79% compared to 74% in the same period last year. Non-GAAP gross margin was 82% compared to 79% in the same period last year.
  • GAAP net loss per basic and diluted share was $0.03 on 198 million shares outstanding compared to $0.31 on 186 million shares outstanding in the same period last year.
  • Non-GAAP net income per diluted share was $0.58 on 208 million shares outstanding compared to $0.22 on 206 million shares outstanding in the same period last year.
  • Net cash provided by operating activities was $105.4 million compared to $57.4 million in the same period last year.
  • Free cash flow was $90.0 million compared to $38.1 million in the same period last year.
  • Cash, cash equivalents, restricted cash and investments were $908.2 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 3. DocuSign recently announced several exciting new product capabilities to help businesses move forward including:
    • DocuSign eSignature enhancements such as Delegated Signing, Recipient Connect, Rooms for Mortgage with Encompass® by ICE Mortgage Technology™, Dynamic Content for DocuSign Click, SMS Delivery enhancement, Notary enhancements, ID Verification enhancement, and Agreement Actions enhancements to automate post-signature tasks.
    • Other Agreement Cloud enhancements such as collaboration enhancements that give DocuSign CLM users the ability to comment, @-mention and assign tasks in the CLM UI, and enhancements to DocuSign Gen for Salesforce Billing, which helps to simplify invoice generation and delivery for businesses.
  • Expansion of Salesforce Partnership. On October 27, 2021, DocuSign and Salesforce announced an expansion of their global strategic partnership to build new joint solutions that make it easier for customers to accelerate how agreements are facilitated around the world. New innovations will automate the contract process with AI-based, smart solutions that improve the customer experience of preparing, signing, and managing agreements, drive faster ROI, and increase collaboration amongst organizations with Slack functionality.
  • DocuSign Ventures. DocuSign introduced DocuSign Ventures, a new initiative dedicated to nurturing the growing ecosystem of entrepreneurs and startups that are changing the future of how we all will agree. Ventures will focus on co-investing in and partnering with companies raising early-stage funding to innovate around the agreement process. This includes technologies that facilitate pre-agreement work and negotiation, as well as the logistics and workflows after an agreement is signed. Ventures reinforces the company's existing strategic investments and partnership efforts across the startup ecosystem.

Outlook

The company currently expects the following guidance:

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


Total revenue

$557

to

$563


Subscription revenue

$544

to

$550


Billings

$647

to

$659


Non-GAAP gross margin

81%

to

82%


Non-GAAP operating margin

17%

to

19%


Non-GAAP diluted weighted-average shares outstanding

205

to

210



Year ending January 31, 2022 (in millions, except percentages):


Total revenue

$2,083

to

$2,089


Subscription revenue

$2,017

to

$2,023


Billings

$2,335

to

$2,347


Non-GAAP gross margin

81%

to

82%


Non-GAAP operating margin

19%

to

21%


Provision for income taxes

$3

to

$4


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 December 2, 2021 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) December 16, 2021 using the passcode 13724911.

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 a 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 2021. DocuSign, Inc. is the owner of DOCUSIGN® and all its other marks (www.docusign.com/IP).

Investor Relations:
Annie Leschin
VP Investor Relations
investors@docusign.com

Media Relations:
Megan Gregorio
Corporate Communications
media@docusign.com

Forward-Looking Statements

This press release contains "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. 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 the benefits of the DocuSign Agreement Cloud, enhancements and additions to it, including as a result of acquisitions. 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 evolving COVID-19 pandemic on our business, our results of operations and our financial condition, as well as our future profitability and growth once the pandemic and its related effects begin to abate or have abated; 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, including the pace of the digital transformation of business and differing levels of demand for our products as our customers' priorities, resources, financial conditions and economic outlook change; our ability to estimate the size of our total addressable market; 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; 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; our ability to estimate the size and potential growth of our target market; 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, 2021 filed on March 31, 2021, our quarterly report on Form 10-Q for the quarter ended July 31, 2021 filed on September 3, 2021 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 are presenting 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.

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, impairment of operating lease right-of-use assets, 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.

Free cash flow: We define free cash flow as net cash provided by (used in) operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, 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.

 

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands, except per share data)

2021


2020


2021


2020

Revenue:








Subscription

$

528,573



$

366,617



$

1,473,266



$

971,182


Professional services and other

16,890



16,306



53,119



50,967


Total revenue

545,463



382,923



1,526,385



1,022,149


Cost of revenue:








Subscription

84,579



69,905



247,105



186,645


Professional services and other

31,396



27,926



87,892



75,833


Total cost of revenue

115,975



97,831



334,997



262,478


Gross profit

429,488



285,092



1,191,388



759,671


Operating expenses:








Sales and marketing

275,619



209,944



777,110



576,729


Research and development

102,603



73,362



282,670



191,387


General and administrative

54,624



50,256



168,314



140,513


Total operating expenses

432,846



333,562



1,228,094



908,629


Loss from operations

(3,358)



(48,470)



(36,706)



(148,958)


Interest expense

(1,485)



(7,769)



(4,826)



(23,013)


Interest income and other income (expense), net

(940)



(311)



4,034



6,032


Loss before provision for (benefit from) income taxes

(5,783)



(56,550)



(37,498)



(165,939)


Provision for (benefit from) income taxes

(107)



1,941



2,033



4,916


Net loss

$

(5,676)



$

(58,491)



$

(39,531)



$

(170,855)


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

$

(0.03)



$

(0.31)



$

(0.20)



$

(0.92)


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

197,597



186,423



195,996



184,767










Stock-based compensation expense included in costs and expenses








Cost of revenue—subscription

$

8,095



$

5,777



$

21,652



$

14,655


Cost of revenue—professional services and other

7,270



6,005



19,250



15,355


Sales and marketing

49,663



36,881



134,720



93,851


Research and development

30,074



18,896



76,811



45,562


General and administrative

14,338



13,361



38,103



33,815


 

DOCUSIGN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands)

October 31, 2021


January 31, 2021

Assets




Current assets




Cash and cash equivalents

$

503,884



$

566,055


Investments—current

314,574



207,450


Accounts receivable, net

305,599



323,570


Contract assets—current

14,690



16,883


Prepaid expenses and other current assets

67,842



48,390


Total current assets

1,206,589



1,162,348


Investments—noncurrent

89,455



92,717


Property and equipment, net

177,832



165,039


Operating lease right-of-use assets

132,608



159,352


Goodwill

355,353



350,151


Intangible assets, net

102,802



121,828


Deferred contract acquisition costs—noncurrent

300,073



260,130


Other assets—noncurrent

45,791



24,942


Total assets

$

2,410,503



$

2,336,507


Liabilities and Equity




Current liabilities




Accounts payable

$

47,712



$

37,367


Accrued expenses and other current liabilities

81,065



66,566


Accrued compensation

144,741



156,158


Convertible senior notes—current

11,510



20,469


Contract liabilities—current

940,111



779,642


Operating lease liabilities—current

35,228



32,971


Total current liabilities

1,260,367



1,093,173


Convertible senior notes, net—noncurrent

718,821



693,219


Contract liabilities—noncurrent

17,070



16,492


Operating lease liabilities—noncurrent

136,240



165,704


Deferred tax liability—noncurrent

6,379



6,464


Other liabilities—noncurrent

32,057



32,328


Total liabilities

2,170,934



2,007,380


Convertible senior notes



3,390


Stockholders' equity




Common stock

20



19


Treasury stock

(1,532)



(1,048)


Additional paid-in capital

1,650,714



1,702,254


Accumulated other comprehensive income (loss)

(1,889)



4,964


Accumulated deficit

(1,407,744)



(1,380,452)


Total stockholders' equity

239,569



325,737


Total liabilities and equity

$

2,410,503



$

2,336,507


 

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2021


2020


2021


2020

Cash flows from operating activities:








Net loss

$

(5,676)



$

(58,491)



$

(39,531)



$

(170,855)


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








Depreciation and amortization

20,166



19,479



61,163



51,455


Amortization of deferred contract acquisition and fulfillment costs

37,283



25,593



100,759



70,787


Amortization of debt discount and transaction costs

1,255



7,044



3,848



20,828


Non-cash operating lease costs

6,527



6,963



20,176



20,082


Stock-based compensation expense

109,441



80,920



290,536



203,238


Deferred income taxes

(1,110)



(766)



(2,360)



(1,050)


Other

3,159



1,699



5,598



1,206


Changes in operating assets and liabilities:








Accounts receivable

(20,869)



(36,583)



17,969



(11,429)


Contract assets

(398)



(5,460)



2,422



(3,890)


Prepaid expenses and other current assets

(2,523)



3,553



(12,890)



(1,835)


Deferred contract acquisition and fulfillment costs

(52,528)



(52,225)



(147,946)



(144,639)


Other assets

(7,036)



(331)



(13,712)



(6,463)


Accounts payable

16,146



(2,620)



6,703



3,655


Accrued expenses and other liabilities

(5,136)



10,242



11,886



21,952


Accrued compensation

(9,734)



688



(22,781)



23,553


Contract liabilities

24,423



65,034



161,047



172,520


Operating lease liabilities

(7,979)



(7,296)



(24,212)



(14,394)


Net cash provided by operating activities

105,411



57,443



418,675



234,721


Cash flows from investing activities:








Cash paid for acquisition, net of acquired cash





(6,388)



(180,370)


Purchases of marketable securities

(117,134)



(68,982)



(302,762)



(80,649)


Sales of marketable securities

68





3,070



28,986


Maturities of marketable securities

79,900



103,366



193,071



404,782


Purchases of strategic and other investments

(250)



(5,300)



(750)



(8,541)


Purchases of property and equipment

(15,392)



(19,393)



(43,926)



(64,144)


Net cash (used in) provided by investing activities

(52,808)



9,691



(157,685)



100,064


Cash flows from financing activities:








Repayments of convertible senior notes

(3,121)





(64,835)




Payment of tax withholding obligation on net share settlement of restricted stock units

(94,534)



(113,417)



(323,109)



(247,277)


Proceeds from exercise of stock options

9,358



1,945



21,176



14,983


Proceeds from employee stock purchase plan

22,910



16,269



46,077



29,859


Net cash used in financing activities

(65,387)



(95,203)



(320,691)



(202,435)


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

(1,909)



(1,208)



(2,472)



1,432


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

(14,693)



(29,277)



(62,173)



133,782


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

518,857



404,542



566,337



241,483


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

$

504,164



$

375,265



$

504,164



$

375,265


(1)

$0.3 million of restricted cash was included in Prepaid expenses and other current assets at October 31, 2021 and July 31, 2021 and in Other assets—noncurrent at January 31, 2021.


 

DOCUSIGN, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)


Reconciliation of gross profit and gross margin:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2021


2020


2021


2020

GAAP gross profit

$

429,488


$

285,092


$

1,191,388


$

759,671

Add: Stock-based compensation

15,365


11,782


40,902


30,010

Add: Amortization of acquisition-related intangibles

2,766


3,376


9,266


7,856

Add: Employer payroll tax on employee stock transactions

1,800


1,676


6,695


4,450

Non-GAAP gross profit

$

449,419


$

301,926


$

1,248,251


$

801,987

GAAP gross margin

79

%


74

%


78

%


74

%

Non-GAAP adjustments

3

%


5

%


4

%


4

%

Non-GAAP gross margin

82

%


79

%


82

%


78

%









GAAP subscription gross profit

$

443,994


$

296,712


$

1,226,161


$

784,537

Add: Stock-based compensation

8,095


5,777


21,652


14,655

Add: Amortization of acquisition-related intangibles

2,766


3,376


9,266


7,856

Add: Employer payroll tax on employee stock transactions

873


722


3,286


2,183

Non-GAAP subscription gross profit

$

455,728


$

306,587


$

1,260,365


$

809,231

GAAP subscription gross margin

84

%


81

%


83

%


81

%

Non-GAAP adjustments

2

%


3

%


3

%


2

%

Non-GAAP subscription gross margin

86

%


84

%


86

%


83

%









GAAP professional services and other gross loss

$

(14,506)


$

(11,620)


$

(34,773)


$

(24,866)

Add: Stock-based compensation

7,270


6,005


19,250


15,355

Add: Employer payroll tax on employee stock transactions

927


954


3,409


2,267

Non-GAAP professional services and other gross loss

$

(6,309)


$

(4,661)


$

(12,114)


$

(7,244)

GAAP professional services and other gross margin

(86)

%


(71)

%


(65)

%


(49)

%

Non-GAAP adjustments

49

%


42

%


42

%


35

%

Non-GAAP professional services and other gross margin

(37)

%


(29)

%


(23)

%


(14)

%


















Reconciliation of operating expenses:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2021


2020


2021


2020

GAAP sales and marketing

$

275,619



$

209,944



$

777,110



$

576,729


Less: Stock-based compensation

(49,663)



(36,881)



(134,720)



(93,851)


Less: Amortization of acquisition-related intangibles

(3,205)



(3,981)



(9,896)



(11,176)


Less: Employer payroll tax on employee stock transactions

(5,184)



(4,125)



(17,668)



(10,992)


Less: Acquisition-related expenses







(186)


Non-GAAP sales and marketing

$

217,567



$

164,957



$

614,826



$

460,524


GAAP sales and marketing as a percentage of revenue

51

%


55

%


51

%


56

%

Non-GAAP sales and marketing as a percentage of revenue

40

%


43

%


40

%


45

%









GAAP research and development

$

102,603



$

73,362



$

282,670



$

191,387


Less: Stock-based compensation

(30,074)



(18,896)



(76,811)



(45,562)


Less: Employer payroll tax on employee stock transactions

(2,316)



(1,752)



(9,244)



(5,317)


Non-GAAP research and development

$

70,213



$

52,714



$

196,615



$

140,508


GAAP research and development as a percentage of revenue

19

%


19

%


19

%


19

%

Non-GAAP research and development as a percentage of revenue

13

%


14

%


13

%


14

%









GAAP general and administrative

$

54,624



$

50,256



$

168,314



$

140,513


Less: Stock-based compensation

(14,338)



(13,361)



(38,103)



(33,815)


Less: Employer payroll tax on employee stock transactions

(804)



(1,406)



(4,365)



(4,007)


Less: Acquisition-related expenses



(336)



(387)



(7,776)


Less: Impairment of operating lease right-of-use assets





(3,892)




Non-GAAP general and administrative

$

39,482



$

35,153



$

121,567



$

94,915


GAAP general and administrative as a percentage of revenue

9

%


13

%


10

%


14

%

Non-GAAP general and administrative as a percentage of revenue

7

%


9

%


8

%


9

%



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


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2021


2020


2021


2020

GAAP loss from operations

$

(3,358)



$

(48,470)



$

(36,706)



$

(148,958)


Add: Stock-based compensation

109,440



80,920



290,536



203,238


Add: Amortization of acquisition-related intangibles

5,971



7,357



19,162



19,032


Add: Employer payroll tax on employee stock transactions

10,104



8,959



37,972



24,766


Add: Acquisition-related expenses



336



387



7,962


Add: Impairment of operating lease right-of-use assets





3,892




Non-GAAP income from operations

$

122,157



$

49,102



$

315,243



$

106,040


GAAP operating margin

(1)

%


(13)

%


(2)

%


(15)

%

Non-GAAP adjustments

23

%


26

%


23

%


25

%

Non-GAAP operating margin

22

%


13

%


21

%


10

%



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


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands, except per share data)

2021


2020


2021


2020

GAAP net loss

$

(5,676)



$

(58,491)



$

(39,531)



$

(170,855)


Add: Stock-based compensation

109,440



80,920



290,536



203,238


Add: Amortization of acquisition-related intangibles

5,971



7,357



19,162



19,032


Add: Employer payroll tax on employee stock transactions

10,104



8,959



37,972



24,766


Add: Amortization of debt discount and issuance costs

1,255



7,044



3,848



20,828


Less: Fair value adjustments to strategic investments





(5,270)




Add: Acquisition-related expenses



336



387



7,962


Add: Impairment of operating lease right-of-use assets





3,892




Non-GAAP net income

$

121,094



$

46,125



$

310,996



$

104,971










Numerator:








Non-GAAP net income

$

121,094



$

46,125



$

310,996



$

104,971


Add: Interest expense on convertible senior notes

(84)





12




Non-GAAP net income attributable to common stockholders, diluted

$

121,010



$

46,125



$

311,008



$

104,971










Denominator:








Weighted-average common shares outstanding, basic

197,597



186,423



195,996



184,767


Effect of dilutive securities

10,508



19,425



12,221



17,623


Non-GAAP weighted-average common shares outstanding, diluted

208,105



205,848



208,217



202,390










GAAP net loss per share, basic and diluted

$

(0.03)



$

(0.31)



$

(0.20)



$

(0.92)


Non-GAAP net income per share, basic

0.61



0.25



1.59



0.57


Non-GAAP net income per share, diluted

0.58



0.22



1.49



0.52




Computation of free cash flow:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2021


2020


2021


2020

Net cash provided by operating activities

$

105,411



$

57,443



$

418,675



$

234,721


Less: Purchases of property and equipment

(15,392)



(19,393)



(43,926)



(64,144)


Non-GAAP free cash flow

$

90,019



$

38,050



$

374,749



$

170,577


Net cash (used in) provided by investing activities

$

(52,808)



$

9,691



$

(157,685)



$

100,064


Net cash used in financing activities

$

(65,387)



$

(95,203)



$

(320,691)



$

(202,435)




Computation of billings:


Three Months Ended
October 31,


Nine Months Ended
October 31,

(in thousands)

2021


2020


2021


2020

Revenue

$

545,463



$

382,923



$

1,526,385



$

1,022,149


Add: Contract liabilities and refund liability, end of period

961,243



702,691



961,243



702,691


Less: Contract liabilities and refund liability, beginning of period

(939,826)



(638,790)



(800,940)



(522,201)


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

18,067



20,395



21,020



15,082


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

(19,708)



(26,808)



(19,708)



(26,808)


Add: Contract assets and unbilled accounts receivable by acquisitions







6,589


Less: Contract liabilities and refund liability contributed by acquisitions







(9,344)


Non-GAAP billings

$

565,239



$

440,411



$

1,688,000



$

1,188,158


 

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SOURCE DocuSign, Inc.