Summary
DocuSign posted FY2021 first quarter total revenue of $297.0 million, up 38.8% from $213.96 million in the prior-year quarter. Subscription revenue was $280.9 million, up 39%, and professional services and other revenue grew 29%. Subscription made up 95% of revenue, versus 94% a year earlier. Billings reached $342.1 million, up 59%. That gap matters because the company invoices most customers annually in advance and recognizes revenue ratably over the contract term.
Profitability stayed mixed. GAAP gross profit was $223.0 million, up 37.7%, but the GAAP gross margin slipped to 75.1% from 75.7%, a decline of 0.6 percentage points. Operating loss was $41.85 million, narrower than the prior-year quarter's $42.44 million loss, and the operating margin improved to -14.1% from -19.8%. The net loss was $47.80 million, wider than $45.72 million a year earlier, and GAAP net loss per diluted share was $0.26. Heavy spending on sales, research and stock-based compensation keeps the GAAP lines in the red while the business scales.
Non-GAAP results look far healthier. Non-GAAP gross margin was 79% in both comparative periods. Non-GAAP operating income was $23.2 million against $10.3 million. Non-GAAP net income was $24.09 million, up from $13.49 million, and non-GAAP diluted earnings per share was $0.12 on 197 million shares, versus $0.07 on 189 million shares.
Cash generation held up. Operating cash flow was $59.1 million, up 29.5% from $45.66 million in the prior-year quarter. Capital expenditures were $26.39 million, up 73.2%. Free cash flow, a separate measure the company reports, was $32.8 million against $30.4 million. Deferred revenue of $552.3 million rose 43.3%, and remaining performance obligations of $784.9 million rose 36.7%. DocuSign ended the quarter with $898.3 million in cash, cash equivalents, restricted cash and investments.
The customer base keeps expanding. DocuSign served over 660,000 customers at April 30, 2020, including over 85,000 enterprise and commercial customers, compared with over 500,000 customers and over 60,000 enterprise and commercial customers a year earlier. Customers spending more than $300,000 in annual contract value totaled 473. International revenue grew 46% and represented 18% of total revenue in both periods.
Guidance points higher. For the quarter ending July 31, 2020, management guided to billings of $333 to $343 million, a non-GAAP gross margin of 78% to 80%, non-GAAP sales and marketing expense of 48% to 50% of revenue, non-GAAP research and development of 14% to 16%, non-GAAP general and administrative of 9% to 11%, non-GAAP interest and other income of $2 to $3 million, a provision for income taxes of $2.5 to $3.5 million and non-GAAP diluted weighted-average shares of 200 to 205 million. For the fiscal year ending January 31, 2021, billings guidance was $1,515 to $1,535 million, with a non-GAAP gross margin of 78% to 80%, non-GAAP sales and marketing expense of 47% to 49% of revenue and non-GAAP diluted weighted-average shares of 200 to 205 million. The company did not reconcile these non-GAAP expectations to GAAP because stock-based compensation cannot be predicted at this time.
Risks center on the pandemic. DocuSign credited COVID-19 for a substantial increase in demand, particularly for eSignature, but it also flagged possible volatility in customer demand, higher churn, late or non-payment by customers, delayed purchasing decisions and pressure on pricing, discounts and payment terms. Travel and hospitality customers have slowed or cut spending. The company closed its acquisition of Seal Software on May 1, 2020 for cash consideration of approximately $185.1 million. It also carries an accumulated deficit of $1.2 billion and expects to keep incurring operating losses as it invests for growth.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $297.0M | $274.9M | +8.0% | $214.0M | +38.8% |
| Gross profit | $223.0M | $206.8M | +7.8% | $161.9M | +37.7% |
| Gross margin | 75.1% | 75.2% | -0.2 pp | 75.7% | -0.6 pp |
| Research & development | $54.2M | $52.1M | +4.1% | $37.2M | +45.9% |
| Sales & marketing | $171.8M | $161.3M | +6.5% | $129.9M | +32.2% |
| General & administrative | $38.8M | $35.8M | +8.6% | $37.3M | +4.2% |
| Total operating expenses | $264.8M | $249.2M | +6.3% | $204.4M | +29.6% |
| Operating income (loss) | -$41.9M | -$42.4M | +1.2% | -$42.4M | +1.4% |
| Operating margin | -14.1% | -15.4% | +1.3 pp | -19.8% | +5.7 pp |
| Net income (loss) | -$47.8M | -$47.4M | -0.8% | -$45.7M | -4.6% |
| Net margin | -16.1% | -17.3% | +1.2 pp | -21.4% | +5.3 pp |
| Customers | 660,000 | 585,000 | +12.8% | 324 | +203603.7% |
Risks
The COVID-19 pandemic has caused a substantial increase in demand for DocuSign eSignature, but the filing warns of slower growth or declining spending in industries most impacted by the pandemic, such as travel and hospitality. It may also lead to volatility in customer demand, increased churn, late payment or non-payment, delayed purchasing decisions, and increased pressure on pricing, discounts and payment terms.
In April 2020, a malicious third party used a brute force password attack to access an isolated testing environment and exfiltrated a portion of the company's source code. Remote work during the COVID-19 pandemic increases the risk of cybersecurity incidents from employees, service providers and third parties using less secure systems.
Subscriptions to e-signature solutions account for substantially all subscription revenue and the source of substantially all professional services revenue, and the company expects to remain substantially dependent on e-signature for the foreseeable future. Slower or declining adoption of e-signature without a corresponding increase in other products could harm operating results.
The market is highly competitive and the primary global e-signature competitor is Adobe Systems Incorporated, while other offerings like DocuSign CLM, DocuSign Payments and DocuSign ID Verification face separate competition. Many competitors have longer operating histories and greater resources, which may impair the company's ability to add and retain customers.
The sales cycle for enterprise and commercial customers is generally three to nine months but can vary substantially, and contract lifecycle management and other advanced offerings often have longer evaluation, testing and qualification processes than e-signature. This makes the timing of sales and related revenue recognition difficult to predict.
The company is subject to privacy and data protection laws including the GDPR, CCPA and HIPAA. The CCPA provides a private right of action for data breaches, and GDPR violations can lead to fines of up to €20 million or 4% of annual global turnover, increasing compliance costs and liability exposure.
On May 1, 2020, the company acquired Seal Software Group Limited for cash consideration of approximately $185.1 million, subject to adjustments. Integration may disrupt operations, divert management attention and fail to achieve anticipated benefits, which could harm financial condition.
Most employees, including those critical to maintaining effective disclosure controls and internal control over financial reporting, are working remotely due to COVID-19. The company has limited experience maintaining effective control systems in remote environments, and risks may arise that result in failure to maintain effective controls.
Revenue grew from $701.0 million in the fiscal year ended January 31, 2019 to $974.0 million in the fiscal year ended January 31, 2020, and the company expects its revenue growth rate to decline in the future. Rapid growth has placed significant demands on management and operational and financial resources.
As of January 31, 2020, the company had $575.0 million principal amount of 0.5% Convertible Senior Notes due 2023. Servicing this debt requires significant cash, and the company may lack funds to settle conversions or repurchase notes upon a fundamental change; the indenture does not restrict incurring additional indebtedness.
SaaS KPIs
All quarters →Total Customers
Free Cash Flow
Non-GAAP Operating Margin
Billings
Non-GAAP Gross Margin
Enterprise and Commercial Customers
Summary, forecast, risks and KPIs are extracted from DOCUSIGN, INC.'s SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.