Summary
DocuSign reported total revenue of $661.4 million for the quarter ended April 30, 2023, up 12.3% from $588.7 million a year earlier. Gross profit rose to $524.9 million, up 15.0% from $456.3 million. Gross margin was 79.4%, up 1.9 percentage points from 77.5%. Subscription revenue accounted for 97% of the total, the same share as a year earlier. Billings, the non-GAAP measure DocuSign uses to gauge demand, came in at $674.8 million, up 10% year over year. Non-GAAP gross margin was 83%, up from 81%.
The bottom line improved. The operating loss narrowed to $4.7 million from $19.2 million, and operating margin was -0.7%, up 2.6 points from -3.3%. GAAP net income was $0.54 million, a swing from a loss of $27.37 million a year earlier. Diluted earnings per share was $0.00 against a loss of $0.14. Non-GAAP net income per diluted share was $0.72, up from $0.38. Stock-based compensation is the main reason the two sets of numbers diverge so widely; the reconciliation runs through nearly every line of the income statement.
Cash generation stayed strong. Operating cash flow was $233.6 million, up 19.0% from $196.3 million. Capital expenditures were $19.1 million, down 12.2% from $21.7 million. Free cash flow, which subtracts purchases of property and equipment from operating cash flow, reached $214.6 million versus $174.6 million a year ago. Deferred revenue, current portion, was $1.19 billion, up 13.4%. Remaining performance obligations of $1.80 billion were up 12.5% from $1.60 billion.
The customer base kept growing. Total customers topped 1.4 million, including approximately 220,000 enterprise and commercial accounts, against more than 1.2 million total customers and almost 182,000 enterprise and commercial accounts a year earlier. Customers with more than $300,000 in annualized contract value rose from 886 to 1,063. International revenue was 25% of the total in both periods. Product releases included Web Forms, an eSignature integration with certified electronic health records, AI-enabled ID Verification built for EU Qualified signature requirements, Document Generation for eSignature, and conditional logic in CLM Essentials. DocuSign also named new finance, product and security chiefs during the quarter and added Anna Marrs to its board of directors.
Management's outlook covers the quarter ending July 31, 2023 and the full fiscal year ending January 31, 2024. For the July quarter, guidance is subscription revenue of $658 million to $662 million, billings of $646 million to $656 million, non-GAAP gross margin of 81% to 82% and non-GAAP operating margin of 24% to 25%. For the full year, the company guides to subscription revenue of $2,640 million to $2,652 million, billings of $2,737 million to $2,757 million, non-GAAP gross margin of 81% to 82% and non-GAAP operating margin of 22% to 24%. Non-GAAP diluted weighted-average shares are guided to 207 million to 212 million for both periods. DocuSign has not reconciled the non-GAAP guidance to GAAP because stock-based compensation expense cannot be reasonably predicted, so the gap between the two views of profitability stays wide.
The risk list is long. The company cites global macroeconomic conditions, inflation, rising and fluctuating interest rates, instability in the global banking sector and market volatility. Competition in an evolving market, data breaches and cyberattacks, the ability to attract new customers and expand the existing base, and the execution of restructuring plans all appear on the list. DocuSign also flags hiring and retaining qualified personnel, including executive level management, after several leadership changes, along with defending litigation, maintaining internal controls, and obligations under its credit facility and convertible notes. Its MD&A points to debt maturing in the next 12 months, an accumulated deficit, and an expectation of continued operating losses for the foreseeable future.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $661.4M | $659.6M | +0.3% | $588.7M | +12.3% |
| Gross profit | $524.9M | $522.1M | +0.5% | $456.3M | +15.0% |
| Gross margin | 79.4% | 79.2% | +0.2 pp | 77.5% | +1.8 pp |
| Research & development | $115.4M | $125.9M | -8.4% | $112.2M | +2.8% |
| Sales & marketing | $280.6M | $304.6M | -7.9% | $300.7M | -6.7% |
| General & administrative | $104.8M | $91.6M | +14.4% | $62.6M | +67.5% |
| Total operating expenses | $529.6M | $522.4M | +1.4% | $475.5M | +11.4% |
| Operating income (loss) | -$4.7M | -$284.0K | -1537.7% | -$19.2M | +75.8% |
| Operating margin | -0.7% | -0.0% | -0.7 pp | -3.3% | +2.6 pp |
| Net income (loss) | $539.0K | $4.9M | -88.9% | -$27.4M | +102.0% |
| Net margin | 0.1% | 0.7% | -0.7 pp | -4.7% | +4.7 pp |
| Diluted EPS | $0.00 | $0.02 | -$0.02 | -$0.14 | +$0.14 |
| Customers | 886 | — | — | 673 | +31.6% |
Risks
Risk Factors state that disruptive technologies such as generative AI may fundamentally alter the market for our services in unpredictable ways and reduce customer demand. The filing also names Adobe Sign as the primary global eSignature competitor and warns that competitors may lower prices or bundle competing products.
The company derives a majority of revenue from DocuSign eSignature, and slower or declining adoption of that product without a corresponding increase in other products could cause operating results to suffer. Subscription revenue was $639.3 million in Q1 FY2024, up 12% year over year, and accounted for 97% of total revenue.
The company has had significant senior leadership changes in the last 12 months: CEO Dan Springer resigned in June 2022, Allan Thygesen was appointed CEO in October 2022, CFO Cynthia Gaylor gave notice in March 2023 effective June 15, 2023, and Blake Grayson was announced as incoming CFO in May 2023. Restructuring plans reducing the workforce by approximately 9% and 10% could negatively impact the ability to attract, integrate, retain and motivate key employees.
Sales cycles for enterprise and commercial customers are generally three to nine months and can be longer for DocuSign CLM and other advanced offerings, requiring significant upfront time and expense before a sale. The filing states the timing of revenue recognition from these customers is difficult to predict.
Risk Factors cite inflation, rising interest rates, increased debt and equity market volatility, instability in the global banking sector, regional or global conflicts, and public health crises as factors that can reduce customer spending and demand. MD&A notes rising interest rates led to an $8.9 million increase in interest income and foreign currency exchange gains increased $5.3 million from the strengthening of the euro and British pound.
The February 2023 restructuring plan reduced the workforce by approximately 10%, primarily in the sales organization, and is expected to be substantially complete by the end of Q2 FY2024. Q1 FY2024 restructuring and other related charges were $28.8 million, primarily $27.7 million of employee termination benefits, with risk of not realizing expected cost savings.
As of April 30, 2023, the company had $37.1 million principal amount outstanding under the 2023 Notes, $690.0 million principal amount outstanding under the 2024 Notes, and $500.0 million available borrowing capacity under its credit facility. The filing notes upcoming maturities in the next 12 months and covenants that could limit operational flexibility.
The company recently launched a new enterprise resource planning system, which is a complex project requiring significant capital and human resources and reengineering of business processes. Failure to operate as intended could disrupt operations, the management of finances and the reporting of financial results, and adversely affect internal control over financial reporting.
The company handles personal, health, and financial information and is subject to regulation by agencies including the FTC and HHS OCR. If products fail to meet requirements such as the ESIGN Act, eIDAS, or FedRAMP, documents executed through the products could be rendered unenforceable, resulting in customer loss, liability, and reputational damage.
International revenue represented 25% of total revenue in each of the three months ended April 30, 2023 and 2022. As of April 30, 2023, the company had offices in 12 countries and approximately 32% of full-time employees outside the U.S., exposing it to regulatory, labor, currency, and geopolitical risks.
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 FY2024 (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 1, 2026.