DOCUSIGN, INC. Q1 FY2026 earnings

Docusign's fiscal 2026 first quarter combined steady top-line growth with a sharp jump in profit. Revenue was $763.7 million, up 7.6% from $709.6 million in the prior-year quarter, with foreign currency exchange rates subtracting 0.6% from the growth rate. Subscription revenue of $746.2 million rose 8%, while professional services and other revenue fell 4% to $17.5 million. Billings of $739.6 million grew 4%.

Gross profit was $606.4 million, up 8.2%, and GAAP gross margin improved to 79.4% from 78.9%. Non-GAAP gross margin was 82.3% against 82.0% a year earlier. Operating income climbed 166.3% to $60.3 million from $22.6 million, and operating margin widened to 7.9% from 3.2%. The prior-year quarter carried $29.1 million in restructuring and other related charges tied to the 2025 Restructuring Plan, and the current quarter recorded none. Net income rose 113.5% to $72.1 million from $33.8 million, and diluted EPS was $0.34 against $0.16. Non-GAAP diluted EPS came in at $0.90 versus $0.82.

Expense trends were mixed. Research and development rose 19% to $159.4 million, driven by higher headcount for product innovation, including the Lexion acquisition, and by a $10.2 million increase in stock-based compensation. Sales and marketing grew 5% to $296.4 million on higher commissions. General and administrative fell 2% to $90.3 million, helped by lower litigation spending and insurance reimbursements for defense costs.

Cash flow was slightly weaker than a year ago. Operating cash flow was $251.4 million, down 1.3% from $254.8 million. Capital expenditures rose 3.8% to $23.6 million. Free cash flow, a non-GAAP measure defined as operating cash flow less purchases of property and equipment, was $227.8 million compared with $232.1 million. Deferred revenue, current portion, stood at $1.42 billion, up 8.3%, and remaining performance obligations were $2.30 billion, up 4.5% from $2.20 billion. Cash, cash equivalents, restricted cash and investments totaled $1.1 billion at April 30, 2025.

The board approved a $1.0 billion increase to the stock repurchase program, lifting total remaining authorization to $1.4 billion as of June 5, 2025. Docusign repurchased $183.4 million of stock in the quarter, up from $149.1 million a year earlier. In May 2025 the company replaced its $500.0 million credit facility with a new $750.0 million revolving facility that matures in May 2030.

Product and customer metrics point to progress on the Intelligent Agreement Management push. Docusign passed 10,000 IAM customers and unveiled new capabilities at its Momentum25 NYC conference, including the Iris AI engine and AI contract agents expected to launch later this year. The number of customers with more than $300,000 in annualized contract value rose to 1,123 from 1,059. Total customers exceeded 1.7 million, up from over 1.5 million. International revenue increased 10% and represented 28% of total revenue.

Guidance for the quarter ending July 31, 2025 puts billings at $757 million to $767 million, non-GAAP gross margin at 80.5% to 81.5% and non-GAAP operating margin at 26.5% to 27.5%. For the full fiscal year ending January 31, 2026, the company guided billings of $3,285 million to $3,339 million, with non-GAAP gross margin of 80.7% to 81.7% and non-GAAP operating margin of 27.8% to 28.8%. Foreign currency is expected to be neutral to guided growth, and billings guidance would be roughly 0.7 points lower excluding currency effects.

The standard risks still apply. Docusign cites competition in an evolving market, the timing and extent of customer renewals, seasonality, the cloud migration transition, and its ability to develop and sell IAM solutions. It also maintains valuation allowances against certain federal, California and Ireland deferred tax assets. With billings growth of 4% trailing revenue growth of 7.6%, the durability of the IAM-driven expansion is the main question for the rest of the year.