Summary
DocuSign closed the second quarter of fiscal 2024 with revenue of $687.7 million, up 10.5% from $622.2 million in the same quarter a year earlier. Gross profit rose 11.7% to $542.1 million from $485.5 million, and gross margin reached 78.8%, up 0.8 points from 78.0%. The top line is still growing at a low double-digit pace, and the cost side is finally bending in the company's favor.
Profitability flipped. Operating income was $6.6 million, compared with an operating loss of $41.1 million a year ago, a swing to a profit. Operating margin was 1.0%, up 7.6 points from negative 6.6%. Net income was $7.4 million versus a net loss of $45.1 million, and diluted EPS came in at $0.04 against a loss of $0.22 per share. Non-GAAP net income was $149.6 million versus $90.1 million, with non-GAAP diluted EPS of $0.72 versus $0.44. One drag on the bottom line: the provision for income taxes rose $11.7 million to $15.1 million in the quarter, reflecting higher pre-tax income and limits on using net operating losses.
Cash generation was the standout. Operating cash flow was $211.0 million, up 74.6% from $120.9 million a year ago. Capital expenditures were $27.4 million, up 77.7% from $15.4 million, and free cash flow, which DocuSign defines as operating cash flow less purchases of property and equipment, was $183.6 million versus $105.5 million. Billings were $711.2 million, up 10%. Deferred revenue of $1.21 billion rose 12.5%, and remaining performance obligations of $1.90 billion rose 11.8%, both signs that booked business is still expanding. Cash, cash equivalents, restricted cash and investments totaled $1.5 billion at quarter end.
Through the first six months, revenue was $1.35 billion, up 11.4%; net income was $7.9 million; operating cash flow was $444.7 million, up 40.2%; and capital expenditures were $46.4 million, up 25.1%.
Guidance for the quarter ending October 31, 2023 puts billings at $668 million to $678 million, non-GAAP gross margin at 81% to 82%, and non-GAAP operating margin at 22% to 23%. Management also issued total and subscription revenue ranges for that quarter. For the full fiscal year ending January 31, 2024, billings are guided to $2,804 million to $2,824 million, non-GAAP gross margin to 81% to 82%, and non-GAAP operating margin to 23% to 24%, alongside total and subscription revenue ranges. The company has not reconciled its non-GAAP guidance to the corresponding GAAP measures because stock-based compensation expense cannot be reasonably predicted.
Operationally, DocuSign reported more than 1.4 million customers as of July 31, 2023, up from over 1.2 million a year earlier, including approximately 226,000 enterprise and commercial customers versus 191,000. The count of customers spending more than $300,000 in annualized contract value climbed to 1,047 from 992. International revenue was 26% of the total, up from 25%. Product news included Liveness Detection for ID Verification, a DocuSign Monitor integration with CLM, and enhanced CLM comments.
Cost discipline is doing much of the work. Sales and marketing expense fell 9% in the quarter, helped by lower headcount from restructuring plans, while general and administrative expense jumped 36%, driven by $15.2 million of stock-based compensation tied to executive hires and transitions plus $6.5 million of personnel costs. Restructuring charges tied to the 2024 Restructuring Plan were $0.8 million in the quarter and $29.6 million for the six months, mostly employee termination benefits. The accumulated deficit stood at $1.7 billion, and the company still expects operating losses for the foreseeable future while it keeps investing in the platform.
The board authorized an additional $300 million for the stock repurchase program, bringing the total to up to $500 million. Liquidity looks comfortable, with no borrowings on the $500 million credit facility, though convertible notes mature on September 15, 2023, with $37.1 million of the 2023 notes unpaid as of July 31, 2023, and on January 15, 2024. The risk list is familiar: macroeconomic conditions, inflation, interest rates, instability in the global banking sector, competition in an evolving market, execution on restructuring plans, and the ability to sustain growth while reaching durable profitability.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $687.7M | $661.4M | +4.0% | $622.2M | +10.5% |
| Gross profit | $542.1M | $524.9M | +3.3% | $485.5M | +11.7% |
| Gross margin | 78.8% | 79.4% | -0.5 pp | 78.0% | +0.8 pp |
| Research & development | $136.0M | $115.4M | +17.9% | $126.5M | +7.5% |
| Sales & marketing | $294.8M | $280.6M | +5.1% | $323.6M | -8.9% |
| General & administrative | $103.9M | $104.8M | -0.9% | $76.5M | +35.9% |
| Total operating expenses | $535.5M | $529.6M | +1.1% | $526.6M | +1.7% |
| Operating income (loss) | $6.6M | -$4.7M | +242.2% | -$41.1M | +116.1% |
| Operating margin | 1.0% | -0.7% | +1.7 pp | -6.6% | +7.6 pp |
| Net income (loss) | $7.4M | $539.0K | +1272.0% | -$45.1M | +116.4% |
| Net margin | 1.1% | 0.1% | +1.0 pp | -7.3% | +8.3 pp |
| Diluted EPS | $0.04 | $0.00 | +$0.04 | -$0.22 | +$0.26 |
| Customers | 992 | 886 | +12.0% | 20 | +4860.0% |
Risks
DocuSign faces competition from disruptive technologies such as generative artificial intelligence that may fundamentally alter the market for its services and reduce customer demand, and it is making significant investments in AI products with no guarantee they will be successful.
DocuSign derives a majority of revenue from its DocuSign eSignature product and remains substantially dependent on it for the foreseeable future; slower or declining adoption of eSignature without a corresponding increase in other products could cause operating results to suffer.
Recent senior leadership changes include the CEO resignation in June 2022, a new CEO appointed in October 2022, and the CFO resignation and replacement in June 2023; two restructuring plans cutting approximately 9% and 10% of the workforce could disrupt execution and make it harder to attract, integrate, and retain key employees.
A majority of DocuSign's subscription contracts are for one year and customers have no obligation to renew; renewal and expansion rates may decline due to spending levels, competition, pricing, and macro conditions, which would cause revenue to decline.
DocuSign's enterprise and commercial sales cycles are long and unpredictable, generally three to nine months and longer for DocuSign CLM and advanced offerings, requiring considerable time and expense before any sale.
Unfavorable global economic conditions, inflation, rising interest rates, instability in the global banking sector, and regional or global conflicts could reduce information technology spending and demand for DocuSign's products.
As of July 31, 2023, DocuSign had $37.1 million principal amount of 2023 Notes maturing September 15, 2023 and $690.0 million principal amount of 2024 Notes maturing January 15, 2024; substantial indebtedness and upcoming maturities could limit flexibility and consume liquidity.
DocuSign has faced security incidents in the past and operates with remote or hybrid work, third-party cloud infrastructure, and increasing cyberattacks; a future breach could cause customer loss, reputational harm, regulatory penalties, and significant liability.
DocuSign implemented restructuring plans in September 2022 and February 2023 reducing its workforce by approximately 9% and 10%, primarily in sales for the latter plan, and incurred $29.6 million in restructuring and other related charges in the six months ended July 31, 2023; failure to realize expected cost savings or unforeseen expenses could harm results.
DocuSign's revenue grew from $2.1 billion in fiscal 2022 to $2.5 billion in fiscal 2023, but it expects its revenue growth rate to decline as scale increases, and future growth rates may fail to meet investor expectations, particularly against pandemic-era acceleration.
DocuSign launched a new ERP system in fiscal 2023; implementation and transition risks could disrupt operations, financial reporting, and internal control over financial reporting, and any failure could harm business and results.
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 Q2 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.