DOCUSIGN, INC. Q2 FY2026 earnings

Docusign's fiscal 2026 second quarter revenue rose to $800.6 million, up 8.8% from the prior-year quarter. Gross profit was $635.2 million, up 9.4%, and gross margin improved to 79.3% from 78.9%. Operating income increased 12.8% to $65.2 million, lifting operating margin to 8.1% from 7.9%. GAAP net income fell 92.9% to $63.0 million, and diluted EPS dropped to $0.30 from $4.26. That decline traces to a large prior-year tax benefit from the release of a valuation allowance, not to a breakdown in operating performance. Non-GAAP gross margin was 82.0%, down from 82.2%, and non-GAAP operating margin was 29.8%, down from 32.2%.

Operating cash flow for the quarter was $246.1 million, up 11.7% from $220.2 million. Free cash flow, which subtracts purchases of property and equipment, was $217.6 million, compared with $197.9 million. Capital expenditures were $28.4 million, up 27.6% from $22.3 million. Deferred revenue, current portion, was $1.44 billion, up 9.8% from $1.31 billion. Remaining performance obligations were $2.30 billion, up 4.5% from $2.20 billion. Billings were $818.0 million, a 13% year-over-year increase.

Across the first six months, revenue rose 8.2% to $1.56 billion. Net income fell 85.4% to $135.1 million, and diluted EPS was $0.64, down from $4.40. Operating cash flow increased 4.7% to $497.5 million. Management credited AI innovation launches and recent go-to-market changes for strength across eSignature, CLM, and IAM. New AI-powered IAM capabilities include Agreement Prep for building custom agreements, ID Verification with CLEAR, Custom Extractions in Navigator, SCIM for user provisioning through Okta and Microsoft Entra, and Maestro Workflow Templates. The company also shipped Unified Task Management for CLM and was named a leader in IDC's 2025 MarketScape for AI-Enabled Buy-Side CLM Applications. The board added Mike Rosenbaum, CEO of Guidewire, and named James Beer as its next Board Chair. Docusign counts over 1.7 million customers, of which 271,000 are served by its direct sales force, up from 253,000 a year earlier. Customers with more than $300,000 in annualized contract value totaled 1,137, compared with 1,066. International revenue grew 12% over the six-month period and represented 29% of total revenue, up from 28%.

Guidance for the next quarter, ending October 31, 2025, points to 7% growth at the midpoint for both total revenue and subscription revenue. Billings are guided to $785 million to $795 million, up 5% at the midpoint. Non-GAAP gross margin is guided to 80.3% to 81.3%, and non-GAAP operating margin to 28.0% to 29.0%. For the full fiscal year ending January 31, 2026, the company guides to 7% total revenue growth and 8% subscription revenue growth at the midpoints, with billings of $3,325 million to $3,355 million, up 7%. Full-year non-GAAP gross margin is guided to 81.0% to 82.0%, and non-GAAP operating margin to 28.6% to 29.6%. The revenue outlook assumes a roughly neutral foreign exchange impact. Excluding currency effects, billings guidance would be about 0.2% points lower for the next quarter and about 0.8% points lower for the fiscal year.

Risks include global macroeconomic conditions, inflation, volatile interest rates or foreign exchange rates, and market volatility. Docusign also points to competition, the challenge of developing, launching, and selling IAM solutions, and the need to fold generative AI into existing and future products. Retention and expansion within the customer base matter, as does holding onto the direct sales force, customer success team, and strategic partners. The company cites exposure to data breaches, cyberattacks, or other fraudulent activity, along with litigation, intellectual property protection, and internal controls. Management keeps funding product innovation and an omnichannel go-to-market model while pushing for better operational and financial efficiency.