Summary
DocuSign's FY2024 Q3 revenue reached $700.4 million, up 8.5% from the prior-year quarter. Gross profit was $557.8 million, up 8.1%, while gross margin slipped to 79.6%, down 0.3 percentage points. The company swung to an operating profit of $19.7 million and net income of $38.8 million. Diluted EPS was $0.19. Operating margin moved to 2.8%, up 7.1 percentage points. Those GAAP results contrast with the prior-year quarter, when DocuSign posted an operating loss of $27.4 million and a net loss of $29.9 million.
Cash generation was the standout. Operating cash flow was $264.2 million, up 402.8%. Capital expenditures were $23.8 million, up 44.7%. Free cash flow, a non-GAAP measure defined as operating cash flow less purchases of property and equipment, was $240.3 million versus $36.1 million a year earlier. The quarter also produced record non-GAAP operating margin of 27% and non-GAAP gross margin of 83%. Billings, another non-GAAP metric, were $691.8 million, up 5%. Non-GAAP net income per diluted share was $0.79, compared with $0.57 in the prior-year quarter.
Backlog and deferred revenue improved. Current deferred revenue was $1.20 billion, up 10.7%. Remaining performance obligations were $2.00 billion, up 17.6%. DocuSign ended the quarter with over 1.4 million customers, including approximately 233,000 enterprise and commercial customers, up from over 1.3 million and approximately 202,000 a year earlier. The number of customers with more than $300,000 in annualized contract value edged down to 1,051 from 1,052. International revenue was 26% of total revenue in the quarter, compared with 24% a year earlier.
For the first nine months of FY2024, revenue was $2.05 billion, up 10.4%. Gross profit was $1.62 billion, up 11.5%. Net income was $46.7 million, compared with a loss in the prior-year period. Operating cash flow was $708.8 million, up 91.7%. Gross margin was 79.3%, up 0.8 percentage points, and operating margin was 1.1%, up 5.8 percentage points. Billings for the nine-month period were $2.08 billion. The year-to-date numbers show the same pattern as the quarter: better profitability and stronger cash flow.
Guidance for the quarter ending January 31, 2024 calls for billings of $758 million to $768 million, non-GAAP gross margin of 81.0% to 82.0%, and non-GAAP operating margin of 22.5% to 23.5%. For the full fiscal year ending January 31, 2024, the company guides billings of $2,835 million to $2,845 million, non-GAAP gross margin of 81.5% to 82.5%, and non-GAAP operating margin of 24.0% to 25.0%. DocuSign has not reconciled these non-GAAP figures to the corresponding GAAP measures because stock-based compensation cannot be reasonably predicted.
Operationally, DocuSign was named a Leader in the 2023 Gartner Magic Quadrant for Contract Life Cycle Management for the fourth year in a row. It was one of five leaders among 16 vendors and placed highest on the ability to execute. The company opened an engineering center of excellence in India. Product updates included a Microsoft Power Pages integration, an Embedded Signing enhancement for seamless embedded agreements, and Agreement Reminders for CLM Essentials customers.
Risks remain. The company points to global macroeconomic conditions, inflation, rising and fluctuating interest rates, instability in the global banking sector, and market volatility. Competition, data breaches, and cyberattacks are also cited. Management expects to continue incurring operating losses for the foreseeable future because of planned investments, and it may need additional capital. The 2024 Notes mature on January 15, 2024, while the 2023 Notes were fully repaid in September 2023. The company has a $500.0 million credit facility with no outstanding borrowings as of October 31, 2023.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $700.4M | $687.7M | +1.9% | $645.5M | +8.5% |
| Gross profit | $557.8M | $542.1M | +2.9% | $515.9M | +8.1% |
| Gross margin | 79.6% | 78.8% | +0.8 pp | 79.9% | -0.3 pp |
| Research & development | $136.6M | $136.0M | +0.5% | $115.9M | +17.9% |
| Sales & marketing | $292.5M | $294.8M | -0.8% | $313.8M | -6.8% |
| General & administrative | $108.2M | $103.9M | +4.2% | $85.6M | +26.5% |
| Total operating expenses | $538.0M | $535.5M | +0.5% | $543.4M | -1.0% |
| Operating income (loss) | $19.7M | $6.6M | +198.5% | -$27.4M | +172.0% |
| Operating margin | 2.8% | 1.0% | +1.9 pp | -4.3% | +7.1 pp |
| Net income (loss) | $38.8M | $7.4M | +424.7% | -$29.9M | +229.9% |
| Net margin | 5.5% | 1.1% | +4.5 pp | -4.6% | +10.2 pp |
| Diluted EPS | $0.19 | $0.04 | +$0.15 | -$0.15 | +$0.34 |
| Customers | 1,052 | 992 | +6.0% | 785 | +34.0% |
Risks
Substantially all subscription revenue depends on DocuSign eSignature, and slower or declining adoption without a corresponding increase in other products could cause operating results to suffer.
Disruptive technologies such as generative AI may fundamentally alter the market for services and reduce customer demand, and DocuSign faces competition from Adobe Sign and other vendors. It plans significant investments in AI products but cannot guarantee success.
Enterprise and commercial sales cycles are long and unpredictable, generally three to nine months and longer for DocuSign CLM, requiring considerable time and expense before any sale.
Significant senior leadership changes in the last 12 months, including CFO Cynthia Gaylor resigning in June 2023 and Blake Grayson being appointed CFO, plus restructuring plans reducing workforce by approximately 9% and 10%, could disrupt execution and retention.
Unfavorable global economic conditions, inflation, rising interest rates, instability in the global banking sector, a potential U.S. government shutdown, and regional or global conflicts could reduce IT spending and demand.
DocuSign has faced security incidents in the past and relies on third-party cloud and remote or hybrid work arrangements, increasing exposure to ransomware, phishing, credential stuffing, and state-sponsored attacks.
Failure to comply with e-signature, privacy, and data protection laws, or to meet FedRAMP and eIDAS requirements, could render documents unenforceable, trigger fines, and inhibit sales.
The 2024 Notes mature on January 15, 2024, and settling them may require a portion of liquidity; debt covenants and the credit facility also limit operational flexibility.
The number of customers with greater than $300,000 in annualized contract value decreased from 1,052 as of October 31, 2022 to 1,051 as of October 31, 2023, and most subscription contracts are one year with no renewal obligation.
Although net income was $38.8 million in the quarter and $46.7 million in the nine months ended October 31, 2023, MD&A states it expects to continue incurring operating losses for the foreseeable future due to planned investments.
SaaS KPIs
All quarters →Total Customers
Free Cash Flow
Non-GAAP Operating Margin
Billings
Non-GAAP Gross Margin
Enterprise and Commercial Customers
Non-GAAP Subscription Gross Margin
Customers with >$300,000 in Annualized Contract Value
Summary, forecast, risks and KPIs are extracted from DOCUSIGN, INC.'s SEC filings for Q3 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 2, 2026.