Summary
Docusign closed FY2026 Q3 with revenue of $818.4 million, up 8.4% from the prior-year quarter. GAAP gross profit was $647.8 million, up 8.3%, while GAAP gross margin was 79.2%, down 0.1 percentage points from 79.3% a year earlier. Operating income rose 44.6% to $85.4 million, and GAAP operating margin expanded 2.6 percentage points to 10.4%. Net income rose 34.1% to $83.7 million, and diluted EPS was $0.40, up 33.3%. Profitability improved faster than the top line, a sign that cost discipline is holding.
Year to date, revenue was $2.38 billion, up 8.3%. Gross profit was $1.89 billion, up 8.6%, and gross margin was 79.3%, up 0.3 percentage points. Operating income reached $210.8 million, up 51.2%, with operating margin of 8.8%, up 2.5 percentage points. Net income of $218.8 million was down 77.8%, and diluted EPS of $1.04 was down 77.8%, a swing tied to the prior-year release of a valuation allowance on U.S. federal and state deferred tax assets. Operating cash flow was $787.8 million, up 11.1%, and capital expenditures were $79.4 million, up 15.7%.
The IAM platform passed 25,000 customers in the quarter. Those accounts hold about 150 million opted-in agreements in the Docusign Navigator repository, an average of more than 5,000 contracts per customer. At the October Discover 25 developer event, the company said IAM will be available in ChatGPT and is now in Anthropic Claude, Gemini Enterprise, GitHub Copilot, and Microsoft Copilot studio through a beta release of its Model Context Protocol server. Docusign also launched Navigator and Maestro APIs, announced Docusign for Agentforce at Salesforce's Dreamforce, and added FedRAMP Moderate and GovRAMP authorization. Navigator gained Brazilian-Portuguese and Spanish plus one new region, Japan.
Customer counts kept climbing. Docusign ended the quarter with nearly 1.8 million customers, including roughly 276,000 small and medium-sized businesses, mid-market companies, and large enterprises served by the direct sales force. Customers with more than $300,000 in annualized contract value totaled 1,165, up from 1,075 a year earlier. International revenue increased 13% in the nine months ended October 31, 2025. It represented 30% of total revenue in the quarter and 29% year to date, against 28% in each of the prior-year periods.
Cash generation stayed solid. Operating cash flow was $290.3 million for the quarter, up 23.9%, and capital expenditures were $27.4 million, up 15.9%. Free cash flow, a non-GAAP measure, was $262.9 million compared with $210.7 million a year earlier. Deferred revenue, the current portion, was $1.44 billion, up 10.5%. Remaining performance obligations were $2.30 billion, flat versus the prior-year quarter. Billings, also non-GAAP, came to $829.5 million, up 10%.
Guidance for the quarter ending January 31, 2026 puts billings at $992 million to $1,002 million and non-GAAP gross margin at 80.8% to 81.2%. Non-GAAP operating margin is guided to 28.3% to 28.7%, with 203 million to 208 million non-GAAP diluted shares. For the full fiscal year ending January 31, 2026, billings are guided to $3,379 million to $3,389 million, non-GAAP gross margin to 81.7% to 81.8%, non-GAAP operating margin to 29.8% to 29.9%, and non-GAAP diluted shares to 208 million to 211 million. The company also issued total revenue and subscription revenue guidance for both periods. Excluding foreign currency effects, billings guidance would be about 1.6 percentage points lower for the quarter and roughly 0.9 percentage points lower for the fiscal year.
Risks in the filings are broad. They include global macroeconomic conditions, inflation, volatile interest rates or foreign exchange rates, and market volatility. Competition in an evolving market is another. So are interruptions or delays in technical infrastructure and data breaches, cyberattacks, or other fraudulent activity. Docusign also points to its ability to attract and retain customers, including large organizations, to scale and update the platform for generative AI, and to hold on to its direct sales force, customer success team, and strategic partnerships. Tax changes under the OBBBA produced additional tax expense, and valuation allowances remain on certain federal, California, and Ireland deferred tax assets. The stock repurchase program has no minimum purchase and no mandated end date, and it may be suspended or discontinued at any time.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2026 | Q2 FY2026 | QoQ | Q3 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $818.4M | $800.6M | +2.2% | $754.8M | +8.4% |
| Gross profit | $647.8M | $635.2M | +2.0% | $598.3M | +8.3% |
| Gross margin | 79.2% | 79.3% | -0.2 pp | 79.3% | -0.1 pp |
| Research & development | $167.6M | $169.6M | -1.2% | $151.1M | +10.9% |
| Sales & marketing | $296.5M | $305.4M | -2.9% | $290.6M | +2.0% |
| General & administrative | $98.3M | $94.9M | +3.6% | $97.6M | +0.8% |
| Total operating expenses | $562.4M | $569.9M | -1.3% | $539.3M | +4.3% |
| Operating income (loss) | $85.4M | $65.2M | +30.9% | $59.0M | +44.6% |
| Operating margin | 10.4% | 8.2% | +2.3 pp | 7.8% | +2.6 pp |
| Net income (loss) | $83.7M | $63.0M | +33.0% | $62.4M | +34.1% |
| Net margin | 10.2% | 7.9% | +2.4 pp | 8.3% | +2.0 pp |
| Diluted EPS | $0.40 | $0.30 | +$0.10 | $0.30 | +$0.10 |
| Customers | 1,165 | 1,137 | +2.5% | 1,075 | +8.4% |
Risks
The filing materially expands AI risk, citing inability to anticipate or respond to rapid AI changes and competition from generic LLMs, generative AI, and prompt-based software creation (vibe coding) that could reduce demand. It also discloses an FTC AI-related inquiry to Docusign and EU AI Act quality-assurance requirements, while MD&A notes significant investments in AI features for the IAM platform with no guarantee of success.
Docusign remains substantially dependent on eSignature for revenue, and subscription revenue was 98% of total revenue in the three and nine months ended October 31, 2025. Slower or declining eSignature adoption without corresponding growth in other IAM platform solutions would adversely affect operating results.
Enterprise and commercial sales cycles are long and unpredictable, generally three to nine months, and are longer for CLM and advanced IAM offerings due to extended evaluation, testing, and qualification. The company expends significant sales and marketing expense before any sale, making revenue and billings timing difficult to forecast.
The filing highlights intense competition for specialized AI personnel and states that failure to attract, integrate, or retain such expertise could harm product development and increase compensation-related expenses, particularly at principal U.S. locations in the San Francisco Bay Area and Seattle.
Docusign states it is a frequent target of cyberattacks and has faced past security incidents that did not have a material impact, and that bad actors have misused its platform and brand to defraud others. AI-enhanced phishing, social engineering, and account takeover attacks increase the risk of customer loss, reputational harm, and liability.
The filing details evolving AI and data privacy regulation, including the EU AI Act, GDPR, FTC, OCR, and California authorities, and notes that Docusign's public privacy notices and commitments can trigger enforcement if found non-compliant. Compliance may require additional controls, product changes, and expenses, and could inhibit sales.
International revenue increased by 13% in the nine months ended October 31, 2025 compared to the prior-year period and represented 30% of total revenue in the three months ended October 31, 2025. With 39% of full-time employees outside the U.S., further expansion creates regulatory, labor, tax, and geopolitical challenges.
The OBBBA enacted on July 4, 2025 resulted in additional tax expense in fiscal 2026, and the provision for income taxes increased 29% in the three months ended October 31, 2025 compared to the prior-year quarter. Pillar Two global minimum tax rules may also increase the effective tax rate in future years.
SaaS KPIs
All quarters →Total Customers
Free Cash Flow
Non-GAAP Operating Margin
Billings
Non-GAAP Gross Margin
Customers served by direct sales force
Customers > $300K Annualized Contract Value
Summary, forecast, risks and KPIs are extracted from DOCUSIGN, INC.'s SEC filings for Q3 FY2026 (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.