DOCUSIGN INC

Previous wording

Docusign offers solutions that address agreement workflows and digital transformation. Docusign’s core offerings, including our IAM platform, the world’s leading electronic signature, and CLM solutions, allow organizations to boost productivity, accelerate contract review cycles, and transform agreement data into insights and actions, while providing a better customer experience. For example, Docusign’s innovative IAM platform automates agreement workflows, uncovers actionable insights, and leverages AI capabilities, which enables organizations to create, commit to, and manage agreements, from virtually anywhere in the world, securely. As a result, over 1.6 million customers andmore than a billion users worldwide utilize our platform to accelerate and simplify the process of doing business.

Current wording

Docusign solutions bring agreements to life, accelerating and simplifying the process of doing business. Docusign’s core offerings — our IAM platform, the world’s leading eSignature solution, and CLM solution — allow organizations to boost productivity, accelerate contract review cycles, and transform agreement data into insights and actions, while providing a better customer experience. For example, Docusign’s innovative IAM platform automates agreement workflows, uncovers actionable insights, and leverages AI capabilities, which enables organizations to create, commit to, and manage agreements, from virtually anywhere in the world, securely. As of April 30, 2025, over 1.7 million customers andmore than a billion users worldwide utilize Docusign to accelerate and simplify the process of doing business.

Previous wording

We generate substantially all our revenue from sales of subscriptions, which accounted for 97% of our revenue in each of the three and nine month periods ended October 31, 2024 and 2023. Our subscription fees include using our products and access to customer support. Subscriptions generally range from one to three years, and substantially all our multi-year customers pay in annual installments, one year in advance.

Current wording

We generate substantially all our revenue from sales of subscriptions, which accounted for 98% of our revenue in the three months ended April 30, 2025, and 97% of our revenue in the three months ended April 30, 2024. Our subscription fees include the use of our products and access to customer support. Subscriptions generally range from one to three years, and substantially all our multi-year customers pay in annual installments, one year in advance.

Previous wording

We also generate revenue from professional and other non-subscription services, which consists primarily of fees associated with providing new customers with deployment and integration services. Other revenue includes amounts derived from sales of on-premises solutions. Professional services and other revenue accounted for the remainder of total revenue in each of the three and nine months ended October 31, 2024 and 2023. We anticipate continuing to invest in customer success through our professional services offerings as we believe it plays an important role in accelerating our customers’ adoption of our products, which helps drive customer retention and expansion.

Current wording

We also generate revenue from professional and other non-subscription services, which consists primarily of fees associated with providing new customers with deployment and integration services. Other revenue includes amounts derived from sales of on-premises solutions. Professional services and other revenue accounted for the remainder of total revenue in each of the three months ended April 30, 2025 and 2024. We anticipate a greater focus on investing in customer success through our professional services offered by partners. We believe it plays an important role in accelerating our customers’ adoption of our products, which helps drive customer retention and expansion.

Previous wording

One pillar of our long-term strategy is to evolve our go-to-market channels from the historically direct sales-driven approach. We are currently investing in three routes to market, including direct sales, partner-assisted sales, and digital self-service purchasing. We expect that Docusign’s IAM platform will increasingly be offered across all three channels.

Current wording

One pillar of our long-term strategy is to evolve our go-to-market (“GTM”) channels from the historically direct sales-driven approach. We are currently investing in three routes to market, including direct sales, partner-assisted sales, and digital self-service purchasing. We expect that Docusign’s IAM platform will increasingly be offered across all three channels.

Previous wording

We offer subscriptions to our products to businesses at all scales, from global enterprise down to local, very small businesses (“VSBs”). We offer more than 900 active partner integrations with the applications that many of our customers already use so that they can create, commit and manage agreements directly within these applications. We have a diverse customer base spanning across virtually all industries and around the world with no significant customer concentration. No single customer accounted for more than 10% of total revenue in any of the periods presented.

Current wording

We offer subscriptions to our products to businesses at all scales, from global enterprises down to local, very small businesses (“VSBs”). We offer more than 1,000 active partner integrations with the applications that many of our customers already use so that they can create, commit and manage agreements directly within these applications. We have a diverse customer base spanning across virtually all industries and around the world with no significant customer concentration. No single customer accounted for more than 10% of total revenue in any of the periods presented.

Previous wording

We focused initially on selling our products to commercial businesses and VSBs and later expanded our focus to target enterprise customers. The number of our customers with greater than $300,000 in annualized contract value was 1,075 customers as of October 31, 2024 compared to 1,051 customers as of October 31, 2023. Each of our customer types has a different purchasing pattern. VSBs typically become customers by quickly utilizing our digital and self-serve channels and generate smaller average contract values, while commercial and enterprise customers typically involve longer sales cycles, larger contract values and greater expansion opportunities for us.

Current wording

We focused initially on selling our products to commercial businesses and VSBs and later expanded our focus to target enterprise customers. The number of our customers with greater than $300,000 in annualized contract value was 1,123 customers as of April 30, 2025 compared to 1,059 customers as of April 30, 2024. Each of our customer types has a different purchasing pattern. VSBs typically become customers by quickly utilizing our digital and self-serve channels and generate smaller average contract values, while commercial and enterprise customers typically involve longer sales cycles, larger contract values and greater expansion opportunities for us.

Previous wording

Financial Results for the Three and Nine Months Ended October 31, 2024 and 2023

Current wording

Financial Results for the Three Months Ended April 30, 2025 and 2024

Previous wording

The second growth pillar is to strengthen our omnichannel go-to-market by refining our direct sales, partner, and self-service channels to better address customer needs. By optimizing these routes with a more efficient cost structure,we aim to target growth opportunities and expand our reach in the market.

Current wording

The second growth pillar is to strengthen our omnichannel GTM by evolving our direct sales, partner, and digital e-commerce and self-service channels to better address customer needs. By optimizing these routes with a more efficient cost structure, we aim to target growth opportunities and expand our reach in the market.

Previous wording

Finally, our third growth pillar is to enhance operational and financial efficiency to scale effectively and sustainably. This includes prioritizing investments in infrastructure and technology that best serve our diverse customer base. Additionally, we continue to evaluate strategic acquisitions and partnerships that align with our growth objectives and expand our product offerings.

Current wording

Finally, our third growth pillar is to enhance operational and financial efficiency to scale effectively and sustainably. This includes prioritizing the infrastructure and technology investments that best serve our diverse customer base, as well as generating incremental revenue and growth with a lower cost profile. Additionally, we continue to evaluate strategic acquisitions and partnerships that align with our growth objectives and expand our product offerings.

Previous wording

Our international revenue represented 28% of total revenue in each of the three and nine months ended October 31, 2024 compared to 26% of total revenue in each of the three and nine months ended October 31, 2023.

Current wording

International revenue increased 10% in the three months ended April 30, 2025, compared to the three months ended April 30, 2024. Additionally, our international revenue represented 28% of our total revenue in each of the three month periods ended April 30, 2025 and April 30, 2024.

Previous wording

In fiscal 2024, interest expense consisted primarily of contractual interest expense and amortization of debt issuance costs on our Notes. The Notes were extinguished during fiscal year 2024. In fiscal 2025, interest expense consists primarily of commitment fees on the undrawn balance of our revolving credit facility and the amortization of the associated issuance costs.

Current wording

Interest expense consists primarily of commitment fees on the undrawn balance of our revolving credit facility and the amortization of the associated issuance costs.

Previous wording

Our income tax benefit consists primarily of the release of a $831.4 million valuation allowance related to our U.S. deferred tax assets. We regularly assess the need for a valuation allowance on our deferred tax assets. In making this assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized. As of October 31, 2024, based on all available positive and negative evidence, having demonstrated sustained U.S. profitability, which is objective and verifiable, and taking into account anticipated future earnings, we have concluded it is more likely than not that our U.S. federal and states deferred tax assets will be realizable, with the exception of certain federal deferred tax assets subject to limitation on use and our California deferred tax assets. We continue to maintain a valuation allowance against these deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criterion.

Current wording

We regularly assess the need for a valuation allowance on our deferred tax assets. In making this assessment we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized. As of April 30, 2025, we continue to maintain valuation allowances related to certain federal deferred tax assets subject to limitation on use and our California and Ireland deferred tax assets.

Previous wording

The following discussion and analysis is for the three and nine months ended October 31, 2024, compared to the same period in 2023, unless otherwise stated.

Current wording

The following discussion and analysis is for the three months ended April 30, 2025, compared to the same period in 2024, unless otherwise stated.

Previous wording

Subscription revenue increased by $52.3 million, or 8%, in the three months ended October 31, 2024 and by $152.5 million, or 8%, in the nine months ended October 31, 2024. The increase was primarily due to the expansion of revenue from existing customers and the addition of new customers, as well as an increase in sales to our commercial and enterprise customers through our direct and indirect go-to-market initiatives. We continue to invest in a variety of customer programs and initiatives, which, along with expanded customer use cases, have helped increase our subscription revenue over time.

Current wording

Subscription revenue increased by $54.7 million, or 8%, in the three months ended April 30, 2025. The increase was primarily due to the expansion of revenue from our commercial and enterprise accounts, as well as our digital channel. We continue to invest in a variety of customer programs and initiatives, which, along with expanded customer use cases, have helped increase our subscription revenue over time.

Previous wording

Cost of subscription revenue increased by $20.4 million, or 18%, in the three months ended October 31, 2024 and by $54.2 million, or 16%, in the nine months ended October 31, 2024, primarily driven by higher costs to support our growing customer base.

Current wording

Cost of subscription revenue increased by $10.7 million, or 8%, in the three months ended April 30, 2025, primarily driven by higher costs to support our growing customer base. The increase in the three months ended April 30, 2025, primarily consisted of a $6.8 million increase in information technology costs, including a $5.3 million increase in hosting costs as we transition from co-located data centers to public cloud storage infrastructure to support future growth of our platform, including IAM.

Previous wording

Research and development expenses increased by $14.5 million, or 11%, in the three months ended October 31, 2024 and by $45.0 million, or 12%, in the nine months ended October 31, 2024, primarily due to investments in our workforce to drive product innovation.

Current wording

Research and development expenses increased by $25.1 million, or 19%, in the three months ended April 30, 2025, primarily due to investments in our workforce to support product innovation, including acquisition of Lexion.

Previous wording

•$8.1 million in personnel expense due to higher headcount; and

Current wording

•$12.1 million in personnel expense due to higher headcount; and

Previous wording

•$4.9 million in stock-based compensation due to executive transitions, annual merit increases, and higher headcount.

Current wording

•$10.2 million in stock-based compensation due to annual merit increases and executive new hire grants.

Previous wording

•$6.1 million in professional fees and related expenses, including reduced litigation related expenses and receipt of insurance reimbursements for defense costs in the current year; and

Current wording

General and administrative expenses decreased by $2.2 million, or 2%, in the three months ended April 30, 2025, primarily due to reduced litigation related expenses and receipt of insurance reimbursements for defense costs in the current year.

Previous wording

Our principal sources of liquidity were cash, cash equivalents and investments, as well as cash generated from operations. As of October 31, 2024, we had $942.4 million in cash and cash equivalents and short-term investments. We also had $112.8 millionin long-term investments that provide additional capital resources. We finance our operations primarily through payments by our customers for use of our product offerings and related services, and we have additional borrowing capacity available from our credit facility.

Current wording

Our principal sources of liquidity were cash, cash equivalents and investments, as well as cash generated from operations. As of April 30, 2025, we had $948.7 million in cash and cash equivalents and short-term investments. We also had $160.1 millionin long-term investments that provide additional capital resources. We finance our operations primarily through payments by our customers for use of our product offerings and related services, and we have additional borrowing capacity available from our credit facility.

Previous wording

In January 2021, we entered into a $500.0 million credit facility, as amended in May 2023, which may be increased by an additional $250.0 million subject to customary terms and conditions. The credit facility is available until January 11, 2026, to optimize our capital structure and strengthen our balance sheet. As of October 31, 2024, there were no outstanding borrowings under the credit facility and we were in compliance with related covenants.

Current wording

In January 2021, we entered into a $500.0 million credit facility, as amended in May 2023, which may be increased by an additional $250.0 million subject to customary terms and conditions. As of April 30, 2025, there were no outstanding borrowings under this credit facility, and we were in compliance with related covenants. Subsequently, in May 2025, we entered into a new credit agreement with a syndicate of banks, which superseded and replaced the Credit Facility, and provides for a revolving credit facility in the aggregate principal amount of $750.0 million, which may be increased by an additional $250.0 million subject to customary terms and conditions. The credit facility matures in May 2030, and is available to optimize our capital structure and strengthen our balance sheet. Additional information has been included in Note 6 and Note 13 to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

We believe that our sources of liquidity, including our cash, cash equivalents and investments, and expected future operating cash flows, and borrowing capacity available to us from our credit facility, are adequate to meet our potential cash commitments as well as meet our working capital and capital expenditures needs for the foreseeable future, including upcoming maturities of our contractual obligations over the next 12 months.

Current wording

We believe that our sources of liquidity, including our cash, cash equivalents and investments, and expected future operating cash flows, and borrowing capacity available to us from our credit facility, are adequate to meet our potential cash commitments as well as meet our working capital and capital expenditure needs for the foreseeable future, including upcoming maturities of our contractual obligations over the next 12 months.

Previous wording

Our principal contractual obligations and commitments consist of obligations under operating leases, as well as noncancelable contractual commitments that primarily relate to cloud infrastructure support and sales and marketing activities. Refer to Note 9 to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

Current wording

Our principal contractual obligations and commitments consist of obligations under operating leases, as well as noncancelable contractual commitments that primarily relate to cloud infrastructure support and sales and marketing activities. Refer to Note 7 to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

In addition to our contractual commitments, our board of directors has authorized a stock repurchase program, which commenced in March 2022 and does not have an expiration date. During the nine months ended October 31, 2024, we repurchased 9.2 million shares of common stock for $523.7 million through our stock repurchase program. Included in the repurchase amount is the 1% excise tax as a result of the IRA. The program has no minimum purchase and no mandated end date. The repurchase program may be suspended or discontinued at any time at our discretion. We expect that our existing sources of liquidity, including our existing cash, cash equivalents and investments, expected future operating cash flows, and borrowing capacity of our credit facility, will finance the repurchase of common stock at management’s discretion. The timing and amount of any repurchases of common stock will be determined by management based on its evaluation of market conditions and other factors.

Current wording

In addition to our contractual commitments, our board of directors has authorized a stock repurchase program, which commenced in March 2022. During the three months ended April 30, 2025, we repurchased 2.3 million shares of common stock for $183.4 million through our stock repurchase program. The program has no minimum purchase and no mandated end date. The repurchase program may be suspended or discontinued at any time at our discretion. We expect that our existing sources of liquidity, including our existing cash, cash equivalents and investments, expected future operating cash flows, and the borrowing capacity of our credit facility, will finance the repurchase of common stock at management’s discretion. The timing and amount of any repurchases of common stock will be determined by management based on its evaluation of market conditions and other factors.

Previous wording

Cash provided by operating activities was $709.4 million in thenine months ended October 31, 2024. Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income. Our primary uses of cash include the payment of employee salaries and benefits, including the payment of termination benefits under the 2025 Restructuring Plan implemented in the first quarter of fiscal 2025, in addition to vendor payments. Additionally, in connection with the acquisition of Lexion, we agreed to pay$19.1 million in deferred compensation for key employees, which we paid into an escrow account.

Current wording

Cash provided by operating activities was $251.4 million in thethree months ended April 30, 2025. Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income. Our primary uses of cash include the payment of employee salaries and benefits in addition to vendor payments.

Previous wording

Cash provided by operating activities was $708.8 million for thenine months ended October 31, 2023. Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income due to favorable interest rates. Our primary uses of cash include payment of employee salaries and benefits, including the payment of termination benefits under the 2024 Restructuring Plan implemented in the first quarter of fiscal 2024, in addition to vendor payments.

Current wording

Cash provided by operating activities was $254.8 million for thethree months ended April 30, 2024. Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income. Our primary uses of cash include payment of employee salaries and benefits, including the payment of termination benefits under the 2025 Restructuring Plan implemented in the first quarter of fiscal 2024, in addition to vendor payments.

Previous wording

For the nine months ended October 31, 2024, netcash used in investing activities of $280.6 million was primarily driven by the acquisition of Lexion, which totaled$143.6 million, net of cash acquired in addition to$67.7 million net purchases of marketable securities and $68.6 million in purchases of property and equipment as we continued to support operations at our data centers and invest in capitalized software development projects.

Current wording

For the three months ended April 30, 2025, netcash used in investing activities of $24.9 million was primarily driven by $23.6 million in purchases of property and equipment as we continued to invest in capitalized software development projects and to support operations at our data centers.

Previous wording

For the nine months ended October 31, 2023, net cash used in investing activities of $22.6 million was primarily driven by $70.3 million in purchases of property and equipment as wecontinued to support operations at our data centers and invest in capitalized software development projects. These cash outflows were partially offset by $48.2 million net maturities of marketable securities.

Current wording

For the three months ended April 30, 2024, net cash used in investing activities of $60.8 million was primarily driven by $37.5 million net purchases of marketable securities and $22.8 million in purchases of property and equipment as wecontinued to support the operations at our data centers and invest in capitalized software development projects.

Previous wording

For the nine months ended October 31, 2024, net cash used in financing activities of $607.3 million was primarily driven by$521.8 million to repurchase 9.2 million shares of common stock through our stock repurchase program, and$85.5 million payments for tax withholding on share settlements, net of proceeds associated with equity plans.

Current wording

For the three months ended April 30, 2025, net cash used in financing activities of $223.5 million was primarily driven by$183.4 million to repurchase 2.3 million shares of common stock through our stock repurchase program and$40.1 million payments for tax withholding on share settlements, net of proceeds associated with equity plans.

Previous wording

For the nine months ended October 31, 2023, net cash used infinancing activities of $211.0 million was primarily driven by our stock repurchase program, payments related to our equity plans, and the maturity of our 2023 Notes. We used $145.5 million to repurchase 3.1 million shares of common stock through our stock repurchase program. In addition, we made $52.1 million payments for tax withholding on share settlements, net of proceeds associated with equity plans. We also fully repaid our 2023 Notes at maturity in September 2023 for$37.1 million. These cash outflows were partially offset by$23.7 million received in connection with the settlement of our Capped Calls in relation to our 2023 Notes.

Current wording

For the three months ended April 30, 2024, net cash used infinancing activities of $169.9 million was primarily driven by$149.1 million to repurchase 2.5 million shares of common stock through our stock repurchase program, and $20.8 million payments for tax withholding on share settlements, net of proceeds associated with equity plans.

Previous wording

Except for the following, there have been no material changes to our critical accounting policies and estimates as described in our fiscal 2024 Annual Report on Form 10-K.

Current wording

There have been no material changes to our critical accounting policies and estimates as described in our fiscal 2025 Annual Report on Form 10-K.

Previous wording

Refer to Note 1 in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for recently issued accounting pronouncements not yet adopted as of the date of this report.

Current wording

Refer to Note 1 in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Previous wording

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin and non-GAAP net income: We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs, fair value adjustments to strategic investments, acquisition-related expenses, lease-related impairment and lease-related charges, restructuring and other related charges, and, as applicable, other special items. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business. When evaluating the performance of our business and making operating plans, we do not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder dilution rather than the accounting charges associated with such grants). We believe it is useful to exclude these expenses in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies and over multiple periods. In addition to these exclusions, we subtract an assumed provision for income taxes to calculate non-GAAP net income. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2024 and fiscal 2025, we have determined the projected non-GAAP tax rate to be 20%.

Current wording

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin and non-GAAP net income: We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, acquisition-related expenses, restructuring and other related charges, and, as applicable, other special items. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business. When evaluating the performance of our business and making operating plans, we do not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder dilution rather than the accounting charges associated with such grants). We believe it is useful to exclude these expenses in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies and over multiple periods. In addition to these exclusions, we subtract an assumed provision for income taxes to calculate non-GAAP net income. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. For fiscal 2025 and fiscal 2026, we have determined the projected non-GAAP tax rate to be 20%.