SAN
FRANCISCO, Dec. 8, 2022 /PRNewswire/ -- DocuSign,
Inc. (NASDAQ: DOCU), which offers the world's #1 e-signature
product as part of its industry leading lineup, today announced
results for its fiscal quarter ended October
31, 2022.
"We delivered solid third quarter results, and are pleased with
the continued progress against our critical priorities," said
Allan Thygesen, CEO of DocuSign.
"DocuSign is the pioneer and leader in eSignature. This gives us a
strong foundation to create and deliver a delightful and
differentiated workflow experience, making agreements smarter and
easier for companies of all sizes. I look forward to
continuing to advance our business, as we both innovate and operate
at scale to deliver value for all of our stakeholders."
Third Quarter Financial Highlights
- Total revenue was $645.5
million, an increase of 18% year-over-year. Subscription
revenue was $624.1 million, an
increase of 18% year-over-year. Professional services and other
revenue was $21.4 million, an
increase of 27% year-over-year.
- Billings were $659.4
million, an increase of 17% year-over-year.
- GAAP gross margin was 80% compared to 79% in the same
period last year. Non-GAAP gross margin was 83% compared to 82% in
the same period last year.
- GAAP net loss per basic and diluted share was
$0.15 on 201 million shares
outstanding compared to $0.03 on 198
million shares outstanding in the same period last year.
- Non-GAAP net income per diluted share was $0.57 on 206 million shares outstanding compared
to $0.58 on 208 million shares
outstanding in the same period last year.
- Net cash provided by operating activities was
$52.5 million compared to
$105.4 million in the same period
last year.
- Free cash flow was $36.1
million compared to $90.0
million in the same period last year.
- Cash, cash equivalents, restricted cash and
investments were $1.1 billion at
the end of the quarter.
A reconciliation of GAAP to non-GAAP financial
measures has been provided in the tables included in this press
release. An explanation of these measures is also included below
under the heading "Non-GAAP Financial Measures and Other
Key Metrics."
Operational and Other Financial Highlights:
- 2022 Gartner Magic Quadrant Leader. For the third year
in a row, DocuSign was named a Leader in the 2022 Magic Quadrant
for CLM research report by Gartner, Inc. This year, DocuSign was
placed highest among the 18 vendors evaluated on the "ability to
execute" axis, and highly on the "completeness of vision"
axis.
- DocuSign Agreement Cloud 2022 Product Release 3.
DocuSign announced many new product capabilities with highlights in
the following areas:
-
- DocuSign eSignature. Introduced Elastic Signing, which
enables organizations to deliver a personalized signing experience
that is fast and seamless. Organizations can provide a fully
customizable UI across their websites and mobile apps, display
content based on conditional logic, and let users sign with the
click of a button for a digital-first experience that drives higher
completion.
- Enhanced workflows within Microsoft Applications.
DocuSign announced enhancement to eSignature for Microsoft Teams,
allowing users to send and sign agreements natively, within
Microsoft Teams. DocuSign also announced eSignature enhancements
utilizing Microsoft Power Automate and Microsoft SharePoint.
- DocuSign CLM. Introduced enhancements to the document
review experience within CLM Essentials with a more accessible and
user-friendly interface. Other enhancements include a new process
reporting feature for CLM Essentials and improved insights
regarding contract renewals and notice periods.
- DocuSign Notary. Digital certificates for DocuSign
Notary provides new users with digital certificates to attach to
each notarial transaction, meeting or exceeding digital
certificates requirements for all states. Notaries public will be
able to onboard significantly faster than with third-party
certificate authorities as well as save on certificate fees.
Outlook
The company currently expects the following guidance:
▪ Quarter
ending January 31, 2023 (in millions, except
percentages):
|
|
|
|
|
|
|
|
Total
revenue
|
$637
|
to
|
$641
|
Subscription
revenue
|
$624
|
to
|
$628
|
Billings
|
$705
|
to
|
$715
|
Non-GAAP gross
margin
|
82 %
|
to
|
83 %
|
Non-GAAP operating
margin
|
20 %
|
to
|
22 %
|
Non-GAAP diluted
weighted-average shares outstanding
|
205
|
to
|
210
|
|
|
|
|
▪ Year ending
January 31, 2023 (in millions, except
percentages):
|
|
|
|
|
|
|
|
Total
revenue
|
$2,493
|
to
|
$2,497
|
Subscription
revenue
|
$2,423
|
to
|
$2,427
|
Billings
|
$2,626
|
to
|
$2,636
|
Non-GAAP gross
margin
|
81 %
|
to
|
82 %
|
Non-GAAP operating
margin
|
18 %
|
to
|
20 %
|
Non-GAAP diluted
weighted-average shares outstanding
|
205
|
to
|
210
|
The company has not reconciled its guidance of non-GAAP
financial measures to the corresponding GAAP measures because
stock-based compensation expense cannot be reasonably calculated or
predicted at this time. Accordingly, a reconciliation has not been
provided.
Webcast Conference Call Information
The company will host a conference call on December 8, 2022
at 1:30 p.m. PT (4:30 p.m.
ET) to discuss its financial results. A live
webcast of the event will be available on the DocuSign Investor
Relations website at investor.docusign.com. A live dial-in will be
available domestically at 877-407-0784 or internationally at
201-689-8560. A replay will be available domestically at
844-512-2921 or internationally at 412-317-6671 until midnight (ET)
December 22, 2022 using the passcode
13734316.
About DocuSign
DocuSign helps organizations connect and automate how they
navigate their systems of agreement. As part of its industry
leading product lineup, DocuSign offers eSignature, the world's #1
way to sign electronically on practically any device, from almost
anywhere, at any time. Today, over 1.3 million customers and more
than a billion users in over 180 countries use the DocuSign
platform to accelerate the process of doing business and simplify
people's lives. For more information visit
http://www.docusign.com
Copyright 2022. DocuSign, Inc. is the owner of DOCUSIGN® and all
its other marks (www.docusign.com/IP).
Investor Relations:
DocuSign Investor Relations
investors@docusign.com
Media Relations:
DocuSign Corporate Communications
media@docusign.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that are based on our management's beliefs and assumptions
and on information currently available to management, and which
statements involve substantial risk and uncertainties.
Forward-looking statements include all statements that are not
historical facts and can be identified by terms such as "may,"
"will," "should," "expects," "plans," "anticipates," "could,"
"intends," "target," "projects," "contemplates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative
of these words or other similar terms or expressions that concern
our expectations, strategy, plans or intentions. Forward-looking
statements in this press release include, among other things,
statements under "Outlook" above and any other statements about
expected financial metrics, such as revenue, billings, non-GAAP
gross margin, non-GAAP diluted weighted-average shares outstanding,
and non-financial metrics, such as customer growth, as well as
statements related to our expectations regarding our growth. They
also include statements about our future operating results and
financial position, our business strategy and plans, market growth
and trends, and our objectives for future operations. These
statements are subject to substantial risks and uncertainties that
could cause actual results to differ materially from those
expressed or implied by such statements.
These risks and uncertainties include, among other things, risks
related to our expectations regarding global macro-economic
conditions, including the effects of inflation, rising and
fluctuating interest rates and market volatility on the global
economy; our ability to estimate the size and growth of our total
addressable market, and the development of the market for our
products, which is new and evolving; our ability to effectively
sustain and manage our growth and future expenses, achieve and
maintain future profitability, attract new customers and maintain
and expand our existing customer base; our ability to effectively
implement and execute our restructuring plan; the impact of the
coronavirus pandemic (the "COVID-19 pandemic") or its abatement, on
our business, results of operations, financial condition, and
future profitability and growth; the impact of the evolving
COVID-19 pandemic on the businesses of our customers, partners and
suppliers, and the economy; our ability to scale and update our
platform to respond to customers' needs and rapid technological
change; the effects of increased competition in our market and our
ability to compete effectively; our ability to expand use cases
within existing customers and vertical solutions; our ability to
expand our operations and increase adoption of our platform
internationally; our ability to strengthen and foster our
relationships with developers; our ability to expand our direct
sales force, customer success team and strategic partnerships
around the world; the impact of any data breaches, cyberattacks or
other malicious activity on our technology systems; our ability to
identify targets for and execute potential acquisitions; our
ability to successfully integrate the operations of businesses we
may acquire, and to realize the anticipated benefits of such
acquisitions; our ability to maintain, protect and enhance our
brand; the sufficiency of our cash, cash equivalents and capital
resources to satisfy our liquidity needs; limitations on us due to
obligations we have under our credit facility or other
indebtedness; our failure or the failure of our software to comply
with applicable industry standards, laws and regulations; our
ability to maintain, protect and enhance our intellectual property;
our ability to successfully defend litigation against us; our
ability to attract large organizations as users; our ability to
maintain our corporate culture; our ability to offer high-quality
customer support; our ability to hire, retain and motivate
qualified personnel, including executive level management; our
ability to successfully manage and integrate executive management
transitions; uncertainties regarding the impact of general economic
and market conditions, including as a result of regional and global
conflicts or related government sanctions; our ability to
successfully implement and maintain new and existing information
technology systems, including our ERP system; and our ability to
maintain proper and effective internal controls. Additional risks
and uncertainties that could affect our financial results are
included in the sections titled "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in our annual report on Form 10-K for the fiscal year
ended January 31, 2022 filed on
March 25, 2022, our quarterly report
on Form 10-Q for the quarter ended October
31, 2022, which we expect to file on December 8, 2022 with the Securities and Exchange
Commission (the "SEC"), and other filings that we make from time to
time with the SEC. In addition, any forward-looking statements
contained in this press release are based on assumptions that we
believe to be reasonable as of this date. Except as required by
law, we assume no obligation to update these forward-looking
statements, or to update the reasons if actual results differ
materially from those anticipated in the forward-looking
statements.
Non-GAAP Financial Measures and Other Key Metrics
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use certain
non-GAAP financial measures, as described below, to understand and
evaluate our core operating performance. These non-GAAP financial
measures, which may be different than similarly-titled measures
used by other companies, are presented to enhance investors'
overall understanding of our financial performance and should not
be considered a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP.
We believe that these non-GAAP financial measures provide useful
information about our financial performance, enhance the overall
understanding of our past performance and future prospects, and
allow for greater transparency with respect to important metrics
used by our management for financial and operational
decision-making. We present these non-GAAP measures to assist
investors in seeing our financial performance using a management
view, and because we believe that these measures provide an
additional tool for investors to use in comparing our core
financial performance over multiple periods with other companies in
our industry. However, these non-GAAP measures are not intended to
be considered in isolation from, a substitute for, or superior to
our GAAP results.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP income from operations, non-GAAP
operating margin, non-GAAP net income and non-GAAP net income per
share: 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, acquisition-related expenses,
fair value adjustments to strategic investments, executive
transition costs, lease-related impairment and lease-related
charges, restructuring and other related charges, as these costs
are not reflective of ongoing operations 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 2023, we
determined the projected non-GAAP tax rate to be 20% tax rate.
Free cash flow: We define free cash flow as net
cash provided by operating activities less purchases of
property and equipment. We believe free cash flow is an
important liquidity measure of the cash that is available (if any),
after purchases of property and equipment, for operational
expenses, investment in our business, and to make acquisitions.
Free cash flow is useful to investors as a liquidity measure
because it measures our ability to generate or use cash in excess
of our capital investments in property and equipment. Once our
business needs and obligations are met, cash can be used to
maintain a strong balance sheet and invest in future growth.
Billings: We define billings as total revenues plus the
change in our contract liabilities and refund liability less
contract assets and unbilled accounts receivable in a given period.
Billings reflects sales to new customers plus subscription renewals
and additional sales to existing customers. Only amounts invoiced
to a customer in a given period are included in billings. We
believe billings is a key metric to measure our periodic
performance. Given that most of our customers pay in annual
installments one year in advance, but we typically recognize a
majority of the related revenue ratably over time, we use billings
to measure and monitor our ability to provide our business with the
working capital generated by upfront payments from our
customers.
For a reconciliation of these non-GAAP financial measures to the
most directly comparable GAAP financial measure, please see
"Reconciliation of GAAP to Non-GAAP Financial Measures" below. In
this press release, we have not reconciled our guidance of non-GAAP
financial measures to the corresponding GAAP measures because
stock-based compensation expense cannot be reasonably calculated or
predicted at this time.
CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in thousands,
except per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue:
|
|
|
|
|
|
|
|
Subscription
|
$
624,055
|
|
$
528,573
|
|
$ 1,798,500
|
|
$ 1,473,266
|
Professional services
and other
|
21,408
|
|
16,890
|
|
57,839
|
|
53,119
|
Total
revenue
|
645,463
|
|
545,463
|
|
1,856,339
|
|
1,526,385
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Subscription
|
102,524
|
|
84,579
|
|
315,614
|
|
247,105
|
Professional services
and other
|
27,018
|
|
31,396
|
|
83,048
|
|
87,892
|
Total cost of
revenue
|
129,542
|
|
115,975
|
|
398,662
|
|
334,997
|
Gross
profit
|
515,921
|
|
429,488
|
|
1,457,677
|
|
1,191,388
|
Operating
expenses:
|
|
|
|
|
|
|
|
Sales and
marketing
|
313,783
|
|
275,619
|
|
938,062
|
|
777,110
|
Research and
development
|
115,934
|
|
102,603
|
|
354,693
|
|
282,670
|
General and
administrative
|
85,553
|
|
54,624
|
|
224,587
|
|
168,314
|
Restructuring and
other related charges
|
28,082
|
|
—
|
|
28,082
|
|
—
|
Total operating
expenses
|
543,352
|
|
432,846
|
|
1,545,424
|
|
1,228,094
|
Loss from
operations
|
(27,431)
|
|
(3,358)
|
|
(87,747)
|
|
(36,706)
|
Interest
expense
|
(1,456)
|
|
(1,485)
|
|
(4,737)
|
|
(4,826)
|
Interest income and
other income (expense), net
|
820
|
|
(940)
|
|
(2,827)
|
|
4,034
|
Loss before
provision for (benefit from) income taxes
|
(28,067)
|
|
(5,783)
|
|
(95,311)
|
|
(37,498)
|
Provision for (benefit
from) income taxes
|
1,799
|
|
(107)
|
|
7,006
|
|
2,033
|
Net
loss
|
$
(29,866)
|
|
$ (5,676)
|
|
$
(102,317)
|
|
$
(39,531)
|
Net loss per share
attributable to common stockholders, basic and
diluted
|
$
(0.15)
|
|
$
(0.03)
|
|
$
(0.51)
|
|
$
(0.20)
|
Weighted-average
number of shares used in computing net loss per share attributable
to common stockholders, basic and diluted
|
201,393
|
|
197,597
|
|
200,569
|
|
195,996
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense included in costs and expenses
|
|
|
|
|
|
|
|
Cost of
revenue—subscription
|
$ 11,665
|
|
$
8,095
|
|
$ 35,272
|
|
$ 21,652
|
Cost of
revenue—professional services and other
|
6,767
|
|
7,270
|
|
18,327
|
|
19,250
|
Sales and
marketing
|
57,925
|
|
49,663
|
|
166,574
|
|
134,720
|
Research and
development
|
35,506
|
|
30,074
|
|
108,689
|
|
76,811
|
General and
administrative
|
23,384
|
|
14,338
|
|
58,314
|
|
38,103
|
Restructuring and other
related charges
|
5,590
|
|
—
|
|
5,590
|
|
—
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
(in
thousands)
|
October 31,
2022
|
|
January 31,
2022
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
632,620
|
|
$
509,059
|
Investments—current
|
342,730
|
|
293,763
|
Accounts receivable,
net
|
422,612
|
|
440,950
|
Contract
assets—current
|
13,609
|
|
12,588
|
Prepaid expenses and
other current assets
|
68,814
|
|
63,236
|
Total current
assets
|
1,480,385
|
|
1,319,596
|
Investments—noncurrent
|
129,783
|
|
94,938
|
Property and equipment,
net
|
196,127
|
|
184,664
|
Operating lease
right-of-use assets
|
92,155
|
|
126,021
|
Goodwill
|
352,423
|
|
355,058
|
Intangible assets,
net
|
75,232
|
|
98,816
|
Deferred contract
acquisition costs—noncurrent
|
329,958
|
|
311,835
|
Other
assets—noncurrent
|
75,521
|
|
50,337
|
Total
assets
|
$
2,731,584
|
|
$
2,541,265
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
47,176
|
|
$
52,804
|
Accrued expenses and
other current liabilities
|
96,227
|
|
91,377
|
Accrued
compensation
|
146,297
|
|
160,163
|
Convertible senior
notes—current
|
36,921
|
|
—
|
Contract
liabilities—current
|
1,088,197
|
|
1,029,891
|
Operating lease
liabilities—current
|
34,713
|
|
37,404
|
Total current
liabilities
|
1,449,531
|
|
1,371,639
|
Convertible senior
notes, net—noncurrent
|
684,861
|
|
718,487
|
Contract
liabilities—noncurrent
|
15,242
|
|
16,725
|
Operating lease
liabilities—noncurrent
|
81,237
|
|
126,340
|
Deferred tax
liability—noncurrent
|
10,400
|
|
9,316
|
Other
liabilities—noncurrent
|
21,807
|
|
23,255
|
Total
liabilities
|
2,263,078
|
|
2,265,762
|
Stockholders'
equity
|
|
|
|
Common
stock
|
20
|
|
20
|
Treasury
stock
|
(1,785)
|
|
(1,532)
|
Additional paid-in
capital
|
2,108,062
|
|
1,720,013
|
Accumulated other
comprehensive loss
|
(34,244)
|
|
(4,809)
|
Accumulated
deficit
|
(1,603,547)
|
|
(1,438,189)
|
Total stockholders'
equity
|
468,506
|
|
275,503
|
Total liabilities
and stockholders' equity
|
$
2,731,584
|
|
$
2,541,265
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net loss
|
$
(29,866)
|
|
$ (5,676)
|
|
$ (102,317)
|
|
$
(39,531)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
21,532
|
|
20,166
|
|
63,976
|
|
61,163
|
Amortization of
deferred contract acquisition and fulfillment costs
|
44,806
|
|
37,283
|
|
134,381
|
|
100,759
|
Amortization of debt
discount and transaction costs
|
1,243
|
|
1,255
|
|
3,725
|
|
3,848
|
Non-cash operating
lease costs
|
7,002
|
|
6,527
|
|
20,468
|
|
20,176
|
Stock-based
compensation expense
|
140,835
|
|
109,441
|
|
392,765
|
|
290,536
|
Deferred income
taxes
|
(23)
|
|
(1,110)
|
|
3,045
|
|
(2,360)
|
Other
|
5,441
|
|
3,159
|
|
13,540
|
|
5,598
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(83,084)
|
|
(20,869)
|
|
18,338
|
|
17,969
|
Prepaid expenses and
other current assets
|
8,435
|
|
(2,523)
|
|
(7,593)
|
|
(12,890)
|
Deferred contract
acquisition and fulfillment costs
|
(53,305)
|
|
(52,528)
|
|
(161,620)
|
|
(147,946)
|
Other
assets
|
(8,452)
|
|
(7,434)
|
|
(15,707)
|
|
(11,290)
|
Accounts
payable
|
2,948
|
|
16,146
|
|
(1,739)
|
|
6,703
|
Accrued expenses and
other liabilities
|
(2,094)
|
|
(5,136)
|
|
873
|
|
11,886
|
Accrued
compensation
|
(1,808)
|
|
(9,734)
|
|
(15,827)
|
|
(22,781)
|
Contract
liabilities
|
15,010
|
|
24,423
|
|
56,824
|
|
161,047
|
Operating lease
liabilities
|
(16,083)
|
|
(7,979)
|
|
(33,430)
|
|
(24,212)
|
Net cash provided by
operating activities
|
52,537
|
|
105,411
|
|
369,702
|
|
418,675
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Cash paid for
acquisition, net of acquired cash
|
—
|
|
—
|
|
—
|
|
(6,388)
|
Purchases of marketable
securities
|
(105,956)
|
|
(117,134)
|
|
(402,249)
|
|
(302,762)
|
Sales of marketable
securities
|
—
|
|
68
|
|
—
|
|
3,070
|
Maturities of
marketable securities
|
121,590
|
|
79,900
|
|
311,769
|
|
193,071
|
Purchases of strategic
and other investments
|
(1,000)
|
|
(250)
|
|
(3,625)
|
|
(750)
|
Purchases of property
and equipment
|
(16,477)
|
|
(15,392)
|
|
(53,590)
|
|
(43,926)
|
Net cash used in
investing activities
|
(1,843)
|
|
(52,808)
|
|
(147,695)
|
|
(157,685)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Repayments of
convertible senior notes
|
—
|
|
(3,121)
|
|
(16)
|
|
(64,835)
|
Repurchases of common
stock
|
(38,034)
|
|
—
|
|
(63,041)
|
|
—
|
Payment of tax
withholding obligation on net RSU settlement and ESPP
purchase
|
(23,263)
|
|
(94,534)
|
|
(67,120)
|
|
(323,109)
|
Proceeds from exercise
of stock options
|
383
|
|
9,358
|
|
11,009
|
|
21,176
|
Proceeds from employee
stock purchase plan
|
12,375
|
|
22,910
|
|
36,526
|
|
46,077
|
Net cash used in
financing activities
|
(48,539)
|
|
(65,387)
|
|
(82,642)
|
|
(320,691)
|
Effect of foreign
exchange on cash, cash equivalents and restricted cash
|
(6,612)
|
|
(1,909)
|
|
(14,652)
|
|
(2,472)
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
(4,457)
|
|
(14,693)
|
|
124,713
|
|
(62,173)
|
Cash, cash equivalents
and restricted cash at beginning of period
(1)
|
638,849
|
|
518,857
|
|
509,679
|
|
566,336
|
Cash, cash equivalents
and restricted cash at end of period (1)
|
$
634,392
|
|
$
504,164
|
|
$
634,392
|
|
$
504,163
|
(1) Cash, cash equivalents and
restricted cash included restricted cash of $1.8 million and
$0.6 million at October 31, 2022 and January 31,
2022.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL
MEASURES (Unaudited)
|
|
Reconciliation of
gross profit and gross margin:
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
GAAP gross
profit
|
$
515,921
|
|
$
429,488
|
|
$
1,457,677
|
|
$
1,191,388
|
Add: Stock-based
compensation
|
18,432
|
|
15,365
|
|
53,599
|
|
40,902
|
Add: Amortization of
acquisition-related intangibles
|
2,425
|
|
2,766
|
|
7,232
|
|
9,266
|
Add: Employer payroll
tax on employee stock transactions
|
471
|
|
1,800
|
|
1,792
|
|
6,695
|
Add: Lease-related
impairment and lease-related charges
|
413
|
|
—
|
|
678
|
|
—
|
Non-GAAP gross
profit
|
$
537,662
|
|
$
449,419
|
|
$
1,520,978
|
|
$
1,248,251
|
GAAP gross
margin
|
80 %
|
|
79 %
|
|
79 %
|
|
78 %
|
Non-GAAP
adjustments
|
3 %
|
|
3 %
|
|
3 %
|
|
4 %
|
Non-GAAP gross
margin
|
83 %
|
|
82 %
|
|
82 %
|
|
82 %
|
|
|
|
|
|
|
|
|
GAAP subscription gross
profit
|
$
521,531
|
|
$
443,994
|
|
$
1,482,886
|
|
$
1,226,161
|
Add: Stock-based
compensation
|
11,665
|
|
8,095
|
|
35,272
|
|
21,652
|
Add: Amortization of
acquisition-related intangibles
|
2,425
|
|
2,766
|
|
7,232
|
|
9,266
|
Add: Employer payroll
tax on employee stock transactions
|
310
|
|
873
|
|
1,150
|
|
3,286
|
Add: Lease-related
impairment and lease-related charges
|
127
|
|
—
|
|
321
|
|
—
|
Non-GAAP subscription
gross profit
|
$
536,058
|
|
$
455,728
|
|
$
1,526,861
|
|
$
1,260,365
|
GAAP subscription gross
margin
|
84 %
|
|
84 %
|
|
82 %
|
|
83 %
|
Non-GAAP
adjustments
|
2 %
|
|
2 %
|
|
3 %
|
|
3 %
|
Non-GAAP subscription
gross margin
|
86 %
|
|
86 %
|
|
85 %
|
|
86 %
|
|
|
|
|
|
|
|
|
GAAP professional
services and other gross loss
|
$
(5,610)
|
|
$ (14,506)
|
|
$ (25,209)
|
|
$ (34,773)
|
Add: Stock-based
compensation
|
6,767
|
|
7,270
|
|
18,327
|
|
19,250
|
Add: Employer payroll
tax on employee stock transactions
|
161
|
|
927
|
|
642
|
|
3,409
|
Add: Lease-related
impairment and lease-related charges
|
286
|
|
—
|
|
357
|
|
—
|
Non-GAAP professional
services and other gross profit (loss)
|
$ 1,604
|
|
$
(6,309)
|
|
$
(5,883)
|
|
$ (12,114)
|
GAAP professional
services and other gross margin
|
(26) %
|
|
(86) %
|
|
(44) %
|
|
(65) %
|
Non-GAAP
adjustments
|
33 %
|
|
49 %
|
|
34 %
|
|
42 %
|
Non-GAAP professional
services and other gross margin
|
7 %
|
|
(37) %
|
|
(10) %
|
|
(23) %
|
Reconciliation of
operating expenses:
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
GAAP sales and
marketing
|
$
313,783
|
|
$
275,619
|
|
$
938,062
|
|
$
777,110
|
Less: Stock-based
compensation
|
(57,925)
|
|
(49,663)
|
|
(166,574)
|
|
(134,720)
|
Less: Amortization of
acquisition-related intangibles
|
(2,688)
|
|
(3,205)
|
|
(8,522)
|
|
(9,896)
|
Less: Employer payroll
tax on employee stock transactions
|
(1,277)
|
|
(5,184)
|
|
(5,250)
|
|
(17,668)
|
Less: Lease-related
impairment and lease-related charges
|
(1,467)
|
|
—
|
|
(2,353)
|
|
—
|
Non-GAAP sales and
marketing
|
$
250,426
|
|
$
217,567
|
|
$
755,363
|
|
$
614,826
|
GAAP sales and
marketing as a percentage of revenue
|
49 %
|
|
51 %
|
|
51 %
|
|
51 %
|
Non-GAAP sales and
marketing as a percentage of revenue
|
39 %
|
|
40 %
|
|
41 %
|
|
40 %
|
|
|
|
|
|
|
|
|
GAAP research and
development
|
$
115,934
|
|
$
102,603
|
|
$
354,693
|
|
$
282,670
|
Less: Stock-based
compensation
|
(35,506)
|
|
(30,074)
|
|
(108,689)
|
|
(76,811)
|
Less: Employer payroll
tax on employee stock transactions
|
(608)
|
|
(2,316)
|
|
(3,009)
|
|
(9,244)
|
Less: Lease-related
impairment and lease-related charges
|
(434)
|
|
—
|
|
(819)
|
|
—
|
Non-GAAP research and
development
|
$
79,386
|
|
$
70,213
|
|
$
242,176
|
|
$
196,615
|
GAAP research and
development as a percentage of revenue
|
18 %
|
|
19 %
|
|
19 %
|
|
19 %
|
Non-GAAP research and
development as a percentage of revenue
|
12 %
|
|
13 %
|
|
13 %
|
|
13 %
|
|
|
|
|
|
|
|
|
GAAP general and
administrative
|
$
85,553
|
|
$
54,624
|
|
$
224,587
|
|
$
168,314
|
Less: Stock-based
compensation
|
(23,384)
|
|
(14,338)
|
|
(58,314)
|
|
(38,103)
|
Less:
Acquisition-related expenses
|
—
|
|
—
|
|
—
|
|
(387)
|
Less: Employer payroll
tax on employee stock transactions
|
(180)
|
|
(804)
|
|
(926)
|
|
(4,365)
|
Less: Executive
transition costs
|
(830)
|
|
—
|
|
(2,634)
|
|
—
|
Less: Lease-related
impairment and lease-related charges
|
(363)
|
|
—
|
|
(655)
|
|
(3,892)
|
Non-GAAP general and
administrative
|
$
60,796
|
|
$
39,482
|
|
$
162,058
|
|
$
121,567
|
GAAP general and
administrative as a percentage of revenue
|
13 %
|
|
9 %
|
|
12 %
|
|
10 %
|
Non-GAAP general and
administrative as a percentage of revenue
|
9 %
|
|
7 %
|
|
9 %
|
|
8 %
|
Reconciliation of
income (loss) from operations and operating margin:
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
GAAP loss from
operations
|
$ (27,431)
|
|
$
(3,358)
|
|
$ (87,747)
|
|
$ (36,706)
|
Add: Stock-based
compensation
|
135,247
|
|
109,440
|
|
387,176
|
|
290,536
|
Add: Amortization of
acquisition-related intangibles
|
5,113
|
|
5,971
|
|
15,754
|
|
19,162
|
Add: Employer payroll
tax on employee stock transactions
|
2,536
|
|
10,104
|
|
10,977
|
|
37,972
|
Add:
Acquisition-related expenses
|
—
|
|
—
|
|
—
|
|
387
|
Add: Restructuring and
other related charges
|
28,082
|
|
—
|
|
28,082
|
|
—
|
Add: Executive
transition costs
|
830
|
|
—
|
|
2,634
|
|
—
|
Add: Lease-related
impairment and lease-related charges
|
2,677
|
|
—
|
|
4,505
|
|
3,892
|
Non-GAAP income from
operations
|
$
147,054
|
|
$
122,157
|
|
$
361,381
|
|
$
315,243
|
GAAP operating
margin
|
(4) %
|
|
(1) %
|
|
(5) %
|
|
(2) %
|
Non-GAAP
adjustments
|
27 %
|
|
23 %
|
|
24 %
|
|
23 %
|
Non-GAAP operating
margin
|
23 %
|
|
22 %
|
|
19 %
|
|
21 %
|
Reconciliation of
net income (loss) and net income (loss) per share, basic and
diluted:
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in thousands,
except per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
GAAP net
loss
|
$
(29,866)
|
|
$ (5,676)
|
|
$ (102,317)
|
|
$
(39,531)
|
Add: Stock-based
compensation
|
135,247
|
|
109,440
|
|
387,176
|
|
290,536
|
Add: Amortization of
acquisition-related intangibles
|
5,113
|
|
5,971
|
|
15,754
|
|
19,162
|
Add: Employer payroll
tax on employee stock transactions
|
2,536
|
|
10,104
|
|
10,977
|
|
37,972
|
Add: Amortization of
debt discount and issuance costs
|
1,197
|
|
1,255
|
|
3,679
|
|
3,848
|
Less: Fair value
adjustments to strategic investments
|
45
|
|
—
|
|
(384)
|
|
(5,270)
|
Add:
Acquisition-related expenses
|
—
|
|
—
|
|
—
|
|
387
|
Add: Restructuring and
other related charges
|
28,082
|
|
—
|
|
28,082
|
|
—
|
Add: Executive
transition costs
|
830
|
|
—
|
|
2,634
|
|
—
|
Add: Lease-related
impairment and lease-related charges
|
2,677
|
|
—
|
|
4,505
|
|
3,892
|
Add: Income tax effect
of non-GAAP adjustments (1)
|
(27,733)
|
|
—
|
|
(64,416)
|
|
—
|
Non-GAAP net
income
|
$
118,128
|
|
$
121,094
|
|
$
285,690
|
|
$
310,996
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
$
118,128
|
|
$
121,094
|
|
$
285,690
|
|
$
310,996
|
Add: Interest expense
on convertible senior notes
|
46
|
|
(84)
|
|
75
|
|
12
|
Non-GAAP net income
attributable to common stockholders, diluted
|
$
118,174
|
|
$
121,010
|
|
$
285,765
|
|
$
311,008
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding, basic
|
201,393
|
|
197,597
|
|
200,569
|
|
195,996
|
Effect of dilutive
securities
|
4,255
|
|
10,508
|
|
5,721
|
|
12,221
|
Non-GAAP
weighted-average common shares outstanding, diluted
|
205,648
|
|
208,105
|
|
206,290
|
|
208,217
|
|
|
|
|
|
|
|
|
GAAP net loss per
share, basic and diluted
|
$
(0.15)
|
|
$
(0.03)
|
|
$
(0.51)
|
|
$
(0.20)
|
Non-GAAP net income
per share, basic
|
0.59
|
|
0.61
|
|
1.42
|
|
1.59
|
Non-GAAP net income
per share, diluted
|
0.57
|
|
0.58
|
|
1.39
|
|
1.49
|
(1)
Represents the income tax adjustment using our estimated non-GAAP
tax rate of 20%. Estimating a non-GAAP tax rate of 20%, the income
tax effect of non-GAAP adjustments was $24.3 million for the three
months ended October 31, 2021, and $60.6 million for the nine
months ended October 31, 2021.
|
Computation of free
cash flow:
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$ 52,537
|
|
$
105,411
|
|
$
369,702
|
|
$
418,675
|
Less: Purchases of
property and equipment
|
(16,477)
|
|
(15,392)
|
|
(53,590)
|
|
(43,926)
|
Non-GAAP free cash
flow
|
$ 36,060
|
|
$ 90,019
|
|
$
316,112
|
|
$
374,749
|
Net cash used in
investing activities
|
$ (1,843)
|
|
$
(52,808)
|
|
$ (147,695)
|
|
$ (157,685)
|
Net cash used in
financing activities
|
$
(48,539)
|
|
$
(65,387)
|
|
$
(82,642)
|
|
$ (320,691)
|
Computation of
billings:
|
|
|
Three Months
Ended
October 31,
|
|
Nine Months
Ended
October 31,
|
(in
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue
|
$
645,463
|
|
$
545,463
|
|
$
1,856,339
|
|
$
1,526,385
|
Add: Contract
liabilities and refund liability, end of period
|
1,113,131
|
|
961,243
|
|
1,113,131
|
|
961,243
|
Less: Contract
liabilities and refund liability, beginning of period
|
(1,094,939)
|
|
(939,826)
|
|
(1,049,106)
|
|
(800,940)
|
Add: Contract assets
and unbilled accounts receivable, beginning of period
|
13,695
|
|
18,067
|
|
18,273
|
|
21,020
|
Less: Contract assets
and unbilled accounts receivable, end of period
|
(17,945)
|
|
(19,708)
|
|
(17,945)
|
|
(19,708)
|
Non-GAAP
billings
|
$
659,405
|
|
$
565,239
|
|
$
1,920,692
|
|
$
1,688,000
|
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SOURCE DocuSign, Inc.