Thu Jun 6, 2019 3:05pm EST

SAN FRANCISCO, June 6, 2019 /PRNewswire/ -- DocuSign (NASDAQ: DOCU), which offers the world's #1 eSignature solution as part of the DocuSign Agreement Cloud for digitally transforming how organizations prepare, sign, act on, and manage agreements, today announced results for its fiscal quarter ended April 30, 2019.

"Overall, we posted a solid first quarter for Fiscal 2020—revenues grew 37% year-over-year, we were again profitable on a non-GAAP basis, and we now have over half a million paying customers around the world. What's more, we are seeing strong results from the work we've done to optimize our go-to-market sales motion, bringing in net new customers and expanding use cases within our installed base. And with the announcement of the DocuSign Agreement Cloud this quarter—our suite of products and integrations for automating the entire agreement process—we can now deliver a much broader set of solutions to market, positioning us as the next 'must-have' cloud." said Dan Springer, CEO of DocuSign.

First Quarter Financial Highlights

  • Total revenue was $214.0 million, an increase of 37% year-over-year. Subscription revenue was $201.5 million, an increase of 36% year-over-year. Professional services and other revenue was $12.5 million, an increase of 64% year-over-year.
  • Billings were $215.0 million, an increase of 27% year-over-year.
  • GAAP gross margin was 76%, compared to 63% in the same period last year. Non-GAAP gross margin was 79% compared to 80% in the same period last year.
  • GAAP net loss per basic and diluted share was $0.27 on 172 million shares outstanding compared to GAAP net loss per share of $7.46 in the first quarter of fiscal 2019 on 36 million shares outstanding.
  • Non-GAAP net income per diluted share was $0.07 on 189 million shares outstanding compared to non-GAAP net income per share of $0.01 in the first quarter of fiscal 2019 on 60 million shares outstanding.
  • Net cash provided by operating activities was $45.7 million, compared to $15.0 million in the same period last year.
  • Free cash flow was $30.4 million in the first quarter of fiscal 2020 compared to free cash flow of $8.8 million in the same period last year.
  • Cash, cash equivalents, restricted cash and investments were $937.0 million 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

  • DocuSign Agreement Cloud. In March the company announced the DocuSign Agreement Cloud—a suite of more than a dozen products and 350 integrations for digitally transforming how organizations prepare, sign, act on and manage agreements. By helping to automate and connect the entire agreement process, the DocuSign Agreement Cloud allows organizations to do business faster, with less risk, and lower costs, and in turn deliver better experiences for customers, partners, and employees. This comprehensive suite defines a new category of cloud software that we believe has the potential to significantly expand our total addressable market.
  • DocuSign Spring 19 Release. The company launched several new products and updates as part of the DocuSign Agreement Cloud: DocuSign Gen for Salesforce, which simplifies and accelerates the generation of signature-ready contracts from within Salesforce; DocuSign Click, which allows organizations of any size to capture consent to standard agreement terms on websites, such as a privacy policy, with a single click; and DocuSign Identify, which enables companies to automate the verification of government-issued IDs and European eIDs, for transactions that require them.
  • Seal Software Investment. The company announced a $15 million investment in Seal Software, a leader in artificial intelligence. Building on the partnership between DocuSign and Seal Software, this investment in Seal's artificial intelligence-based agreement discovery and analytics solutions builds on DocuSign's commitment to make the DocuSign Agreement Cloud offering smarter and more impactful for customers.

Outlook

The company currently expects the following guidance:

•   Quarter ending July 31, 2019 (in millions, except percentages):





Total revenue

$218

to

$222

Billings

$215

to

$225

Non-GAAP gross margin

78%

to

80%

Non-GAAP sales and marketing

48%

to

50%

Non-GAAP research and development

15%

to

17%

Non-GAAP general and administrative

10%

to

14%

Interest and other income (expense)

$3

to

$4

Provision for income taxes

$2

to

$2.2

Non-GAAP diluted weighted-average shares outstanding

185

to

190



•   Year ending January 31, 2020 (in millions, except percentages):





Total revenue

$917

to

$922

Billings

$1,010

to

$1,030

Non-GAAP gross margin

78%

to

80%

Non-GAAP sales and marketing

48%

to

50%

Non-GAAP research and development

15%

to

17%

Non-GAAP general and administrative

10%

to

13%

Interest and other income (expense)

$12

to

$16

Provision for income taxes

$8

to

$10

Non-GAAP diluted weighted-average shares outstanding

190

to

195

The company has not reconciled its expectations 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 is not available without unreasonable effort.

Webcast Conference Call Information

The company will host a conference call on June 6, 2019 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 docusign.com/investors. 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) June 20, 2019 using the passcode 13690792.

About DocuSign

DocuSign helps organizations connect and automate how they prepare, sign, act on, and manage agreements. As part of the DocuSign Agreement Cloud, DocuSign offers eSignature: the world's #1 way to sign electronically on practically any device, from almost anywhere, at any time. Today, more than 500,000 customers and hundreds of millions of users in over 180 countries use DocuSign to accelerate the process of doing business and to simplify people's lives.

For more information, visit www.docusign.com, call +1-877-720-2040, or follow @DocuSign on Twitter, LinkedIn, Facebook and Instagram.

Copyright 2003-2019. DocuSign, Inc. is the owner of DOCUSIGN® and all its other marks (www.docusign.com/IP).

Investor Relations:
Annie Leschin
VP Investor Relations
investors@docusign.com

Media Relations:
Adrian Wainwright
Head of Communications
media@docusign.com

Forward-Looking Statements

This press release contains "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include 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 the benefits of the DocuSign Agreement Cloud, our estimated total addressable market and the impact of DocuSign Agreement Cloud on such market, the potential benefits of our investment in, and partnership with, Seal Software, and our ability to deliver product innovation. They also include statements about our possible or assumed business strategies, potential growth opportunities and potential market opportunities.

Forward-looking statements include all statements that are not historical facts and can be identified by terms such as "believe," "could," "potential," "will," "would" or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: our ability to estimate the size of our total addressable market; our ability to 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 scale and update our platform to respond to customers' needs, rapid technological change and increased competition in our market; our ability to compete effectively, expand our operations and increase adoption of our platform internationally; our ability to successfully integrate SpringCM's operations; our ability to pay off our convertible senior notes when due; our ability to successfully defend assertions by third parties that we violate their intellectual property rights; and our ability to respond to a network or data security incident that allows unauthorized access to our network or data or our customers' data. Additional risks and uncertainties that could affect our financial results are included in the section 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 year ended January 31, 2019, 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 are presenting 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.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP operating margin, non-GAAP net income (loss) and non-GAAP net income (loss) 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 from our convertible senior notes issued in September 2018, 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. 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.

Free cash flows: We define free cash flow as net cash provided by (used in) operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, 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.

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended April 30,

(in thousands, except per share data)

2019


2018

Revenue:




Subscription

$

201,458



$

148,198


Professional services and other

12,504



7,610


Total revenue

213,962



155,808


Cost of revenue:




Subscription

33,119



32,438


Professional services and other

18,900



25,856


Total cost of revenue

52,019



58,294


Gross profit

161,943



97,514


Operating expenses:




Sales and marketing

129,936



191,085


Research and development

37,183



70,870


General and administrative

37,261



103,117


Total expenses

204,380



365,072


Loss from operations

(42,437)



(267,558)


Interest expense

(7,156)



(193)


Interest income and other income (expense), net

5,217



(2,228)


Loss before provision for income taxes

(44,376)



(269,979)


Provision for income taxes

1,346



708


Net loss

$

(45,722)



$

(270,687)


Net loss per share attributable to common stockholders, basic and diluted

$

(0.27)



$

(7.46)


Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted

172,101



36,334






Stock-based compensation expense included in costs and expenses:




Cost of revenue—subscription

$

2,282



$

9,955


Cost of revenue—professional services

3,440



16,045


Sales and marketing

18,102



112,481


Research and development

7,317



47,268


General and administrative

11,130



84,045


 

DOCUSIGN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands)

April 30, 2019


January 31, 2019

Assets




Current assets




Cash and cash equivalents

$

236,476



$

517,811


Investments—current

515,648



251,203


Restricted cash

167



367


Accounts receivable

117,134



174,548


Contract assets—current

13,360



10,616


Prepaid expense and other current assets

39,341



29,976


Total current assets

922,126



984,521


Investments—noncurrent

184,683



164,220


Property and equipment, net

84,094



75,832


Operating lease right-of-use assets

143,361




Goodwill

194,775



195,225


Intangible assets, net

69,490



74,203


Deferred contract acquisition costs—noncurrent

115,924



112,583


Other assets—noncurrent

23,947



8,833


Total assets

$

1,738,400



$

1,615,417


Liabilities and Stockholders' Equity




Current liabilities




Accounts payable

$

21,436



$

19,590


Accrued expenses

28,133



21,755


Accrued compensation

57,684



77,553


Contract liabilities—current

385,460



381,060


Operating lease liabilities—current

16,921




Deferred rent—current



2,452


Other liabilities—current

12,973



13,903


Total current liabilities

522,607



516,313


Convertible senior notes, net

445,385



438,932


Contract liabilities—noncurrent

7,586



7,712


Operating lease liabilities—noncurrent

154,778




Deferred rent—noncurrent



24,195


Deferred tax liability—noncurrent

4,267



4,207


Other liabilities—noncurrent

6,095



9,696


Total liabilities

1,140,718



1,001,055


Stockholders' equity




Common stock

17



17


Additional paid-in capital

1,575,471



1,545,088


Accumulated other comprehensive loss

(3,258)



(1,965)


Accumulated deficit

(974,548)



(928,778)


Total stockholders' equity

597,682



614,362


Total liabilities and stockholders' equity

$

1,738,400



$

1,615,417


 

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended April 30,

(in thousands)

2019


2018

Cash flows from operating activities:




Net loss

$

(45,722)



$

(270,687)


Adjustments to reconcile net loss to net cash used in operating activities




Depreciation and amortization

11,971



8,600


Amortization of deferred contract acquisition and fulfillment costs

14,260



9,246


Amortization of debt discount and transaction costs

6,454




Amortization of operating lease right-of-use assets

4,128




Stock-based compensation expense

42,271



269,794


Deferred income taxes

52



(6)


Other

(1,111)



2,225


Changes in operating assets and liabilities




Accounts receivable

57,414



19,622


Contract assets

(2,701)



2,546


Prepaid expenses and other current assets

(7,107)



(6,519)


Deferred contract acquisition and fulfillment costs

(20,487)



(12,326)


Other assets

541



440


Accounts payable

282



(7,218)


Accrued expenses

6,442



3,302


Accrued compensation

(19,869)



(16,947)


Contract liabilities

4,274



12,611


Operating lease liabilities

(3,705)




Other liabilities

(1,732)



309


Net cash provided by operating activities

45,655



14,992


Cash flows from investing activities:




Purchases of marketable securities

(375,211)




Maturities of marketable securities

92,457




Purchases of strategic investments

(15,500)




Purchases of property and equipment

(15,237)



(6,184)


Net cash used in investing activities

(313,491)



(6,184)


Cash flows from financing activities:




Payment of tax withholding obligation on RSU settlement

(56,137)




Proceeds from exercise of stock options

32,254



7,815


Proceeds from employee stock purchase plan

10,563




Payment of deferred offering costs



(2,194)


Net cash provided by (used in) financing activities

(13,320)



5,621


Effect of foreign exchange on cash, cash equivalents and restricted cash

(379)



(2,069)


Net increase (decrease) in cash, cash equivalents and restricted cash

(281,535)



12,360


Cash, cash equivalents and restricted cash at beginning of period

518,178



257,436


Cash, cash equivalents and restricted cash at end of period

$

236,643



$

269,796


 

DOCUSIGN, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)


Reconciliation of gross profit and gross margin:




Three Months Ended April 30,

(in thousands)

2019


2018

GAAP gross profit

$

161,943



$

97,514


Add: Stock-based compensation

5,722



26,000


Add: Amortization of acquisition-related intangibles

1,627



1,668


Add: Employer payroll tax on employee stock transactions

652




Non-GAAP gross profit

$

169,944



$

125,182


GAAP gross margin

76

%


63

%

Non-GAAP adjustments

3

%


17

%

Non-GAAP gross margin

79

%


80

%





GAAP subscription gross profit

$

168,339



$

115,760


Add: Stock-based compensation

2,282



9,955


Add: Amortization of acquisition-related intangibles

1,627



1,668


Add: Employer payroll tax on employee stock transactions

221




Non-GAAP subscription gross profit

$

172,469



$

127,383


GAAP subscription gross margin

84

%


78

%

Non-GAAP adjustments

2

%


8

%

Non-GAAP subscription gross margin

86

%


86

%





GAAP professional services and other gross loss

$

(6,396)



$

(18,246)


Add: Stock-based compensation

3,440



16,045


Add: Employer payroll tax on employee stock transactions

431




Non-GAAP professional services and other gross loss

$

(2,525)



$

(2,201)


GAAP professional services and other gross margin

(51)

%


(240)

%

Non-GAAP adjustments

31

%


211

%

Non-GAAP professional services and other gross margin

(20)

%


(29)

%

 

Reconciliation of operating expenses:



Three Months Ended April 30,

(in thousands)

2019


2018

GAAP sales and marketing

$

129,936



$

191,085


Less: Stock-based compensation

(18,102)



(112,481)


Less: Amortization of acquisition-related intangibles

(3,106)



(765)


Less: Employer payroll tax on employee stock transactions

(2,351)




Non-GAAP sales and marketing

$

106,377



$

77,839


GAAP sales and marketing as a percentage of revenue

61

%


123

%

Non-GAAP sales and marketing as a percentage of revenue

50

%


50

%





GAAP research and development

$

37,183



$

70,870


Less: Stock-based compensation

(7,317)



(47,268)


Less: Employer payroll tax on employee stock transactions

(1,150)




Non-GAAP research and development

$

28,716



$

23,602


GAAP research and development as a percentage of revenue

17

%


45

%

Non-GAAP research and development as a percentage of revenue

13

%


15

%





GAAP general and administrative

$

37,261



$

103,117


Less: Stock-based compensation

(11,130)



(84,045)


Less: Employer payroll tax on employee stock transactions

(1,602)




Non-GAAP general and administrative

$

24,529



$

19,072


GAAP general and administrative as a percentage of revenue

18

%


67

%

Non-GAAP general and administrative as a percentage of revenue

11

%


12

%

 

Reconciliation of income (loss) from operations and operating margin:



Three Months Ended April 30,

(in thousands)

2019


2018

GAAP operating loss

$

(42,437)



$

(267,558)


Add: Stock-based compensation

42,271



269,794


Add: Amortization of acquisition-related intangibles

4,733



2,433


Add: Employer payroll tax on employee stock transactions

5,755




Non-GAAP operating income

$

10,322



$

4,669


GAAP operating margin

(20)

%


(172)

%

Non-GAAP adjustments

25

%


175

%

Non-GAAP operating margin

5

%


3

%

 

Reconciliation of net income (loss) and net income (loss) per share, basic and diluted:



Three Months Ended April 30,

(in thousands, except per share data)

2019


2018

GAAP net loss

$

(45,722)



$

(270,687)


Add: Stock-based compensation

42,271



269,794


Add: Amortization of acquisition-related intangibles

4,733



2,433


Add: Employer payroll tax on employee stock transactions

5,755




Add: Amortization of debt discount and issuance costs

6,454




Non-GAAP net income

$

13,491



$

1,540






Numerator:




Non-GAAP net income

$

13,491



$

1,540


Less: preferred stock accretion



(353)


Less: net income allocated to participating securities



(871)


Non-GAAP net income attributable to common stockholders

$

13,491



$

316






Denominator:




Weighted-average common shares outstanding, basic

172,101



36,334


Effect of dilutive securities

17,080



23,833


Non-GAAP weighted-average common shares outstanding, diluted

189,181



60,167






GAAP net loss per share, basic and diluted

$

(0.27)



$

(7.46)


Non-GAAP net income per share, basic

0.08



0.01


Non-GAAP net income per share, diluted

0.07



0.01


 

Computation of free cash flow:



Three Months Ended April 30,

(in thousands)

2019


2018

Net cash provided by operating activities

$

45,655



$

14,992


Less: purchase of property and equipment

(15,237)



(6,184)


Non-GAAP free cash flow

$

30,418



$

8,808


Net cash used in investing activities

$

(313,491)



$

(6,184)


Net cash provided by (used in) financing activities

$

(13,320)



$

5,621


 

Computation of billings:



Three Months Ended April 30,

(in thousands)

2019


2018

Revenue

$

213,962



$

155,808


Add: Contract liabilities and refund liability, end of period

395,254



293,667


Less: Contract liabilities and refund liability, beginning of period

(390,887)



(282,943)


Add: Contract assets and unbilled accounts receivable, beginning of period

13,436



16,899


Less: Contract assets and unbilled accounts receivable, end of period

(16,810)



(14,555)


Non-GAAP billings

$

214,955



$

168,876


 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/docusign-announces-first-quarter-fiscal-2020-financial-results-300863557.html

SOURCE DocuSign, Inc.



More Trending News & Market Analysis