SAN FRANCISCO, Sept. 5, 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 July 31,
2019.
"With revenue growth exceeding 40% and billings growth at 47%,
our second quarter performance reflects our clear leadership
position in e-signature and increasing adoption of our broader
Agreement Cloud offering," said Dan
Springer, CEO of DocuSign. "In the second quarter, we added
29,000 new customers onto the platform, bringing our total to
537,000 worldwide. We truly believe the Agreement Cloud category
has the potential to be as big as CRM and ERP one day and
our customers are increasingly buying in."
Second Quarter Financial Highlights
- Total revenue was $235.6
million, an increase of 41% year-over-year. Subscription
revenue was $220.8 million, an
increase of 39% year-over-year. Professional services and other
revenue was $14.8 million, an
increase of 72% year-over-year.
- Billings were $252.4
million, an increase of 47% year-over-year.
- GAAP gross margin was 74%, compared to 78% in the same
period last year. Non-GAAP gross margin was 78% compared to 81% in
the same period last year.
- GAAP net loss per basic and diluted share was
$0.39 on 175 million shares
outstanding compared to GAAP net loss per share of $0.22 in the second quarter of fiscal 2019 on 166
million shares outstanding.
- Non-GAAP net income per diluted share was $0.01 on 189 million shares outstanding compared
to non-GAAP net income per share of $0.03 in the second quarter of fiscal 2019 on 191
million shares outstanding.
- Net cash provided by operating activities was
$26.4 million, compared to
$22.7 million in the same period last
year.
- Free cash flow was $11.9
million in the second quarter of fiscal 2020 compared to
free cash flow of $18.4 million in
the same period last year.
- Cash, cash equivalents, restricted cash and
investments were $930.5 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 Summer '19 Release. As part of the company's
ongoing commitment to innovation, several enhancements to the
DocuSign Agreement Cloud were announced in the latest quarterly
release: DocuSign Rooms for Mortgage, which accelerates closing
times and improves the borrower experience with a secure, digital
workspace for everyone involved in the process; Conditional
Recipients, which allows customers to automate their existing
workflows by configuring the rules on an envelope and automatically
routing it to different recipients; eWitness, which allows signers
to identify a witness and capture their information as part of
agreements and deeds; eSignature API v2.1, which offers developers
access to the same API that DocuSign uses internally and makes the
very latest features available-such as comments, bulk envelopes,
and more.
- DocuSign for Forests. As part of its drive to create a
significant and sustained impact on the world's environment, the
company announced a new $1M
commitment to The Wilderness Society, the leading American
conservation organization working to protect the nation's
wildlands. The investment will support the Society's efforts to
ensure that wild forests stay healthy and intact for generations to
come. DocuSign is also partnering with environmentalist and Grammy
Award-winning singer-songwriter, Dave
Matthews and his band (DMB) as a presenting sponsor for its
Bama Green Project Eco-Village—an ongoing partnership between DMB
and non-profit Reverb that encompasses the environmental efforts
undertaken by the band while on the road, in the studio, or at
home. These actions align closely with DocuSign's overall
environmental protection efforts and demonstrate its long-term
commitment to the cause.
Outlook
The company currently expects the following guidance:
|
•
|
Quarter ending
October 31, 2019 (in millions, except percentages):
|
|
|
|
Total
revenue
|
$237
|
to
|
$241
|
|
Billings
|
$260
|
to
|
$270
|
|
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
|
12%
|
|
Interest and other
income (expense)
|
$3
|
to
|
$4
|
|
Provision for income
taxes
|
$1
|
to
|
$2
|
|
Non-GAAP diluted
weighted-average shares outstanding
|
185
|
to
|
190
|
|
|
|
|
|
•
|
Year ending
January 31, 2020 (in millions, except percentages):
|
|
|
|
Total
revenue
|
$947
|
to
|
$951
|
|
Billings
|
$1,063
|
to
|
$1,083
|
|
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
|
11%
|
to
|
13%
|
|
Interest and other
income (expense)
|
$13
|
to
|
$16
|
|
Provision for income
taxes
|
$6
|
to
|
$8
|
|
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 September 5,
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) September 19, 2019 using the passcode 13693623.
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 535,000 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 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
the growth in adoption of our broader Agreement Cloud offering, the
benefits of the DocuSign Agreement Cloud and enhancements to it,
our estimated total addressable market and the impact of DocuSign
Agreement Cloud on such market, including our belief that the
Agreement Cloud category has the potential to be as big as CRM and
ERP one day and that customers will share that belief, our ability
to deliver product innovation, and our intentions to make
charitable donations. 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; including our ability to deliver the
benefits anticipated by enhancements to our DocuSign Agreement
Cloud; our ability to successfully integrate SpringCM's operations;
our ability to pay off our convertible senior notes when due; our
ability to successfully defend or otherwise resolve 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, our quarterly report on Form 10-Q for the quarter
ended April 30, 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. 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.
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
July 31,
|
|
Six Months Ended
July 31,
|
|
(in thousands,
except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Subscription
|
$
|
220,811
|
|
|
$
|
158,461
|
|
|
$
|
422,269
|
|
|
$
|
306,659
|
|
|
Professional services
and other
|
14,801
|
|
|
8,583
|
|
|
27,305
|
|
|
16,193
|
|
|
Total
revenue
|
235,612
|
|
|
167,044
|
|
|
449,574
|
|
|
322,852
|
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
Subscription
|
39,472
|
|
|
23,057
|
|
|
72,591
|
|
|
55,495
|
|
|
Professional services
and other
|
21,704
|
|
|
13,304
|
|
|
40,604
|
|
|
39,160
|
|
|
Total cost of
revenue
|
61,176
|
|
|
36,361
|
|
|
113,195
|
|
|
94,655
|
|
|
Gross
profit
|
174,436
|
|
|
130,683
|
|
|
336,379
|
|
|
228,197
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
150,886
|
|
|
103,779
|
|
|
280,822
|
|
|
294,864
|
|
|
Research and
development
|
47,517
|
|
|
33,773
|
|
|
84,700
|
|
|
104,643
|
|
|
General and
administrative
|
40,755
|
|
|
30,851
|
|
|
78,016
|
|
|
133,968
|
|
|
Total
expenses
|
239,158
|
|
|
168,403
|
|
|
443,538
|
|
|
533,475
|
|
|
Loss from
operations
|
(64,722)
|
|
|
(37,720)
|
|
|
(107,159)
|
|
|
(305,278)
|
|
|
Interest
expense
|
(7,273)
|
|
|
(47)
|
|
|
(14,429)
|
|
|
(240)
|
|
|
Interest income and
other income, net
|
4,531
|
|
|
2,998
|
|
|
9,748
|
|
|
770
|
|
|
Loss before
provision for income taxes
|
(67,464)
|
|
|
(34,769)
|
|
|
(111,840)
|
|
|
(304,748)
|
|
|
Provision for income
taxes
|
1,168
|
|
|
1,945
|
|
|
2,514
|
|
|
2,653
|
|
|
Net
loss
|
$
|
(68,632)
|
|
|
$
|
(36,714)
|
|
|
$
|
(114,354)
|
|
|
$
|
(307,401)
|
|
|
Net loss per share
attributable to common stockholders, basic and
diluted
|
$
|
(0.39)
|
|
|
$
|
(0.22)
|
|
|
$
|
(0.66)
|
|
|
$
|
(3.01)
|
|
|
Weighted-average
number of shares used in computing net loss per share attributable
to common stockholders, basic and diluted
|
175,389
|
|
|
166,084
|
|
|
173,773
|
|
|
102,284
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense included in costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenue—subscription
|
$
|
3,115
|
|
|
$
|
1,588
|
|
|
$
|
5,397
|
|
|
$
|
11,543
|
|
|
Cost of
revenue—professional services
|
4,821
|
|
|
2,822
|
|
|
8,261
|
|
|
18,867
|
|
|
Sales and
marketing
|
25,942
|
|
|
16,791
|
|
|
44,044
|
|
|
129,272
|
|
|
Research and
development
|
11,963
|
|
|
7,359
|
|
|
19,280
|
|
|
54,627
|
|
|
General and
administrative
|
9,951
|
|
|
11,605
|
|
|
21,081
|
|
|
95,650
|
|
|
DOCUSIGN,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
|
(in
thousands)
|
July 31,
2019
|
|
January 31,
2019
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
224,290
|
|
|
$
|
517,811
|
|
|
Investments—current
|
525,963
|
|
|
251,203
|
|
|
Restricted
cash
|
133
|
|
|
367
|
|
|
Accounts
receivable
|
138,652
|
|
|
174,548
|
|
|
Contract
assets—current
|
15,548
|
|
|
10,616
|
|
|
Prepaid expense and
other current assets
|
38,907
|
|
|
29,976
|
|
|
Total current
assets
|
943,493
|
|
|
984,521
|
|
|
Investments—noncurrent
|
180,146
|
|
|
164,220
|
|
|
Property and
equipment, net
|
92,078
|
|
|
75,832
|
|
|
Operating lease
right-of-use assets
|
137,292
|
|
|
—
|
|
|
Goodwill
|
195,427
|
|
|
195,225
|
|
|
Intangible assets,
net
|
65,070
|
|
|
74,203
|
|
|
Deferred contract
acquisition costs—noncurrent
|
124,434
|
|
|
112,583
|
|
|
Other
assets—noncurrent
|
23,896
|
|
|
8,833
|
|
|
Total
assets
|
$
|
1,761,836
|
|
|
$
|
1,615,417
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
$
|
23,452
|
|
|
$
|
19,590
|
|
|
Accrued
expenses
|
34,227
|
|
|
21,755
|
|
|
Accrued
compensation
|
79,980
|
|
|
77,553
|
|
|
Contract
liabilities—current
|
402,734
|
|
|
381,060
|
|
|
Operating lease
liabilities—current
|
17,193
|
|
|
—
|
|
|
Deferred
rent—current
|
—
|
|
|
2,452
|
|
|
Other
liabilities—current
|
16,563
|
|
|
13,903
|
|
|
Total current
liabilities
|
574,149
|
|
|
516,313
|
|
|
Convertible senior
notes, net
|
451,934
|
|
|
438,932
|
|
|
Contract
liabilities—noncurrent
|
7,784
|
|
|
7,712
|
|
|
Operating lease
liabilities—noncurrent
|
150,493
|
|
|
—
|
|
|
Deferred
rent—noncurrent
|
—
|
|
|
24,195
|
|
|
Deferred tax
liability—noncurrent
|
4,270
|
|
|
4,207
|
|
|
Other
liabilities—noncurrent
|
6,527
|
|
|
9,696
|
|
|
Total
liabilities
|
1,195,157
|
|
|
1,001,055
|
|
|
Stockholders'
equity
|
|
|
|
|
Common
stock
|
18
|
|
|
17
|
|
|
Additional paid-in
capital
|
1,612,786
|
|
|
1,545,088
|
|
|
Accumulated other
comprehensive loss
|
(2,945)
|
|
|
(1,965)
|
|
|
Accumulated
deficit
|
(1,043,180)
|
|
|
(928,778)
|
|
|
Total stockholders'
equity
|
566,679
|
|
|
614,362
|
|
|
Total liabilities
and stockholders' equity
|
$
|
1,761,836
|
|
|
$
|
1,615,417
|
|
|
DOCUSIGN,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
Three Months Ended
July 31,
|
|
Six Months Ended
July 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(68,632)
|
|
|
$
|
(36,714)
|
|
|
$
|
(114,354)
|
|
|
$
|
(307,401)
|
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
12,290
|
|
|
7,081
|
|
|
24,261
|
|
|
15,681
|
|
|
Amortization of
deferred contract acquisition and fulfillment costs
|
16,889
|
|
|
9,900
|
|
|
31,149
|
|
|
19,146
|
|
|
Amortization of debt
discount and transaction costs
|
6,548
|
|
|
—
|
|
|
13,002
|
|
|
—
|
|
|
Non-cash operating
lease costs
|
4,735
|
|
|
—
|
|
|
8,863
|
|
|
—
|
|
|
Stock-based
compensation expense
|
55,792
|
|
|
40,165
|
|
|
98,063
|
|
|
309,959
|
|
|
Deferred income
taxes
|
(24)
|
|
|
(6)
|
|
|
28
|
|
|
(12)
|
|
|
Other
|
(1,260)
|
|
|
(3,100)
|
|
|
(2,371)
|
|
|
(875)
|
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(21,518)
|
|
|
(4,237)
|
|
|
35,896
|
|
|
15,385
|
|
|
Contract
assets
|
(2,204)
|
|
|
(1,397)
|
|
|
(4,905)
|
|
|
1,149
|
|
|
Prepaid expenses and
other current assets
|
3,950
|
|
|
3,113
|
|
|
(3,157)
|
|
|
(3,406)
|
|
|
Deferred contract
acquisition and fulfillment costs
|
(27,952)
|
|
|
(18,013)
|
|
|
(48,439)
|
|
|
(30,339)
|
|
|
Other
assets
|
418
|
|
|
895
|
|
|
959
|
|
|
1,335
|
|
|
Accounts
payable
|
1,306
|
|
|
2,184
|
|
|
1,588
|
|
|
(5,034)
|
|
|
Accrued
expenses
|
5,997
|
|
|
(996)
|
|
|
12,439
|
|
|
2,306
|
|
|
Accrued
compensation
|
22,296
|
|
|
17,307
|
|
|
2,427
|
|
|
360
|
|
|
Contract
liabilities
|
17,472
|
|
|
6,892
|
|
|
21,746
|
|
|
19,503
|
|
|
Operating lease
liabilities
|
(3,493)
|
|
|
—
|
|
|
(7,198)
|
|
|
—
|
|
|
Other
liabilities
|
3,795
|
|
|
(379)
|
|
|
2,063
|
|
|
(69)
|
|
|
Net cash provided by
operating activities
|
26,405
|
|
|
22,695
|
|
|
72,060
|
|
|
37,688
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchases of
marketable securities
|
(155,675)
|
|
|
—
|
|
|
(530,886)
|
|
|
—
|
|
|
Maturities of
marketable securities
|
151,992
|
|
|
—
|
|
|
244,449
|
|
|
—
|
|
|
Purchases of
strategic investments
|
—
|
|
|
—
|
|
|
(15,500)
|
|
|
—
|
|
|
Purchases of property
and equipment
|
(14,554)
|
|
|
(4,336)
|
|
|
(29,791)
|
|
|
(10,520)
|
|
|
Net cash used in
investing activities
|
(18,237)
|
|
|
(4,336)
|
|
|
(331,728)
|
|
|
(10,520)
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of common stock in initial public offering, net of
underwriting commissions
|
—
|
|
|
529,305
|
|
|
—
|
|
|
529,305
|
|
|
Payment of tax
withholding obligation on RSU settlement
|
(29,841)
|
|
|
—
|
|
|
(85,978)
|
|
|
—
|
|
|
Proceeds from
exercise of stock options
|
10,194
|
|
|
2,503
|
|
|
42,448
|
|
|
10,318
|
|
|
Proceeds from
employee stock purchase plan
|
—
|
|
|
—
|
|
|
10,563
|
|
|
—
|
|
|
Payment of deferred
offering costs
|
—
|
|
|
(1,328)
|
|
|
—
|
|
|
(3,522)
|
|
|
Net cash provided by
(used in) financing activities
|
(19,647)
|
|
|
530,480
|
|
|
(32,967)
|
|
|
536,101
|
|
|
Effect of foreign
exchange on cash, cash equivalents and restricted cash
|
(741)
|
|
|
527
|
|
|
(1,120)
|
|
|
(1,543)
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
(12,220)
|
|
|
549,366
|
|
|
(293,755)
|
|
|
561,726
|
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
236,643
|
|
|
269,796
|
|
|
518,178
|
|
|
257,436
|
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
224,423
|
|
|
$
|
819,162
|
|
|
$
|
224,423
|
|
|
$
|
819,162
|
|
|
DOCUSIGN,
INC.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(Unaudited)
|
|
|
Reconciliation of
gross profit and gross margin:
|
|
|
Three Months Ended
July 31,
|
|
Six Months Ended
July 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
GAAP gross
profit
|
$
|
174,436
|
|
|
$
|
130,683
|
|
|
$
|
336,379
|
|
|
$
|
228,197
|
|
|
Add: Stock-based
compensation
|
7,936
|
|
|
4,410
|
|
|
13,658
|
|
|
30,410
|
|
|
Add: Amortization of
acquisition-related intangibles
|
1,381
|
|
|
1,003
|
|
|
3,008
|
|
|
2,671
|
|
|
Add: Employer payroll
tax on employee stock transactions
|
541
|
|
|
—
|
|
|
1,193
|
|
|
—
|
|
|
Non-GAAP gross
profit
|
$
|
184,294
|
|
|
$
|
136,096
|
|
|
$
|
354,238
|
|
|
$
|
261,278
|
|
|
GAAP gross
margin
|
74
|
%
|
|
78
|
%
|
|
75
|
%
|
|
71
|
%
|
|
Non-GAAP
adjustments
|
4
|
%
|
|
3
|
%
|
|
4
|
%
|
|
10
|
%
|
|
Non-GAAP gross
margin
|
78
|
%
|
|
81
|
%
|
|
79
|
%
|
|
81
|
%
|
|
|
|
|
|
|
|
|
|
GAAP subscription
gross profit
|
$
|
181,339
|
|
|
$
|
135,404
|
|
|
$
|
349,678
|
|
|
$
|
251,164
|
|
|
Add: Stock-based
compensation
|
3,115
|
|
|
1,588
|
|
|
5,397
|
|
|
11,543
|
|
|
Add: Amortization of
acquisition-related intangibles
|
1,381
|
|
|
1,003
|
|
|
3,008
|
|
|
2,671
|
|
|
Add: Employer payroll
tax on employee stock transactions
|
211
|
|
|
—
|
|
|
432
|
|
|
—
|
|
|
Non-GAAP subscription
gross profit
|
$
|
186,046
|
|
|
$
|
137,995
|
|
|
$
|
358,515
|
|
|
$
|
265,378
|
|
|
GAAP subscription
gross margin
|
82
|
%
|
|
85
|
%
|
|
83
|
%
|
|
82
|
%
|
|
Non-GAAP
adjustments
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
5
|
%
|
|
Non-GAAP subscription
gross margin
|
84
|
%
|
|
87
|
%
|
|
85
|
%
|
|
87
|
%
|
|
|
|
|
|
|
|
|
|
GAAP professional
services and other gross loss
|
$
|
(6,903)
|
|
|
$
|
(4,721)
|
|
|
$
|
(13,299)
|
|
|
$
|
(22,967)
|
|
|
Add: Stock-based
compensation
|
4,821
|
|
|
2,822
|
|
|
8,261
|
|
|
18,867
|
|
|
Add: Employer payroll
tax on employee stock transactions
|
330
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
Non-GAAP professional
services and other gross loss
|
$
|
(1,752)
|
|
|
$
|
(1,899)
|
|
|
$
|
(4,277)
|
|
|
$
|
(4,100)
|
|
|
GAAP professional
services and other gross margin
|
(47)
|
%
|
|
(55)
|
%
|
|
(49)
|
%
|
|
(142)
|
%
|
|
Non-GAAP
adjustments
|
35
|
%
|
|
33
|
%
|
|
33
|
%
|
|
117
|
%
|
|
Non-GAAP professional
services and other gross margin
|
(12)
|
%
|
|
(22)
|
%
|
|
(16)
|
%
|
|
(25)
|
%
|
|
|
|
Reconciliation of
operating expenses:
|
|
|
Three Months Ended
July 31,
|
|
Six Months Ended
July 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
GAAP sales and
marketing
|
$
|
150,886
|
|
|
$
|
103,779
|
|
|
$
|
280,822
|
|
|
$
|
294,864
|
|
|
Less: Stock-based
compensation
|
(25,942)
|
|
|
(16,791)
|
|
|
(44,044)
|
|
|
(129,272)
|
|
|
Less: Amortization of
acquisition-related intangibles
|
(3,039)
|
|
|
(765)
|
|
|
(6,145)
|
|
|
(1,530)
|
|
|
Less: Employer
payroll tax on employee stock transactions
|
(1,577)
|
|
|
—
|
|
|
(3,928)
|
|
|
—
|
|
|
Non-GAAP sales and
marketing
|
$
|
120,328
|
|
|
$
|
86,223
|
|
|
$
|
226,705
|
|
|
$
|
164,062
|
|
|
GAAP sales and
marketing as a percentage of revenue
|
64
|
%
|
|
62
|
%
|
|
62
|
%
|
|
91
|
%
|
|
Non-GAAP sales and
marketing as a percentage of revenue
|
51
|
%
|
|
52
|
%
|
|
50
|
%
|
|
51
|
%
|
|
|
|
|
|
|
|
|
|
GAAP research and
development
|
$
|
47,517
|
|
|
$
|
33,773
|
|
|
$
|
84,700
|
|
|
$
|
104,643
|
|
|
Less: Stock-based
compensation
|
(11,963)
|
|
|
(7,359)
|
|
|
(19,280)
|
|
|
(54,627)
|
|
|
Less: Employer
payroll tax on employee stock transactions
|
(1,026)
|
|
|
—
|
|
|
(2,176)
|
|
|
—
|
|
|
Non-GAAP research and
development
|
$
|
34,528
|
|
|
$
|
26,414
|
|
|
$
|
63,244
|
|
|
$
|
50,016
|
|
|
GAAP research and
development as a percentage of revenue
|
20
|
%
|
|
20
|
%
|
|
19
|
%
|
|
33
|
%
|
|
Non-GAAP research and
development as a percentage of revenue
|
15
|
%
|
|
16
|
%
|
|
14
|
%
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
GAAP general and
administrative
|
$
|
40,755
|
|
|
$
|
30,851
|
|
|
$
|
78,016
|
|
|
$
|
133,968
|
|
|
Less: Stock-based
compensation
|
(9,951)
|
|
|
(11,605)
|
|
|
(21,081)
|
|
|
(95,650)
|
|
|
Less: Employer
payroll tax on employee stock transactions
|
(720)
|
|
|
—
|
|
|
(2,322)
|
|
|
—
|
|
|
Non-GAAP general and
administrative
|
$
|
30,084
|
|
|
$
|
19,246
|
|
|
$
|
54,613
|
|
|
$
|
38,318
|
|
|
GAAP general and
administrative as a percentage of revenue
|
17
|
%
|
|
19
|
%
|
|
18
|
%
|
|
42
|
%
|
|
Non-GAAP general and
administrative as a percentage of revenue
|
13
|
%
|
|
12
|
%
|
|
12
|
%
|
|
12
|
%
|
|
|
|
Reconciliation of
income (loss) from operations and operating margin:
|
|
|
Three Months Ended
July 31,
|
|
Six Months Ended
July 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
GAAP operating
loss
|
$
|
(64,722)
|
|
|
$
|
(37,720)
|
|
|
$
|
(107,159)
|
|
|
$
|
(305,278)
|
|
|
Add: Stock-based
compensation
|
55,792
|
|
|
40,165
|
|
|
98,063
|
|
|
309,959
|
|
|
Add: Amortization of
acquisition-related intangibles
|
4,420
|
|
|
1,768
|
|
|
9,153
|
|
|
4,201
|
|
|
Add: Employer payroll
tax on employee stock transactions
|
3,864
|
|
|
—
|
|
|
9,619
|
|
|
—
|
|
|
Non-GAAP operating
income (loss)
|
$
|
(646)
|
|
|
$
|
4,213
|
|
|
$
|
9,676
|
|
|
$
|
8,882
|
|
|
GAAP operating
margin
|
(27)
|
%
|
|
(23)
|
%
|
|
(24)
|
%
|
|
(95)
|
%
|
|
Non-GAAP
adjustments
|
27
|
%
|
|
26
|
%
|
|
26
|
%
|
|
98
|
%
|
|
Non-GAAP operating
margin
|
—
|
%
|
|
3
|
%
|
|
2
|
%
|
|
3
|
%
|
|
|
|
Reconciliation of
net income (loss) and net income (loss) per share, basic and
diluted:
|
|
|
Three Months Ended
July 31,
|
|
Six Months Ended
July 31,
|
|
(in thousands,
except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
GAAP net
loss
|
$
|
(68,632)
|
|
|
$
|
(36,714)
|
|
|
$
|
(114,354)
|
|
|
$
|
(307,401)
|
|
|
Add: Stock-based
compensation
|
55,792
|
|
|
40,165
|
|
|
98,063
|
|
|
309,959
|
|
|
Add: Amortization of
acquisition-related intangibles
|
4,420
|
|
|
1,768
|
|
|
9,153
|
|
|
4,201
|
|
|
Add: Employer payroll
tax on employee stock transactions
|
3,864
|
|
|
—
|
|
|
9,619
|
|
|
—
|
|
|
Add: Amortization of
debt discount and issuance costs
|
6,548
|
|
|
—
|
|
|
13,002
|
|
|
—
|
|
|
Non-GAAP net
income
|
$
|
1,992
|
|
|
$
|
5,219
|
|
|
$
|
15,483
|
|
|
$
|
6,759
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
$
|
1,992
|
|
|
$
|
5,219
|
|
|
$
|
15,483
|
|
|
$
|
6,759
|
|
|
Less: preferred stock
accretion
|
—
|
|
|
—
|
|
|
—
|
|
|
(353)
|
|
|
Less: net income
allocated to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,085)
|
|
|
Non-GAAP net income
attributable to common stockholders
|
$
|
1,992
|
|
|
$
|
5,219
|
|
|
$
|
15,483
|
|
|
$
|
4,321
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding, basic
|
175,389
|
|
|
166,084
|
|
|
173,773
|
|
|
102,284
|
|
|
Effect of dilutive
securities
|
13,952
|
|
|
25,339
|
|
|
15,516
|
|
|
24,586
|
|
|
Non-GAAP
weighted-average common shares outstanding, diluted
|
189,341
|
|
|
191,423
|
|
|
189,289
|
|
|
126,870
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per
share, basic and diluted
|
$
|
(0.39)
|
|
|
$
|
(0.22)
|
|
|
$
|
(0.66)
|
|
|
$
|
(3.01)
|
|
|
Non-GAAP net income
per share, basic
|
0.01
|
|
|
0.03
|
|
|
0.09
|
|
|
0.04
|
|
|
Non-GAAP net income
per share, diluted
|
0.01
|
|
|
0.03
|
|
|
0.08
|
|
|
0.03
|
|
|
|
|
Computation of
free cash flow:
|
|
|
Three Months Ended
July 31,
|
|
Six Months Ended
July 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net cash provided by
operating activities
|
$
|
26,405
|
|
|
$
|
22,695
|
|
|
$
|
72,060
|
|
|
$
|
37,688
|
|
|
Less: purchase of
property and equipment
|
(14,554)
|
|
|
(4,336)
|
|
|
(29,791)
|
|
|
(10,520)
|
|
|
Non-GAAP free cash
flow
|
$
|
11,851
|
|
|
$
|
18,359
|
|
|
$
|
42,269
|
|
|
$
|
27,168
|
|
|
Net cash used in
investing activities
|
$
|
(18,237)
|
|
|
$
|
(4,336)
|
|
|
$
|
(331,728)
|
|
|
$
|
(10,520)
|
|
|
Net cash provided by
(used in) financing activities
|
$
|
(19,647)
|
|
|
$
|
530,480
|
|
|
$
|
(32,967)
|
|
|
$
|
536,101
|
|
|
|
|
Computation of
billings:
|
|
|
Three Months Ended
July 31,
|
|
Six Months Ended
July 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenue
|
$
|
235,612
|
|
|
$
|
167,044
|
|
|
$
|
449,574
|
|
|
$
|
322,852
|
|
|
Add: Contract
liabilities and refund liability, end of period
|
412,953
|
|
|
300,426
|
|
|
412,953
|
|
|
300,426
|
|
|
Less: Contract
liabilities and refund liability, beginning of period
|
(395,254)
|
|
|
(293,667)
|
|
|
(390,887)
|
|
|
(282,943)
|
|
|
Add: Contract assets
and unbilled accounts receivable, beginning of period
|
16,810
|
|
|
14,555
|
|
|
13,436
|
|
|
16,899
|
|
|
Less: Contract assets
and unbilled accounts receivable, end of period
|
(17,757)
|
|
|
(16,196)
|
|
|
(17,757)
|
|
|
(16,196)
|
|
|
Non-GAAP
billings
|
$
|
252,364
|
|
|
$
|
172,162
|
|
|
$
|
467,319
|
|
|
$
|
341,038
|
|
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SOURCE DocuSign, Inc.