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DocuSign Tops Forecasts

June 8, 2018

DocuSign reported results for its fiscal quarter ended April 30, 2018. Earnings excluding certain items came in at 1 cent per share, verses the loss of 7 cents per share investors anticipated. Revenue was reported at $155.8 million with only $146.2 million expected.

"In the first quarter, our core e-signature solution-and our broader platform for automating the agreement process-continued to gain traction in helping to accelerate business and simplify life for hundreds of millions of users around the world. This led to 37% year-over-year growth in our total revenue and the addition of 30,000 new customers-bringing our total paying customer base to over 400,000," said Dan Springer, CEO of DocuSign. "We also saw strong growth, expansion and development of our international business. And we continue to deliver product innovation across our evolving System of Agreement platform in the areas of preparing, signing, acting on and managing agreements. I believe these results highlight the commitment, passion and drive that DocuSign has for the next big platform opportunity in cloud computing."

First Quarter Financial Highlights

  • Total revenue was $155.8 million, an increase of 37% year-over-year. Subscription revenue was $148.2 million, an increase of 39% year-over-year. Professional services and other revenue was $7.6 million, an increase of 14% year-over-year.
  • Contract liabilities were $290.5 million, an increase of 43% year-over-year.
  • Billings were $168.9 million, an increase of 33% year-over-year.
  • GAAP gross margin was 63%, compared to 76% in the same period last year. GAAP gross margin for the first quarter of fiscal 2019 included a $25.4 million stock-based compensation charge related to restricted stock units ("RSUs") with a liquidity event performance condition. Non-GAAP gross margin was 80% compared to 78% in the same period last year.
  • GAAP net loss per basic and diluted share was $7.46 in the first quarter of fiscal 2019 on 36 million shares outstanding compared to GAAP net loss per share of $0.66 in the first quarter of fiscal 2018 on 30 million shares outstanding. GAAP net loss for the first quarter of fiscal 2019 included a $262.8 million stock-based compensation charge related to RSUs with a liquidity event performance condition.
  • Non-GAAP earnings per diluted share was $0.01 in the first quarter of fiscal 2019 based on 60 million shares outstanding compared to a non-GAAP net loss per share of $0.30 in the first quarter of fiscal 2018 based on 30 million shares outstanding.
  • Net cash provided by operating activities was $15.0 million, compared to $0.7 million used in operating activities in the same period last year.
  • Free cash flow was $8.8 million in the first quarter of fiscal 2019 compared to negative free cash flow of $7.5 million in the same period last year.
  • Cash, cash equivalents and restricted cash was $269.8 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."

Initial Public Offering

On May 1, 2018 the company completed its initial public offering ("IPO"). The company sold 19,314,182 shares of common stock, raising net proceeds of $524.8 million, including the over-allotment option. Upon the completion of the IPO, all shares of outstanding convertible preferred stock automatically converted into 100,350,008 shares of common stock.

Stock-based Compensation Related to Liquidity Event Restricted Stock Units

RSUs issued through January 31, 2018 generally vest upon the satisfaction of both service-based and liquidity event performance conditions. The service condition is typically a four-year service period. liquidity event performance condition was satisfied upon the effectiveness of our IPO registration statement on April 26, 2018. On that date the company recorded a cumulative stock-based compensation expense of $262.8 million, of which $25.4 million was included in cost of revenue, related to all RSUs, for which the service was condition fully satisfied as of that date.

Outlook

Quarter ending July 31, 2018 (in millions, except percentages):


 

 

 

Total revenue

$157

to

$160


 

Billings

$160

to

$170


 

Non-GAAP gross margin

78%

to

81%


 

Non-GAAP Sales and marketing

49%

to

51%


 

Non-GAAP research and development

16%

to

18%


 

Non-GAAP general and administrative

10%

to

12%


 

Other expense

<$0.5


 

 

 

Provision for income taxes

$0.75


 

 

 

Non-GAAP diluted weighted-average shares outstanding

190

to

195

 

Year ending January 31, 2019 (in millions, except percentages):


 

 

 

Total revenue

$652

to

$658


 

Billings

$680

to

$700


 

Non-GAAP gross margin

78%

to

81%


 

Non-GAAP Sales and marketing

49%

to

51%


 

Non-GAAP research and development

16%

to

18%


 

Non-GAAP general and administrative

10%

to

12%


 

Other expense

<$2


 

 

 

Provision for income taxes

$3


 

 

 

Non-GAAP diluted weighted-average shares outstanding

160

to

165

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.

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