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DOCUSIGN, INC. (DOCU)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered a clean beat on revenue and non-GAAP EPS versus Wall Street consensus, while billings landed slightly below the guidance range due to earlier-than-anticipated reductions in early renewals driven by go-to-market changes; non-GAAP operating margin expanded 100 bps YoY to 29.5% .
  • DOCU raised FY2026 total revenue guidance midpoint by ~$22M and introduced Q2 guidance showing continued top-line growth; FY billings midpoint was trimmed ~$15M to reflect more conservative early-renewal timing, with nearly zero impact on revenue .
  • Management authorized an additional $1.0B for share repurchases (total remaining authorization now ~$1.4B), repurchased $183M in Q1, and secured a new $750M revolver, underlining capital return capacity supported by robust free cash flow (30% margin) .
  • IAM momentum accelerated: >10,000 IAM customers, strong self-serve adoption (~1,000 added in weeks), and >50% QoQ growth in international IAM deal volume; the quarter’s narrative focused on IAM product expansion and sales transformation as catalysts for second-half billings acceleration .

What Went Well and What Went Wrong

What Went Well

  • IAM adoption accelerated across channels; management remains “on track for IAM to account for a double-digit percentage of subscription book of business exiting Q4” and surpassed 10,000 IAM customers .
  • Profitability outperformed with non-GAAP operating margin at 29.5% (+100 bps YoY) and free cash flow of $228M (30% margin), enabling enhanced buybacks and validating operating efficiency initiatives .
  • Strong usage trends: dollar net retention ticked up to 101% (vs 99% in Q1 FY2025), contract consumption hit multi-year highs, and total customers grew 10% YoY to >1.7M, providing a foundation for IAM upsell .

Quote: “Q1 financial performance was strong. Revenue of $764 million and 8% growth outpaced our expectations... Profitability outperformed, with operating margins improving by 1% versus last year to 29.5%” — Allan Thygesen .

What Went Wrong

  • Billings grew 4% YoY to $740M, slightly below guidance, due to early-renewal timing shifts from compensation and portfolio changes; management took responsibility and will forecast more conservatively .
  • International growth (28% of revenue) was impacted by lower-than-expected expansion rates, particularly in EMEA, despite improving IAM traction; FX was a minor headwind for revenue .
  • Cloud migration continues to pressure gross margin (~1 pt FY headwind), with more impact anticipated during FY2026 before easing in FY2027 .

Financial Results

Headline Metrics vs Prior Periods and Estimates

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$754.8 $776.3 $763.7
Revenue YoY Growth (%)8% 9% 8%
Subscription Revenue ($USD Millions)$734.7 $757.8 $746.2
Prof. Services & Other ($USD Millions)$20.1 $18.5 $17.5
Billings ($USD Millions)$752.3 $923.2 $739.6
Non-GAAP Gross Margin (%)82.5% 82.3% 82.3%
Non-GAAP Operating Margin (%)29.6% 28.8% 29.5%
GAAP Diluted EPS ($)$0.30 $0.39 $0.34
Non-GAAP Diluted EPS ($)$0.90 $0.86 $0.90
Free Cash Flow ($USD Millions)$210.7 $279.6 $227.8

Actuals vs Wall Street Consensus (S&P Global)

MetricQ3 2025Q4 2025Q1 2026
Revenue Consensus Mean ($USD Millions)745.33*761.64*748.92*
Revenue Actual ($USD Millions)$754.82 $776.25 $763.65
Primary EPS Consensus Mean ($)0.8736*0.8540*0.8148*
Non-GAAP Diluted EPS Actual ($)$0.90 $0.86 $0.90
# of Revenue Estimates17*18*17*
# of EPS Estimates18*19*17*

Values retrieved from S&P Global.*

Notable: Q1 FY2026 delivered a bold beat on revenue and EPS versus consensus, continuing the pattern from Q3 and Q4 FY2025 .

Segment Breakdown (Revenue)

Segment ($USD Millions)Q3 2025Q4 2025Q1 2026
Subscription$734.7 $757.8 $746.2
Prof. Services & Other$20.1 $18.5 $17.5

KPIs and Operating Metrics

KPIQ1 2025Q4 2025Q1 2026
Dollar Net Retention (%)99% ~In line with Q4 (reference only) 101%
Total Customers (Millions)——>1.7M; +10% YoY
Large Customers >$300K (Count)—1,123 (seasonally down QoQ) 1,123
International Revenue (% of Total)——28%; +10% YoY (~13% ex-FX)
Free Cash Flow Margin (%)——30%
Share Repurchases ($USD Millions)—$161.7 $183.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY2026$3.129–$3.141 $3.151–$3.163 Raised
Subscription Revenue ($USD Billions)FY2026$3.062–$3.074 $3.083–$3.095 Raised
Billings ($USD Billions)FY2026$3.300–$3.354 $3.285–$3.339 Lowered (timing conservatism)
Non-GAAP Gross Margin (%)FY202680.5–81.5 80.7–81.7 Slightly raised (mix/timing)
Non-GAAP Operating Margin (%)FY202627.8–28.8 27.8–28.8 Maintained
Non-GAAP Diluted Shares (Millions)FY2026210–215 210–215 Maintained
Total Revenue ($USD Millions)Q2 FY2026—$777–$781 New
Subscription Revenue ($USD Millions)Q2 FY2026—$760–$764 New
Billings ($USD Millions)Q2 FY2026—$757–$767 New
Non-GAAP Gross Margin (%)Q2 FY2026—80.5–81.5 New
Non-GAAP Operating Margin (%)Q2 FY2026—26.5–27.5 New

Management emphasized the FY billings trim reflects more conservative early-renewal timing assumptions and cautious bookings stance given macro uncertainty, with minimal revenue impact .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2025)Previous Mentions (Q4 FY2025)Current Period (Q1 FY2026)Trend
AI/IAM initiativesEarly IAM momentum; Navigator upgrades; global expansion of IAM Maestro/App Center Global release of IAM for Sales/Core; developer ecosystem buildout Deep IAM roadmap (Agreement Desk, Workspaces, Custom Extractions), Iris AI engine, AI contract agents; >10k IAM customers; strong self-serve and international traction Strengthening innovation cadence and adoption
Go-to-market transformation—Positioning to pursue IAM opportunity Resegmentation, self-serve migration, incentive changes to prioritize in-quarter closes; earlier drop in early renewals vs plan; fundamentals improving Transition underway; stabilization underway in Q2
Cloud migration——~1 pt FY gross margin headwind; timing shift pushed more impact beyond Q1; easing expected in FY2027 Margin headwind near-term, moderating later
Regional trends——International revenue 28% of total; +10% YoY (≈13% ex-FX); EMEA expansion slower; >50% QoQ increase in international IAM deals International IAM ramp offsetting slower expansions
Partner ecosystem—CLM connector; alliances expanding Alliances with Microsoft (Azure Marketplace), Deloitte, SAP; CDW growth; Fortune 500 energy win Building enterprise channel via GSIs/partners
Capital allocation$172.7M repo in Q3 $161.7M repo in Q4 $183.4M repo; +$1.0B authorization; $1.4B remaining authorization; new $750M revolver Increasing buyback capacity
Macro/supply chain/tariffs——No material macro impact in Q1; cautious guide given volatility; timing effects dominate billings variability Cautious stance; demand resilient

Management Commentary

  • Strategic message: “DocuSign is building on its leadership position to reimagine how organizations manage agreements through IAM… delivering innovation to customers at the fastest pace in our history” — Allan Thygesen .
  • IAM product vision: Introduction of Iris (agreement-specific AI), upcoming AI contract agents, and features across Create/Commit/Manage (Agreement Desk, Workspaces, Custom Extractions, Obligation Management) .
  • Go-to-market rationale: “We migrated a meaningful cohort of customers to the self-serve-first digital experience… changed compensation to encourage closing in-quarter” — Allan Thygesen .
  • Profitability posture: “Our focus on operating efficiency initiatives drove strong results… non-GAAP operating margin 29.5%… free cash flow $228M” — Blake Grayson .

Q&A Highlights

  • Early renewals timing: Compensation changes shifted activity earlier than expected, reducing Q1 early renewals; management will forecast more conservatively and emphasized it’s timing, not demand-related .
  • Second-half acceleration: Acceleration assumption rooted in commercial IAM rollout globally; enterprise contribution expected to grow more materially in FY2027+, not required for H2 guide .
  • Usage/consumption: Multi-year highs in contract consumption; improving gross retention and DNR underpin IAM upsell runway .
  • International/EMEA: International revenue growth double-digit, but expansion rates softer in EMEA; IAM deals up >50% QoQ internationally post launch .
  • Metric communication: Considering better alternatives to billings (given timing volatility), while continuing to highlight IAM’s contribution to recurring revenue/book of business .

Estimates Context

  • Q1 FY2026: Revenue $763.65M vs consensus $748.92M (beat); non-GAAP diluted EPS $0.90 vs consensus $0.815 (beat); both supported by stronger digital and IAM contributions and some smaller non-recurring revenue positives .
  • Prior quarters: Q4 FY2025 revenue $776.25M vs $761.64M estimate (beat); non-GAAP EPS $0.86 vs $0.854 estimate (beat) . Q3 FY2025 revenue $754.82M vs $745.33M estimate (beat); non-GAAP EPS $0.90 vs $0.874 estimate (beat) .
  • FY2026 consensus revenue estimate: ~$3.199B*, with management midpoint at $3.157B; billings midpoint lowered on timing conservatism, not demand .

Values retrieved from S&P Global.*

Where estimates may adjust: Street models likely lift FY revenue and near-term EPS given Q1 beat and raised FY revenue guide, while trimming billings to reflect timing and cautious bookings assumptions .

Key Takeaways for Investors

  • Bold beat on revenue and EPS with stable-to-improving margins; billings softness tied to renewal timing from GTM changes, not demand—monitor H2 billings trajectory and renewal timing normalization .
  • IAM adoption and innovation cadence are accelerating across direct, self-serve, and partner routes—expect increasing contribution to subscription book and potential enterprise ramp into FY2027 .
  • Capital return remains a core pillar: $1.4B repurchase authorization and strong FCF support opportunistic buybacks amid transformation and cloud migration investments .
  • International is a lever: despite slower EMEA expansions, IAM deals are ramping (>50% QoQ), suggesting a path to improving overseas growth with new leadership .
  • Near-term margin headwinds from cloud migration (~1 pt gross margin FY impact) are transitory; easing expected in FY2027—maintaining operating margin despite investment signals disciplined execution .
  • Trading implications: Setup favors sentiment improvement on IAM momentum and raised revenue guide; watch billings prints (timing volatility) and any enterprise deal signals/outsize IAM contributions in H2 .
  • Medium-term thesis: Agreement-centric AI platform (Iris + agents) strengthens competitive moat; partner ecosystem (Microsoft, Deloitte, SAP) can pull DOCU deeper into enterprise workflows, expanding TAM and upsell potential .
Primary Source Documents
- Q1 FY2026 earnings press release and financial statements: **[1261333_20250605SF03716:0]** **[1261333_20250605SF03716:1]** **[1261333_20250605SF03716:2]** **[1261333_20250605SF03716:7]** **[1261333_20250605SF03716:11]**
- Q1 FY2026 8-K and exhibit: **[1261333_0001261333-25-000073_docu-20250605.htm:1]** **[1261333_0001261333-25-000073_q126ex-991er.htm:2]** **[1261333_0001261333-25-000073_q126ex-991er.htm:8]** **[1261333_0001261333-25-000073_q126ex-991er.htm:12]**
- Q1 FY2026 earnings call transcript: **[0001261333_2255979_1]** **[0001261333_2255979_2]** **[0001261333_2255979_3]** **[0001261333_2255979_4]** **[0001261333_2255979_5]** **[0001261333_2255979_6]** **[0001261333_2255979_7]** **[0001261333_2255979_8]** **[0001261333_2255979_9]** **[0001261333_2255979_10]** **[0001261333_2255979_11]** **[0001261333_2255979_12]** **[0001261333_2255979_13]** **[0001261333_2255979_14]** **[0001261333_2255979_15]** **[0001261333_2255979_16]** **[0001261333_2255979_17]** **[0001261333_2255979_18]**
Prior Quarter References
- Q4 FY2025 press release: **[1261333_20250313SF40353:0]** **[1261333_20250313SF40353:1]** **[1261333_20250313SF40353:2]** **[1261333_20250313SF40353:7]** **[1261333_20250313SF40353:12]** **[1261333_20250313SF40353:13]**
- Q3 FY2025 press release: **[1261333_20241205SF73160:0]** **[1261333_20241205SF73160:1]** **[1261333_20241205SF73160:8]**