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DOCUSIGN, INC. (DOCU)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 revenue was $800.6M, up 9% year over year, with billings of $818.0M (+13% YoY); non-GAAP operating margin was 29.8% and free cash flow was $217.6M (27% margin) .
  • Results beat Wall Street consensus: revenue $780.6M* vs actual $800.6M and EPS $0.85* vs actual $0.92; management cited stronger direct sales, improved gross retention, early renewals, and a shift toward annual billing as drivers .
  • FY26 guidance was raised: revenue to $3.189–$3.201B (from $3.151–$3.163B) and billings to $3.325–$3.355B (from $3.285–$3.339B); Q3 revenue guidance is $804–$808M and billings $785–$795M, reflecting renewal timing headwinds .
  • Strategic catalysts: accelerating IAM adoption (more than 50% of enterprise reps closed at least one IAM deal), DNR improved to 102%, and continued AI product launches (Navigator custom extractions, Agreement Prep, SCIM, CLEAR identity verification; FedRAMP Moderate authorization) .

Note: Asterisk-marked values are consensus figures retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Strong top-line and billings momentum: “Revenue was $801M, up 9% YoY, and billings were $818M, up 13% YoY,” with outperformance driven by direct e-signature demand, healthier early renewals, and higher annual billing mix .
  • Retention and usage improving: Dollar net retention rose to 102% (from 101% in Q1 and 99% in Q2 FY25); envelope utilization and volumes grew across segments and verticals .
  • IAM and CLM traction: More than 50% of enterprise AEs closed at least one IAM deal; CLM delivered one of its strongest quarters for bookings and was recognized by IDC as a leader in AI-enabled buy-side CLM .

Selected management quotes:

  • “Q2 business results outperformed…one of our strongest growth quarters over the past two years” — Allan Thygesen .
  • “We remain on track for IAM customers to contribute a low double-digit percentage share of the subscription book of business exiting Q4” — Blake Grayson .
  • “We’re approaching 100 million agreements ingested into Navigator and available for AI processing” — Allan Thygesen .

What Went Wrong

  • Margin headwinds vs prior year: Non-GAAP operating margin fell 240 bps YoY due to cloud migration costs, shift to cash comp for some roles, and a one-time benefit last year; non-GAAP gross margin also faced ~1 pt cloud migration headwind .
  • Professional services gross margin remained weak: GAAP PS gross margin was −31.5% (non-GAAP near breakeven), highlighting ongoing services inefficiencies .
  • Billings variability remains: Q3 billings guidance embeds a renewal timing headwind similar to Q2’s early renewal benefit; management is evaluating replacing billings with an alternative top-line measure due to volatility .

Financial Results

Core P&L, Cash Flow, and Efficiency (oldest → newest)

MetricQ4 FY25Q1 FY26Q2 FY26
Total Revenue ($USD Millions)$776.3 $763.7 $800.6
Subscription Revenue ($USD Millions)$757.8 $746.2 $784.4
Professional Services & Other Revenue ($USD Millions)$18.5 $17.5 $16.2
Billings ($USD Millions)$923.2 $739.6 $818.0
Non-GAAP Gross Margin (%)82.3% 82.3% 82.0%
Non-GAAP Operating Margin (%)28.8% 29.5% 29.8%
Non-GAAP Diluted EPS ($)$0.86 $0.90 $0.92
GAAP Diluted EPS ($)$0.39 $0.34 $0.30
Free Cash Flow ($USD Millions)$279.6 $227.8 $217.6

Segment Mix (oldest → newest)

MetricQ4 FY25Q1 FY26Q2 FY26
Subscription (% of Total Revenue)97.6% 97.7% 98.0%
Professional Services & Other (% of Total Revenue)2.4% 2.3% 2.0%
International Revenue ($USD Millions)$219 $217 $233
International (% of Revenue)28% 28% 29%

KPIs (oldest → newest)

KPIQ4 FY25Q1 FY26Q2 FY26
Total Customers (Millions)1.66 1.71 1.74
Enterprise & Commercial Customers (Thousands)260 268 271
Customers >$300k ACV (Count)1,131 1,123 1,137
Dollar Net Retention (%)101% 101% 102%

Results vs S&P Global Consensus (oldest → newest)

MetricQ4 FY25Q1 FY26Q2 FY26
Revenue ($USD Millions)$761.6* / $776.3 $748.9* / $763.7 $780.6* / $800.6
Primary EPS ($)$0.85* / $0.86 $0.81* / $0.90 $0.85* / $0.92

Values with asterisks are consensus estimates retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($B)FY26$3.151–$3.163 $3.189–$3.201 Raised
Subscription Revenue ($B)FY26$3.083–$3.095 $3.121–$3.133 Raised
Billings ($B)FY26$3.285–$3.339 $3.325–$3.355 Raised
Non-GAAP Gross Margin (%)FY2680.7–81.7 81.0–82.0 Raised
Non-GAAP Operating Margin (%)FY2627.8–28.8 28.6–29.6 Raised
Non-GAAP Diluted Shares (M)FY26210–215 207–212 Lower range
Total Revenue ($M)Q3 FY26N/A$804–$808 Initiated
Subscription Revenue ($M)Q3 FY26N/A$786–$790 Initiated
Billings ($M)Q3 FY26N/A$785–$795 Initiated
Non-GAAP Gross Margin (%)Q3 FY26N/A80.3–81.3 Initiated
Non-GAAP Operating Margin (%)Q3 FY26N/A28.0–29.0 Initiated
Non-GAAP Diluted Shares (M)Q3 FY26N/A207–212 Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25, Q1 FY26)Current Period (Q2 FY26)Trend
AI/IAM product innovationGlobal IAM rollout, expanded AI features; Q1 announced Iris, AI agents, Agreement Desk, AI-Assisted Review New IAM launches: custom extractions, Agreement Prep; SCIM; CLEAR integration; approaching 100M agreements ingested into Navigator Accelerating
Go-to-market changesPartner program relaunch; increase to buyback; resegmentation and incentives initiated in Q1 Direct channel strength; enterprise IAM uptake; largest deal via Azure Marketplace; federal GSA partner route Positive impact
Retention/UsageDNR steady at ~101%; envelopes consistent DNR improved to 102%; envelopes and utilization improved broadly Improving
CLM performanceCLM AI-Assisted Review launched; steady growth Double-digit CLM growth and large enterprise wins (e.g., T-Mobile); IDC leader recognition Strengthening
Cloud migration costsExpected FY26 headwind (~1 pt gross margin) Headwind persists; peak year; easing expected in FY27+ Headwind moderating later
Federal/regulatoryN/AFedRAMP Moderate for IAM; GSA partnership to expand federal adoption Strategic opening
Billing timingFY25/early renewal comps noted Early renewals benefited Q2; Q3 guidance reflects offsetting timing headwind; evaluating alternative to billings Volatile, managed

Management Commentary

  • Allan Thygesen (CEO): “Q2 business results outperformed…Revenue was $801M, up 9% YoY, and billings were $818M, up 13% YoY…one of our strongest growth quarters over the past two years” .
  • Blake Grayson (CFO): “Dollar net retention rate rose to 102%…IAM sales maintained strong momentum…we delivered record-high non-GAAP operating income…Operating margin was 29.8%” .
  • On AI scale: “We’re approaching 100 million agreements ingested into Navigator…practically everybody’s doing [opt-in]…time to value is just unheard of” .
  • On billings and guidance: “Q3 billings guidance reflects a renewal timing headwind…FY26 revenue midpoint increasing by $38M…billings midpoint increasing by $28M from last quarter” .

Q&A Highlights

  • E-signature fundamentals: Broad-based envelope consumption and utilization improvements across financial services, healthcare, and business services; real estate slower but positive .
  • CLM pipeline: Strong quarter with large enterprise deals (e.g., T-Mobile); encouraging but too early to call category breakout .
  • IAM economics/adoption: IAM deals accretive via expansion; early days; e-sign dominates dollars but IAM critical to growth acceleration; >50% enterprise reps closed IAM .
  • Margins and investment mix: FY26 is peak year for cloud migration costs; margin pressure from cloud, cash comp shift, prior-year benefits; leverage potential as top-line moves to double-digit .
  • Federal strategy: GSA partnership facilitates purchasing; presence across cabinet-level departments; significant headroom; FedRAMP Moderate achieved .

Estimates Context

  • Q2 FY26: Revenue $780.6M* vs actual $800.6M (beat), EPS $0.85* vs actual $0.92 (beat) .
  • Trajectory: Q1 FY26 revenue $748.9M* vs $763.7M and EPS $0.81* vs $0.90 (beats) . Q4 FY25 revenue $761.6M* vs $776.3M and EPS $0.85* vs $0.86 (beats) .

Values with asterisks are consensus estimates retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and EPS beat with accelerating billings and raised FY26 guidance; narrative shifting toward sustained mid-to-high single-digit growth with IAM as a lever .
  • Retention and usage metrics improving (DNR 102%, envelopes/utilization up), supporting durable e-signature base and upsell runway into IAM .
  • IAM commercialization is progressing (enterprise penetration, larger deal sizes), with differentiated AI scale (approaching 100M agreements ingested) and rapid time-to-value .
  • Margin headwinds appear transitory (cloud migration peak in FY26; easing from FY27), while operating discipline maintains ~30% non-GAAP margin .
  • Billings volatility from renewal timing persists; management exploring replacement metric to reduce noise for investors .
  • Federal and compliance credentials (FedRAMP Moderate) plus CLEAR identity verification expand TAM and strengthen competitive moat in regulated and identity-intensive workflows .
  • Near-term trading implications: positive reaction bias on beats and guidance raise; watch Q3 billings timing and margin cadence; medium-term thesis centers on IAM adoption, AI agents launch, and sustained retention-led growth .

Additional Q2 FY26 Press Releases and Context

  • CLEAR identity verification integration (post-quarter) enhances IAM Commit workflows; supports frictionless identity checks .
  • FedRAMP Moderate authorization for IAM expands addressability in U.S. federal sector .
  • Board and governance updates: Mike Rosenbaum joins board; James Beer appointed next Chair .