Executive Summary

Q4 FY2025 delivered a clean beat on both revenue and EPS with accelerating billings and improving retention. Revenue was $776.3M (+9% y/y) vs S&P Global consensus ~$761.6M; non‑GAAP diluted EPS was $0.86 vs ~$0.854 consensus, while billings rose 11% y/y to $923.2M, and dollar net retention improved to 101% (highest in six quarters) *.
Profitability remained strong: non‑GAAP gross margin 82.3% and non‑GAAP operating margin 28.8%; free cash flow was $279.6M (36% margin) .
FY2026 outlook implies mid‑single‑digit growth and stable high‑20s operating margins as DOCU absorbs a ~1pt gross margin headwind from cloud migration and ~1.5pt operating margin headwind from mix/comp effects; Q1 FY2026 also faces ~1pt revenue headwind from the leap year .
Catalyst: early traction from Intelligent Agreement Management (IAM) — fastest‑growing new product in company history, contributing a high single‑digit % of direct deal volume and >20% of direct new customer deals in Q4; management targets re‑acceleration via IAM upsell and improving retention .

What Went Well and What Went Wrong

What Went Well
- Broad beat and improving fundamentals: revenue +9% y/y to $776.3M; billings +11% y/y to $923.2M; non‑GAAP op margin 28.8%; DNR rose to 101% .
- IAM momentum: “IAM has quickly become the fastest‑growing new product in DocuSign’s history,” with high single‑digit % of direct deal volume and >20% of direct new customer deals; “some IAM customers have reduced contracting cycles by up to 75%” .
- Strong cash generation and capital return: Q4 FCF $279.6M; FY25 repurchases $683.5M (75% of FCF), with $161.7M in Q4; cash, equivalents and investments ~$1.1B; no debt .
What Went Wrong
- FY2026 guide signals only ~5% revenue growth amid FX/leap year headwinds; gross margin to be pressured ~1pt in FY26 by cloud migration; operating margin headwind ~1.5pts (cloud plus prior-year one‑offs and comp mix shift) .
- Non‑GAAP EPS was $0.86, down sequentially vs Q2/Q3 (mix and investment cadence), and management highlighted a larger gross margin impact in FY26 before easing in FY27 .
- International growth decelerated in FY25 vs domestic re‑acceleration; execution pivot to upsell/cross‑sell and partner channel is ongoing (near‑term enterprise IAM still early) .

Financial Results

Revenue, profitability, billings, and cash flow – last three quarters (oldest → newest):

Metric	Q2 FY2025	Q3 FY2025	Q4 FY2025
Total Revenue ($M)	$736.0 (+7% y/y)	$754.8 (+8% y/y)	$776.3 (+9% y/y)
Subscription Revenue ($M)	$717.4 (+7% y/y)	$734.7 (+8% y/y)	$757.8 (+9% y/y)
Prof. Services & Other ($M)	$18.7 (+2% y/y)	$20.1 (+11% y/y)	$18.5 (+11% y/y)
Billings ($M)	$724.5 (+2% y/y)	$752.3 (+9% y/y)	$923.2 (+11% y/y)
Non‑GAAP Gross Margin %	82.2%	82.5%	82.3%
Non‑GAAP Operating Margin %	32.2%	29.6%	28.8%
GAAP Diluted EPS ($)	$4.26	$0.30	$0.39
Non‑GAAP Diluted EPS ($)	$0.97	$0.90	$0.86
Net Cash from Ops ($M)	$220.2	$234.3	$307.9
Free Cash Flow ($M)	$197.9	$210.7	$279.6

Q4 vs S&P Global consensus:

Metric	Consensus	Actual	Result
Revenue ($M)	$761.64*	$776.25	Beat
Primary EPS ($)	$0.854*	$0.86	Beat

*Values retrieved from S&P Global

Segment revenue mix – last three quarters:

Segment ($M)	Q2 FY2025	Q3 FY2025	Q4 FY2025
Subscription	$717.4	$734.7	$757.8
Prof. Services & Other	$18.7	$20.1	$18.5
Total Revenue	$736.0	$754.8	$776.3

KPIs and operating indicators:

KPI	Q2 FY2025	Q3 FY2025	Q4 FY2025
Dollar Net Retention (%)	99	100	101
International Revenue (% of total)	28%	28% (+14% y/y)	28% (+12% y/y)
Total Customers	~1.6M	1.6M	~1.7M (approaching)
Customers >$300k ACV	1,066	1,075	1,131
Free Cash Flow Margin (%)	27%	28%	36%

Why Q4 beat: Billings outperformance was driven ~50% by higher early renewals (including capacity‑driven consumption), with the remainder from higher IAM billings and a slight increase in annual billing terms; the same dynamic also aided revenue vs forecast .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue ($M)	Q1 FY2026	N/A	$745–$749	New
Subscription Revenue ($M)	Q1 FY2026	N/A	$729–$733	New
Billings ($M)	Q1 FY2026	N/A	$741–$751	New
Non‑GAAP Gross Margin (%)	Q1 FY2026	N/A	80.5–81.5	New
Non‑GAAP Operating Margin (%)	Q1 FY2026	N/A	27.0–28.0	New
Diluted Shares (M)	Q1 FY2026	N/A	210–215	New
Total Revenue ($B)	FY2026	N/A	$3.129–$3.141	New
Subscription Revenue ($B)	FY2026	N/A	$3.062–$3.074	New
Billings ($B)	FY2026	N/A	$3.300–$3.354	New
Non‑GAAP Gross Margin (%)	FY2026	N/A	80.5–81.5	New
Non‑GAAP Operating Margin (%)	FY2026	N/A	27.8–28.8	New
Diluted Shares (M)	FY2026	N/A	210–215	New
Total Revenue ($M)	Q4 FY2025	$758–$762	Actual $776.3	Beat prior guide

Context and drivers: FY2026 guide embeds ~0.7ppt FX headwind to revenue in Q1 and FY26, ~1ppt FX headwind to billings in Q1 and FY26, ~1ppt revenue headwind in Q1 from the leap year, and ~1ppt billings headwind in FY26 from reduced early renewals due to go‑to‑market design changes (shift to IAM‑led upsell) .

Earnings Call Themes & Trends

Topic	Q2 FY2025 (Q‑2)	Q3 FY2025 (Q‑1)	Q4 FY2025 (Current)	Trend
IAM/AI momentum	GA of IAM; higher win rates, larger deal sizes, faster closes; bookings ramped through Aug	10x q/q IAM deal volume; strong time‑to‑live; enablement ongoing	Fastest‑growing new product; high single‑digit % of direct deal volume; >20% of direct new customer deals; enterprise/cohorts early but encouraging	Accelerating
Retention	DNR stable at 99%	DNR improved to 100%	DNR up to 101%; highest in 6 quarters	Improving
Digital/self‑serve	Digital revenue >2x direct growth	Digital growth accelerated; self‑serve upgrades aided	Continued self‑serve focus; April renewals capacity online; IAM self‑serve soon	Improving
International	28% of revenue; faster than total	28% of revenue; +14% y/y	28% of revenue; +12% y/y; domestic re‑accelerating; intl saw headwinds in FY25; IAM launching globally	Mixed
Billings & renewals	Q2 billings +2% y/y; guide lowest quarterly growth in FY25	Q3 billings +9% y/y; early renewals 1/3 of beat	Q4 billings +11% y/y; ~half beat from early renewals; remainder IAM/annual terms	Improving
Margin outlook	Record 32.2% non‑GAAP op margin; one‑time tailwind ~150bps	29.6% non‑GAAP; down vs Q2 due to investments	FY26 GM headwind ~1pt (cloud migration); FY26 OM headwind ~1.5pts (cloud + comp shift + prior one‑off comp)	Near‑term pressure
Capital returns	$200M buyback (Q2)	$173M buyback (Q3); $770M auth remaining	$162M buyback (Q4); $608M auth remaining; ~75% FY25 FCF returned	Ongoing

Management Commentary

Strategic focus: “Fiscal 2025 was a transformative year… we launched Docusign IAM… In Q4, our business generated strong revenue growth and profitability.” — CEO Allan Thygesen .
IAM traction and value: “IAM represented a high single‑digit percentage of in‑quarter deal volume for the direct channel at over 20% of direct new customer deals… the fastest‑growing new product in DocuSign’s history.” .
Enterprise runway: “We’re very bullish on the enterprise opportunity… sales cycles longer but early wins; departmental deployments underway.” .
Billings/revenue beat drivers: “About half of the beat [in billings] was driven by higher early renewals… remaining half by higher IAM billings and more deals shifting to annual billing terms… also drove some of the Q4 revenue outperformance.” — CFO Blake Grayson .
FY2026 margin headwinds: “~1ppt gross margin headwind due to cloud migration… ~1.5ppt operating margin headwind (cloud + prior-year litigation reserve release + comp mix shift).” — CFO .

Q&A Highlights

IAM up‑market: Early enterprise reception “very encouraging”; IAM value scales with company size; departmental deployments first .
Billings→Revenue lag: Revenue lags billings 6–7 quarters given ~19‑month average duration; FY26 is first full year expecting billings acceleration to flow into later revenue acceleration .
Macro/envelope volumes: No material changes; February envelope volumes “as expected” .
Sales model evolution: Territory/portfolio adjustments and enablement to support solution selling; incentives aligned to IAM .
Retention trajectory: Q1 FY26 DNR expected flat, then moderate improvement through FY26 on better gross retention and IAM upsell .
Seasonality/headwinds: Q1 guide reflects leap year (~1ppt rev headwind), early renewal pull‑forward in Q4, and tougher digital comp .

Estimates Context

Q4 FY2025 results compared to S&P Global consensus: Revenue $776.25M vs $761.64M*, Primary EPS $0.86 vs $0.854* — both beats *.
Implications for models: Management’s FY2026 framework (rev +5% with FX headwind; billings +7% with a deliberate reduction in early renewals; GM/OM headwinds as noted) suggests near‑term EPS may be constrained by investment and cloud migration, while accelerating billings and improving retention support out‑year revenue uplift .
*Values retrieved from S&P Global

Key Takeaways for Investors

Momentum inflection: Broad beat with accelerating billings (+11% y/y) and DNR to 101% shows core stabilization and early IAM contribution — a constructive setup for re‑acceleration as IAM scales .
TAM expansion via IAM: Fastest‑growing new product, strong attach in direct channel, and departmental enterprise motion underway position IAM as the primary growth lever over multi‑years .
Cash engine intact: FCF strength (36% in Q4) and net cash balance support continued buybacks and reinvestment; $608M remaining authorization provides flexibility .
Near‑term guardrails: FY26 revenue guided ~5% amid FX/leap year; cloud migration drives ~1pt GM headwind and ~1.5pt OM headwind; watch for path to re‑expand margins post‑migration (FY27+) .
What to monitor: IAM deal volume/ASP uplift, enterprise deployments, international upsell pivot, DNR trend line past Q1 flat, and cadence of early renewals vs IAM‑led expansions .
Trading lens: Positive sentiment likely tied to sustained billings acceleration, DNR improvement, and concrete evidence of IAM scaling in enterprise; any signs of GM relief or upside to FY26 billings could be additional catalysts .

Additional Q4‑Period Press Release (Product)

Docusign launched Notary On‑Demand, a remote online notarization service integrated into IAM (50‑state recognition), addressing identity/fraud pain points and enabling 24/7 access via partner OneNotary; early customers cited 20% cycle‑time reduction in HELOC funding .

DOCUSIGN, INC. (DOCU)·Q4 2025 Earnings Summary