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05.09.2019 22:05:00
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DocuSign Announces Second Quarter Fiscal 2020 Financial Results
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 cashand 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.
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