Docusign Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Docusign's Q3 Fiscal Year 2026 earnings call highlighted strong financial performance, driven by growth in core products and the Intelligent Agreement Management (IAM) platform. Key themes included revenue and billings growth, operational efficiency, IAM adoption, and strategic initiatives for long-term growth. The company also announced upcoming changes to its financial disclosures, focusing on ARR and IAM's contribution.
Key Financial Results
Revenue was $818 million, up 8% year over year.
Subscription revenue was $801 million, up 9% year over year.
Billings were $829 million, up 10% year over year.
Non-GAAP operating margin of 31%.
Free cash flow grew 25% year over year to $263 million, a 32% margin.
Share repurchases of $215 million.
Dollar net retention rate was 102%.
Non-GAAP diluted EPS was $1.01, up from $0.90 last year.
GAAP diluted EPS was $0.40 versus $0.30 last year.
Business Segment Results
More than 25,000 paying direct and digital customers adopted IAM, up from more than 10,000 in April.
IAM is on pace to represent a low double-digit percentage of recurring revenue at year-end.
eSignature dollar net retention improved by 2 percentage points year over year to 102%.
International revenue is approximately 30% of overall business.
Total customers grew 9% year over year, ending the quarter at nearly 1.8 million.
Customers spending over $300,000 annually accelerated to 8% year over year to 1,165 in Q3.
Capital Allocation
Share repurchases of $215 million in Q3.
Over $1 billion in remaining buyback authorization.
Opportunistically repurchase shares.
Industry Trends and Dynamics
Agreement Management is a $2 trillion global market problem.
Growing interest in IAM.
Customers are increasing overall eSignature usage, with utilization rates at multi-year highs.
Competitive Landscape
Docusign CLM remains the top choice for enterprise customers with sophisticated workflows.
Docusign was named a leader in the Gartner Magic Quadrant for CLM for the sixth year in a row.
Docusign has more than 1000 3rd party integrations and enterprise-ready APIs.
Newsweek has named Docusign the most trustworthy software company in the US for two years in a row.
Growth Opportunities and Strategies
Executing across three strategic pillars: improving go-to-market motion, platform evolution and AI innovation, and driving operational efficiency.
Deepening solution selling motion.
Adding new features to IAM.
Expanding ecosystem by adding new AI tools and platforms.
Focus on long-term goal to deliver sustainable, profitable, double-digit growth.
Financial Guidance and Outlook
For Q4 2026, expect total revenue of $825 million to $829 million, or a 7% year-over-year increase at the midpoint.
For fiscal year 2026, expect total revenue of $3.208 billion to $3.212 billion, or an 8% year-over-year increase at the midpoint.
Expect subscription revenue of $808 million to $812 million in Q4, or a 7% year-over-year increase at the midpoint.
For fiscal year 2026, expect subscription revenue of $3.140 billion to $3.144 billion, or an 8% year-over-year increase at the midpoint.
For billings, expect $992 million to $1.002 billion in Q4, or an 8% growth rate year-over-year at the midpoint.
For fiscal year 2026, expect billings of $3.379 billion to $3.389 billion, or growth of 9% year-over-year at the midpoint.
Non-GAAP gross margin to be between 80.8% to 81.2% for Q4, and between 81.7% and 81.8% for fiscal 2026.
Expect non-GAAP operating margin to reach 28.3% to 28.7% for Q4 and 29.8% to 29.9% for fiscal 2026.
Non-GAAP fully diluted weighted average shares outstanding of $203 million to $208 million for Q4 and $208 million to $211 million for fiscal 2026.
Starting Q4 2026, the company will disclose annual recurring revenue (ARR), including historical data for recent years and will provide full-year ARR growth guidance for fiscal 2027, which will be updated quarterly.
The company will also introduce IAM as a percentage of ARR as a quarterly reporting metric beginning in Q4 of 2026 and will provide guidance in fiscal 2027 for the approximate year-end IAM percentage of ARR.
The company will no longer report billings in fiscal 2027.
