DocuSign’s Earnings Call Highlights Growth and Optimism

Docusign ((DOCU)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for DocuSign, Inc. was predominantly positive, highlighting significant achievements in revenue growth, Intelligent Agreement Management (IAM) momentum, customer expansion, and improved profitability. Despite some challenges, such as impacts on gross margins due to infrastructure migration and a slowdown in international growth, the overall sentiment was optimistic, with positive aspects outweighing the negatives.

Revenue Growth

DocuSign reported a robust revenue growth in the fourth quarter, with figures reaching $776 million, marking a 9% increase year-over-year. For fiscal 2025, the company achieved a total revenue of $3 billion, reflecting an 8% rise from the previous year. This growth underscores the company’s strong market position and its ability to generate substantial revenue.

IAM Momentum

The Intelligent Agreement Management (IAM) platform has emerged as a pivotal growth driver for DocuSign. IAM accounted for a high single-digit percentage of in-quarter deal volume for the direct channel, contributing to over 20% of direct new customer deals. It has become the fastest-growing new product in the company’s history, highlighting its critical role in DocuSign’s strategic growth initiatives.

Operating Efficiency and Profitability

DocuSign demonstrated significant improvements in operating efficiency and profitability, with non-GAAP operating margins increasing to 29% in Q4 and 30% for the entire fiscal year 2025. The company’s free cash flow also saw a notable improvement, reaching $280 million in Q4, which represents a 36% margin.

Customer Growth

The company experienced a 10% year-over-year growth in total customers, reaching nearly 1.7 million. Additionally, the number of large customers spending over $300,000 annually increased to 1,131 in Q4, indicating strong customer retention and expansion.

International Expansion

International revenue in Q4 accounted for 28% of DocuSign’s total revenue, growing 12% year-over-year. This growth highlights the company’s successful efforts in expanding its global footprint, despite facing some headwinds in international core growth.

Gross Margin Impact

The non-GAAP gross margin for fiscal 2025 experienced a slight decline year-over-year due to the ongoing migration to cloud infrastructure. This transition is expected to optimize long-term operational efficiency, despite its short-term impact on margins.

Deceleration in International Core Growth

Despite overall growth, DocuSign’s international business faced growth headwinds in fiscal 2025. This deceleration in international core growth presents a challenge that the company aims to address through strategic initiatives.

Forward-Looking Guidance

Looking ahead, DocuSign anticipates a 5% year-over-year revenue increase for fiscal 2026, with Q1 revenue expected to range between $745 million and $749 million. The company forecasts billings growth between $3.300 billion and $3.354 billion, with non-GAAP gross margins projected to range from 80.5% to 81.5%. DocuSign plans to leverage its IAM platform to drive future growth, expecting it to represent a low double-digit percentage of total subscription recurring revenue by the end of fiscal 2026.

In conclusion, DocuSign’s earnings call reflected a positive outlook, with notable achievements in revenue growth, IAM momentum, and customer expansion. While challenges such as gross margin impacts and international growth deceleration remain, the company’s strategic initiatives and forward-looking guidance indicate a promising future.