DocuSign reports strong Q4 2025 earnings, introduces Intelligent Agreement Management, positive.
From Nasdaq: 2025-03-14 00:15:11
DocuSign held its Q4 2025 earnings call on March 13, 2025, reporting $776 million in revenue for the quarter, up 9% year over year, and $3 billion for fiscal 2025, up 8% year over year. The company introduced Intelligent Agreement Management (IAM) in fiscal 2025, leading to strong momentum and improved fundamentals. DocuSign also achieved 29% non-GAAP operating margins in Q4 and 30% for fiscal 2025. Looking ahead to fiscal 2026, DocuSign aims to increase customer value through product innovation, market expansion, and operational efficiency gains.
During the call, DocuSign highlighted the successful rollout of IAM, including DocuSign Navigator, Maestro, and the App Center, as well as the acquisition of Lexion to enhance agreement AI capabilities. IAM customers have seen significant reductions in contracting cycles, demonstrating the platform’s value. DocuSign remains committed to innovation, customer value, and growth as the leading agreement platform in the market. DocuSign will showcase its ambitious fiscal 2026 product roadmap at the April Momentum Customer Conference and Partner Day in New York, with new features like agreement AI and expanded ecosystem capabilities. IAM, DocuSign’s fastest-growing new product, has shown strong momentum, with customers like Metro Credit Union and Duncan Family Farms streamlining workflows and increasing efficiency. The company also saw improved net retention rates and sustained growth in new customer acquisitions, with digital self-service revenue on the rise. DocuSign aims to drive further growth by focusing on enterprise customers, self-service channels, and operational efficiency in fiscal 2026. In fiscal 2025, the company focused on core business improvement and future growth through innovation, omnichannel capabilities, and efficiency. Q4 revenue was $776 million, subscription revenue was $758 million, both up 9% YoY. Billings were $923 million in Q4, up 11% YoY. Dollar net retention rate improved to 101% in Q4. Total customers grew 10% YoY. Self-service initiatives drove digital revenue growth. IAM platform demand is strong, expected to represent a low double-digit percentage of total revenue by Q4 2026. International revenue grew 12% YoY in Q4, representing 28% of total revenue. Operating efficiency initiatives drove non-GAAP gross margin of 82.3% in Q4. In Q4, non-GAAP operating income for fiscal 2025 was $886 million, up 25% year over year with a 29.8% operating margin. The company ended with 6,838 employees and $280 million in free cash flow. The balance sheet closed with $1.1 billion in cash, with no debt. $162 million in stock was repurchased in Q4, totaling $684 million for fiscal 2025. GAAP diluted EPS for Q4 was $0.39. For Q1 2026, total revenue is expected to be between $745 million and $749 million, with full year revenue between $3.129 billion and $3.141 billion. Billings are expected between $741 million and $751 million in Q1, and $3.300 billion to $3.354 billion for fiscal 2026. The company anticipates an accelerated annual billings growth for fiscal 2026. DocuSign has provided profitability guidance for Q1 and full year fiscal 2026, expecting a gross margin and operating margin impact due to cloud data center migration efforts. The company aims to prioritize IAM investments for long-term growth, anticipating improving operating leverage in fiscal year 2026 with accelerating billings growth. DocuSign made progress in Q4 with solid revenue and billings growth, focusing on strengthening the IAM platform vision. The company is excited about the opportunity to create greater value for customers across various sectors.
DocuSign CEO Allan Thygesen discussed the successful start of IAM sales in SMB and commercial segments, with positive reception in the enterprise space. The company sees strong interest from international and enterprise customers, with the value proposition increasing with company size due to complexity. IAM offers value to a broader set of users within companies, driving interest and expansion opportunities. CFO Blake Grayson highlighted the lag between billings and revenue growth, indicating a shift in revenue recognition over six to seven quarters as the company continues to roll off earlier contracts in fiscal ’26. In FY ’24, billings grew over 9%, in FY ’25, it was under 7%. FY ’26 is expected to see accelerated billings, especially in IAM, leading to potential revenue growth in the long term. Despite no material changes in envelope volume, DocuSign remains diversified across sectors and company sizes. With a move towards solution sales in IAM, the sales cycle may be more complex, but the company is well-prepared with successful average deal sizes and rapid client installations. Investments in upskilling sales teams and deepening partnerships with enterprise customers are underway to capitalize on the opportunity for growth. DocuSign CEO, Allan Thygesen, discusses the significant opportunity for Identity and Access Management (IAM) solutions to drive customer penetration and increase average spend. The company is seeing success in various functional areas across enterprises of all sizes. The goal is to provide value and compensation for the services offered, with potential for large uplifts in revenue. The company expects moderate improvement in net retention throughout the year, driven by continued improvements in gross retention rates and expansion opportunities within the IAM and eSign businesses. The recent sales changes are part of a larger effort to transition into a big-time enterprise company, with positive feedback from the team. As IAM expands into larger customer segments, there is a focus on retention gains and accelerated billings for next year. The increase in customers with over $300,000 ACV is mainly from core offerings, with higher usage and trends driving growth. Despite competition in eSign, IAM remains a market leader. Existing customer ARPU growth is a key focus, alongside new customer wins. Amid uncertainties like tariffs and trade wars, there has been no shift in customer sentiment towards technology spending. IAM’s value proposition remains strong, but economic downturns could impact software spending. A solution has been found to the challenges faced by many companies with broken and delayed agreements, especially for large corporations. The IAM proposition resonates strongly with C-suite executives in Fortune 500 clients, indicating a game changer in the industry. DocuSign’s pricing for eSignature remains stable, maintaining its premium product status. IAM contribution to subscription revenue does not include CLM revenue and represents monthly recurring revenue relative to the total subscription revenue book of business. International growth for DocuSign is decelerating, with a focus on upselling and cross-selling to existing customers and expanding the partner channel. Overall, DocuSign is focusing on international expansion to drive growth, with plans to penetrate markets outside major English-speaking countries like Germany and Japan. The company sees potential in the public sector, particularly with state and local governments in the U.S., and is investing in this area. Despite seasonal drops in subscription revenue, DocuSign had a strong quarter and expects continued momentum, especially in the Identity Access Management (IAM) sector where they anticipate a five to six times increase in business next year. The company credits their success to improved gross retention and the value they provide to customers. DocuSign has seen positive results from their mid-market and SMB segment in North America and Australia, eight months after launching. They are confident in their ability to expand without relying on big enterprise success. The company is also optimistic about their opportunity with the federal government, hiring new leaders and adding product resources. While early renewals have been successful, the focus is on balancing resources to prioritize expansion opportunities. Overall, DocuSign is proud of their progress and committed to transforming and growing their business. The company continues to pursue significant opportunities ahead. 1. The U.S. economy added 210,000 jobs in October, surpassing expectations and bringing the unemployment rate down to 4.6%. This marks the lowest rate since the pandemic began.
2. A new study found that the COVID-19 vaccine is 89% effective in preventing hospitalizations in children aged 5-11. The study included over 1.6 million children and showed promising results.
3. In sports news, the Los Angeles Rams defeated the San Francisco 49ers in a thrilling overtime game, securing their spot as a top contender in the NFC.
4. The United Nations Climate Change Conference concluded with a new agreement to limit global warming to 1.5 degrees Celsius. Countries committed to reducing greenhouse gas emissions and transitioning to renewable energy sources.
5. Apple announced the release of its new MacBook Pro with the M1 Pro and M1 Max chips, offering improved performance and battery life. The laptops are set to hit stores next week.
Read more at Nasdaq: DocuSign (DOCU) Q4 2025 Earnings Call Transcript