DocuSign raises FY26 revenue midpoint by $38M as IAM adoption accelerates
Sep. 04, 2025 9:51 PM ET
AI-Generated Earnings Calls Insight
Earnings Call Insights: DocuSign (DOCU) Q2 2026
Management View- Allan Thygesen, President, CEO & Director, described Q2 as "an outstanding quarter" and highlighted that platform innovation, combined with go-to-market changes introduced in Q1, drove strong performance in commercial and enterprise segments across eSignature, CLM, and the AI-native Docusign Intelligent Agreement Management (IAM) platform. Thygesen reported, "Q2 business results outperformed our expectations. Revenue was $801 million, up 9% year-over-year, and billings were $818 million, up 13% year-over-year."
- Dollar net retention increased to 102% due to higher gross retention rates. The company saw steady growth in envelopes sent, improved contract utilization, and accelerated international growth, with digital revenue outpacing the overall business. IAM customers represented a greater share of direct deal volume and gross bookings than in Q1, and commercial SMB customers continued their strong pace of IAM investment.
- Thygesen announced a new partnership with the U.S. Federal Government’s General Services Administration (GSA) and highlighted the largest Q2 deal transacted through the Microsoft Azure marketplace.
- On product innovation, Thygesen stated, "In Q2, we launched several new AI-powered IAM capabilities to help customers unlock value across the entire agreement management lifecycle," including Custom Extractions and Agreement Preparation.
- Thygesen acknowledged changes to the Board, welcoming James Beer as Board Chair and Mike Rosenbaum as a new member.
- Blake Grayson, Executive VP & CFO, stated, "Our performance was strong across the business in Q2, a testament to our continued execution against our three strategic pillars." Grayson noted, "Non-GAAP gross margin for Q2 was 82.0%, relatively in line with the prior year, as higher revenue mostly offset the impact of cloud migration costs."
Outlook- DocuSign expects total revenue between $804 million to $808 million in Q3, reflecting a 7% year-over-year increase at the midpoint. Fiscal 2026 revenue guidance is set at $3.189 billion to $3.201 billion, also a 7% year-over-year increase at the midpoint.
- Subscription revenue guidance for Q3 is $786 million to $790 million, and $3.121 billion to $3.133 billion for fiscal 2026.
- Billings guidance for Q3 is $785 million to $795 million, with fiscal 2026 billings forecasted at $3.325 billion to $3.355 billion.
- Grayson explained, "The annual guidance midpoint is increasing by $38 million from last quarter’s full year guidance," primarily due to Q2 business strength and expectations for continued trends, while billings guidance increases by $28 million. The outlook factors in renewal timing headwinds and a more challenging year-over-year comparison in the second half of fiscal 2026.
- Non-GAAP gross margin guidance is 80.3% to 81.3% for Q3 and 81.0% to 82.0% for fiscal 2026. Non-GAAP operating margin guidance is 28.0% to 29.0% for Q3 and 28.6% to 29.6% for fiscal 2026.
Financial Results- Q2 revenue was $801 million, and subscription revenue was $784 million, both up 9% year-over-year. Billings were $818 million, up 13% year-over-year.
- Free cash flow was $218 million, representing a 27% margin. DocuSign repurchased $200 million in shares during Q2.
- Non-GAAP diluted EPS for Q2 was $0.92, while GAAP diluted EPS was $0.30.
- Dollar net retention rose to 102% in Q2 from 101% in Q1 and 99% in Q2 of the prior year. Total customers grew 9% year-over-year, exceeding 1.7 million, with large customers spending over $300k annually increasing by 7% year-over-year to 1,137.
- International revenue accounted for 29% of total revenue and grew 13% year-over-year, with Asia Pacific as the fastest-growing international region.
Q&A- Robbie Owens, Piper Sandler, asked about improved fundamentals in eSignature. Grayson replied, "This is a trend we've been seeing pretty consistently over the past year," highlighting strong growth in financial services, health care, and business services.
- Tyler Radke, Citi, inquired about CLM’s breakout quarter and pipeline. Thygesen responded, "I think it was a very strong quarter, and we closed some very large deals, really exciting and great to see."
- Jacob Roberge, William Blair, asked about IAM adoption in enterprise and international markets. Thygesen said, "We started to see some larger deals with enterprise customers, which is very exciting because that's an even larger market opportunity for us in the long run."
- Josh Baer, Morgan Stanley, pressed for IAM’s contribution to billings outperformance. Grayson: "IAM did slightly outperform our expectations, but it's still very early days for us in that area and that platform."
- Bill (for Kirk Materne), Evercore ISI, asked about drivers behind improved gross retention. Thygesen noted, "Operational execution plays a huge part of this. We have folks at Docusign now spending a much greater portion of time with regards to staying in front of these renewal opportunities."
- Brad Sills, BofA Securities, questioned the impact of the GSA partnership. Thygesen: "Our federal business is relatively modest today... there’s just a lot of headroom."
- Austin Cole, Citizens JMP, asked about sales team adaptation to go-to-market changes. Thygesen stated, "I feel really good about. Look, we made those changes to position us for the long-term to accelerate our IAM business and just more generally be able to go deeper with customers."
Sentiment Analysis- Analyst tone was positive, with questions focusing on growth drivers, IAM adoption, and the impact of partnerships rather than expressing skepticism or pressing on risk factors.
- Management maintained a confident and upbeat tone in prepared remarks, with Thygesen stating, "We believe IAM and the Docusign Iris AI engine are uniquely positioned to transform how organizations operate their businesses."
- During Q&A, management remained constructive and provided detailed responses, showing a consistent level of confidence compared to the previous quarter.
- Compared to last quarter, both management and analysts sustained a positive sentiment, with a shift toward greater focus on IAM’s early enterprise traction and improved fundamentals.
Quarter-over-Quarter Comparison- Revenue and billings growth accelerated compared to Q1, and management raised full-year revenue and billings guidance midpoints.
- IAM continued to gain traction, representing a higher percentage of direct deal volume and gross bookings than in Q1.
- Management’s tone reflected increased confidence, particularly around innovation, go-to-market changes, and the larger deal sizes in enterprise.
- Analysts shifted from questions on early renewals and timing impacts in Q1 to focus on product adoption, deal momentum, and expansion opportunities in Q2.
- Operational execution and improved gross retention rates were emphasized more strongly this quarter.
Risks and Concerns- Management cited renewal timing variability as a key factor impacting billings quarter-to-quarter, and is evaluating potential topline reporting changes.
- Cloud migration continues to be a headwind for gross and operating margins.
- The federal partnership is still in early stages and not yet a meaningful contributor to revenue.
- Thygesen acknowledged headroom in federal and enterprise expansion, while Grayson flagged that billings can fluctuate due to contract timing.
Final Takeaway
DocuSign’s Q2 2026 call emphasized accelerating revenue and billings, improved retention, and strong adoption of the IAM platform across both commercial and enterprise customers. Management highlighted raised full-year guidance and ongoing product innovation with AI-powered capabilities, while noting continued margin discipline and active share repurchases. The company expressed confidence in the durability of growth, supported by go-to-market changes, expanding enterprise penetration, and new strategic partnerships, while continuing to monitor renewal timing and cloud migration impacts.
Read the full Earnings Call Transcript |
