DOCUSIGN, INC. Q4 FY2025 earnings call

Innovation

• Launched Intelligent Agreement Management (IAM) with features like DocuSign Navigator, Maestro, and the App Center. Customers using IAM have reduced contracting cycles by up to 75%.
• Upcoming April Momentum customer conference to share fiscal 2026 product roadmap.

Go-to-market

• IAM had strong momentum in Q4 for small and mid-market customers, with over 20% of direct new customer deals. Sales teams are promoting IAM during renewals. Customer engagement increasing, with typical IAM customers having ~4,000 contracts in Navigator.

Core business

• Dollar net retention rate improved to 101%, up from 100% in Q3 and 98% in Q4 of fiscal 2024. Customer count grew 10% year-over-year to nearly 1.7 million. Large customers spending over $300K annually increased. Self-service channel driving growth, with digital revenue growth accelerating for the second consecutive quarter. Operating efficiency improved, with non-GAAP operating margin at 29% in Q4 and 30% for fiscal 2025.

In Q4, revenue was $776 million, up 9% year-over-year, and fiscal 2025 revenue was $3 billion, up 8% year-over-year. Subscription revenue in Q4 was $758 million, also up 9% year-over-year. Billings in Q4 were $923 million, up 11% year-over-year. The dollar net retention rate improved to 101% in Q4. International revenue in Q4 represented 28% of total revenue and grew 12% year-over-year. IAM showed strong momentum, with it being a high single-digit percentage of in-quarter deal volume for the direct channel to small and mid-market customers and quickly becoming the fastest-growing new product in DocuSign's history.

Q1 2026

• Total revenue expected to be between $745 million and $749 million (5% year-over-year midpoint).
• Subscription revenue expected to be $729 million to $733 million (6% year-over-year midpoint).
• Billings expected to be $741 million to $751 million (5% year-over-year midpoint).

Fiscal 2026

• Total revenue expected between $3.129 billion and $3.141 billion (5% year-over-year midpoint).
• Billings expected between $3.300 billion and $3.354 billion (7% year-over-year midpoint).
• Non-GAAP gross margin expected 80.5% to 81.5% for Q1 and fiscal 2026.
• Non-GAAP operating margin expected 27.0% to 28.0% for Q1 and 27.8% to 28.8% for fiscal 2026.

• Macro economic uncertainties that could impact customer demand.
• Risks related to product innovation pace and changes in customer demand.
• Cloud infrastructure migration impacting gross margins.
• Foreign currency rate impacts on international revenue and billings.
• Challenges in fully exploiting enterprise IAM opportunities due to longer sales cycles and complex go-to-market requirements.

Q: Jake Roberge with William Blair asked about the early reception of IAM in the enterprise space.

A: Allan Thygesen responded that early signs are encouraging, with similar sales productivity and customer acceptance in new geographies for SMB segments, and strong interest in enterprise due to higher cost of complexity and broader user appeal.

Q: Brad Sills with Bank of America asked about the macro environment's impact on envelope volume and solution sales.

A: Allan Thygesen stated no material change in envelope volume trends yet, and Blake Grayson discussed the preparedness of the direct sales channel for solution sales, including upskilling teams and adjusting incentive plans.

Q: Kurt Maturn with Evercore ISI asked about the dimensionalization of IAM's opportunity and net dollar retention.

A: Allan Thygesen said IAM is a significant expansion opportunity across customer sizes, and Blake Grayson explained that net dollar retention is expected to be flat in Q1 2026 but moderately improve throughout the year due to gross retention gains and IAM upsell opportunities.

Q: Patrick Walravens with Citizens asked about the increase in large customers and competitive opportunities with Dropbox.

A: Blake Grayson said the increase in large customers is from core business, and Allan Thygesen stated Dropbox's deemphasis on sign business doesn't significantly impact DocuSign as it remains the market leader.

Q: Rishi Jaluria with RBC asked about IAM's contribution to subscription revenue and international business growth.

A: Blake Grayson explained IAM's contribution is separate from CLM, and Allan Thygesen discussed international business plans to reaccelerate growth through upsell, product localization, and channel evolution.