DocuSign, Inc. Q2 FY2026 earnings call

• Made meaningful changes to the direct sales organization at the start of the year, including new sales segments, territories, and performance-based compensation, leading to strong direct sales performance and growth in gross new bookings.
• International growth outpaced domestic, and digital revenue grew faster than the overall business.
• Relaunched the partner program to align with the IAM strategy, with a large deal transacted through the Microsoft Azure marketplace and a new partnership with the US federal government's General Services Administration.
• IAM platform showed strong momentum, with customers moving to the IAM platform representing a greater share of direct deal volume and total gross bookings. Average IAM customer deal size increased, and over 50% of enterprise account reps closed at least one IAM deal in Q2.
• Launched several new AI-powered IAM capabilities, including custom extractions, agreement preparation, and SCIM for user management. CLM saw improved momentum with strong year-over-year quarterly bookings growth, including a large deal with T-Mobile.

Revenue for Q2 was $801 million, up 9% year over year. Billings were $818 million, up 13% year over year. ESignature and CLM segments showed growth. International revenue represented 29% of total revenue, growing 13% year over year. Digital revenue grew faster than the overall business. IAM demand contributed to the growth, with customers moving to the IAM platform increasing their eSignature usage.

• Q3 total revenue expected between $804 to $808 million, a 7% year-over-year increase at the midpoint. Fiscal 2026 total revenue expected between $3.189 to $3.201 billion, a 7% year-over-year increase at the midpoint.
• Q3 subscription revenue expected between $786 to $790 million, a 7% year-over-year increase at the midpoint. Fiscal 2026 subscription revenue expected between $3.121 to $3.133 billion, an 8% year-over-year increase at the midpoint.
• Q3 billings expected between $785 to $795 million, a 5% year-over-year growth rate at the midpoint. Fiscal 2026 billings expected between $3.325 to $3.355 billion, a 7% year-over-year growth rate at the midpoint.
• Non-GAAP gross margin expected 80.3% to 81.3% for Q3 and 81% to 82% for fiscal 2026. Non-GAAP operating margin expected 28% to 29% for Q3 and 28.6% to 29.6% for fiscal 2026.

• Factors affecting customer demand and adoption are subject to change, with known and unknown risks that may cause actual results to differ from forward-looking statements.
• Cloud migration efforts continue to provide a year-over-year headwind to margins.
• Timing of renewals can impact quarterly billings.

Q: While the early success in IAM is compelling, drill down into improved fundamentals across core eSignature. What's underpinning this?

A: Trends seen over past year with certain verticals like financial services, health care, business services growing well. Consumption and envelope send trends consistent over last twelve months.

Q: Talk about CLM pipeline and whether it's a sustainable trend.

A: Strong quarter with large deals, but too early to call a broader category trend, but encouraging.

Q: Discuss enterprise and international rollout progress compared to core North American commercial market and pricing uplift.

A: Enterprise release started in December, seeing larger deals with sophisticated clients. International regions embracing IAM, with expansion consistent for customers moving from eSignature to IAM.

Q: Talk about economics of IAM adoption, accretive to growth.

A: IAM slightly outperformed expectations, early days, but customers see value in moving to IAM, leading to expansion.

Q: Drivers behind improved growth retention and potential in second half.

A: Operational execution plays a huge part, with folks staying in front of renewal opportunities, opportunities on improving gross rates and expansion driven by IAM.

Q: Partnership with US Federal General Services Administration and impact on federal business.

A: Big growth opportunity, but early days, federal business relatively modest today but with headroom.

Q: Adaptation of reps to go-to-market changes and selling IAM.

A: Reps responded well to changes, new incentive system and territories, proud of team's response.

Q: Customer acceptance for Iris AI scanning agreements and agreement library.

A: Customers explicitly opt in, approaching 100 million agreements in DocuSign Navigator, diverse range, leading to strong AI features.

Q: Margin trade-off and investments in go-to-market, products.

A: Hard comps this year, balancing investments in growth and efficiency, cloud migration peak year, expecting mitigation in FY '27 and beyond.

Q: Customer acceptance for IAM attach and top-of-funnel dynamics.

A: Early days for IAM attach, hyperfocused on upselling existing customers to IAM, top-of-funnel focused on new customers.

Q: Differentiation of IAM versus other AI vendors.

A: DocuSign's deep knowledge of agreement structure, exceptional scale, embedded in agreement workflows, integrated into enterprise systems, providing unique position.