DOCU 8-K
Docusign, Inc. (DOCU)
8-K
2020-09-03
For: 2020-08-28
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________
FORM 8-K
______________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 28, 2020
Commission File Number: 001-38465
______________________________________
(Exact name of registrant as specified in its charter)
______________________________________
| (State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification Number) | |||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
(415 ) 489-4940
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On September 3, 2020, DocuSign, Inc. (the “Company”) reported financial results for the three and six months ended July 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The press release is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The information in this Item 2.02 and in the accompanying Exhibit 99.1 shall not be deemed incorporated by reference into any registration statement or other filing with the Securities and Exchange Commission made by the Company, whether made before or after the date of this Current Report, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific references in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b)
On September 3, 2020, the Company announced that its Board of Directors (the “Board”) appointed Michael Sheridan as President of International. In connection with this appointment, he will step down as the Company’s Chief Financial Officer. Mr. Sheridan’s current compensation arrangements will remain unchanged. Mr. Sheridan’s appointment is contingent and effective immediately upon the later of (i) the filing of the Company’s Quarterly Report on Form 10 Q for the quarter ended July 31, 2020 and (ii) September 8, 2020.
(c)
On August 28, 2020, the Board appointed Cynthia Gaylor, 47, to serve as the Company’s Chief Financial Officer, contingent and effective immediately upon the later of (i) the filing of the Company’s Quarterly Report on Form 10 Q for the quarter ended July 31, 2020 and (ii) September 8, 2020 (such time of appointment, the “Effective Time”). Ms. Gaylor will also succeed Mr. Sheridan as “principal financial officer” and “principal accounting officer” of the Company within the meaning of Rule 16a-1(f) under the Exchange Act as of the Effective Time. Ms. Gaylor currently serves as a member of the Board and previously served as a member of the Board’s Audit Committee. Ms. Gaylor resigned from the Audit Committee effective August 28, 2020 and has tendered her resignation as a member of the Board as of the Effective Time due to her concurrent appointment as Chief Financial Officer. Ms. Gaylor’s decision to resign as a member of the Board is not a result of any disagreement with us regarding any matter relating to our operations, policies or practices. The Board appointed Teresa Briggs to succeed Ms. Gaylor as chair of the Audit Committee effective August 28, 2020.
Ms. Gaylor has served on the Company’s Board since December 2018. Ms. Gaylor served as Senior Vice President and Chief Financial Officer of Pivotal Software, Inc., a multinational software and services company, from May 2016 to December 2019. Prior to joining Pivotal Software, Ms. Gaylor was an independent strategic advisor from November 2014 to May 2016. From June 2013 to October 2014, Ms. Gaylor was the Head of Corporate Development and an Advisor at Twitter, Inc. Prior to Twitter, Ms. Gaylor was a Managing Director at Morgan Stanley, serving in various positions in the technology investment banking group between March 2006 and May 2013. Ms. Gaylor received a B.S. degree in Economics from The Wharton School of the University of Pennsylvania.
Ms. Gaylor does not have any family relationships with any of the Company’s directors or executive officers and, since the beginning of the Company’s last fiscal year, there have been no transactions between the Company and Ms. Gaylor or any member of her immediate family that would require disclosure pursuant to Item 404(a) of Regulation S-K of the Securities Act, except for the director compensation previously disclosed in the Company’s proxy statement filed with the Securities and Exchange Commission on April 15, 2020 and the arrangements described in this Current Report on Form 8-K.
(d)
On August 28, 2020, following the recommendation of the Nominating and Corporate Governance Committee, the Board appointed James Beer to the Board to serve as a director of the Company, effective August 28, 2020. In connection with Mr. Beer’s appointment, the Board increased the authorized size of the Board to 10 members until the Effective Time of Ms. Gaylor’s resignation from the Board, whereupon the authorized size of the Board will be reduced to nine members. Mr. Beer will serve as a Class II director whose term will expire at the Company’s 2023 Annual Meeting of Stockholders, which is the next stockholder meeting at which Class II directors will be elected, and until Mr. Beer’s successor shall have been duly elected and qualified, or until Mr. Beer’s earlier death, resignation, disqualification or removal. The Board also appointed Mr. Beer to serve as a member of the Audit Committee, effective August 28, 2020. The Board determined that Mr. Beer qualifies as an independent director pursuant to the Securities Act and the listing standards of the Nasdaq Stock Market, meets the further audit
committee standards required by SEC Rule 10A-3, and is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K of the Securities Act.
There is no arrangement or understanding between Mr. Beer and any other person pursuant to which Mr. Beer was selected as a director. Mr. Beer has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K of the Securities Act. Mr. Beer will receive compensation for his service as a member of the Board in accordance with the Company’s Amended and Restated Director Compensation Policy.
Mr. Beer has also entered into the Company’s standard form of indemnity agreement, which is attached as Exhibit 10.2 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 28, 2018 (File No. 333-223990).
Item 7.01 Regulation FD Disclosure.
A copy of the Company’s news release announcing the leadership changes described above has been furnished as Exhibit 99.2 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
| Exhibit No. | Description | ||||
| 99.1 | |||||
| 99.2 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: September 3, 2020
| DOCUSIGN, INC. | ||||||||
| By: | /s/ Michael J. Sheridan | |||||||
| Michael J. Sheridan | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Accounting and Financial Officer) | ||||||||
Exhibit 99.1
DocuSign Announces Second Quarter Fiscal 2021 Financial Results
San Francisco – September 3, 2020 – DocuSign, Inc. (NASDAQ: DOCU), which offers the world’s #1 eSignature solution as part of the DocuSign Agreement Cloud, today announced results for its fiscal quarter ended July 31, 2020.
“In an accelerating digital world where business can be conducted from anywhere, the need to agree electronically and remotely has never been stronger, as shown in our 61% year-over-year billings growth,” said Dan Springer, CEO of DocuSign. “We are just scratching the surface of our Agreement Cloud opportunity and believe we are increasingly becoming an essential cloud-software platform for organizations of all sizes.”
Second Quarter Financial Highlights
▪Total revenue was $342.2 million, an increase of 45% year-over-year. Subscription revenue was $323.6 million, an increase of 47% year-over-year. Professional services and other revenue was $18.6 million, an increase of 25% year-over-year.
▪Billings were $405.7 million, an increase of 61% year-over-year.
▪GAAP gross margin was 74% in both comparative periods. Non-GAAP gross margin was 78% in both comparative periods.
▪GAAP net loss per basic and diluted share was $0.35 on 185 million shares outstanding compared to $0.39 on 175 million shares outstanding in the same period last year.
▪Non-GAAP net income per diluted share was $0.17 on 203 million shares outstanding compared to $0.01 on 189 million shares outstanding in the same period last year.
▪Net cash provided by operating activities was $118.1 million compared to $26.4 million in the same period last year.
▪Free cash flow was $99.8 million compared to $11.9 million in the same period last year.
▪Cash, cash equivalents, restricted cash and investments were $740.6 million at the end of the quarter.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures and Other Key Metrics.”
Operational and Other Financial Highlights
▪DocuSign Agreement Cloud 2020 Product Release 2. DocuSign introduced several new features and enhancements in the latest release to support customers in their digital transformations: DocuSign eSignature for Workplace from Facebook, which allows access to DocuSign eSignature via a chatbot within Facebook from Work; Workflow Templates for DocuSign CLM, which allows business users to quickly configure common contract processes such as approvals, signature, and routing; and enhancements to DocuSign ID Verification and DocuSign Click.
▪Liveoak Technologies Acquisition. On July 7, 2020, DocuSign announced its acquisition of Liveoak Technologies, Inc. in an all-stock transaction. For agreements that would normally require people to be physically present together, Liveoak enables the transaction to be done remotely via videoconferencing. The company’s platform includes several other technologies specific to remote agreements, such as video identity verification, collaborative form-filling, an integration with DocuSign eSignature, and a detailed audit trail. DocuSign plans to leverage Liveoak’s technology and expertise to accelerate the launch of DocuSign Notary, a new product for remote online notarization, where signers and the notary public are in different places. The beta release of DocuSign Notary is currently slated for November 2020.
▪CTO appointment. On August 25, 2020, DocuSign announced Kamal Hathi as its new chief technology officer (CTO). Prior to joining DocuSign, Kamal was chief product and technology officer at Trader Interactive, a leading provider of online marketplaces and products serving the lifestyle vehicles and commercial equipment sector. Before that he spent more than two decades at Microsoft, most recently as GM for its SaaS analytics and business intelligence solution, Power BI. As CTO, Kamal will oversee the development and execution of DocuSign’s technology roadmap, including the expansion of the DocuSign Agreement Cloud.
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Outlook
The company currently expects the following guidance:
▪Quarter ending October 31, 2020 (in millions, except percentages):
| Total revenue | $358 | to | $362 | ||||||||
| Subscription revenue | $343 | to | $347 | ||||||||
| Billings | $380 | to | $390 | ||||||||
| Non-GAAP gross margin | 78% | to | 80% | ||||||||
| Non-GAAP sales and marketing | 46% | to | 48% | ||||||||
| Non-GAAP research and development | 14% | to | 16% | ||||||||
| Non-GAAP general and administrative | 9% | to | 11% | ||||||||
| Non-GAAP interest and other income (expense) | $(1) | to | $1 | ||||||||
| Provision for income taxes | $2 | to | $3 | ||||||||
| Non-GAAP diluted weighted-average shares outstanding | 200 | to | 205 | ||||||||
▪Year ending January 31, 2021 (in millions, except percentages):
| Total revenue | $1,384 | to | $1,388 | ||||||||
| Subscription revenue | $1,315 | to | $1,319 | ||||||||
| Billings | $1,623 | to | $1,643 | ||||||||
| Non-GAAP gross margin | 78% | to | 80% | ||||||||
| Non-GAAP sales and marketing | 45% | to | 47% | ||||||||
| Non-GAAP research and development | 14% | to | 16% | ||||||||
| Non-GAAP general and administrative | 9% | to | 11% | ||||||||
| Non-GAAP interest and other income | $4 | to | $6 | ||||||||
| Provision for income taxes | $7 | to | $9 | ||||||||
| Non-GAAP diluted weighted-average shares outstanding | 200 | to | 205 | ||||||||
The company has not reconciled its expectations of non-GAAP financial measures to the corresponding GAAP measures because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.
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Webcast Conference Call Information
The company will host a conference call on September 3, 2020 at 1:30 p.m. PT (4:30 p.m. ET) to discuss its financial results. A live webcast of the event will be available on the DocuSign Investor Relations website at investor.docusign.com. A live dial-in will be available domestically at 877-407-0784 or internationally at 201-689-8560. A replay will be available domestically at 844-512-2921 or internationally at 412-317-6671 until midnight (ET) September 17, 2020 using the passcode 13708111.
About DocuSign
DocuSign helps organizations connect and automate how they prepare, sign, act on, and manage agreements. As part of the DocuSign Agreement Cloud, DocuSign offers eSignature, the world's #1 way to sign electronically on practically any device, from almost anywhere, at any time. Today, nearly 750,000 customers and hundreds of millions of users in over 180 countries use DocuSign to accelerate the process of doing business and to simplify people’s lives.
For more information, visit www.docusign.com, call +1-877-720-2040, or follow @DocuSign on Twitter, LinkedIn, Facebook and Instagram.
Copyright 2020. DocuSign, Inc. is the owner of DOCUSIGN® and all its other marks (www.docusign.com/IP).
Investor Relations:
Annie Leschin
VP Investor Relations
Media Relations:
Adrian Wainwright
Head of Communications
Forward-Looking Statements
This press release contains “forward-looking” statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements in this press release include, among other things, statements under “Outlook” above and any other statements about expected financial metrics, such as revenue, billings, non-GAAP gross margin, non-GAAP diluted weighted-average shares outstanding, and non-financial metrics, such as customer growth, as well as statements related to our expectations regarding the benefits of the DocuSign Agreement Cloud and enhancements to it, additions to the Agreement Cloud suite of products, and the anticipated benefits of the acquisition and integration of Seal Software and Liveoak Technologies. They also include statements about our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations. These statements are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.
These risks include, among other things, risks related to the impact of the COVID-19 pandemic on our business, financial condition and results of operations as well as the businesses of our customers and partners and the economy as a whole; our ability to estimate the size of our total addressable market; our ability to effectively sustain and manage our growth and future expenses, achieve and maintain future profitability, attract new customers and maintain and expand our existing customer base; our ability to scale and update our platform to respond to customers' needs and rapid technological change; the effects of increased competition in our market and our ability to compete effectively; our ability to expand use cases within existing customers and vertical solutions; our ability to expand our operations and increase adoption of our platform internationally; our ability to strengthen and foster our relationship with developers; our ability to expand our direct sales force, customer success team and strategic partnerships around the world; our ability to identify targets for, execute on, integrate the operations of and realize the anticipated benefits of potential acquisitions; our ability to maintain, protect and enhance our brand; the sufficiency of our cash and cash equivalents to satisfy our liquidity needs; our failure or the failure of our software to comply with applicable industry standards, laws and regulations; our ability to maintain, protect and enhance our
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intellectual property; our ability to successfully defend litigation against us; our ability to attract large organizations as users; our ability to maintain our corporate culture; our ability to offer high-quality customer support; our ability to hire, retain and motivate qualified personnel; and our ability to maintain proper and effective internal controls. Additional risks and uncertainties that could affect our financial results are included in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the fiscal year ended January 31, 2020 filed on March 27, 2020, our quarterly report on Form 10-Q for the quarter ended April 30, 2020 filed on June 5, 2020, and other filings that we make from time to time with the with the Securities and Exchange Commission (the “SEC”). In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
Non-GAAP Financial Measures and Other Key Metrics
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance using a management view, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share: We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs from our convertible senior notes issued in September 2018, acquisition-related expenses, and, as applicable, other special items. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and that do not correlate to the operation of the business. When evaluating the performance of our business and making operating plans, we do not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder dilution rather than the accounting charges associated with such grants). We believe it is useful to exclude these expenses in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies and over multiple periods.
Free cash flows: We define free cash flow as net cash provided by operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash that is available (if any), after purchases of property and equipment, for operational expenses, investment in our business, and to make acquisitions. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in excess of our capital investments in property and equipment. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.
Billings: We define billings as total revenues plus the change in our contract liabilities and refund liability less contract assets and unbilled accounts receivable in a given period. Billings reflects sales to new customers plus subscription renewals and additional sales to existing customers. Only amounts invoiced to a customer in a given period are included in billings. We believe billings is a key metric to measure our periodic performance. Given that most of our customers pay in annual installments one year in advance, but we typically recognize a majority of the related revenue ratably over time, we use billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
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DOCUSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Subscription | $ | 323,643 | $ | 220,811 | $ | 604,565 | $ | 422,269 | |||||||||||||||
| Professional services and other | 18,566 | 14,801 | 34,661 | 27,305 | |||||||||||||||||||
| Total revenue | 342,209 | 235,612 | 639,226 | 449,574 | |||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Subscription | 64,730 | 39,472 | 116,740 | 72,591 | |||||||||||||||||||
| Professional services and other | 25,885 | 21,704 | 47,907 | 40,604 | |||||||||||||||||||
| Total cost of revenue | 90,615 | 61,176 | 164,647 | 113,195 | |||||||||||||||||||
| Gross profit | 251,594 | 174,436 | 474,579 | 336,379 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 194,992 | 150,886 | 366,785 | 280,822 | |||||||||||||||||||
| Research and development | 63,791 | 47,517 | 118,025 | 84,700 | |||||||||||||||||||
| General and administrative | 51,446 | 40,755 | 90,257 | 78,016 | |||||||||||||||||||
| Total operating expenses | 310,229 | 239,158 | 575,067 | 443,538 | |||||||||||||||||||
| Loss from operations | (58,635) | (64,722) | (100,488) | (107,159) | |||||||||||||||||||
| Interest expense | (7,684) | (7,273) | (15,244) | (14,429) | |||||||||||||||||||
| Interest income and other income, net | 2,601 | 4,531 | 6,343 | 9,748 | |||||||||||||||||||
| Loss before provision for income taxes | (63,718) | (67,464) | (109,389) | (111,840) | |||||||||||||||||||
| Provision for income taxes | 842 | 1,168 | 2,975 | 2,514 | |||||||||||||||||||
| Net loss | $ | (64,560) | $ | (68,632) | $ | (112,364) | $ | (114,354) | |||||||||||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.35) | $ | (0.39) | $ | (0.61) | $ | (0.66) | |||||||||||||||
| Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted | 184,862 | 175,389 | 183,930 | 173,773 | |||||||||||||||||||
| Stock-based compensation expense included in costs and expenses: | |||||||||||||||||||||||
| Cost of revenue—subscription | $ | 5,014 | $ | 3,115 | $ | 8,878 | $ | 5,397 | |||||||||||||||
| Cost of revenue—professional services and other | 5,225 | 4,821 | 9,350 | 8,261 | |||||||||||||||||||
| Sales and marketing | 32,305 | 25,942 | 56,970 | 44,044 | |||||||||||||||||||
| Research and development | 14,781 | 11,963 | 26,666 | 19,280 | |||||||||||||||||||
| General and administrative | 11,442 | 9,951 | 20,454 | 21,081 | |||||||||||||||||||
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DOCUSIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (in thousands) | July 31, 2020 | January 31, 2020 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 404,262 | $ | 241,203 | |||||||
| Investments—current | 269,777 | 414,939 | |||||||||
| Restricted cash | 280 | 280 | |||||||||
| Accounts receivable | 224,502 | 237,841 | |||||||||
| Contract assets—current | 17,044 | 12,502 | |||||||||
| Prepaid expenses and other current assets | 52,158 | 37,125 | |||||||||
| Total current assets | 968,023 | 943,890 | |||||||||
| Investments—noncurrent | 66,265 | 239,729 | |||||||||
| Property and equipment, net | 150,646 | 128,293 | |||||||||
| Operating lease right-of-use assets | 168,313 | 149,833 | |||||||||
| Goodwill | 349,254 | 194,882 | |||||||||
| Intangible assets, net | 135,825 | 56,500 | |||||||||
| Deferred contract acquisition costs—noncurrent | 198,325 | 153,333 | |||||||||
| Other assets—noncurrent | 16,659 | 24,678 | |||||||||
| Total assets | $ | 2,053,310 | $ | 1,891,138 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 33,053 | $ | 28,144 | |||||||
| Accrued expenses and other current liabilities | 54,916 | 54,344 | |||||||||
| Accrued compensation | 111,623 | 83,189 | |||||||||
| Contract liabilities—current | 624,031 | 507,560 | |||||||||
| Operating lease liabilities—current | 30,415 | 20,728 | |||||||||
| Total current liabilities | 854,038 | 693,965 | |||||||||
| Convertible senior notes, net | 479,105 | 465,321 | |||||||||
| Contract liabilities—noncurrent | 11,837 | 11,478 | |||||||||
| Operating lease liabilities—noncurrent | 177,862 | 162,432 | |||||||||
| Deferred tax liability—noncurrent | 8,740 | 4,920 | |||||||||
| Other liabilities—noncurrent | 19,837 | 6,695 | |||||||||
| Total liabilities | 1,551,419 | 1,344,811 | |||||||||
Stockholders’ equity | |||||||||||
| Common stock | 19 | 18 | |||||||||
| Additional paid-in capital | 1,749,323 | 1,685,167 | |||||||||
| Accumulated other comprehensive income (loss) | 2,098 | (1,673) | |||||||||
| Accumulated deficit | (1,249,549) | (1,137,185) | |||||||||
Total stockholders’ equity | 501,891 | 546,327 | |||||||||
Total liabilities and stockholders’ equity | $ | 2,053,310 | $ | 1,891,138 | |||||||
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DOCUSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net loss | $ | (64,560) | $ | (68,632) | $ | (112,364) | $ | (114,354) | |||||||||||||||
| Adjustments to reconcile net to net cash used in operating activities | |||||||||||||||||||||||
| Depreciation and amortization | 17,937 | 12,290 | 31,976 | 24,261 | |||||||||||||||||||
| Amortization of deferred contract acquisition and fulfillment costs | 23,834 | 16,889 | 45,194 | 31,149 | |||||||||||||||||||
| Amortization of debt discount and transaction costs | 6,942 | 6,548 | 13,784 | 13,002 | |||||||||||||||||||
| Non-cash operating lease costs | 6,795 | 4,735 | 13,119 | 8,863 | |||||||||||||||||||
| Stock-based compensation expense | 68,767 | 55,792 | 122,318 | 98,063 | |||||||||||||||||||
| Deferred income taxes | (180) | (24) | (284) | 28 | |||||||||||||||||||
| Other | (997) | (1,260) | (493) | (2,371) | |||||||||||||||||||
| Changes in operating assets and liabilities | |||||||||||||||||||||||
| Accounts receivable | 7,915 | (21,518) | 25,154 | 35,896 | |||||||||||||||||||
| Contract assets | 2,310 | (2,204) | 1,570 | (4,905) | |||||||||||||||||||
| Prepaid expenses and other current assets | 4,272 | 3,950 | (5,388) | (3,157) | |||||||||||||||||||
| Deferred contract acquisition and fulfillment costs | (51,377) | (27,952) | (92,414) | (48,439) | |||||||||||||||||||
| Other assets | (4,768) | 418 | (6,132) | 959 | |||||||||||||||||||
| Accounts payable | 8,829 | 1,306 | 6,275 | 1,588 | |||||||||||||||||||
| Accrued expenses and other liabilities | 12,626 | 9,792 | 11,710 | 14,502 | |||||||||||||||||||
| Accrued compensation | 24,401 | 22,296 | 22,865 | 2,427 | |||||||||||||||||||
| Contract liabilities | 62,892 | 17,472 | 107,486 | 21,746 | |||||||||||||||||||
| Operating lease liabilities | (7,504) | (3,493) | (7,098) | (7,198) | |||||||||||||||||||
| Net cash provided by operating activities | 118,134 | 26,405 | 177,278 | 72,060 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Cash paid for acquisition, net of acquired cash | (180,370) | — | (180,370) | — | |||||||||||||||||||
| Purchases of marketable securities | (11,667) | (155,675) | (11,667) | (530,886) | |||||||||||||||||||
| Sales of marketable securities | — | — | 28,986 | — | |||||||||||||||||||
| Maturities of marketable securities | 131,345 | 151,992 | 301,416 | 244,449 | |||||||||||||||||||
| Purchases of strategic investments | — | — | — | (15,500) | |||||||||||||||||||
Purchases of other investments | (241) | — | (3,241) | — | |||||||||||||||||||
| Purchases of property and equipment | (18,362) | (14,554) | (44,751) | (29,791) | |||||||||||||||||||
| Net cash provided by (used in) investing activities | (79,295) | (18,237) | 90,373 | (331,728) | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Payment of tax withholding obligation on RSU settlement | (87,137) | (29,841) | (133,860) | (85,978) | |||||||||||||||||||
| Proceeds from exercise of stock options | 5,403 | 10,194 | 13,038 | 42,448 | |||||||||||||||||||
| Proceeds from employee stock purchase plan | — | — | 13,590 | 10,563 | |||||||||||||||||||
| Net cash used in financing activities | (81,734) | (19,647) | (107,232) | (32,967) | |||||||||||||||||||
| Effect of foreign exchange on cash, cash equivalents and restricted cash | 4,920 | (741) | 2,640 | (1,120) | |||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (37,975) | (12,220) | 163,059 | (293,755) | |||||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 442,517 | 236,643 | 241,483 | 518,178 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 404,542 | $ | 224,423 | $ | 404,542 | $ | 224,423 | |||||||||||||||
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DOCUSIGN, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Reconciliation of gross profit and gross margin:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| GAAP gross profit | $ | 251,594 | $ | 174,436 | $ | 474,579 | $ | 336,379 | |||||||||||||||
| Add: Stock-based compensation | 10,239 | 7,936 | 18,228 | 13,658 | |||||||||||||||||||
| Add: Amortization of acquisition-related intangibles | 3,132 | 1,381 | 4,480 | 3,008 | |||||||||||||||||||
| Add: Employer payroll tax on employee stock transactions | 1,738 | 541 | 2,774 | 1,193 | |||||||||||||||||||
| Non-GAAP gross profit | $ | 266,703 | $ | 184,294 | $ | 500,061 | $ | 354,238 | |||||||||||||||
| GAAP gross margin | 74 | % | 74 | % | 74 | % | 75 | % | |||||||||||||||
| Non-GAAP adjustments | 4 | % | 4 | % | 4 | % | 4 | % | |||||||||||||||
| Non-GAAP gross margin | 78 | % | 78 | % | 78 | % | 79 | % | |||||||||||||||
| GAAP subscription gross profit | $ | 258,913 | $ | 181,339 | $ | 487,825 | $ | 349,678 | |||||||||||||||
| Add: Stock-based compensation | 5,014 | 3,115 | 8,878 | 5,397 | |||||||||||||||||||
| Add: Amortization of acquisition-related intangibles | 3,132 | 1,381 | 4,480 | 3,008 | |||||||||||||||||||
| Add: Employer payroll tax on employee stock transactions | 926 | 211 | 1,461 | 432 | |||||||||||||||||||
| Non-GAAP subscription gross profit | $ | 267,985 | $ | 186,046 | $ | 502,644 | $ | 358,515 | |||||||||||||||
| GAAP subscription gross margin | 80 | % | 82 | % | 81 | % | 83 | % | |||||||||||||||
| Non-GAAP adjustments | 3 | % | 2 | % | 2 | % | 2 | % | |||||||||||||||
| Non-GAAP subscription gross margin | 83 | % | 84 | % | 83 | % | 85 | % | |||||||||||||||
| GAAP professional services and other gross loss | $ | (7,319) | $ | (6,903) | $ | (13,246) | $ | (13,299) | |||||||||||||||
| Add: Stock-based compensation | 5,225 | 4,821 | 9,350 | 8,261 | |||||||||||||||||||
| Add: Employer payroll tax on employee stock transactions | 812 | 330 | 1,313 | 761 | |||||||||||||||||||
| Non-GAAP professional services and other gross loss | $ | (1,282) | $ | (1,752) | $ | (2,583) | $ | (4,277) | |||||||||||||||
| GAAP professional services and other gross margin | (39) | % | (47) | % | (38) | % | (49) | % | |||||||||||||||
| Non-GAAP adjustments | 32 | % | 35 | % | 31 | % | 33 | % | |||||||||||||||
| Non-GAAP professional services and other gross margin | (7) | % | (12) | % | (7) | % | (16) | % | |||||||||||||||
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Reconciliation of operating expenses:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| GAAP sales and marketing | $ | 194,992 | $ | 150,886 | $ | 366,785 | $ | 280,822 | |||||||||||||||
| Less: Stock-based compensation | (32,305) | (25,942) | (56,970) | (44,044) | |||||||||||||||||||
| Less: Amortization of acquisition-related intangibles | (4,284) | (3,039) | (7,195) | (6,145) | |||||||||||||||||||
| Less: Acquisition-related expenses | (186) | — | (186) | — | |||||||||||||||||||
| Less: Employer payroll tax on employee stock transactions | (3,958) | (1,577) | (6,867) | (3,928) | |||||||||||||||||||
| Non-GAAP sales and marketing | $ | 154,259 | $ | 120,328 | $ | 295,567 | $ | 226,705 | |||||||||||||||
| GAAP sales and marketing as a percentage of revenue | 57 | % | 64 | % | 57 | % | 62 | % | |||||||||||||||
| Non-GAAP sales and marketing as a percentage of revenue | 45 | % | 51 | % | 46 | % | 50 | % | |||||||||||||||
| GAAP research and development | $ | 63,791 | $ | 47,517 | $ | 118,025 | $ | 84,700 | |||||||||||||||
| Less: Stock-based compensation | (14,781) | (11,963) | (26,666) | (19,280) | |||||||||||||||||||
| Less: Employer payroll tax on employee stock transactions | (2,019) | (1,026) | (3,565) | (2,176) | |||||||||||||||||||
| Non-GAAP research and development | $ | 46,991 | $ | 34,528 | $ | 87,794 | $ | 63,244 | |||||||||||||||
| GAAP research and development as a percentage of revenue | 19 | % | 20 | % | 18 | % | 19 | % | |||||||||||||||
| Non-GAAP research and development as a percentage of revenue | 14 | % | 15 | % | 14 | % | 14 | % | |||||||||||||||
| GAAP general and administrative | $ | 51,446 | $ | 40,755 | $ | 90,257 | $ | 78,016 | |||||||||||||||
| Less: Stock-based compensation | (11,442) | (9,951) | (20,454) | (21,081) | |||||||||||||||||||
| Less: Acquisition-related expenses | (6,746) | — | (7,440) | — | |||||||||||||||||||
| Less: Employer payroll tax on employee stock transactions | (1,544) | (720) | (2,601) | (2,322) | |||||||||||||||||||
| Non-GAAP general and administrative | $ | 31,714 | $ | 30,084 | $ | 59,762 | $ | 54,613 | |||||||||||||||
| GAAP general and administrative as a percentage of revenue | 15 | % | 17 | % | 15 | % | 18 | % | |||||||||||||||
| Non-GAAP general and administrative as a percentage of revenue | 9 | % | 13 | % | 9 | % | 12 | % | |||||||||||||||
Reconciliation of income (loss) from operations and operating margin:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| GAAP loss from operations | $ | (58,635) | $ | (64,722) | $ | (100,488) | $ | (107,159) | |||||||||||||||
| Add: Stock-based compensation | 68,767 | 55,792 | 122,318 | 98,063 | |||||||||||||||||||
| Add: Amortization of acquisition-related intangibles | 7,416 | 4,420 | 11,675 | 9,153 | |||||||||||||||||||
| Add: Acquisition-related expenses | 6,932 | — | 7,626 | — | |||||||||||||||||||
| Add: Employer payroll tax on employee stock transactions | 9,259 | 3,864 | 15,807 | 9,619 | |||||||||||||||||||
| Non-GAAP income from operations | $ | 33,739 | $ | (646) | $ | 56,938 | $ | 9,676 | |||||||||||||||
| GAAP operating margin | (17) | % | (27) | % | (16) | % | (24) | % | |||||||||||||||
| Non-GAAP adjustments | 27 | % | 27 | % | 25 | % | 26 | % | |||||||||||||||
| Non-GAAP operating margin | 10 | % | — | % | 9 | % | 2 | % | |||||||||||||||
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Reconciliation of net income (loss) and net income (loss) per share, basic and diluted:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| GAAP net loss | $ | (64,560) | $ | (68,632) | $ | (112,364) | $ | (114,354) | |||||||||||||||
| Add: Stock-based compensation | 68,767 | 55,792 | 122,318 | 98,063 | |||||||||||||||||||
| Add: Amortization of acquisition-related intangibles | 7,416 | 4,420 | 11,675 | 9,153 | |||||||||||||||||||
| Add: Acquisition-related expenses | 6,932 | — | 7,626 | — | |||||||||||||||||||
| Add: Employer payroll tax on employee stock transactions | 9,259 | 3,864 | 15,807 | 9,619 | |||||||||||||||||||
| Add: Amortization of debt discount and issuance costs | 6,942 | 6,548 | 13,784 | 13,002 | |||||||||||||||||||
| Non-GAAP net income | $ | 34,756 | $ | 1,992 | $ | 58,846 | $ | 15,483 | |||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Non-GAAP net income | $ | 34,756 | $ | 1,992 | $ | 58,846 | $ | 15,483 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average common shares outstanding, basic | 184,862 | 175,389 | 183,930 | 173,773 | |||||||||||||||||||
| Effect of dilutive securities | 18,547 | 13,952 | 16,247 | 15,516 | |||||||||||||||||||
| Non-GAAP weighted-average common shares outstanding, diluted | 203,409 | 189,341 | 200,177 | 189,289 | |||||||||||||||||||
| GAAP net loss per share, basic and diluted | $ | (0.35) | $ | (0.39) | $ | (0.61) | $ | (0.66) | |||||||||||||||
| Non-GAAP net income per share, basic | 0.19 | 0.01 | 0.32 | 0.09 | |||||||||||||||||||
| Non-GAAP net income per share, diluted | 0.17 | 0.01 | 0.29 | 0.08 | |||||||||||||||||||
Computation of free cash flow:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Net cash provided by operating activities | $ | 118,134 | $ | 26,405 | $ | 177,278 | $ | 72,060 | |||||||||||||||
| Less: Purchases of property and equipment | (18,362) | (14,554) | (44,751) | (29,791) | |||||||||||||||||||
| Non-GAAP free cash flow | $ | 99,772 | $ | 11,851 | $ | 132,527 | $ | 42,269 | |||||||||||||||
| Net cash provided by (used in) investing activities | $ | (79,295) | $ | (18,237) | $ | 90,373 | $ | (331,728) | |||||||||||||||
| Net cash used in financing activities | $ | (81,734) | $ | (19,647) | $ | (107,232) | $ | (32,967) | |||||||||||||||
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Computation of billings:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| (in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Revenue | $ | 342,209 | $ | 235,612 | $ | 639,226 | $ | 449,574 | |||||||||||||||
| Add: Contract liabilities and refund liability, end of period | 638,790 | 412,953 | 638,790 | 412,953 | |||||||||||||||||||
| Less: Contract liabilities and refund liability, beginning of period | (568,544) | (395,254) | (522,201) | (390,887) | |||||||||||||||||||
| Add: Contract assets and unbilled accounts receivable, beginning of period | 16,390 | 16,810 | 15,082 | 13,436 | |||||||||||||||||||
| Less: Contract assets and unbilled accounts receivable, end of period | (20,395) | (17,757) | (20,395) | (17,757) | |||||||||||||||||||
| Add: Contract assets and unbilled accounts receivable by acquisitions | 6,589 | — | 6,589 | — | |||||||||||||||||||
| Less: Contract liabilities and refund liability contributed by acquisitions | (9,344) | — | (9,344) | — | |||||||||||||||||||
| Non-GAAP billings | $ | 405,695 | $ | 252,364 | $ | 747,747 | $ | 467,319 | |||||||||||||||
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Exhibit 99.2
DocuSign promotes Sheridan to lead international and welcomes Gaylor as new CFO
San Francisco – September 3, 2020 – As part of its Agreement Cloud strategy to automate the agreement process for companies of all sizes around the world, DocuSign (NASDAQ:DOCU) today promoted chief financial officer Michael Sheridan to President of International, and announced board member and audit committee chair Cynthia Gaylor as the new CFO. The company also appointed Teresa Briggs and James Beer to its board of directors.
After more than five years as CFO, Sheridan will now focus on driving growth in DocuSign’s $200+ million business outside the United States. The move reflects the vast commercial and consumer potential the company sees in international markets, which today account for over half its total addressable market, yet less than 20% of its total revenue.
The news expands the additional role Sheridan took on as GM of DocuSign’s EMEA region at the start of the year. It also builds on his established career as the CFO of companies like FireEye, Facebook, IGN Entertainment (now part of News Corp.) and SonicWALL (now part of Dell).
As the new DocuSign CFO, Gaylor—who joined the board almost two years ago—will assume responsibility for the global finance organization and its overall strategy. She brings over 25 years’ experience in finance and capital markets to the role, as well as background in strategy, operations, and a deep understanding of enterprise and consumer software. Most recently the CFO of Pivotal Software, Gaylor previously led corporate development at Twitter, and prior to that was a managing director in Morgan Stanley’s technology group.
“Mike has played an increasingly important role in our EMEA business this year. On the back of his significant impact there—plus his extensive strategic track record at DocuSign and other technology companies— he will bring strong leadership and add great value to the critical growth initiatives we’re planning across our international regions,” said Dan Springer, DocuSign’s CEO.
“In Cynthia, we have the ideal successor to Mike. As a public company CFO and someone with a strong background in technology and finance, she has already provided huge value to us as a board member. I know Cynthia will hit the ground running, and Mike and I looking forward to working closely with her as we continue to drive the business forward.”
Speaking about today’s news Sheridan thanked the board and Springer. “The chance to drive DocuSign’s international growth is incredible. I’m looking forward to working with the entire team, and to partnering with Cynthia in her new role,” he said.
Gaylor added, "When I joined the board in 2018, it was clear that DocuSign was best-in-class, with a vast opportunity in e-signature and beyond. Watching the company articulate its Agreement Cloud vision over the past two years, and begin to deliver on it, has been remarkable. I am inspired by DocuSign’s ambitious goals and the chance to continue scaling the company. I’m also thrilled to join the exceptional finance team and help DocuSign become an increasingly essential cloud software platform.”
In terms of the board appointments, Briggs—who will assume the role of audit committee chair—brings a wealth of experience from Deloitte, and relevant board experience at ServiceNow and Snowflake. For his part, Beer has extensive executive experience at companies like American Airlines, McKesson, Symantec and Atlassian, all of which will help DocuSign as it continues to scale.
For more information, please visit investor.docusign.com.
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Media Relations:
Adrian Wainwright
Head of Communications
Investor Relations:
Annie Leschin
VP Investor Relations
About DocuSign
DocuSign helps organizations connect and automate how they prepare, sign, act on, and manage agreements. As part of the DocuSign Agreement Cloud, DocuSign offers eSignature: the world’s #1 way to sign electronically on practically any device, from almost anywhere, at any time. Today, nearly 750,000 customers and hundreds of millions of users in over 180 countries use DocuSign to accelerate the process of doing business and to simplify life.
For more information, visit www.docusign.com, call +1-877-720-2040, or follow @DocuSign on Twitter, LinkedIn, Facebook and Instagram.
Forward-Looking Statements
This press release may contain “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “potential,” “will,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Our actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of our future performance. Risks, uncertainties and assumptions also include the possibility that expected benefits may not materialize as expected; risks related to hiring and retaining key employees; and other risks that are described in greater detail in our public filings with the Securities and Exchange Commission (the “SEC”), copies of which may be obtained by visiting our Investor Relations web site at www.investor.docusign.com or the SEC's web site at www.sec.gov. In addition, any forward-looking statements contained in this release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update such statements.
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