Live: Will DocuSign (DOCU) Soar After Its Earnings Announcement?
Key Points
- IAM momentum accelerating: 10,000+ direct customers and rapid self-serve uptake; H2 billings acceleration still expected.
- Guidance balances investment and efficiency: cloud migration trims gross margin ~1 pt; FY26 operating margin ~28%.
- Consensus implies mid-single-digit growth; watch billings timing, enterprise IAM adoption, and digital channel durability.
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Final Reactions
| Metric | Prior Street | New Company Guide | Δ |
|---|---|---|---|
| FY26 Revenue | $3.12B | $3.189–3.201B | ▲ |
| FY26 Billings | $3.24B | $3.325–3.355B | ▲ |
Sentiment Signals:
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Bullish: AI-led IAM traction, raised guide, FCF strength.
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Neutral: Pro services still declining.
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Bearish: Heavy reliance on AI adoption sustaining momentum.
Key Operating Highlights
- Revenue +9% YoY to $800.6M.
- Billings +13% YoY, showing momentum in bookings.
- Subscription revenue +9% YoY; professional services –13% YoY drag.
- Non-GAAP operating margin 29.8%, near record levels.
- Free cash flow $218M, margin 27%.
- Repurchased $202M in stock this quarter.
Guidance Update
| Period | New Guidance | Street Consensus | Direction |
|---|---|---|---|
| Q3 Rev | $804–808M | ~$790M | 📈 Raised |
| Q3 Billings | $785–795M | ~$770M | 📈 Raised |
| FY26 Rev | $3.189–3.201B | ~$3.12B | 📈 Raised |
| FY26 Billings | $3.325–3.355B | ~$3.24B | 📈 Raised |
Both Q3 and FY26 outlooks raised — a major sentiment shift after several years of uneven execution.
Management Commentary
CEO Allan Thygesen: “Q2 was an outstanding quarter, with AI innovation launches and go-to-market changes leading to strong performance across the eSignature, CLM, and IAM businesses.”
Key message: AI + product integration is now showing tangible impact on growth and margins.
Numbers Are In
Stock up ~8.4% AH on stronger-than-expected results and guidance:
First Take
| Metric | Actual | Estimate | Beat/Miss |
|---|---|---|---|
| Revenue | $800.6M | ~$782M | ✅ Beat |
| EPS (Non-GAAP, Diluted) | $0.92 | ~$0.81 | ✅ Beat |
| Billings | $818.0M | ~$785M | ✅ Beat |
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Shares climb +8% AH as DOCU posted one of its best growth/profit quarters in years.
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Outperformance driven by AI-driven IAM launches and strength across eSignature, CLM, and IAM.
How DOCU Performed After Recent Earnings
| Quarter | EPS Surprise | 1-Day Move | 7-Day Move | 14-Day Move |
|---|---|---|---|---|
| Q1 2026 | +11.11% | −19.80% | −27.05% | −29.99% |
| Q4 2025 | +1.18% | +0.44% | +8.16% | −8.70% |
| Q3 2025 | +3.45% | +15.89% | +13.03% | +11.89% |
| Q2 2025 | +19.75% | +0.06% | +4.57% | +2.38% |
Average 7-day move (last 4): −0.32%
DocuSign (Nasdaq: DOCU) is mid-transformation from e-signature to Intelligent Agreement Management (IAM). Q1 FY26 delivered 8% revenue growth to $764M and non-GAAP EPS of $0.90, with operating margin at 29.5% and free-cash-flow margin at 30%. Management added $1B to its repurchase authorization, ended the quarter with ~$1.1B in cash and no debt, and reiterated that lower early-renewal activity reflects timing (not demand) as sales incentives shift toward in-quarter closes and IAM expansion. Near-term, cloud-migration costs pressure gross margin; management still sees billings accelerating in 2H as IAM scales.
Estimates Snapshot (Wall Street consensus)
- Current Qtr (Q2 FY26, Jul): Revenue $780.59M, EPS $0.85
- Next Qtr (Q3 FY26, Oct): Revenue $797.40M, EPS $0.90
- FY2026: Revenue $3.16B, EPS $3.58
- FY2027: Revenue $3.37B, EPS $3.88
Key Areas to Watch
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IAM adoption and monetization — 10,000+ direct IAM customers; nearly 1,000 self-serve customers added within weeks. Management expects IAM to reach a low double-digit share of subscription BoB exiting FY26.
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Billings vs. renewal timing — Lower early renewals pulled billings slightly below guide, but leadership emphasizes timing (not demand) and still models 2H acceleration. Track DNR (101%) and usage, both improving.
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Margins and cloud migration — FY26 guide embeds ~1 pt gross-margin headwind from migration and ~1.5 pts operating-margin headwind (mix and comp changes). Q2 is the toughest OM comp.
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Product cadence and AI — August roll-out features (Agreement Desk, Workspaces, custom extractions) plus DocuSign Iris AI engine aim to widen value versus e-sig only. Customer references suggest broader enterprise workflows.
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Routes to market — Digital/self-serve grew at >2× overall revenue; international IAM deal volume up >50% QoQ after launch; early GSI momentum should support larger enterprise wins over time.
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