Executive Summary
DocuSign delivered a solid QQ2 2026 performance, highlighted by 9% year-over-year revenue growth to $801 million and 13% billings growth to $818 million, underscoring the strength of its direct channel and eSignature demand. The company continued to demonstrate the earnings power of its AI-native Intelligent Agreement Management (IAM) platform, with IAM contributing to higher deal sizes and an expanding enterprise footprint as DocuSign accelerates upmarket adoption. Management emphasized margin discipline amid ongoing cloud data center migration and a shift in compensation mix, resulting in non-GAAP gross margin of 82% and non-GAAP operating margin of 29.8%, with free cash flow of $218 million (27% margin) and a debt-free balance sheet supporting $200 million of share buybacks. International revenue remained a meaningful growth driver, representing 29% of total revenue and growing 13% YoY, with Asia-Pacific as the fastest-growing international region. DocuSign reiterated a multi-year strategy built around expanding routes to market, accelerating product innovation (notably IAM upgrades and AI capabilities), and operational efficiency, while guiding to mid-single-digit revenue growth and mid-to-high single-digit billings growth in the near term. The narrative remains constructive for long-term, double-digit revenue growth driven by IAM, product expansion, and expansion into enterprise and government segments, offset by cloud-migration costs and a measured pace of profitability improvement. This report integrates management commentary from the earnings call and the quarterly results to assess implications for investors, customers, and competitors.
Key Performance Indicators
QoQ: -12.65% | YoY:-92.91%
QoQ: -11.43% | YoY:-92.86%
Key Insights
Revenue: $801.0M (+9% YoY); Subscription: $784.0M (+9% YoY); Billings: $818.0M (+13% YoY); Non-GAAP gross margin: 82.0%; Non-GAAP operating margin: 29.8%; Free cash flow: $218.0M (FCF margin 27%); Net income (GAAP): not disclosed at the level of profitability on a quarterly basis in the call; Net income (non-GAAP): implied by $0.92 diluted EPS; DNR: 102% in Q2 (up from 101% in Q1, up YoY); International revenue: 29% of total, +13% YoY; Customers > 1.7M; Large customers (> $300K) ~1,137; IA...
Financial Highlights
Revenue: $801.0M (+9% YoY); Subscription: $784.0M (+9% YoY); Billings: $818.0M (+13% YoY); Non-GAAP gross margin: 82.0%; Non-GAAP operating margin: 29.8%; Free cash flow: $218.0M (FCF margin 27%); Net income (GAAP): not disclosed at the level of profitability on a quarterly basis in the call; Net income (non-GAAP): implied by $0.92 diluted EPS; DNR: 102% in Q2 (up from 101% in Q1, up YoY); International revenue: 29% of total, +13% YoY; Customers > 1.7M; Large customers (> $300K) ~1,137; IAM contribution: low double-digit % of subscription book by year-end; Cash and equivalents/investments: ~$1.1B with no net debt; Share repurchases: $200M in Q2; Guidance: Q3 rev $804–$808M (+7% YoY at midpoint); FY2026 rev $3.189–$3.201B (+7% YoY); FY2026 billings $3.325–$3.355B (+~7% YoY); Gross margin guidance: 80.3–81.3% in Q3; 81–82% for FY2026; OPM guidance: 28–29% in Q3; 28.6–29.6% for FY2026.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
800.64M |
8.78% |
4.84% |
| Gross Profit |
635.17M |
9.41% |
4.75% |
| Operating Income |
65.23M |
12.85% |
8.25% |
| Net Income |
62.97M |
-92.91% |
-12.65% |
| EPS |
0.31 |
-92.86% |
-11.43% |
Management Commentary
- Strategy and IAM trajectory: Management reiterated IAM as a core growth engine and a differentiator, aiming for IAM to represent a low double-digit share of the subscription book by year-end and to drive deeper penetration in both commercial and enterprise segments. Allan Thygesen stressed IAM as a critical factor for year-over-year growth and a platform that will unlock multi-year value (quote embedded in transcript).
- Quote: IAM is a critical factor on year-over-year growth. We expect IAM to be a low double-digit percentage of our overall book. (Allan C. Thygesen)
- GTM and regional momentum: The company highlighted a refined omnichannel go-to-market, with a renewed direct-sales structure and a relaunch of partner programs aligned to IAM strategies. International growth outpaced domestic, with Asia-Pacific driving the acceleration in international revenue. More than 50% of enterprise reps closed at least one IAM deal in Q2, signaling early success in upmarket strategies.
- Quote: We remain on track for IAM customers to represent a low double-digit percentage share of the subscription book at year-end. (Allan C. Thygesen)
- CLM and enterprise deal flow: CLM delivered some of the strongest YoY quarterly bookings growth in years, with large deals such as T-Mobile illustrating enterprise momentum. DocuSign was recognized as a leader in IDC MarketScape AI-enabled buy-side CLM, underscoring IAM as a core component of the strategy.
- AI and product roadmap: IAM’s AI-native stack, including DocuSign Iris and Navigator, has accelerated data processing, with document ingestion up >150% over two quarters and tens of millions of agreements processed per month. New AI capabilities (custom extractions, agreement preparation, SCIM provisioning) were launched to expand use cases and address enterprise security and scale. Management signaled upcoming AI agents within IAM, expanding addressable market opportunities.
- Margin discipline and profitability: Management emphasized the cloud-migration headwind and comp actions shifting from equity to cash, which contributed to a YoY margin headwind. However, incremental revenue strength enabled a higher-than-expected profitability outcome, with non-GAAP gross margin near 82% and free cash flow margin around 27%. The company expects continuing margin headwinds from migration into FY2027 and beyond, but maintains long-term double-digit topline growth potential with leverage arising from higher scale and IAM adoption.
- Guidance and cadence: Q3 revenue guidance implies continued mid-single-digit top-line growth; full-year 2026 guidance was nudged up, reflecting better-than-expected Q2 execution. The company cautioned that billings are sensitive to renewal timing and may exhibit quarter-to-quarter volatility, with a plan to discuss top-line metric updates on the Q3 earnings call. (Blake Grayson and Allan Thygesen)
IAM is a critical factor on year-over-year growth. And an even more important factor in the growth acceleration that I think we and you are all excited to begin to see for the future. IAM is a low double-digit share of our overall book by year-end.
— Allan C. Thygesen
We remain on track for IAM customers to contribute a low double-digit percentage share of the subscription book of business exiting Q4.
— Allan C. Thygesen
Forward Guidance
DocuSign maintains a constructive near-to-medium-term outlook grounded in IAM-driven upsell, continued eSignature demand, and expanding CLM deployments, while acknowledging cloud-migration-related margin headwinds. Key takeaways:
- Revenue trajectory: FY2026 revenue guided to $3.189–$3.201B (+7% YoY at the midpoint), with Q3 revenue guidance of $804–$808M (+7% YoY at the midpoint).
- Billings and monetization: FY2026 billings guided to $3.325–$3.355B (+~7% YoY at the midpoint), with Q3 billings $785–$795M (+5% YoY at the midpoint). Renewals timing remains a meaningful driver of quarterly variability.
- Margin profile: Non-GAAP gross margin expected to be ~81% in FY2026 and ~80.3–81.3% in Q3, with non-GAAP operating margins of ~28.6–29.6% for FY2026, reflecting ongoing cloud migration costs and the mix shift to cash compensation.
- IAM trajectory: IAM contribution to the subscription book targeted to a low double-digit percentage by year-end, underpinning long-term growth and operating leverage as the installed base expands and higher-value enterprise deals scale.
- Catalysts and watchpoints for investors: (1) IAM upmarket progression and attach to eSignature; (2) international expansion, especially APAC; (3) continued AI-enabled capabilities that improve contract insights and cycle times; (4) potential federal/state government pipeline expansion via GSA partnership; (5) execution on cost discipline and migration cost timing that could alter margin trajectory. Investors should monitor IAM adoption rates, renewal timing, billings volatility, and cloud-migration costs as primary drivers of near-term profitability vs. long-run growth.”,