Docusign Q2 Earnings Call Highlights

Docusign reported solid second-quarter results, with revenue up 9% year over year to $876 million, non-GAAP operating income rising 16% to $277 million, and free cash flow increasing more than 35% to $296 million.

IAM adoption accelerated, reaching 15.1% of total ARR versus 12.6% in the prior quarter. Docusign expanded AI features, agentic tools and integrations, while raising its full-year ARR growth outlook to 8.5%–9.0% and expecting IAM to represent 18%–19% of ARR by fiscal year-end.

The company ended the quarter with nearly $1 billion in cash, no debt and $2.1 billion remaining under its buyback authorization after repurchasing $307 million of stock. It also raised its fiscal 2027 revenue outlook to $3.499 billion–$3.507 billion, or roughly 9% growth at the midpoint.

Docusign NASDAQ: DOCU reported second-quarter fiscal 2027 revenue of $876 million, up 9% from a year earlier, as adoption of its Intelligent Agreement Management, or IAM, platform increased and the company expanded its artificial intelligence capabilities and integrations. Chief Executive Officer Allan Thygesen said IAM accounted for 15.1% of total annual recurring revenue, or ARR, at the end of the quarter, up from 12.6% in the first quarter.

The company raised its full-year ARR growth outlook to a range of 8.5% to 9.0%, compared with 8.0% growth in fiscal 2026, and expects IAM to account for 18% to 19% of total ARR exiting the fourth quarter.

"Our platform strategy is working," Thygesen said, citing increased IAM adoption, continued product development and the company’s ability to maintain margins while expanding AI-driven functionality.

Docusign’s second-quarter revenue included a 1.3 percentage-point benefit from foreign exchange rates. International revenue represented 31% of the total. Chief Financial Officer Blake Grayson said that, after adjusting for foreign exchange and the prior-year contribution from digital add-ons, revenue growth accelerated by nearly one percentage point year over year.

Non-GAAP operating income rose 16% year over year to $277 million. The company reported a non-GAAP operating margin of 31.6%, up 180 basis points from the prior-year period and above the midpoint of its guidance range. Non-GAAP diluted earnings per share increased 26% to $1.16, while GAAP diluted earnings per share rose 33% to $0.40.

Free cash flow was $296 million, up more than 35% from the prior-year quarter and equal to a 34% margin. Over the trailing 12 months, Docusign generated $1.2 billion in free cash flow, according to Grayson. The company ended the quarter with just under $1 billion in cash equivalents and investments and no debt. It repurchased $307 million of stock during the quarter, reducing total diluted shares outstanding by 8% year over year to 193 million. Docusign had $2.1 billion remaining under its share-repurchase authorization.

Non-GAAP gross margin was 81.7%, slightly below the prior-year level due to the company’s cloud migration investments. Docusign said the migration remains on track to be largely completed by the end of fiscal 2027 and expects full-year gross margin to decline slightly year over year.

Thygesen said customers had ingested more than 300 million documents through IAM Agreement Manager. He said the platform’s AI-native architecture allows Docusign to process workloads at lower marginal costs than products that route work to external large language models.