DocuSign Reports Subscription Revenue of $169.4 Million in Q3 FY19

DocuSign reported strong growth in its third quarter of fiscal year 2019, despite reporting a GAAP net loss of $0.31 per basic and diluted

Subscription News: DocuSign Reports Subscription Revenue of $169.4 Million in Q3 FY19

Source: DocuSign

DocuSign (NASDAQ: DOCU) reported strong growth in its third quarter of fiscal year 2019, despite reporting a GAAP net loss of $52.8 million, or $0.31 per basic and diluted share. The eSignature solution provider had $178.4 million in total revenue for the quarter ended October 31, 2018, representing a 37 percent increase year-over-year. Subscription revenue was $169.4 million, a 38 percent increase over the same period last year, and professional services and other revenue of $9.0 million, a 17 percent increase year-over-year. Subscription revenue represents 95 percent of DocuSign’s total revenue.

Other financial highlights from the quarter include:

  • Billings were $198.0 million, a 40 percent increase year-over-year.
  • GAAP gross margin was 75 percent, slightly lower than the 76 percent for the same period last year.
  • Free cash flow was negative $4.3 million, compared to free cash flow of $7.0 million in Q3 FY18.
  • Cash, cash equivalents and restricted cash was $1.1 billion as of October 31, 2018.

Subscription News: DocuSign Reports Subscription Revenue of $169.4 Million in Q3 FY19

Source: DocuSign

“With year-over-year growth of 37 percent in revenue and 40% in billings, DocuSign’s business continued to excel in the third quarter. We added another 25,000 customers, bringing our total to 454,000 worldwide. Expansions within existing customers, traction around our System of Agreement vision, and our strategic partner ecosystem all contributed to our strong results,” said Dan Springer, CEO of DocuSign, in a December 6 news release.

From an operational perspective, DocuSign’s biggest highlight was the September acquisition of SpringCM, Inc., a cloud-based document generation and lifecycle management software company for $218.8 million. This deal will help DocuSign customers with end-to-end services including everything from signing to managing agreements.

“Every company is undergoing a digital transformation and automating the foundation of doing business – the agreement process – has never been more strategic,” said Springer of the acquisition. “Now with SpringCM, DocuSign will be able to bring the same simplification and acceleration it brought to eSignature to the rest of the agreement process. I am thrilled to welcome SpringCM to the DocuSign family.”

DocuSign provided the following guidance for the quarter ending January 31, 2019:

  • Total revenue between $192 million to $194 million
  • Billings between $245 million to $255 million
  • Non-GAAP gross margin between 78 percent to 81 percent

For the full fiscal year 2019, DocuSign offered the following guidance:

  • Total revenue between $693 million to $695 million
  • Billings between $795 million to $805 million
  • Non-GAAP gross margin between 78 percent to 81 percent

At the end of the quarter, DocuSign had more than 454,000 customers, and its product is part of business applications including Microsoft, Salesforce, Oracle and Workday among others. Their customers include Comcast Business, Verizon, EllieMae, Purdue University, LinkedIn, Stripe, Authorize.net, FedEx and Berkshire Hathaway. The company has 15 offices worldwide and 2,900 employees, including 24 percent who work internally.

Despite the net loss, DocuSign’s stock has risen from $41.77 per share on December 6 to $43.15 pe share as of 6:40 p.m. yesterday.

Subscription News: DocuSign Reports Subscription Revenue of $169.4 Million in Q3 FY19

Source: DocuSign

Insider Take:

As a technology and business solutions provider, DocuSign holds the #1 spot as an eSignature provider. Its acquisition of SpringCM will help the company provide additional services to their clients, helping DocuSign retain its existing clients while attracting new ones. With current growth, the company will eventually turn the corner and turn the net losses into profits.

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