What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-12-06 compared with 2021-09-03 · 97 added, 127 removed, 517 unchanged (30% of the section changed)

Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of July 3 1 , 2021 and January 31, 2021

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended July 3 1 , 2021 and 2020

Condensed Consolidated Statement s of Stockholders' Equity for the Three and Six Months Ended July 3 1 , 2021 and 2020

Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 3 1 , 2021 and 2020

Condensed Consolidated Balance Sheets as of October 31, 2021 and January 31, 2021

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended October 31, 2021 and 2020

Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended October 31, 2021 and 2020

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2021 and 2020

Notes to Condensed Consolidated Financial Statements

56 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data) July 31, 2021 January 31, 2021

(in thousands, except per share data) October 31, 2021 January 31, 2021

Current assets

1 unchanged sentence

Investments—current 314,574 207,450

Accounts receivable, net of allowance for doubtful accounts of $ 6,437 and $ 5,362 as of July 31, 2021 and January 31, 2021

Accounts receivable, net of allowance for doubtful accounts of $ 6,388 and $ 5,362 as of October 31, 2021 and January 31, 2021

305,599 323,570

29 unchanged sentences

Preferred stock, $ 0.0001 par value;

10,000 shares authorized, 0 shares issued and outstanding as of July 31, 2021 and January 31, 2021

10,000 shares authorized, 0 shares issued and outstanding as of October 31, 2021 and January 31, 2021

Common stock, $ 0.0001 par value;

500,000 shares authorized, 196,467 shares outstanding as of July 31, 2021;

500,000 shares authorized, 197,754 shares outstanding as of October 31, 2021;

500,000 shares authorized, 192,807 shares outstanding as of January 31, 2021

Treasury stock, at cost:

5 shares as of July 31, 2021 and January 31, 2021

7 and 5 shares as of October 31, 2021 and January 31, 2021

( 1,532 ) ( 1,048 )

Additional paid-in capital 1,650,714 1,702,254

Accumulated other comprehensive income 3,246 4,964

Accumulated other comprehensive income (loss) ( 1,889 ) 4,964

Accumulated deficit ( 1,407,744 ) ( 1,380,452 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

(in thousands, except per share data) 2021 2020 2021 2020

15 unchanged sentences

Interest income and other income (expense), net ( 940 ) ( 311 ) 4,034 6,032

Loss before provision for income taxes ( 25,343 ) ( 63,718 ) ( 31,715 ) ( 109,389 )

Provision for income taxes 158 842 2,140 2,975

Loss before provision for (benefit from) income taxes ( 5,783 ) ( 56,550 ) ( 37,498 ) ( 165,939 )

Provision for (benefit from) income taxes ( 107 ) 1,941 2,033 4,916

Net loss $ ( 5,676 ) $ ( 58,491 ) $ ( 39,531 ) $ ( 170,855 )

3 unchanged sentences

Foreign currency translation gain (loss), net of tax $ ( 4,720 ) $ ( 2,413 ) $ ( 6,142 ) $ 1,112

Unrealized gains (losses) on investments, net of tax ( 54 ) 87 ( 296 ) 246

Unrealized losses on investments, net of tax ( 415 ) ( 825 ) ( 711 ) ( 579 )

Other comprehensive income (loss) ( 5,135 ) ( 3,238 ) ( 6,853 ) 533

13 unchanged sentences

(in thousands) Shares Amount

Balances at April 30, 2021 194,734 $ 19 $ 1,615,646 $ ( 1,219 ) $ 5,358 $ ( 1,376,567 ) $ 243,237

Balances at July 31, 2021 196,467 $ 20 $ 1,611,897 $ ( 1,219 ) $ 3,246 $ ( 1,402,068 ) $ 211,876

Settlement of convertible senior notes due in 2023 32 — ( 32 ) — — — ( 32 )

Exercise of stock options 357 — 9,358 — — — 9,358

Settlement of restricted stock units 865 — — — — — —

Tax withholding on net share settlement of restricted stock units — — ( 114,481 ) — — — ( 114,481 )

Charitable donation of common stock 10 3,000 3,000

Settlement of restricted stock units and employee stock purchase plan 767 — — — — — —

Tax withholding on net share settlement of restricted stock units and employee stock purchase plan — — ( 106,098 ) ( 313 ) — — ( 106,411 )

Employee stock purchase plan 131 — 22,910 — — — 22,910

Employee stock-based compensation — — 112,679 — — — 112,679

1 unchanged sentence

Other comprehensive loss, net — — — — ( 5,135 ) — ( 5,135 )

Balances at October 31, 2021 197,754 $ 20 $ 1,650,714 $ ( 1,532 ) $ ( 1,889 ) $ ( 1,407,744 ) $ 239,569

Balances at July 31, 2020 185,137 $ 19 $ 1,749,323 $ — $ 2,098 $ ( 1,249,549 ) $ 501,891

Balances at April 30, 2020 183,428 $ 18 $ 1,714,462 $ — $ ( 6,703 ) $ ( 1,184,989 ) $ 522,788

Exercise of stock options 171 — 1,945 — — — 1,945

1 unchanged sentence

Tax withholding on net share settlement of restricted stock units — — ( 114,277 ) ( 1,048 ) — — ( 115,325 )

Issuance of shares as consideration for acquisition 247 — 48,361 — — — 48,361

Employee stock purchase plans 208 — 16,269 — — — 16,269

Employee stock-based compensation — — 82,981 — — — 82,981

Net loss — — — — — ( 58,491 ) ( 58,491 )

Other comprehensive income, net — — — — 8,801 — 8,801

Balances at July 31, 2020 185,137 $ 19 $ 1,749,323 $ — $ 2,098 $ ( 1,249,549 ) $ 501,891

Other comprehensive loss, net — — — — ( 3,238 ) — ( 3,238 )

Balances at October 31, 2020 186,531 $ 19 $ 1,736,241 $ ( 1,048 ) $ ( 1,140 ) $ ( 1,308,040 ) $ 426,032

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9 unchanged sentences

Exercise of stock options 1,468 — 21,176 — — — 21,176

Settlement of restricted stock units 1,820 — — — — — —

Settlement of restricted stock units and employee stock purchase plan 2,586 — — — — — —

Tax withholding on net share settlement of restricted stock units and employee stock purchase plan — — ( 333,991 ) ( 484 ) — — ( 334,475 )

4 unchanged sentences

Other comprehensive loss, net — — — — ( 6,853 ) — ( 6,853 )

Balances at July 31, 2021 196,467 $ 20 $ 1,611,897 $ ( 1,219 ) $ 3,246 $ ( 1,402,068 ) $ 211,876

Balances at October 31, 2021 197,754 $ 20 $ 1,650,714 $ ( 1,532 ) $ ( 1,889 ) $ ( 1,407,744 ) $ 239,569

Balances at January 31, 2020 181,254 $ 18 $ 1,685,167 $ — $ ( 1,673 ) $ ( 1,137,185 ) $ 546,327

7 unchanged sentences

Other comprehensive income, net — — — — 533 — 533

Balances at July 31, 2020 185,137 $ 19 $ 1,749,323 $ — $ 2,098 $ ( 1,249,549 ) $ 501,891

Balances at October 31, 2020 186,531 $ 19 $ 1,736,241 $ ( 1,048 ) $ ( 1,140 ) $ ( 1,308,040 ) $ 426,032

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended July 31,

Nine Months Ended October 31,

(in thousands) 2021 2020

5 unchanged sentences

Amortization of debt discount and transaction costs 3,848 20,828

Fair value adjustments to strategic investments ( 5,119 ) —

Impairment of operating lease right-of-use assets 3,892 —

Non-cash operating lease costs 20,176 20,082

Stock-based compensation expense 290,536 203,238

Non-cash charitable donation 3,000 —

Deferred income taxes ( 2,360 ) ( 1,050 )

32 unchanged sentences

$ 504,164 $ 375,265

(1) $ 0.3 million of restricted cash was included in Prepaid expenses and other current assets at July 31, 2021, and in Other assets—noncurrent at January 31, 2021.

(1) $ 0.3 million of restricted cash was included in Prepaid expenses and other current assets at October 31, 2021, and in Other assets—noncurrent at January 31, 2021.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

Six Months Ended July 31,

Nine Months Ended October 31,

(in thousands) 2021 2020

20 unchanged sentences

Net Loss Per Share Attributable to Common Stockholders

Geographic Information

DocuSign, Inc.

18 unchanged sentences

Our condensed consolidated balance sheet as of January 31, 2021 was derived from audited financial statements but does not include all disclosures required by U.S.

The results of operations for the three and six months ended July 31, 2021 are not necessarily indicative of the results to be expected for the year ending January 31, 2022 .

The results of operations for the three and nine months ended October 31, 2021 are not necessarily indicative of the results to be expected for the year ending January 31, 2022 .

O ur fiscal year ends on January 3 1.

4 unchanged sentences

Significant items subject to such estimates and assumptions made by management include, but are not limited to, the determination of:

• the fair value of assets acquired and liabilities assumed in business combinations;

• the average period of benefit associated with deferred contract acquisition costs and fulfillment costs;

9 unchanged sentences

As of the date of issuance of the financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates or judgments or revise the carrying value of our assets or liabilities, except for a sublease that resulted in an impairment of $ 3.9 million on operating lease right-of-use assets recorded during the three months ended July 31, 2021.

These estimates may change as new events occur and additional information is obtained, which could be recognized in the

DocuSign, Inc.

| 2022 Form 10Q | 12

estimates may change as new events occur and additional information is obtained, which could be recognized in the condensed consolidated financial statements as soon as they become known.

condensed consolidated financial statements as soon as they become known.

Actual results could differ from those estimates and any such differences may be material to our financial statements.

18 unchanged sentences

• a cumulative-effect adjustment of $ 12.2 million to the beginning balance of accumulated deficit as of February 1, 2021.

Subscription revenue is recognized over time and accounted for approximately 96 % and 95 % of our revenue for the three months ended July 31, 2021 and 2020 and approximately 96 % and 95 % of our revenue for the six months ended July 31, 2021 and 2020.

Subscription revenue is recognized over time and accounted for approximately 97 % and 96 % of our revenue for the three months ended October 31, 2021 and 2020 and approximately 97 % and 95 % of our revenue for the nine months ended October 31, 2021 and 2020.

Performance Obligations

As of July 31, 2021, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $ 1.3 billion.

We expect to recognize 52 % of the transaction price allocated to remaining performance obligations within the 12 months following July 31, 2021 in our condensed consolidated statement of operations and comprehensive loss.

DocuSign, Inc.

| 2022 Form 10Q | 13

As of October 31, 2021, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $ 1.5 billion.

We expect to recognize 52 % of the transaction price allocated to remaining performance obligations within the 12 months following October 31, 2021 in our condensed consolidated statement of operations and comprehensive loss.

Contract Balances

Contract assets represent amounts for which we have recognized revenue, pursuant to our revenue recognition policy, for contracts that have not yet been fully invoiced to our customers where there remains a performance obligation, typically for our multi-year arrangements.

Total contract assets were $ 14.6 million and $ 17.5 million as of July 31, 2021 and January 31, 2021, of which $ 0.6 million and $ 0.6 million were noncurrent and included within “Other assets—noncurrent” on our condensed consolidated balance sheets.

Total contract assets were $ 15.0 million and $ 17.5 million as of October 31, 2021 and January 31, 2021, of which $ 0.3 million and $ 0.6 million were noncurrent and included within “Other assets—noncurrent” on our condensed consolidated balance sheets.

The change in contract assets reflects the difference in timing between the satisfaction of our remaining performance obligations and our contractual right to bill our customers.

DocuSign, Inc.

| 2022 Form 10Q | 13

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract.

Such amounts are generally recognized as revenue over the contractual period.

For the six months ended July 31, 2021 and 2020, we recognized revenue of $ 595.4 million and $ 375.8 million that was included in the corresponding contract liability balance at the beginning of the periods presented.

For the nine months ended October 31, 2021 and 2020, we recognized revenue of $ 730.7 million and $ 463.1 million that was included in the corresponding contract liability balance at the beginning of the periods presented.

We receive payments from customers based upon contractual billing schedules.

1 unchanged sentence

Payment terms on invoiced amounts are typically 30 days.

Geographic Information

Revenue by geography is based on the address of the customer as specified in our master subscription agreements with our customers.

Revenue by geographic area was as follows:

Three Months Ended October 31, Nine Months Ended October 31,

(in thousands) 2021 2020 2021 2020

$ 417,296 $ 306,680 $ 1,183,601 $ 824,342

International 128,167 76,243 342,784 197,807

Total revenue $ 545,463 $ 382,923 $ 1,526,385 $ 1,022,149

DocuSign, Inc.

| 2022 Form 10Q | 14

Fair Value Measurements

The following table summarizes our financial assets that are measured at fair value on a recurring basis:

July 31, 2021

October 31, 2021

(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

20 unchanged sentences

Total $ 584,187 $ 388 $ ( 96 ) $ 584,479

DocuSign, Inc.

| 2022 Form 10Q | 14

(1) Included in “cash and cash equivalents” in our consolidated balance sheets as of July 31, 2021, in addition to cash of $ 382.8 million and commercial paper of $ 18.6 million.

(1) Included in “cash and cash equivalents” in our consolidated balance sheets as of October 31, 2021, in addition to cash of $ 404.3 million and commercial paper of $ 6.0 million.

(2) Included in “cash and cash equivalents” in our consolidated balance sheets as of January 31, 2021, in addition to cash of $ 281.7 million.

2 unchanged sentences

The fair value of our Level 3 investments is determined based on an income approach using unobservable inputs.

The fair value of our available-for-sale securities as of July 31, 2021, by remaining contractual maturities, were as follows (in thousands):

The fair value of our available-for-sale securities as of October 31, 2021, by remaining contractual maturities, were as follows (in thousands):

Due in one year or less $ 320,571

Due in one to two years 89,455

As of July 31, 2021 and January 31, 2021, securities in an unrealized loss position were, individually and in aggregate, not material.

DocuSign, Inc.

| 2022 Form 10Q | 15

As of October 31, 2021 and January 31, 2021, securities in an unrealized loss position were, individually and in aggregate, not material.

An allowance for credit losses was deemed unnecessary for these securities, given the extent of the unrealized loss positions as well the issuers' high credit ratings and consistent payment history.

Strategic Investments

During the six months ended July 31, 2021, investments in equity securities without readily determinable fair values increased by $ 4.8 million due to adjustments related to observable price changes that occurred primarily during the three months ended April 30, 2021.

During the nine months ended October 31, 2021, investments in equity securities without readily determinable fair values increased by $ 4.8 million due to adjustments related to observable price changes that occurred primarily during the three months ended April 30, 2021.

Such investments are recorded in “Other assets—noncurrent” on our condensed consolidated balance sheets.

3 unchanged sentences

Refer to Note 6 for further information.

(in thousands) July 31, 2021 January 31, 2021

(in thousands) October 31, 2021 January 31, 2021

0.5 % Convertible Senior Notes due in 2023

4 unchanged sentences

Fair value amount 721,167 725,100

DocuSign, Inc.

| 2022 Form 10Q | 15

Property and Equipment, Net

Property and equipment consisted of the following:

(in thousands) July 31, 2021 January 31, 2021

(in thousands) October 31, 2021 January 31, 2021

Computer and network equipment $ 122,551 $ 102,163

7 unchanged sentences

Total $ 177,832 $ 165,039

Depreciation and amortization expense associated with property and equipment was $ 14.3 million and $ 10.5 million for the three months ended July 31, 2021 and 2020, and $ 27.8 million and $ 20.3 million for the six months ended July 31, 2021 and 2020.

For the three months ended July 31, 2021 and 2020, we capitalized $ 9.3 million and $ 6.8 million of internally developed software.

F or the six months ended July 31, 2021 and 2020, we capitalized $ 17.1 million and $ 11.0 million of internally developed software.

Depreciation and amortization expense associated with property and equipment was $ 14.2 million and $ 12.1 million for the three months ended October 31, 2021 and 2020, and $ 42.0 million and $ 32.4 million for the nine months ended October 31, 2021 and 2020.

For the three months ended October 31, 2021 and 2020, we capitalized $ 9.5 million of internally developed software.

F or the nine months ended October 31, 2021 and 2020, we capitalized $ 26.6 million and $ 20.5 million of internally developed software.

DocuSign, Inc.

| 2022 Form 10Q | 16

Deferred Contract Acquisition and Fulfillment Costs

The following table represents a rollforward of our deferred contract acquisition and fulfillment costs:

Six Months Ended July 31,

Nine Months Ended October 31,

(in thousands) 2021 2020

13 unchanged sentences

The net proceeds from the issuance of the 2023 Notes were $ 560.8 million after deducting the initial purchasers’ discounts and transaction costs.

Based upon the reported sales price of our common stock, the 2023 Notes became convertible on August 1, 2020 and continue to be convertible through July 31, 2021.

Based upon the reported sales price of our common stock, the 2023 Notes became convertible on August 1, 2020 and continue to be convertible through October 31, 2021.

In January 2021 we issued $ 690.0 million in aggregate principal amount of the 0 % Convertible Senior Notes due in 2024 (“2024 Notes,” and together with the 2023 Notes, the “Notes”).

The net proceeds from the issuance of the 2024 Notes were $ 677.3 million after deducting the initial purchasers’ discounts and transaction costs.

As of July 31, 2021, the conversion conditions for the 2024 Notes described in our 2021 Annual Report on Form 10-K were not met.

DocuSign, Inc.

| 2022 Form 10Q | 16

As of October 31, 2021, the conversion conditions for the 2024 Notes described in our 2021 Annual Report on Form 10-K were not met.

Conversions of the 2023 Notes

We accounted for early conversions and settlements of the 2023 Notes during the six months ended July 31, 2021 under ASU 2020-06.

We accounted for early conversions and settlements of the 2023 Notes during the nine months ended October 31, 2021 under ASU 2020-06.

Refer to Note 1 for further discussion of early adoption.

During the six months ended July 31, 2021, we settled $ 61.7 million aggregate amount of the principal of 2023 Notes, including $ 23.9 million elected for conversion as of January 31, 2021, for aggregate consideration of $ 195.0 million, consisting of $ 61.7 million in cash and 0.6 million shares of our common stock with a value of $ 133.3 million.

During the nine months ended October 31, 2021, we settled $ 64.8 million aggregate amount of the principal of 2023 Notes, including $ 23.9 million elected for conversion as of January 31, 2021, for aggregate consideration of $ 207.3 million, consisting of $ 64.8 million in cash and 0.6 million shares of our common stock with a value of $ 142.5 million.

The $ 0.8 million excess of the cash consideration over the corresponding carrying value was recorded as a reduction to additional paid-in capital.

Additionally, as of July 31, 2021, we had received conversion notices on our 2023 Notes for $ 2.0 million in aggregate principal amount, the corresponding carrying value is reflected in Convertible senior notes—current on our condensed consolidated balance sheet.

From August 1, 2021 through September 2, 2021, we received conversion notices on our 2023 Notes for $ 1.1 million in aggregate principal amount.

We plan to settle the principal amount in cash during the three months ended October 31, 2021.

Additionally, as of October 31, 2021, we had received conversion notices on our 2023 Notes for $ 11.6 million in aggregate principal amount, the corresponding carrying value is reflected in Convertible senior notes—current on our condensed consolidated balance sheet.

From November 1, 2021 through December 3, 2021, we received conversion notices on our 2023 Notes for $ 1.5 million in aggregate principal amount.

We plan to settle the principal amount in cash during the three months ended January 31, 2022.

DocuSign, Inc.

1 unchanged sentence

The net carrying amounts of the liability and equity components of the Notes were as follows:

(in thousands) July 31, 2021 January 31, 2021

(in thousands) October 31, 2021 January 31, 2021

Principal $ 50,169 $ 115,000

17 unchanged sentences

Interest expense recognized related to the Notes was as follows:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

(in thousands) 2021 2020 2021 2020

21 unchanged sentences

Upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the cap prices listed above in the Capped Calls section, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price.

As of July 31, 2021, the market price of our common stock exceeded the $ 110.00 per share cap price associated with the 2023 Notes but not the $ 525.30 cap price associated with the 2024 Notes;

As of October 31, 2021, the market price of our common stock exceeded the $ 110.00 per share cap price associated with the 2023 Notes but not the $ 525.30 cap price associated with the 2024 Notes;

therefore, the 2023 Notes would have caused economic dilution if converted.

4 unchanged sentences

The Credit Facility matures in January 2026 and requires us to comply with customary affirmative and negative covenants.

We were in compliance with all covenants as of July 31, 2021.

As of July 31, 2021, there were no outstanding borrowings under the Credit Facility.

We were in compliance with all covenants as of October 31, 2021.

As of October 31, 2021, there were no outstanding borrowings under the Credit Facility.

The Credit Facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate between 0.25 % and 0.30 % per annum on the daily undrawn balance.

Commitments and Contingencies

As of July 31, 2021, we had outstanding unused letters of credit associated with our various operating leases totaling $ 7.4 million.

As of October 31, 2021, we had outstanding unused letters of credit associated with our various operating leases totaling $ 7.3 million.

We have entered into certain noncancellable contractual arrangements that require future purchases of goods and services.

These arrangements primarily relate to cloud infrastructure support and sales and marketing activities.

As of July 31, 2021, the future noncancellable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows:

As of October 31, 2021, the future noncancellable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows:

Fiscal Period:

11 unchanged sentences

Historically, we have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements.

As a result, we believe the fair value of these indemnification agreements is not material as of July 31, 2021, and January 31, 2021.

As a result, we believe the fair value of these indemnification agreements is not material as of October 31, 2021, and January 31, 2021.

We maintain commercial general liability insurance and product liability insurance to offset certain of our potential liabilities under these indemnification agreements.

8 unchanged sentences

the 2018 Equity Incentive Plan (the “2018 Plan”), the Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”) and the Amended and Restated 2003 Stock Plan (the “2003 Plan”).

The 2018 Plan serves as a successor to the 2011 Plan and 2003 Plan and provides for the grant of stock-based awards to our employees, directors and consultants.

Shares available for grant under the 2011 Plan that were reserved but not issued as of the effective date of the 2018 Plan were added to the reserves of the 2018 Plan.

No additional awards under the 2011 Plan or 2003 Plan have been made since the effective date of the 2018 Plan.

Outstanding awards under these two plans continue to be subject to the terms and conditions of the respective plans.

As of July 31, 2021, 42.2 million shares of our common stock were available for issuance under the 2018 Plan.

The 2018 Plan provides that the number of shares reserved will automatically increase on the first day of each fiscal year, beginning on February 1, 2019 and ending on February 1, 2028, by 5 % of the total number of shares of our capital stock outstanding on the immediately preceding January 31st (or such lesser number of shares as our board of directors or a committee of our board of directors may approve).

The most recent automatic increase of 9.6 million shares occurred on February 1, 2021.

As of October 31, 2021, 42.0 million shares of our common stock were available for issuance under the 2018 Plan.

Restricted Stock Units

Restricted stock units (“RSUs”) granted under the 2018 Plan generally vest over a four-year period, either quarterly or with 25 % vesting at the end of one year and the remainder quarterly thereafter.

The majority of RSUs vest upon the satisfaction of a service-based vesting condition.

From time to time, we also grant RSUs that are subject to either a performance-based or market-based vesting condition.

The performance-based conditions will be satisfied upon satisfaction of certain financial performance targets.

The market-based conditions will be satisfied if certain milestones based on our common stock price or relative total shareholder return are met.

DocuSign, Inc.

| 2022 Form 10Q | 20

RSU activity for the six months ended July 31, 2021 was as follows:

Restricted stock unit (“RSU”) activity for the nine months ended October 31, 2021 was as follows:

(in thousands, except per share data) Number of Units Weighted-Average Grant Date Fair Value

3 unchanged sentences

Canceled ( 989 ) $ 98.23

Unvested at July 31, 2021 9,305 $ 119.83

As of July 31, 2021, our total unrecognized compensation cost related to RSUs was $ 869.0 million.

Unvested at October 31, 2021 8,739 $ 137.82

As of October 31, 2021, our total unrecognized compensation cost related to RSUs was $ 941.3 million.

We expect to recognize this expense over the remaining weighted-average period of approximately 2.3 years.

DocuSign, Inc.

| 2022 Form 10Q | 20

Stock Options

Option activity for the six months ended July 31, 2021 was as follows:

Option activity for the nine months ended October 31, 2021 was as follows:

(in thousands, except years and per share data) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value

1 unchanged sentence

Exercised ( 1,468 ) 14.39

Outstanding at July 31, 2021, all vested and exercisable 3,686 $ 16.16 4.8 $ 1,039,112

As of July 31, 2021, there was no remaining unrecognized compensation cost related to stock option grants.

Outstanding at October 31, 2021, all vested and exercisable 3,330 $ 16.06 4.6 $ 873,198

As of October 31, 2021, there was no remaining unrecognized compensation cost related to stock option grants.

2018 Employee Stock Purchase Plan

The Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of our common stock at a discounted price, normally through payroll deductions, of up to 15 % of their earnings, subject to the terms of the ESPP and applicable law.

The purchase price for common stock under the ESPP is equal to 85 % of the fair market value of our common stock on the first or last day of the offering period, whichever is lower.

The ESPP provides for separate six-month offering periods that begin in the first and third quarter of each year.

In the six months ended July 31, 2021, 0.1 million shares of our common stock were purchased under the ESPP.

Compensation expense related to the ESPP was $ 4.8 million and $ 2.9 million for the three months ended July 31, 2021 and 2020, and $ 9.1 million and $ 4.8 million for the six months ended July 31, 2021 and 2020.

The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through February 1, 2028, in an amount equal to the lesser of (i) 1 % of the total number of shares of our common stock outstanding on January 31 of the preceding fiscal year, (ii) 3.8 million shares or (iii) a lesser number of shares determined by our board of directors.

As of July 31, 2021, 8.1 million shares of our common stock were reserved for issuance under the ESPP.

DocuSign, Inc.

| 2022 Form 10Q | 21

The Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of our common stock at a discounted price, normally through payroll deductions, subject to the terms of the ESPP and applicable law.

As of October 31, 2021, 8.0 million shares of our common stock were reserved for issuance under the ESPP.

Compensation expense related to the ESPP was $ 4.8 million and $ 3.4 million for the three months ended October 31, 2021 and 2020, and $ 13.9 million and $ 8.2 million for the nine months ended October 31, 2021 and 2020.

Net Loss per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for periods presented:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

(in thousands, except per share data) 2021 2020 2021 2020

12 unchanged sentences

There were no material discrete items in the quarter.

Our income tax provision was $ 0.2 million and $ 0.8 million for the three months ended July 31, 2021 and 2020.

Our income tax provision was $ 2.1 million and $ 3.0 million for the six months ended July 31, 2021 and 2020.

DocuSign, Inc.

| 2022 Form 10Q | 21

Our income tax benefit was $ 0.1 million and income tax provision was $ 1.9 million for the three months ended October 31, 2021 and 2020.

Our income tax provision was $ 2.0 million and $ 4.9 million for the nine months ended October 31, 2021 and 2020.

We review the likelihood that we will realize the benefit of our deferred tax assets and, therefore, the need for valuation allowances, on a quarterly basis.

2 unchanged sentences

In the event we determine our deferred tax assets are realizable based on our assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made.

As of July 31, 2021, our gross unrecognized tax benefits totaled $ 37.2 million, excluding related accrued interest and penalties, of which $ 16.3 million would impact the effective tax rate if recognized.

As of October 31, 2021, our gross unrecognized tax benefits totaled $ 45.6 million, excluding related accrued interest and penalties, of which $ 15.1 million would impact the effective tax rate if recognized.

Our policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision.

1 unchanged sentence

We are subject to taxation in the United States and various foreign jurisdictions.

Our tax years from inception in 2003 through July 31, 2021 remain subject to examination by U.S.

Our tax years from inception in 2003 through October 31, 2021 remain subject to examination by U.S.

and California taxing authorities, as well as taxing authorities in various other state and foreign jurisdictions.

2 unchanged sentences

We believe that adequate amounts have been reserved in all jurisdictions.

Geographic Information

We operate in one operating segment and one reportable segment as we only report financial information on an aggregate and consolidated basis to the Chief Executive Officer, who is our chief operating decision maker.

DocuSign, Inc.

| 2022 Form 10Q | 22

Revenue by geography is based on the address of the customer as specified in our master subscription agreements with our customers.

Revenue by geographic area was as follows:

Three Months Ended July 31, Six Months Ended July 31,

(in thousands) 2021 2020 2021 2020

$ 397,882 $ 275,494 $ 766,305 $ 517,662

International 113,962 66,715 214,618 121,564

Total revenue $ 511,844 $ 342,209 $ 980,923 $ 639,226

No single country other than the U.S.

had revenue greater than 10% of total revenue in the three and six months ended July 31, 2021 and 2020 .

Our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows:

(in thousands) July 31, 2021 January 31, 2021

$ 219,503 $ 221,549

Ireland 61,977 66,670

International 33,092 36,172

Total long-lived assets $ 314,572 $ 324,391

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements