What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-12-06 compared with 2021-09-03 · 86 added, 97 removed, 333 unchanged (35% of the section changed)

4 unchanged sentences

Our fiscal year ends January 31.

Executive Overview of Second Quarter Results

Executive Overview of Third Quarter Results

DocuSign accelerates the process of doing business for companies and simplifies life for their customers and employees.

11 unchanged sentences

Our customers have the flexibility to put a large number of documents in an Envelope.

For a number of

For a number of use cases, such as buying a home, multiple Envelopes are used over the course of the process.

To drive customer reach and adoption, we also offer for free certain limited-time or feature-constrained versions of our platform.

DocuSign, Inc.

| 2022 Form 10Q | 22

use cases, such as buying a home, multiple Envelopes are used over the course of the process.

To drive customer reach and adoption, we also offer for free certain limited-time or feature-constrained versions of our platform.

We generate substantially all our revenue from sales of subscriptions, which accounted for 96% and 95% of our revenue in the three months and the six months ended July 31, 2021 and 2020.

We generate substantially all our revenue from sales of subscriptions, which accounted for 97% and 96% of our revenue in the three months ended October 31, 2021 and 2020 and 97% and 95% in the nine months ended October 31, 2021 and 2020.

Our subscription fees include the use of our software suite and access to customer support.

2 unchanged sentences

Other revenue includes amounts derived from sales of on-premises solutions.

Professional services and other revenue accounted for the remainder of total revenue in the three and six months ended July 31, 2021 and 2020.

Professional services and other revenue accounted for the remainder of total revenue in the three and the nine months ended October 31, 2021 and 2020.

We anticipate continuing to invest in customer success through our professional services offerings as we believe it plays an important role in accelerating our customers’ deployment of our software suite, which helps drive customer retention and expansion of the use of the DocuSign Agreement Cloud.

6 unchanged sentences

We focused initially on selling our e-signature solutions to commercial businesses and VSBs, and later expanded our focus to target enterprise customers.

To demonstrate this growth over time, the number of our customers with greater than $300,000 in annual contract value (measured in billings) has increased from approximately 30 customers as of January 31, 2013 to 714 customers as of July 31, 2021.

Each of our customer types has a different purchasing pattern.

3 unchanged sentences

We are continuing to monitor the effects of the pandemic across our business.

These effects are dependent on highly uncertain future developments, including the duration, spread and severity of the pandemic, the emergence of coronavirus variants, the actions undertaken to contain the virus or mitigate its impacts, the speed and breadth of vaccination progress, vaccine efficacy against COVID-19 variants, current or future travel restrictions and how quickly and to what extent normal global economic and operating conditions can or will resume , all of which are highly uncertain and cannot be accurately predicted.

While our revenue and earnings are relatively predictable as a result of our subscription-based business model, the effects of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods.

These effects are dependent on highly uncertain future developments, including the duration, spread and severity of the pandemic, the emergence of coronavirus variants, the actions undertaken to contain the virus or mitigate its impacts, including actions mandated by governments and health authorities and changing public health directives or restrictions, the speed and breadth of vaccination progress, vaccine efficacy against COVID-19 variants, current or future travel restrictions and how quickly and to what extent normal global economic and operating conditions can or will resume , all of which are highly uncertain and cannot be accurately predicted.

The effects of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods as a result of our subscription-based business model.

During the pandemic, we have taken a number of precautionary measures to ensure the health and safety of our employees, partners and customers, including by shifting to a largely remote work environment, imposing work-related travel restrictions for all employees and shifting most planned customer, partner and investor events to virtual-only formats.

1 unchanged sentence

The impact of these and any other operational changes we may implement is uncertain, but as of the date of this filing they have not materially affected our ability to maintain operations.

We have experienced a substantial increase in overall demand for our products, particularly DocuSign eSignature, as the shift to remote, digital business operations has caused more organizations to adopt or expand their use of digital agreements.

This acceleration of the digital transformation of agreements has resulted in growth in our customer base and a significant increase in customer spending across almost all industries and regions we serve.

We have experienced a substantial increase in overall demand for our products, particularly DocuSign eSignature, since the beginning of the pandemic as the shift to remote, digital business operations caused more organizations to adopt or expand their use of digital agreements.

This acceleration of the digital transformation of agreements contributed to growth in our customer base and increases in customer spending across industries and regions.

While we have experienced a significant increase in paying customers and revenue due to the pandemic, there is no assurance that we will experience a continued increase in paying customers or that new or existing customers will continue to utilize our products at similar levels after the COVID-19 pandemic has tapered globally.

As vaccinations

DocuSign, Inc.

| 2022 Form 10Q | 23

As vaccinations become widely available and the pandemic wanes, this may result in a decline in paying customers once individuals are no longer working or attending school from home and/or their priorities change.

As the pandemic continued in 2021, the rate of vaccinations and emerging COVID-19 variants have had variable impacts on different regions of the world and areas of the economy.

become widely available and the pandemic wanes, this may result in a decline in paying customers once individuals are no longer working or attending school from home and/or their priorities change.

As the pandemic continued in 2021, the rate of vaccinations, emerging COVID-19 variants, and shifting governmental policies on vaccination mandates and other pandemic restrictions have had variable impacts on different regions of the world and areas of the economy.

This has caused and may continue to cause new, existing and potential customers to experience rapidly changing conditions and disruptions to their businesses.

This may result in differing levels of demand for our products as our customers’ priorities, resources, financial conditions and economic outlook change, which could adversely affect or increase the volatility of our financial results.

Additionally, as a service provider to U.S.

state and federal government agencies, we are subject to a variety of COVID-19 vaccination, testing, and related health and safety requirements, including the requirement that our U.S.-based employees be fully vaccinated against COVID-19 by January 4, 2022, absent a medical or religious exemption.

We are not able to currently predict the full impact this requirement may have on our business.

See the section below titled “ Risk Factors” for further discussion of the potential impact of the COVID-19 pandemic, including the conclusion or tapering of the pandemic, on our business, financial condition and results of operations.

Financial Results for the Three and Six Months Ended July 31, 2021 and 2020

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

Financial Results for the Three and Nine Months Ended October 31, 2021 and 2020

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

(in thousands) 2021 2020 2021 2020

6 unchanged sentences

Purchases of property and equipment (15,392) (19,393) (43,926) (64,144)

Cash, cash equivalents, restricted cash and investments were $887.2 million as of July 31, 2021 .

Cash, cash equivalents, restricted cash and investments were $908.2 million as of October 31, 2021 .

Key Factors Affecting Our Performance

3 unchanged sentences

We have invested, and expect to continue to invest, heavily in our sales and marketing efforts to drive customer acquisition.

As of July 31, 2021, we had a total of over 1,053,000 customers, including over 148,000 enterprise and commercial customers, comp ared to almost 750,000 customers and over 95,000 enterprise and commercial customers as of July 31, 2020.

As of October 31, 2021, we had a total of over 1.1 million customers, including over 159,000 enterprise and commercial customers, comp ared to almost 820,000 customers and over 110,000 enterprise and commercial customers as of October 31, 2020.

We define a customer as a separate and distinct buying entity, such as a company, an educational or government institution or a distinct business unit of a large company that has an active contract to access our software suite.

4 unchanged sentences

By increasing awareness of our software suite, further developing our sales and marketing expertise and continuing to build features tuned to different industry needs, we have expanded the diversity of our customer base to include organizations of all sizes across nearly every industry.

DocuSign, Inc.

| 2022 Form 10Q | 24

Retaining and Expanding Contracts with Existing Enterprise and Commercial Customers

3 unchanged sentences

We believe there is significant expansion opportunity with our customers following their initial adoption of our software suite.

DocuSign, Inc.

| 2022 Form 10Q | 25

Increasing International Revenue

Our international revenue represented 22% and 19% of our total revenue in both the three months and the six months ended July 31, 2021 and 2020.

Our international revenue represented 23% and 20% of our total revenue in the three months ended October 31, 2021 and 2020 and 22% and 19% in the nine months ended October 31, 2021 and 2020.

We started our international selling efforts in English-speaking common law countries, such as Canada, the United Kingdom and Australia, where we were able to leverage our core technologies due to similar approaches to e-signature in these jurisdictions and the United States (“U.S.”).

4 unchanged sentences

We plan to increase our international revenue by leveraging and continuing to expand the investments we have already made in our technology, direct sales force and strategic partnerships, as well as helping existing U.S.-based customers manage agreements across their international businesses.

We have experienced increased demand in Latin America and are expanding our sales and marketing resources to capitalize on the potential growth of these markets.

We have experienced increased demand across multiple regions and are expanding our sales and marketing resources to capitalize on the potential growth of these markets.

Additionally, we expect to continue to develop and enhance our strategic partnerships in key international markets as we grow internationally.

15 unchanged sentences

Other revenue includes amounts derived from sales of on-premises solutions.

DocuSign, Inc.

| 2022 Form 10Q | 25

Overhead Allocation

1 unchanged sentence

As such, these allocated overhead costs are reflected in each cost of revenue and operating expense category.

DocuSign, Inc.

| 2022 Form 10Q | 26

Cost of Revenue

23 unchanged sentences

Interest expense consists primarily of contractual interest expense, amortization of discount and amortization of debt issuance costs on our Convertible Senior Notes (the “ Notes”).

Interest income and other income (expense), net

Interest income and other income (expense), net , consists primarily of interest earned on our cash, cash equivalents and investments, changes in fair value of our strategic investments and foreign currency transaction gains and losses.

DocuSign, Inc.

| 2022 Form 10Q | 26

Provision for income taxes

Our provision for income taxes consists primarily of income taxes in certain foreign jurisdictions where we conduct business, and tax benefits arising from deductions for stock-based compensation.

Interest income and other income (expense), net

Provision for (benefit from) income taxes

Our provision for (benefit from) income taxes consists primarily of income taxes in certain foreign jurisdictions where we conduct business, and tax benefits arising from deductions for stock-based compensation.

We have a valuation allowance against our U.S.

6 unchanged sentences

The following table summarizes our historical consolidated statements of operations data:

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

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

(in thousands, except percentages) 2021 As % of revenue 2020 As % of revenue 2021 As % of revenue 2020 As % of revenue

15 unchanged sentences

Interest income and other income (expense), net (940) — (311) — 4,034 — 6,032 1

Loss before provision for income taxes (25,343) (5) (63,718) (19) (31,715) (3) (109,389) (19)

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

Loss before provision for (benefit from) income taxes (5,783) (1) (56,550) (15) (37,498) (2) (165,939) (16)

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

Net loss $ (5,676) (1) % $ (58,491) (15) % $ (39,531) (3) % $ (170,855) (17) %

Amortization of finite-lived intangible assets was as follows:

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

(in thousands) 2021 2020 2021 2020

Cost of subscription revenue $ 3,328 $ 3,132 $ 6,500 $ 4,480

Sales and marketing 3,333 4,284 6,691 7,195

Total $ 6,661 $ 7,416 $ 13,191 $ 11,675

The following discussion and analysis is for the three and six months ended July 31, 2021, compared to the same period in 2020, unless otherwise stated.

Three Months Ended July 31, 2021 versus 2020 Six Months Ended July 31, 2021 versus 2020

The following discussion and analysis is for the three and nine months ended October 31, 2021, compared to the same period in 2020, unless otherwise stated.

Three Months Ended October 31, 2021 versus 2020 Nine Months Ended October 31, 2021 versus 2020

(in thousands, except for percentages) 2021 2020 2021 2020

2 unchanged sentences

Total revenue $ 545,463 $ 382,923 42 % $ 1,526,385 $ 1,022,149 49 %

DocuSign, Inc.

| 2022 Form 10Q | 29

Subscription revenue increased by $169.1 million, or 52%, in the three months ended July 31, 2021 and by $340.1 million, or 56%, in the six months ended July 31, 2021.

Subscription revenue increased by $162.0 million, or 44%, in the three months ended October 31, 2021 and by $502.1 million, or 52%, in the nine months ended October 31, 2021.

The increase was primarily due to a combination of the acquisition of new customers and upsells to our existing customer base.

2 unchanged sentences

We expect subscription revenue to continue to increase as existing customers increase their usage across their organizations while we offer new functionality, attract new customers and fully realize the potential of our acquisitions in our product offerings.

We continue to monitor the COVID-19 pandemic in fiscal 2022 and its impact on the economy, the digital transformation of business and customer demand for our solutions.

DocuSign, Inc.

| 2022 Form 10Q | 28

Cost of Revenue and Gross Margin

Three Months Ended July 31, 2021 versus 2020 Six Months Ended July 31, 2021 versus 2020

Three Months Ended October 31, 2021 versus 2020 Nine Months Ended October 31, 2021 versus 2020

(in thousands, except for percentages) 2021 2020 2021 2020

7 unchanged sentences

Total gross margin 79 % 74 % 5 pts 78 % 74 % 4 pts

Cost of subscription revenue increased $19.7 million, or 30%, in the three months ended July 31, 2021 and $45.8 million, or 39%, in the six months ended July 31, 2021, primarily driven by higher costs to support our growing customer base.

Increases in the three months ended July 31, 2021 primarily consisted of:

Cost of subscription revenue increased $14.7 million, or 21%, in the three months ended October 31, 2021 and $60.5 million, or 32%, in the nine months ended October 31, 2021, primarily driven by higher costs to support our growing customer base.

Increases in the three months ended October 31, 2021 primarily consisted of:

▪ $4.3 million in personnel costs and $2.3 million in stock-based compensation driven by higher headcount and annual salary increases;

▪ $5.3 million in operating costs due to higher costs to support our platform and the growth in our revenue, including increases in subscription reseller fees, hosting costs and authentication and processing fees.

Increases in the six months ended July 31, 2021 primarily consisted of:

▪ $4.0 million in operating costs to support our platform and the growth in our revenue, including increases in hosting costs and processing fees.

Increases in the nine months ended October 31, 2021 primarily consisted of:

▪ $19.6 million in personnel costs and $7.0 million in stock-based compensation driven by higher headcount and annual salary increases;

▪ $11.5 million in operating costs to support our platform and the growth in our revenue, including increases in subscription reseller fees, hosting costs and authentication and processing fees;

▪ $15.5 million in operating costs to support our platform and the growth in our revenue, including increases in hosting costs, authentication and processing fees and subscription reseller fees;

▪ $13.3 million in depreciation and amortization, which reflects the impact of higher data center and capitalized software assets as well as the higher existing technology intangible assets from acquisitions.

Cost of professional services and other revenue increased $3.4 million, or 13%, in the three months ended July 31, 2021 and $8.6 million, or 18%, in the six months ended July 31, 2021, primarily due to an increase in personnel costs driven by higher headcount and annual salary increases.

Cost of professional services and other revenue increased $3.5 million, or 12%, in the three months ended October 31, 2021 and $12.1 million, or 16%, in the nine months ended October 31, 2021, primarily due to an increase in personnel costs driven by higher headcount, annual salary increases and stock-based compensation.

Sales and Marketing

Three Months Ended July 31, 2021 versus 2020 Six Months Ended July 31, 2021 versus 2020

Three Months Ended October 31, 2021 versus 2020 Nine Months Ended October 31, 2021 versus 2020

(in thousands, except for percentages) 2021 2020 2021 2020

1 unchanged sentence

Percentage of revenue 51 % 55 % 51 % 56 %

Sales and marketing expenses increased $67.4 million, or 35%, in the three months ended July 31, 2021 and $134.7 million, or 37%, in the six months ended July 31, 2021, primarily driven by investments in workforce and

DocuSign, Inc.

| 2022 Form 10Q | 30

technology support to accommodate the significant increase in demand due to the acceleration of the digital transformation of agreements.

Increases in the three months ended July 31, 2021 primarily consisted of:

Sales and marketing expenses increased $65.7 million, or 31%, in the three months ended October 31, 2021 and $200.4 million, or 35%, in the nine months ended October 31, 2021 primarily driven by investments in workforce and technology support to accommodate demand for our products and increased interest in digital transformation of agreements.

Increases in the three months ended October 31, 2021 primarily consisted of:

▪ $38.9 million in personnel costs and $12.8 million in stock-based compensation due to higher headcount, annual salary increases, higher commissions in line with higher sales and higher payroll taxes;

▪ $12.8 million in marketing and advertising expense due to higher spend on online advertising platforms to help capture the increased market interest in our product offering.

Increases in the six months ended July 31, 2021 primarily consisted of:

▪ $8.7 million in marketing and advertising expense due to higher spend on online advertising platforms to help capture the continued market interest in our product offering.

Increases in the nine months ended October 31, 2021 primarily consisted of:

▪ $113.5 million in personnel costs and $40.9 million in stock-based compensation due to higher headcount, annual salary increases, higher commissions in line with higher sales and higher payroll taxes;

▪ $23.7 million in marketing and advertising expense due to higher spend on online advertising platforms to help capture the increased market interest in our product offering.

DocuSign, Inc.

| 2022 Form 10Q | 29

▪ $32.4 million in marketing and advertising expense due to higher spend on online advertising platforms to help capture the continued market interest in our product offering;

▪ $12.2 million due to higher information technology costs.

Research and Development

Three Months Ended July 31, 2021 versus 2020 Six Months Ended July 31, 2021 versus 2020

Three Months Ended October 31, 2021 versus 2020 Nine Months Ended October 31, 2021 versus 2020

(in thousands, except for percentages) 2021 2020 2021 2020

1 unchanged sentence

Percentage of revenue 19 % 19 % 19 % 19 %

Research and development expenses increased $30.9 million, or 48%, in the three months ended July 31, 2021 and $62.0 million, or 53%, in the six months ended July 31, 2021, primarily due to investments in workforce and technology support to accommodate growth.

Personnel costs and stock-based compensation increased $15.5 million and $11.5 million in the three months ended July 31, 2021 and $34.8 million and $20.1 million in the six months ended July 31, 2021, due to higher headcount and annual salary increases.

The increase in the six months ended July 31, 2021 also reflects the impact of the addition of Seal and Liveoak employees to our workforce.

Research and development expenses increased $29.2 million, or 40%, in the three months ended October 31, 2021 and $91.3 million, or 48%, in the nine months ended October 31, 2021, primarily due to investments in workforce and technology support to accommodate growth.

Personnel costs and stock-based compensation increased $15.6 million and $11.2 million in the three months ended October 31, 2021 and $50.3 million and $31.2 million in the nine months ended October 31, 2021, due to higher headcount and annual salary increases, which also reflects the impact of the addition of Seal and Liveoak employees to our workforce.

Additionally, the increase in the nine months ended October 31, 2021 includes $7.2 million due to higher information technology costs.

General and Administrative

Three Months Ended July 31, 2021 versus 2020 Six Months Ended July 31, 2021 versus 2020

Three Months Ended October 31, 2021 versus 2020 Nine Months Ended October 31, 2021 versus 2020

(in thousands, except for percentages) 2021 2020 2021 2020

1 unchanged sentence

Percentage of revenue 9 % 13 % 10 % 14 %

General and administrative expenses increased $12.2 million, or 24%, in the three months ended July 31, 2021 and $23.4 million, or 26%, in the six months ended July 31, 2021, primarily due to investments in workforce and technology support to accommodate growth.

Personnel costs and stock-based compensation increased $2.9 million and $2.2 million in the three months ended July 31, 2021 and $9.8 million and $4.2 million in the six months ended July 31, 2021, due to higher headcount and the impact of annual salary increases.

The expense for the three and six months ended July 31, 2021 also includes $3.9 million impairment of operating lease right-of-use assets.

DocuSign, Inc.

| 2022 Form 10Q | 31

General and administrative expenses increased $4.4 million, or 9%, in the three months ended October 31, 2021 and $27.8 million, or 20%, in the nine months ended October 31, 2021, primarily due to investments in workforce and technology support to accommodate growth.

Personnel costs and stock-based compensation increased $1.4 million and $1.5 million in the three months ended October 31, 2021 and $10.0 million and $5.3 million in the nine months ended October 31, 2021, due to higher headcount and the impact of annual salary increases.

The expense for the nine months ended October 31, 2021 also includes $3.9 million impairment of operating lease right-of-use assets.

Other Income and Expense

Three Months Ended July 31, 2021 versus 2020 Six Months Ended July 31, 2021 versus 2020

Three Months Ended October 31, 2021 versus 2020 Nine Months Ended October 31, 2021 versus 2020

(in thousands, except for percentages) 2021 2020 2021 2020

1 unchanged sentence

Percentage of revenue — % 2 % — % 2 %

Interest income $1,194 $1,825 (35) % $2,320 $5,206 (55) %

Foreign currency gain (loss) (1,738) 1,425 NM (1,473) 880 NM

Fair value adjustments to strategic investments — — — % 5,270 — — %

Other (519) (649) (20) % (1,143) 257 NM

Interest income and other income (expense), net $(940) $(311) 202 % $4,034 $6,032 (33) %

Percentage of revenue — % — % — % 1 %

Interest expense decreased by $6.0 million in the three months ended July 31, 2021 and $11.9 million in the six months ended July 31, 2021, primarily due to lower amortization expense under ASU 2020-06 effective February 1, 2021.

Interest income and other income, net, for the six months ended July 31, 2021 included $5.3 million adjustments to fair value of certain strategic investments resulting from observable price changes that occurred during the quarter.

Interest expense decreased by $6.3 million in the three months ended October 31, 2021 and $18.2 million in the nine months ended October 31, 2021, primarily due to lower amortization expense under ASU 2020-06 effective February 1, 2021.

Interest income and other income, net, for the nine months ended October 31, 2021 included $4.8 million adjustments to fair value of certain strategic investments resulting from observable price changes that occurred during the quarter ended April 30, 2021.

DocuSign, Inc.

2 unchanged sentences

Our principal sources of liquidity were cash, cash equivalents and investments as well as cash generated from operations.

As of July 31, 2021, we had $822.9 million in cash and cash equivalents and short-term investments.

As of October 31, 2021, we had $818.5 million in cash and cash equivalents and short-term investments.

We also had $89.5 million in long-term investments that provide additional capital resources.

We finance our operations primarily through payments by our customers for use of our product offerings and related services and through debt financings.

In September 2018, we issued and sold $575.0 million in aggregate principal amount of 0.5% Convertible Senior Notes due 2023, of which $521.7 million has been settled as of July 31, 2021.

In September 2018, we issued and sold $575.0 million in aggregate principal amount of 0.5% Convertible Senior Notes due 2023, of which $524.8 million has been settled as of October 31, 2021.

In January 2021, we issued and sol d $690.0 million in aggregate principal amount of 0% Convertible Senior Notes due 2024.

1 unchanged sentence

The credit facility is available until January 11, 2026, to optimize our capital structure and strengthen our balance sheet.

There were no outstanding borrowings under the credit facility as of July 31, 2021 .

There were no outstanding borrowings under the credit facility as of October 31, 2021 .

Further details of these transactions are described in Note 6 to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

We were in compliance with all debt covenants at July 31, 2021 .

We were in compliance with all debt covenants at October 31, 2021 .

We believe our existing cash, cash equivalents and marketable securities will be sufficient to meet our working capital and capital expenditures needs over at least the next 12 months.

While we have generated positive cash flows from operations in recent years, we have generated losses from operations in the past as reflected in our accumulated deficit of $1.4 billion as of July 31, 2021.

We may not achieve profitability in the foreseeable future due to the investments we intend to make and may require additional capital resources to execute strategic initiatives to grow our business.

We typically invoice our customers annually in advance.

We typically invoice our direct customers annually in advance.

Therefore, a substantial source of our cash is from such invoices, which are included on our consolidated balance sheets in contract liabilities until revenue is recognized or in accounts receivable until cash is collected.

Accordingly, collections from our customers have a material impact on our cash flows from operating activities.

Our accounts receivable decreased by $38.8 million in the six months ended July 31, 2021, compared to a decrease of $25.2 million in the six months ended July 31, 2020, which resulted in a $13.6 million increase in cash provided by operating activities year over year.

Our accounts receivable decreased by $18.0 million in the nine months ended October 31, 2021, compared to an increase of $11.4 million in the nine months ended October 31, 2020, which resulted in a $29.4 million increase in cash provided by operating activities year over year.

Contract liabilities consist of the unearned portion of billed fees for our subscriptions, which is subsequently recognized as revenue in accordance with our revenue recognition policy.

Our contract liabilities increased by $136.6 million in the six months ended July 31, 2021, compared to an increase of $107.5 million in the six months ended July 31, 2020.

The year over year increase contributed an additional $29.1 million to cash provided by operating activities.

Our contract liabilities increased by $161.0 million in the nine months ended October 31, 2021, compared to an increase of $172.5 million in the nine months ended October 31, 2020, which resulted in an $11.5 million decrease in cash provided by operating activities.

Our future capital requirements will depend on many factors including our growth rate, customer retention and expansion, tax withholding obligations related to settlement of our RSUs, the timing and extent of spending to support our efforts to develop our software suite, the expansion of sales and marketing activities and the continuing market acceptance of our software suite.

6 unchanged sentences

The following table summarizes our cash flows for the periods indicated:

Six Months Ended July 31,

Nine Months Ended October 31,

(in thousands) 2021 2020

6 unchanged sentences

Cash Flows from Operating Activities

Cash provided by operating activities was $313.3 million and $177.3 million for the six months ended July 31, 2021 and 2020.

Cash provided by operating activities was $418.7 million and $234.7 million for the nine months ended October 31, 2021 and 2020.

The improvement of $184.0 million compared to the prior year, was primarily the result of increased sales and the related cash collections, partially offset by higher operating costs to support growth and increased headcount.

Cash Flows from Investing Activities

For the six months ended July 31, 2021, net cash used in investing activities of $104.9 million was primarily driven by $69.5 million net purchases of marketable securities, $28.5 million purchases of property and equipment, and $6.4 million cash paid for acquisitions.

For the six months ended July 31, 2020 , cash provided by investing activities of $90.4 million was primarily driven by $318.7 million from maturities and sales of marketable securities, partially offset by $180.4 million paid for acquisitions, net of cash acquired, and $44.8 million purchases of property and equipment.

For the nine months ended October 31, 2021, net cash used in investing activities of $157.7 million was primarily driven by $106.6 million net purchases of marketable securities, $43.9 million purchases of property and equipment, and $6.4 million cash paid for acquisitions.

For the nine months ended October 31, 2020 , cash provided by investing activities of $100.1 million was primarily driven by $353.1 million from maturities and sales of marketable securities, partially offset by $180.4 million paid for acquisitions, net of cash acquired, $64.1 million purchases of property and equipment and $8.5 million purchases of strategic and other investments.

Cash Flows from Financing Activities

For the six months ended July 31, 2021, cash used in financing activities of $255.3 million was primarily driven by $193.6 million in net payments related to our equity plans, as compared to $107.2 million in the prior year for similar activities.

For the nine months ended October 31, 2021, cash used in financing activities of $320.7 million was primarily driven by $255.9 million in net payments related to our equity plans, as compared to $202.4 million in the prior year for similar activities.

We also used $64.8 million for repayments of our 2023 Notes.

3 unchanged sentences

We do not have any special purpose entities and we do not engage in off-balance sheet financing arrangements.

DocuSign, Inc.

| 2022 Form 10Q | 32

Critical Accounting Policies and Estimates

7 unchanged sentences

There have been no material changes to our critical accounting policies and estimates as described in our 2021 Annual Report on Form 10-K.

DocuSign, Inc.

| 2022 Form 10Q | 34

Recent Accounting Pronouncements

25 unchanged sentences

Reconciliation of gross profit and gross margin:

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

23 unchanged sentences

Reconciliation of income (loss) from operations and operating margin:

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

12 unchanged sentences

Reconciliation of net income (loss):

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

9 unchanged sentences

Computation of free cash flow:

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

5 unchanged sentences

Computation of billings:

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

10 unchanged sentences

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 2. Management’s Discussion and Analysis