What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-03-25 compared with 2021-03-31 · 206 added, 221 removed, 1030 unchanged (29% of the section changed)

7 unchanged sentences

Interest-earning instruments carry a degree of interest rate risk.

Our investment portfolio is comprised of highly rated securities and limits the amount of credit exposure to any one issuer.

A hypothetical 100 basis point increase in interest rates would result in an approximately $1.8 million decrease of the fair value of our investment portfolio as of January 31, 2021.

Our investment portfolio is composed of highly rated securities and limits the amount of credit exposure to any one issuer.

A hypothetical 100 basis point increase in interest rates would result in an approximate $2.5 million decrease of the fair value of our investment portfolio as of January 31, 2022.

Such losses would only be realized if we sold the investments prior to maturity.

13 unchanged sentences

Foreign currency translation adjustments are accounted for as a component of “Accumulated other comprehensive income (loss)” within “Stockholders’ equity”.

Gains or losses due to remeasurements of transactions denominated in foreign currencies are included in “Interest and other income, net” in our consolidated statements of operations and comprehensive loss.

Gains or losses due to remeasurements of transactions denominated in foreign currencies are included in “Interest income and other income, net” in our consolidated statements of operations and comprehensive loss.

We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future.

3 unchanged sentences

CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PC AO B ID 238 )

Consolidated Financial Statements

1 unchanged sentence

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended January 31, 2022 , 2021 and 2020

Consolidated Statement s of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years Ended January 31, 2021, 2020 and 2019

Consolidated Statements of Stockholders’ Equity for the Years Ended January 31, 2022 , 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended January 31, 2022 , 2021 and 2020

4 unchanged sentences

Property and Equipment, Net

Acquisition s

Goodwill and Intangible Assets, Net

Contract Balances

Deferred Contract Acquisition and Fulfillment Costs

10 unchanged sentences

We have audited the accompanying consolidated balance sheets of DocuSign, Inc.

and its subsidiaries (the “Company”) as of January 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity (deficit), and of cash flows for each of the three years in the period ended January 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of January 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for each of the three years in the period ended January 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of January 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases effective February 1, 2019.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible debt effective February 1, 2021 and the manner in which it accounts for leases effective February 1, 2019.

Basis for Opinions

11 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded Seal Software Group Limited and Liveoak Technologies, Inc.

from its assessment of internal control over financial reporting as of January 31, 2021 because they were acquired by the Company in a purchase business combination during 2021.

We have also excluded Seal Software Group Limited and Liveoak Technologies, Inc.

from our audit of internal control over financial reporting.

Seal Software Group Limited and Liveoak Technologies, Inc.

are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 1.5% and 1.5%, respectively, of the related consolidated financial statement amounts as of and for the year ended January 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

DocuSign, Inc.| 2021 Form 10-K | 60

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

1 unchanged sentence

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (iii) provide reasonable assurance regarding prevention or timely

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detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

12 unchanged sentences

For the year ended January 31, 2022, the Company’s revenue was $2.11 billion.

The principal considerations for our determination that performing procedures relating to revenue recognition, specifically identifying and evaluating terms and conditions in contracts, is a critical audit matter are the significant judgment by management in identifying and evaluating terms and conditions in contracts that impact revenue recognition.

This in turn led to significant auditor judgment and effort in performing procedures and evaluating audit evidence to determine whether terms and conditions were appropriately identified and evaluated by management.

2 unchanged sentences

These procedures also included, among others, testing the completeness and accuracy of management’s identification and evaluation of the specific terms and conditions in contracts with customers by examining revenue contracts on a test basis and testing management’s process for identifying and evaluating the terms and conditions in contracts, including management’s determination of the impact of those terms and conditions on revenue recognition.

PricewaterhouseCoopers LLP

/s/ PricewaterhouseCoopers LLP

San Francisco, California

47 unchanged sentences

5 shares as of January 31, 2021

( 1,532 ) ( 1,048 )

Additional paid-in capital 1,720,013 1,702,254

26 unchanged sentences

Interest income and other income, net 1,413 8,914 19,207

Loss before provision for (benefit from) income taxes ( 229,492 ) ( 203,556 ) ( 428,208 )

Provision for (benefit from) income taxes 13,775 4,803 ( 1,750 )

Loss before provision for income taxes ( 66,914 ) ( 229,492 ) ( 203,556 )

Provision for income taxes 3,062 13,775 4,803

Net loss $ ( 69,976 ) $ ( 243,267 ) $ ( 208,359 )

15 unchanged sentences

DOCUSIGN, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

Redeemable Convertible Preferred Stock Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity (Deficit)

(in thousands) Shares Amount Shares Amount

Balances at January 31, 2018 100,226 $ 547,501 35,700 $ 4 $ 160,265 $ 3,403 $ ( 502,320 ) $ ( 338,648 )

Issuance of common stock in connection with initial public offering, net of offering costs — — 19,314 2 524,977 — — 524,979

Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering ( 100,226 ) ( 547,854 ) 100,350 10 547,844 — — 547,854

Conversion of preferred stock warrant to common stock warrant in connection with initial public offering — — — — 848 — — 848

Equity component of convertible senior notes issuance — — — — 131,331 — — 131,331

Purchase of capped calls related to issuance of convertible senior notes — — — — ( 67,563 ) — — ( 67,563 )

Exercise of stock options — — 5,791 — 50,211 — — 50,211

Settlement of RSUs — — 8,126 1 ( 1 ) — — —

Tax withholding on net share settlement of RSUs — — — — ( 215,332 ) — — ( 215,332 )

Employee stock-based compensation expense — — — — 411,803 — — 411,803

Non-employee stock-based compensation expense — — — — 1,058 — — 1,058

Accretion of preferred stock — 353 — — ( 353 ) — — ( 353 )

Exercise of common stock warrants — — 22 — — — — —

Net loss — — — — — — ( 426,458 ) ( 426,458 )

Other comprehensive loss, net — — — — — ( 5,368 ) — ( 5,368 )

Balances at January 31, 2019 — — 169,303 $ 17 $ 1,545,088 $ ( 1,965 ) $ ( 928,778 ) $ 614,362

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

DocuSign, Inc.| 2021 Form 10-K | 64

DOCUSIGN, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity

2 unchanged sentences

Exercise of stock options 6,737 1 72,176 — — — 72,177

Settlement of RSUs 4,706 — — — — — —

Tax withholding on net share settlement of RSUs — — ( 166,504 ) — — — ( 166,504 )

Settlement of restricted stock units 4,706 — — — — — —

Tax withholding on net share settlement of restricted stock units — — ( 166,504 ) — — — ( 166,504 )

Employee stock purchase plan 508 — 23,872 — — — 23,872

10 unchanged sentences

Exercise of stock options 2,072 — 24,305 — — — 24,305

Settlement of RSUs 4,072 — — — — — —

Tax withholding on net share settlement of RSUs and employee stock purchase plan — — ( 376,542 ) ( 1,048 ) — — ( 377,590 )

Settlement of restricted stock units 4,072 — — — — — —

Tax withholding on net share settlement of restricted stock units and employee stock purchase plan — — ( 376,542 ) ( 1,048 ) — — ( 377,590 )

Employee stock purchase plan 464 — 29,859 — — — 29,859

6 unchanged sentences

DOCUSIGN, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity

(in thousands) Shares Amount

Balances at January 31, 2021 192,807 19 1,702,254 ( 1,048 ) 4,964 ( 1,380,452 ) 325,737

Cumulative impact of Accounting Standards Update 2020-06 adoption — — ( 86,144 ) — — 12,239 ( 73,905 )

Settlement of convertible senior notes due in 2023 749 — ( 873 ) — — — ( 873 )

Exercise of stock options 1,693 — 23,729 — — — 23,729

Settlement of restricted stock units and employee stock purchase plan 5,071 1 ( 1 ) — — — —

Tax withholding on net share settlement of restricted stock units and employee stock purchase plan ( 1,760 ) — ( 388,915 ) ( 484 ) — — ( 389,399 )

Employee stock purchase plan 264 — 46,077 — — — 46,077

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

Employee stock-based compensation expense — — 420,886 — — — 420,886

Net loss — — — — — ( 69,976 ) ( 69,976 )

Other comprehensive loss, net — — — — ( 9,773 ) — ( 9,773 )

Balances at January 31, 2022 198,834 $ 20 $ 1,720,013 $ ( 1,532 ) $ ( 4,809 ) $ ( 1,438,189 ) $ 275,503

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

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DOCUSIGN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

30 unchanged sentences

Maturities of marketable securities 283,184 488,538 627,309

Purchases of strategic investments ( 5,300 ) ( 15,500 ) —

Purchases of other investments ( 3,241 ) — —

Purchases of strategic and other investments ( 1,750 ) ( 8,541 ) ( 15,500 )

Purchases of property and equipment ( 61,396 ) ( 82,395 ) ( 72,046 )

5 unchanged sentences

Payment of revolving credit facility costs — ( 2,453 ) —

Proceeds from issuance of common stock in initial public offering, net of underwriting commissions — — 529,305

Payment of tax withholding obligation on RSU settlement and ESPP purchase ( 386,521 ) ( 372,463 ) ( 166,504 )

1 unchanged sentence

Proceeds from employee stock purchase plan 46,077 29,859 23,872

Payment of deferred offering costs — — ( 4,011 )

Other financing — — ( 250 )

Net cash (used in) provided by financing activities ( 394,621 ) ( 58,976 ) ( 70,455 )

18 unchanged sentences

Fair value of shares issued as part of the repayments of convertible senior notes 174,230 1,233,990 —

Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering — — 547,854

Conversion of preferred stock warrant to common stock warrant in connection with initial public offering — — 848

Preferred stock accretion — — 353

Recognition of build-to-suit lease — — 2,479

Derecognition of build-to-suit lease — — 2,479

13 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).

The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”).

Our fiscal year ends on January 31.

6 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;

5 unchanged sentences

• the recognition, measurement and valuation of deferred income taxes.

The World Health Organization declared in March 2020 that the outbreak of the coronavirus disease named COVID-19 constitutes a global pandemic.

We have undertaken measures to protect our employees, partners and customers.

There can be no assurance that these measures will be effective, however, or that we can adopt them without adversely affecting our business operations.

In addition, the COVID-19 pandemic has created and may continue to create significant uncertainty in global financial markets, which may decrease technology spending, depress demand for our products and harm our business and results of operations.

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, judgments or revise the carrying value of our assets or liabilities.

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

Since the emergence of the COVID-19 pandemic in March 2020, we have undertaken measures to protect our employees, partners and customers, including providing the majority of our employees the option to work remotely until at least January 31, 2023.

However, there can be no assurance that these measures will be effective, that we will be able to adopt new measures as needed or that we will be able to discontinue these measures without adversely affecting our business operations.

In addition, the COVID-19 pandemic and related recent developments (including the emergence of new 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, 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) have created and may continue to create significant uncertainty in global financial markets, which may decrease technology spending, depress demand for our products and harm our business and results of operations.

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 certain subleases that resulted in an impairment of $ 5.1 million on operating lease right-of-use assets recorded during the twelve months ended January 31, 2022.

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

DocuSign, Inc.| 2022 Form 10-K | 69

Concentration of Credit Risk

5 unchanged sentences

No customer individually accounted for more than 10% of our revenues in the years ended January 31, 2022, 2021 and 2020 or for more than 10% of our accounts receivable as of January 31, 2022 and 2021.

We perform ongoing credit

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evaluations of our customers, do not require collateral and maintain allowances for potential credit losses on customers’ accounts using the expected loss model.

We perform ongoing credit evaluations of our customers, do not require collateral and maintain allowances for potential credit losses on customers’ accounts using the expected loss model.

Revenue Recognition

22 unchanged sentences

We generate all our revenue from contracts with customers.

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Subscription Revenue

We generate revenue primarily from sales of subscriptions to access our software suite and related subscriptions of our customers.

We generate revenue primarily from sales of subscriptions to access our software platform and related subscriptions of our customers.

Our subscription revenue is driven by our go-to-market model, which includes a combination of direct sales, partner-assisted sales and web-based self-service purchasing.

Subscription arrangements with customers do not provide the customer with the right to take possession of our software operating our software suite at any time.

Instead, customers are granted continuous access to our software suite over the contractual period.

Subscription arrangements with customers do not provide the customer with the right to take possession of our software operating platform at any time.

Instead, customers are granted continuous access to our software platform over the contractual period.

A time-elapsed method is used to measure progress because we transfer control evenly over the contractual period.

Accordingly, the fixed consideration related to subscription revenue is generally recognized on a straight-line basis over the contract term beginning on the date access to our software suite is provided.

DocuSign, Inc.| 2021 Form 10-K | 69

Professional Services and Other Revenue

Professional services and other revenue consists of fees associated with consulting and training services from assisting customers in implementing and expanding the use of our software suite.

Professional services and other revenue consists of fees associated with consulting and training services from assisting customers in implementing and expanding the use of our software platform.

These services are generally distinct from subscription services.

19 unchanged sentences

Commissions paid for renewal of a subscription contract are not considered commensurate with the commissions paid for the acquisition of the initial subscription contract given the substantive difference in commission rates between new and renewal contracts.

The period of benefit for commissions paid for the acquisition of the initial subscription contract, of five years , is determined by taking into consideration our initial estimated customer life and the technological life of our software suite and related significant features.

The period of benefit for renewal subscription contracts, of two years , is determined by considering the average contractual term for renewal contracts.

DocuSign, Inc.| 2022 Form 10-K | 71

Commissions paid on professional services contracts are amortized over the period of benefit, being the period the associated revenue is earned as the commissions paid on new and renewal professional services contracts are commensurate with each other.

2 unchanged sentences

There were no material impairment losses recorded during the periods presented.

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Deferred Contract Fulfillment Costs

2 unchanged sentences

Cost of Revenue

“Subscription” cost of revenue primarily consists of personnel and related costs to support our software suite, amortization expense associated with capitalized internally-developed software and technology-related intangible assets, property and equipment depreciation, allocated overhead expenses, merchant processing fees and server hosting costs.

“Subscription” cost of revenue primarily consists of personnel and related costs to support our software platform, amortization expense associated with capitalized internally-developed software and technology-related intangible assets, property and equipment depreciation, allocated overhead expenses, merchant processing fees and server hosting costs.

“Professional services and other” cost of revenue consists primarily of personnel costs for our professional services delivery team, travel-related costs and allocated overhead.

11 unchanged sentences

Such RSUs contain a performance condition in the form of a specified liquidity event which was satisfied upon the effectiveness of our registration statement on Form S-1 (“IPO Registration Statement”) on April 26, 2018.

On that date we recorded a cumulative stock-based compensation expense of $ 262.8 million using the accelerated attribution method for all the RSUs, for which the service condition has been fully satisfied as of April 26, 2018.

The remaining unrecognized stock-based compensation expense related to the RSUs will be recorded over their remaining requisite service periods.

RSUs granted after January 31, 2018, generally vest only on the satisfaction of service-based condition.

2 unchanged sentences

We recognize compensation expense related to shares issued pursuant to the 2018 ESPP on a straight-line basis over the offering period of six months .

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Compensation expense is recognized net of forfeitures that are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.

1 unchanged sentence

We may elect to issue shares on the settlement dates net of the statutory tax withholding requirements to be paid by us on behalf of our employees.

In these instances, we record the liability for withholding amounts to be paid by us as

DocuSign, Inc.| 2021 Form 10-K | 71

treasury stock or as a reduction to additional paid-in capital, and include these payments as a reduction of cash flows from financing activities.

In these instances, we record the liability for withholding amounts to be paid by us as treasury stock or as a reduction to additional paid-in capital, and include these payments as a reduction of cash flows from financing activities.

We use the asset and liability method of accounting for income taxes.

4 unchanged sentences

The functional currency of our foreign entities and branches is generally the local currency.

Monetary assets and liabilities and transactions denominated in currencies other than an entity's functional currency are remeasured into its functional currency using current exchange rates, whereas nonmonetary assets and liabilities are remeasured using historical exchange rates.

We recognize gains and losses from such remeasurements within “Interest income and other income, net” in the consolidated statements of operations and comprehensive loss in the period of occurrence.

We recorded a foreign currency transaction gain of $ 1.9 million for the year ended January 31, 2021 and foreign currency transaction losses of $ 1.0 million and $ 3.4 million for the years ended January 31, 2020 and 2019.

Nonmonetary assets and liabilities are not remeasured.

We recognize gains and losses from such adjustments within “Interest income and other income, net” in the consolidated statements of operations and comprehensive loss in the period of occurrence.

We present our financial statements in U.S.

7 unchanged sentences

The undistributed earnings are allocated between common stock and participating securities as if all earnings had been distributed during the period presented.

We consider all series of convertible preferred stock to be participating securities as the holders of such stock are entitled to receive noncumulative dividends on a pari passu basis in the event that a dividend is paid on common stock.

We also consider any shares issued on the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of convertible preferred stock and early exercised shares do not have a contractual obligation to share in our losses.

We consider any shares issued on the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of early exercised shares do not have a contractual obligation to share in our losses.

As such, our net losses in all the years presented were not allocated to these participating securities.

5 unchanged sentences

Cash and cash equivalents consist of money market funds, highly liquid investments with original maturities of three months or less at the date of purchase and deposits with financial institutions and are carried at fair value.

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Investments in marketable securities consist of commercial paper, corporate notes and bonds, as well as U.S.

2 unchanged sentences

Marketable securities are classified as available-for-sale and are carried at fair value in the consolidated balance sheet and are classified as short-term or long-term based on their remaining contractual maturities.

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We evaluate our investments with unrealized loss positions at the individual security level to determine whether the unrealized loss was related to credit or noncredit factors.

2 unchanged sentences

Unrealized gains and losses related to noncredit factors are reflected in “Accumulated other comprehensive income (loss)” on the consolidated balance sheets.

Prior to February 1, 2020, the date of the adoption of ASU 2016-13 and ASU 2019-04, we evaluated our investments to assess whether those with unrealized loss positions were other than temporarily impaired.

Prior to February 1, 2020, we evaluated our investments to assess whether those with unrealized loss positions were other than temporarily impaired.

We considered impairments to be other than temporary if they were related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis.

1 unchanged sentence

Strategic Investments

Our strategic investments consist of non-marketable equity investments in privately-held companies in which we do not have a controlling interest or significant influence.

We have elected to apply the measurement alternative for equity investments that do not have readily determinable fair values, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Our strategic investments consist of non-marketable equity investments in privately-held companies and investment companies in which we do not have a controlling interest or significant influence.

We have elected to apply the measurement alternative for equity investments in privately-held companies that do not have readily determinable fair values, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

We have elected to measure our equity investments in investment companies that do not have readily determinable fair values based on the investment’s net asset value.

An impairment loss is recorded when an event or circumstance indicates a decline in value has occurred.

As of January 31, 2022 and 2021, we held equity investments in privately-held companies totaling $ 12.4 million and $ 6.0 million that are classified in “Other assets—noncurrent” on our consolidated balance sheets.

As there have been no material observable price changes, we have not recorded any adjustments resulting from observable price changes for identical or similar investments or impairment charges for any of our equity investments in privately-held companies.

Restricted Cash

Restricted cash consists of certificates of deposits collateralizing our operating lease agreements for office space.

Restricted cash consists of certificates of deposits collateralizing our operating lease agreements for office space and cash withheld from employees to fund claims and program expenses related to the Voluntary Disability Plans in California and Washington.

The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows as of January 31, 2022, 2021, and 2020:

3 unchanged sentences

Restricted cash included in other assets - noncurrent 340 281 —

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 566,336 $ 241,483

Total cash, cash equivalents, and restricted cash $ 509,679 $ 566,336 $ 241,483

DocuSign, Inc.| 2022 Form 10-K | 74

Fair Value of Financial Instruments

3 unchanged sentences

The following are the hierarchical levels of inputs to measure fair value:

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Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

8 unchanged sentences

The carrying values of cash, accounts receivable and accounts payable approximate their respective fair values due to the short period of time to maturity, receipt or payment.

Accounts Receivable, Unbilled Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable primarily consist of amounts billed currently due from customers.

3 unchanged sentences

Our allowance for doubtful accounts includes balances that are specifically identified for adequacy based on a regular evaluation of such factors as age of the receivable balance, current economic conditions, credit quality of the customer, and past collection experience.

We also include in our allowance for doubtful accounts an estimate for future credit losses, based on historical experience, which is recorded in the period in which we invoice our customers starting February 1, 2020, the date of the adoption of ASU 2016-13 and ASU 2019-04.

We do not have any off-balance-sheet credit exposure related to our customers.

Unbilled accounts receivable represent amounts for which we have recognized revenue, pursuant to our revenue recognition policy, and have an unconditional right to consideration prior to invoicing the customer.

The unbilled accounts receivable balance was $ 3.6 million and $ 1.6 million as of January 31, 2021 and 2020.

We do not typically offer right of refund in our contracts and do not require collateral from our customers.

7 unchanged sentences

Leasehold improvements Lesser of lease term and 10 years

Disposals are removed at cost less accumulated depreciation, and any gain or loss from disposition is reflected in the statement of operations in the year of disposition.

Disposals are removed at cost less accumulated depreciation, and any gain or loss from disposition is reflected in the statement of operations and comprehensive loss in the year of disposition.

Additions and improvements that increase the value or extend the life of an asset are capitalized.

11 unchanged sentences

The right-of-use asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments to lessors and lease incentives.

Our operating lease right-of-use assets and liabilities recognized at February 1, 2019, the adoption date of Topic 842, were based on the present value of lease payments over the remaining lease term as of that date, using the incremental borrowing rate as of that date.

We do not recognize right-of-use assets and liabilities for leases with a term of twelve months or less.

27 unchanged sentences

An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

There was no impairment of long-lived assets recognized in the periods presented.

We recognized an impairment of $ 5.1 million on operating lease right-of-use assets as part of General and administrative expense during the year ended January 31, 2022.

There was no impairment recognized in the other periods presented.

Software Development and Cloud Computing Arrangement Implementation Costs

4 unchanged sentences

Capitalization of such costs ceases once the software of the hosting arrangement is ready for its intended use.

CCA implementation costs are included in “Other assets—noncurrent” on our consolidated balance sheets and are amortized on a straight-line basis over the term of the associated hosting arrangement.

The CCA implementation costs balance was $ 22.6 million and $ 4.3 million as of January 31, 2022 and 2021, and is included in “Other assets—noncurrent” on our consolidated balance sheets and amortized on a straight-line basis over the term of the associated hosting arrangement.

Business Combinations

10 unchanged sentences

Convertible Debt

We account for our convertible debt instruments as separate liability and equity components.

Prior to February 1, 2021, we accounted for our convertible debt instruments as separate liability and equity components.

We determined the carrying amount of the liability component as the present value of its cash flows using a discount rate based on comparable convertible transactions for similar companies.

The carrying amount of the equity component representing the conversion option was calculated by deducting the fair value of the liability component from the principal amount of the convertible debt instruments as a whole.

This difference represents a debt discount that is amortized to interest expense over the term of the convertible debt instruments using the effective interest rate method.

The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

This difference represented a debt discount that was amortized to interest expense over the term of the convertible debt instruments using the effective interest rate method.

The equity component was not remeasured as long as it continued to meet the conditions for equity classification.

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The transaction costs incurred related to the issuance of the convertible debt instruments were allocated to the liability and equity components based on their relative initial carrying value of the convertible debt instruments.

Transaction costs attributable to the liability component are being amortized to interest expense over the respective terms of the convertible debt instruments, and transaction costs attributable to the equity component are netted against the equity component of the convertible debt instruments in stockholders’ equity.

Transaction costs attributable to the liability component were being amortized to interest expense over the respective terms of the convertible debt instruments, and transaction costs attributable to the equity component were netted against the equity component of the convertible debt instruments in stockholders’ equity.

Effective February 1, 2021, we account for our convertible debt instruments as a single liability measured at its amortized cost.

See “Recently Adopted Accounting Pronouncements” below.

At issuance, the carrying amount is calculated as the proceeds, net of initial purchasers’ discounts and transaction costs.

The difference between the principal amount and carrying value is amortized to interest expense over the term of the convertible debt instruments using the effective interest rate method.

At settlement, the carrying amount of the liability is derecognized and the excess of the cash consideration, if any, over the carrying amount is recorded as a reduction to additional paid-in capital.

Capped calls entered into in connection with the offering of the convertible debt instruments are considered indexed to our own stock and are considered equity classified.

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Recently Adopted Accounting Pronouncements

On February 1, 2020, we adopted Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments-Credit Losses (Topic 326).

The Financial Accounting Standards Board (“FASB”) subsequently issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.

These updates change the impairment model for most financial assets and require the use of an expected loss model in place of the previously used incurred loss method.

Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset.

The effect of adopting ASU 2016-13 and ASU 2019-04 on our consolidated financial statements and related disclosures was not material to the consolidated financial statements.

On February 1, 2020, we adopted ASU No.

2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).

The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update.

The impact of prospectively adopting ASU 2018-15 on our consolidated financial statements was not material to the consolidated financial statements.

Other Recent Accounting Pronouncement

In August 2020, the FASB issued ASU No.

2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40).

The update removes separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature.

Such convertible debt will be accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

The update also requires the if-converted method to be used for convertible instruments and the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares.

The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition.

Early adoption is permitted for periods beginning after December 15, 2020.

We will early adopt the ASU effective February 1, 2021, using the modified retrospective method.

In the consolidated balance sheets the adoption of this new guidance is estimated to result in:

• an increase of approximately $ 77 million to the total carrying value of our convertible senior notes to reflect the full principal amount of the convertible notes outstanding net of issuance costs,

• a reduction of approximately $ 90 million to additional paid-in capital and mezzanine equity to remove the equity component separately recorded for the conversion features associated with the convertible notes, and

• a cumulative-effect adjustment of approximately $ 12 million to the beginning balance of accumulated deficit as of February 1, 2021.

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Revenue and Performance Obligations

On February 1, 2021, we early adopted ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) using the modified retrospective approach.

This ASU removes separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature.

Such convertible debt is accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

The ASU also requires the if-converted method to be used for convertible instruments and the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares.

The adoption of the ASU using the modified retrospective method resulted in:

• an increase of $ 77.3 million to the total carrying value of our convertible senior notes to reflect the full principal amount of the convertible notes outstanding net of issuance costs,

• reductions of $ 86.1 million to additional paid-in capital and $ 3.4 million to mezzanine equity to remove the equity component separately recorded for the conversion features associated with the convertible notes, and

• 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 97 %, 95 % and 94 % of our revenue for the years ended January 31, 2022, 2021 and 2020.

Performance Obligations

As of January 31, 2022, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $ 1.6 billion.

We expect to recognize 53 % of the transaction price allocated to remaining performance obligations within the 12 months following January 31, 2022 in our consolidated statement of operations and comprehensive loss.

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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 invoiced to our customers where there is a remaining performance obligation, typically for multi-year arrangements.

Total contract assets were $ 12.6 million and $ 17.5 million as of January 31, 2022 and 2021.

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

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 years ended January 31, 2022 , 2021 and 2020, we recognized revenue of $ 773.7 million , $ 499.5 million and $ 374.8 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.

We record accounts receivable when the right to consideration becomes unconditional.

Payment terms on invoiced amounts are typically 30 days.

Fair Value Measurements

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Money market funds $ 110,716 $ — $ — $ 110,716

Cash equivalents (1)

Commercial paper 3,499 — — 3,499

Available-for-sale securities

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Corporate notes and bonds 243,840 — ( 1,296 ) 242,544

Treasury securities 4,998 — — 4,998

government agency securities 53,052 12 ( 6 ) 53,058

governmental securities 20,036 — ( 76 ) 19,960

Level 2 total 393,746 1 ( 1,547 ) 392,200

Available-for-sale securities

Corporate notes and bonds 500 — — 500

Total $ 504,462 $ 1 $ ( 1,547 ) $ 502,916

DocuSign, Inc.| 2022 Form 10-K | 79

January 31, 2021

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Corporate notes and bonds 199,277 375 ( 67 ) 199,585

Treasury securities 90,697 153 ( 1 ) 90,849

government agency securities 175,086 153 ( 49 ) 175,190

government securities 58,050 12 ( 6 ) 58,056

Level 2 total 299,375 388 ( 96 ) 299,667

Available-for-sale securities

Corporate notes and bonds 500 — — 500

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

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We use quoted prices in active markets for identical assets to determine the fair value of our Level 1 investments.

The fair value of our Level 2 investments is determined using pricing based on quoted market prices or alternative market

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observable inputs .

The fair value of our Level 2 investments is determined using pricing based on quoted market prices or alternative market observable inputs .

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

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Due in one to two years 94,938

As of January 31, 2021, we had a total of 93 available-for-sale securities, with 42 securities in an unrealized loss position.

As of January 31, 2022 and 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 as the issuers' high credit ratings and consistent payment history.

As of January 31, 2020, we had a total of 178 available-for-sale securities, none of which were considered to be other-than-temporarily impaired.

We had no liabilities measured at fair value on recurring basis as of January 31, 2021 and 2020.

We had no liabilities measured at fair value on a recurring basis as of January 31, 2022 and 2021.

Strategic Investments

During the year ended January 31, 2022, 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 year ended January 31, 2021, there were no material observable price changes.

Convertible Senior Notes

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The Notes are recorded at face value less unamortized debt discount and transaction costs as “Convertible senior notes, net—noncurrent” and “Convertible senior notes—current.” Refer to Note 8 for further information.

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(in thousands) 2022 2021

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Property and Equipment, Net

Property and equipment consisted of the following:

Property and equipment, net consisted of the following:

(in thousands) 2022 2021

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This included amortization expense related to capitalized internally-developed software costs of $ 10.3 million, $ 6.2 million and $ 4.1 million in the respective years .

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We capitalized $ 39.0 million, $ 29.3 million and $ 17.1 million of internally developed software costs, including $ 9.8 million, $ 7.2 million and $ 4.1 million of capitalized stock-based compensation in the years ended January 31, 2022, 2021 and 2020.

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The performance-based condition was based on Seal meeting certain bookings targets for the year ended January 31, 2021 and that performance condition was not met.

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We accounted for the transaction as a business combination using the acquisition method of accounting.

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The estimated useful lives of intangible assets, primarily based on the expected period of benefit to us, and fair values of the identifiable intangible assets at acquisition date were as follows:

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(in thousands, except years) Estimated Fair Value Weighted Average Useful Life

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The unaudited pro forma results have been prepared based on estimates and assumptions, which we believe are reasonable, however, they are not necessarily indicative of the consolidated results of operations had the acquisition occurred on February 1, 2019, or of future results of operations:

DocuSign, Inc.| 2022 Form 10-K | 82

Year Ended January 31,

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We recorded approximately $ 39.9 million of goodwill which is primarily attributed to the assembled workforce and expanded market opportunities for integrating Liveoak’s technology with our existing product offering.

None of the goodwill recognized upon acquisition was deductible for U.S.

No goodwill recognized upon acquisition was deductible for U.S.

federal income tax purposes.

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We included the results of operations of Liveoak in our consolidated statements of operations from the acquisition date.

These results were not material to our consolidated statements of operations for the year ended January 31, 2021 .

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These results, including pro forma information, were not material to our consolidated statements of operations for the year ended January 31, 2021 .

Goodwill and Intangible Assets, Net

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Balance at January 31, 2020 $ 194,882

Additions—Seal 114,663

Additions—Liveoak 39,892

Foreign currency translation 714

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Additions—Seal 1,185

Additions—Liveoak 39,892

Additions—Clause 4,100

Foreign currency translation ( 378 )

Balance at January 31, 2022 $ 355,058

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Intangible assets consisted of the following:

As of January 31, 2022 As of January 31, 2021

(in thousands, except years) Weighted-average Remaining Useful Life (Years) Estimated Fair Value Accumulated Amortization Acquisition-related Intangibles, Net Estimated Fair Value Accumulated Amortization Acquisition-related Intangibles, Net

(in thousands, except years) Weighted-average Remaining Useful Life (Years) Acquisition-related Intangibles, Gross Accumulated Amortization Acquisition-related Intangibles, Net Acquisition-related Intangibles, Gross Accumulated Amortization Acquisition-related Intangibles, Net

Existing technology 3.1 $ 76,194 $ ( 47,307 ) $ 28,887 $ 72,994 $ ( 35,613 ) $ 37,381

17 unchanged sentences

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Contract Balances

Total contract assets were $ 17.5 million and $ 13.4 million as of January 31, 2021 and 2020, of which $ 0.6 million and $ 0.9 million were noncurrent and included within “ Other assets—noncurrent ” on our consolidated balance sheets.

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

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 years ended January 31, 2021 , 2020 and 2019, we recognized revenue of $ 499.5 million , $ 374.8 million and $ 264.0 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.

We record accounts receivable when the right to consideration becomes unconditional.

Payment terms on invoiced amounts are typically 30 days.

Deferred Contract Acquisition and Fulfillment Costs

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Convertible Senior Notes

In September 2018, we issued $ 575.0 million in aggregate principal amount of the 0.5 % Convertible Senior Notes due in 2023 (“2023 Notes”), which included the initial purchasers’ exercise in full of their option to purchase an additional $ 75.0 million aggregate principal amount of the 2023 Notes.

In September 2018, we issued $ 575.0 million in aggregate principal amount of the 0.5 % Convertible Senior Notes due in 2023, which included the initial purchasers’ exercise in full of their option to purchase an additional $ 75.0 million aggregate principal amount of the 2023 Notes.

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

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”), which included the initial purchasers’ exercise in full of their option to purchase an additional $ 90.0 million aggregate principal amount of the 2024 Notes.

In January 2021, we issued $ 690.0 million in aggregate principal amount of the 0 % Convertible Senior Notes due in 2024, which included the initial purchasers’ exercise in full of their option to purchase an additional $ 90.0 million aggregate principal amount of the 2024 Notes.

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

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and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

Upon conversion of the Notes, holders

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will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

Upon conversion of the Notes, holders will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

The 2023 Notes are governed by an indenture dated September 18, 2018 (the “2018 Indenture”).

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The 2024 Notes mature on January 15, 2024 unless earlier repurchased by us or earlier converted in accordance with their terms prior to the maturity date.

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Conversion terms

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• Upon the occurrence of specified corporate events described in the 2018 Indenture.

In the second, third and fourth quarter of the year ended January 31, 2021, the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter was greater than 130 % of the conversion price.

The 2023 Notes therefore became convertible on August 1, 2020 and continue to be convertible through January 31, 2021.

Based upon the reported sales price of our common stock, the 2023 Notes became convertible on August 1, 2020 and continued to be convertible through January 31, 2022.

Holders of the 2024 Notes may convert all or any portion of their 2024 Notes at any time on or after October 15, 2023, until the close of business on September 15, 2024.

1 unchanged sentence

• During any fiscal quarter commencing after the fiscal quarter ending on April 30, 2021 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

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measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

• During the 5 -business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price as defined in the 2021 Indenture per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

• Upon the occurrence of specified corporate events described in the 2021 Indenture.

3 unchanged sentences

We may not redeem the 2024 Notes prior to the maturity date.

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Repurchases of the 2023 Notes

In connection with our issuance of the 2024 Notes, we used a portion of the proceeds to repurchase $ 460.0 million aggregate principal amount of the 2023 Notes in privately negotiated transactions for an aggregate consideration of $ 1.7 billion, consisting of $ 459.2 million in cash and 4.7 million shares of our common stock with a value of $ 1.2 billion, a non-cash financing activity.

In connection with our issuance of the 2024 Notes in the prior year, we used a portion of the proceeds to repurchase $ 460.0 million aggregate principal amount of the 2023 Notes in privately negotiated transactions for an aggregate consideration of $ 1.7 billion, consisting of $ 459.2 million in cash and 4.7 million shares of our common stock with a value of $ 1.2 billion, a non-cash financing activity.

We recorded an extinguishment loss of $ 33.8 million as a result of the transaction.

In our consolidated statement of cash flow, the cash paid to repurchase the 2023 Notes was bifurcated into two components:

In our consolidated statement of cash flows, the cash paid to repurchase the 2023 Notes was bifurcated into two components:

the portion of the repayment attributable to accreted interest related to debt discount is classified as cash outflows from operating activities, and the portion of the repayment attributable to the principal is classified as cash outflows from financing activities.

In January 2021, certain holders of the 2023 Notes exercised their option to convert $ 23.9 million aggregate amount of the principal of the 2023 Notes to be settled in March 2021.

As we are to settle the principal in cash, we reclassified $ 20.5 million of the carrying value to “Convertible senior notes—current.” Additionally, we reclassified $ 3.4 million, representing the difference between the aggregate principal and the carrying value, to mezzanine equity from permanent equity on our consolidated balance sheet as of January 31, 2021.

Net Carrying Amounts of the Liability and Equity Components

Conversions of the 2023 Notes

In January 2021, certain holders of the 2023 Notes exercised their option to convert $ 23.9 million aggregate amount of the principal of the 2023 Notes.

As the principal was settled in cash in March 2021, we reclassified $ 20.5 million of the carrying value to “Convertible senior notes—current” and $ 3.4 million, representing the difference between the aggregate principal and the carrying value, to mezzanine equity from permanent equity on our consolidated balance sheet as of January 31, 2021.

We accounted for early conversions and settlements of the 2023 Notes during the year ended January 31, 2022 under ASU 2020-06.

Refer to Note 1 for further discussion of early adoption.

During the year ended January 31, 2022, we settled $ 77.9 million aggregate amount of the principal of 2023 Notes, for aggregate consideration of $ 252.1 million, consisting of $ 77.9 million in cash and 0.7 million shares of our common stock with a value of $ 174.2 million.

The $ 0.9 million excess of the cash consideration over the corresponding carrying value was recorded as a reduction to additional paid-in capital.

As of January 31, 2022, we had not received conversion notices on our 2023 Notes.

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Net Carrying Amounts of the Liability and Equity Components

(in thousands) 2022 2021

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To minimize the potential economic dilution to our common stock upon conversion of the Notes, we entered into privately-negotiated capped call transactions ("Capped Calls") with certain counterparties.

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The capped call transactions were as follows:

6 unchanged sentences

Shares of our common stock covered by the capped calls (1)

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(1) Subject to adjustments for certain events, such as merger events and tender offers, and anti-dilution adjustments

Impact on Loss Per Share

In periods when we have net income, the shares of our common stock subject to the Notes outstanding during the period is included in our diluted earnings per share under the if-converted method, as share settlement is presumed as of the fourth quarter of 2021.

In prior periods, cash settlement was presumed and shares subject to the Notes would have been included under the treasury stock method.

Upon adoption of ASU 2020-06 on February 1, 2021, in periods when we have net income, the shares of our common stock subject to the Notes outstanding during the period are included in our diluted earnings per share under the if-converted method.

Prior to the adoption of ASU 2020-06, had we had net income, the shares of our common stock subject to the Notes outstanding during the period would have been included in our diluted earnings per share.

In the fourth quarter of 2021, share settlement was presumed leading to the application of the if-converted method.

In periods before that, cash settlement was presumed and shares subject to the Notes would have been included under the treasury stock method.

Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive.

However, 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 January 31, 2021, the market price of a share of our common stock exceeded the $ 110.00 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.

As of January 31, 2022 and January 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 as of January 31, 2022 and January 31, 2021.

Revolving Credit Facility

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The 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.

We lease offices under noncancelable operating lease agreements that expire at various dates through end of February 2032.

We lease offices under noncancelable operating lease agreements that expire at various dates through the end of February 2032.

As of January 31, 2022, we had no finance leases.

Some of our operating leases contain escalation provisions for adjustments in the consumer price index.

The following table is a summary of our lease costs:

Year Ended January 31,

(in thousands) 2021 2020

Operating lease cost $ 34,034 $ 26,490

Short-term lease cost 793 837

Total lease cost $ 34,827 $ 27,327

Rent expense under operating leases was $ 19.8 million during the year ended January 31, 2019.

Operating lease expense for the fiscal years ended January 31, 2022 , 2021 and 2020 was $ 34.4 million, $ 34.0 million and $ 26.5 million.

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Present value of lease liabilities $ 163,744

The weighted average remaining lease term as of January 31, 2021 and 2020 were 6.6 years and 7.7 years.

The discount rate for operating leases as of January 31, 2021 and 2020 were 4.3 % and 4.4 %.

The weighted average remaining lease terms as of January 31, 2022 and 2021 were 5.7 years and 6.6 years.

The discount rates for operating leases as of January 31, 2022 and 2021 were both 4.3 %.

Commitments and Contingencies

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From time to time, we may be subject to legal proceedings, claims and litigation made against us in the ordinary course of business.

We believe the final outcome of these matters will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.

All legal costs associated with litigation are expensed as incurred.

We believe the final outcome of these matters, including the case described below, will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.

DocuSign, Inc.

Securities Litigation

On February 8, 2022, a putative securities class action was filed in the U.S.

District Court for the Northern District of California, captioned Weston v.

DocuSign, Inc., et al., Case No.

3:22-cv-00824, naming DocuSign and certain of our current and former officers as defendants.

The complaint purports to allege claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, based on allegedly false and misleading statements about our business and prospects during the course of the COVID-19 pandemic.

The suit is purportedly brought on behalf of purchasers of our securities between June 4, 2020 and December 2, 2021.

We are not yet required to respond to the complaint, but believe it is devoid of merit.

An earlier action alleging similar claims against the same defendants, captioned Collins v.

DocuSign, Inc., et al., Case No.

3:22-cv-00851, filed in the Eastern District of New York and subsequently transferred to the Northern District of California, was voluntarily dismissed on February 14, 2022.

Stockholders' Equity

Redeemable Convertible Preferred Stock

Prior to the IPO we issued Series A, Series A-1, Series B, Series B-1, Series C, Series D, Series E, and Series F redeemable convertible preferred stock.

Upon completion of the IPO, all 100.2 million shares of our convertible preferred stock automatically converted into an aggregate of 100.4 million shares of our common stock.

Common Stock Reserved for Future Issuance

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The 2018 Plan permits the granting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards and other stock awards.

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.

RSUs granted under the 2018 Plan generally vest over a four-year period, either quarterly or with 25 %

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vesting at the end of one year and the remainder quarterly thereafter.

Additionally, the Company grants performance-based and market-based RSUs to its executives on an annual basis.

Shares available for grant under the 2018 Plan for the year ended January 31, 2022 was as follows:

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(in thousands) Year Ended

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We expect to recognize this expense over the remaining weighted-average period of approximately 2.2 years.

We have $ 55.7 million and $ 46.2 million of unvested RSUs that are subject to market-based vesting conditions as of January 31, 2022 and 2021.

We calculated the fair value of the RSU with market conditions using lattice model simulation analysis based on the following assumptions:

Year Ended January 31,

2022 2021 2020

Risk-free interest rate 0.30 % 0.22 % 1.87 %

Expected dividend yield — % — % — %

Expected life (in years) 3.0 3.0 3.0

Expected volatility 46 % 40 % 35 %

Weighted-average grant date fair value per share $ 331.26 $ 206.54 $ 45.14

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Canceled/expired — —

Outstanding at January 31, 2021 4,798 $ 15.55 5.03 $ 1,042,879

Vested and expected to vest at January 31, 2021 4,798 $ 15.55 5.03 $ 1,042,801

Exercisable at January 31, 2021 4,761 $ 15.54 5.02 $ 1,034,740

As of January 31, 2021, our total unrecognized compensation cost related to stock option grants was $ 0.2 million.

We expect to recognize this expense over the remaining weighted-average period of approximately 0.2 years.

Outstanding at January 31, 2022, all vested and exercisable 3,105 $ 16.41 4.45 $ 339,286

As of January 31, 2022, there was no remaining unrecognized compensation cost related to stock option grants.

The aggregate intrinsic value of options exercised during the years ended January 31, 2022, 2021 and 2020 was $ 391.2 million, $ 302.4 million and $ 325.7 million.

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$ 90.15 - $ 221.20

$ 14.88 - $ 18.56

The expected term for the ESPP purchase rights is based on the duration of the offering period.

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(in thousands, except per share data) 2022 2021 2020

Net loss $ ( 243,267 ) $ ( 208,359 ) $ ( 426,458 )

preferred stock accretion — — ( 353 )

Net loss attributable to common stockholders $ ( 69,976 ) $ ( 243,267 ) $ ( 208,359 )

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Total deferred 694 ( 2,410 ) 1,287

Provision for (benefit from) income taxes $ 13,775 $ 4,803 $ ( 1,750 )

Provision for income taxes $ 3,062 $ 13,775 $ 4,803

The reconciliation of the statutory federal income tax rate to our effective tax rate was as follows:

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Research and development credits 58.2 9.1 8.2

Lapse of Statute of Limitations 1.4 — —

Other deferred adjustment ( 9.9 ) ( 1.1 ) —

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In the years ended January 31, 2022, 2021 and 2020, total stock-based compensation expense was $ 408.5 million, $ 286.9 million and $ 206.4 million.

Recognized tax benefits on total stock-based compensation expense, which are reflected in the "Provision for (benefit from) income taxes" in the consolidated statements of operations and comprehensive loss, were $ 2.2 million, $ 1.0 million and $ 1.7 million in the years ended January 31, 2021, 2020 and 2019.

Recognized tax benefits on total stock-based compensation expense, which are reflected in the "Provision for income taxes" in the consolidated statements of operations and comprehensive loss, were $ 1.6 million, $ 2.2 million and $ 1.0 million in the years ended January 31, 2022, 2021 and 2020.

As of January 31, 2022, we had accumulated net operating loss carryforwards of $ 3.7 billion for federal and $ 1.8 billion for state.

Of the federal net operating losses, $ 3.2 billion is carried forward indefinitely, but is limited to 80% of taxable income.

The remaining federal and state net operating loss carryforwards will begin to expire in 2025 and 2021.

The remaining federal and state net operating loss carryforwards will begin to expire in 2024 and 2023, respectively.

As of January 31, 2022, we also had total foreign net operating loss carryforwards of $ 43.0 million, which do not expire under local law.

9 unchanged sentences

Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examination from various taxing authorities.

A reconciliation of the beginning and ending balance of total unrecognized tax benefits was as follows:

DocuSign, Inc.| 2022 Form 10-K | 96

A reconciliation of the beginning and ending balance of total unrecognized tax benefits was as follows:

(in thousands) 2022 2021

4 unchanged sentences

Unrecognized tax benefits balance at January 31 $ 46,729 $ 33,779

As of January 31, 2021, the total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, would have been $ 15.9 million.

As of January 31, 2022, the Company had $ 46.7 million of unrecognized tax benefits, of which $ 15.0 million could affect the Company’s effective tax rate, if recognized.

The remainder of the unrecognized tax benefits would not affect the effective tax rate due to a significant portion of the unrecognized tax benefit being recorded as a reduction in our gross deferred tax asset, offset by a reduction in our valuation allowance.

A significant portion of the unrecognized tax benefit was recorded as a reduction in our gross deferred tax assets, offset by a reduction in our valuation allowance.

2 unchanged sentences

We recognize interest and penalties related to uncertain tax positions in provision for income taxes.

As of January 31, 2021, accrued interest or penalties was $ 0.8 million.

As of January 31, 2022, accrued interest and penalties was $ 1.3 million.

Our tax years from inception in 2003 through January 31, 2022, remain subject to examination by the U.S.

and California, as well as various other jurisdictions.

We are under examination by the Israeli Tax Authorities for the calendar years 2016 through 2019.

We are under examination by the Israeli Tax Authorities for the period January 1, 2016 through January 31, 2021.

The Company believes that it has reserved adequate amounts for these jurisdictions.

We recognize valuation allowances on deferred tax assets if it is more likely than not that some or all the deferred tax assets will not be realized.

10 unchanged sentences

Convertible senior notes issued — ( 15,453 ) —

Acquisition of SpringCM — — ( 7,064 )

Adoption of ASU 2020-06 19,407 — —

Ending balance $ 999,191 $ 723,767 $ 445,746

DocuSign, Inc.| 2022 Form 10-K | 97

Geographic Information

7 unchanged sentences

Total revenue $ 2,107,213 $ 1,453,047 $ 973,971

DocuSign, Inc.| 2021 Form 10-K | 95

No single country other than the U.S.

7 unchanged sentences

Subsequent Events

Between February 1, 2021 and March 30, 2021, we received conversion notices on our 2023 Notes for $ 12.8 million in aggregate principal amount, for which we elected to settle the principal amount in cash during the three months ended April 30, 2021 and for $ 6.6 million in aggregate principal amount, for which we elected to settle the principal amount in cash in the three months ended July 31, 2021.

During that period, we also settled the $ 23.9 million of 2023 Notes for which conversion was elected prior to January 31, 2021, for aggregate consideration of $ 72.3 million, consisting of $ 23.9 million in cash and 0.2 million shares of our common stock with a value of $ 48.4 million.

DocuSign, Inc.| 2021 Form 10-K | 96

In March 2022, our Board of Directors authorized a stock repurchase program of up to $ 200 million of our outstanding common stock.

The program has no minimum purchase commitment and no mandated end date.

The repurchase program may be suspended or discontinued at any time at our discretion.

The timing and the amount of any repurchased common stock will be determined by management based on its evaluation of market conditions and other factors.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk