What changed in this filing

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Item 1. Financial Statements

2022-06-09 compared with 2021-12-06 · 152 added, 188 removed, 426 unchanged (44% of the section changed)

Financial Statements (unaudited)

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

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

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

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

Condensed Consolidated Balance Sheets as of April 30, 2022 and January 31, 2022

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended April 30, 2022 and 2021

Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended April 30, 2022 and 2021

Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2022 and 2021

Notes to Condensed Consolidated Financial Statements

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties.

All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations, and the impact of the ongoing coronavirus pandemic (the “COVID-19 pandemic”) on our financial conditions and results of operations are forward-looking statements.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management's beliefs and assumptions and on information currently available to management, and which statements involve substantial risk and uncertainties.

All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, objectives for future operations, and the continuing impact of the coronavirus pandemic (the “COVID-19 pandemic”) and its effects on our financial conditions and results of operations are forward-looking statements.

Forward-looking statements generally relate to future events or our future financial or operating performance.

In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

▪ our ability to effectively sustain and manage our growth and future expenses, and our ability to achieve and maintain future profitability;

▪ our expectations regarding the impact of the ongoing COVID-19 pandemic on our business, the businesses of our customers, partners and suppliers, and the economy;

▪ our ability to attract new customers and to maintain and expand our existing customer base;

▪ our ability to scale and update our software suite to respond to customers’ needs and rapid technological change;

▪ the effects of increased competition on our market and our ability to compete effectively;

These risks and uncertainties include, among other things, risks related to our expectations regarding the continuing impact of the COVID-19 pandemic, including the easing of related regulations and measures as the pandemic and its related effects begin to abate or have abated, on our business, results of operations, financial condition, and future profitability and growth;

our expectations regarding the impact of the evolving COVID-19 pandemic on the businesses of our customers, partners and suppliers, and the economy, as well as the macro- and micro-effects of the pandemic, including the pace of the digital transformation of business and differing levels of demand for our products as our customers’ priorities, resources, financial conditions and economic outlook change;

global macro-economic conditions, including the effects of inflation, rising interest rates and market volatility on the global economy;

our ability to estimate the size of our total addressable market, and the development of the market for our products, which is new and evolving;

our ability to effectively sustain and manage our growth and future expenses, achieve and maintain future profitability, attract new customers and maintain and expand our existing customer base;

our ability to scale and update our platform to respond to customers’ needs and rapid technological change;

the effects of increased competition in our market and our ability to compete effectively;

our ability to expand use cases within existing customers and vertical solutions;

▪ our ability to expand our operations and increase adoption of our software suite internationally;

▪ our ability to strengthen and foster our relationship with developers;

our ability to expand our operations and increase adoption of our platform internationally;

our ability to strengthen and foster our relationships with developers;

our ability to expand our direct sales force, customer success team and strategic partnerships around the world;

the impact of any data breaches, cyberattacks or other malicious activity on our technology systems;

our ability to identify targets for and execute potential acquisitions;

▪ our ability to successfully integrate the operations of businesses we may acquire, or to realize the anticipated benefits of such acquisitions;

our ability to successfully integrate the operations of businesses we may acquire, and to realize the anticipated benefits of such acquisitions;

our ability to maintain, protect and enhance our brand;

▪ the sufficiency of our cash and cash equivalents to satisfy our liquidity needs;

▪ our failure or the failure of our software suite of services to comply with applicable industry standards, laws and regulations;

the sufficiency of our cash, cash equivalents and capital resources to satisfy our liquidity needs;

limitations on us due to obligations we have under our credit facility or other indebtedness;

our failure or the failure of our software to comply with applicable industry standards, laws and regulations;

our ability to maintain, protect and enhance our intellectual property;

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our ability to estimate the size and potential growth of our target market;

▪ our ability to maintain proper and effective internal controls.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

uncertainties regarding the impact of general economic and market conditions, including as a result of regional and global conflicts or related government sanctions;

and our ability to maintain proper and effective internal controls.

You should not rely upon forward-looking statements as predictions of future events.

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The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

Moreover, we operate in a very competitive and rapidly changing environment.

New risks and uncertainties emerge from time to time, including risks and uncertainties related to the COVID-19 pandemic.

Many risks and uncertainties are currently elevated by, and may or will continue to be elevated by, the COVID-19 pandemic.

It is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q.

We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

DocuSign, Inc.

| 2022 Form 10Q | 3

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which such statements are made.

We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

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

(in thousands, except per share data) April 30, 2022 January 31, 2022

Current assets

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Investments—current 329,425 293,763

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

Accounts receivable, net of allowance for doubtful accounts of $ 5,076 and $ 5,807 as of April 30, 2022 and January 31, 2022

300,872 440,950

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Commitments and contingencies ( Note 7 )

Convertible senior notes ( Note 6 )

Stockholders’ equity

Preferred stock, $ 0.0001 par value;

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

10,000 shares authorized, 0 shares issued and outstanding as of April 30, 2022 and January 31, 2022

Common stock, $ 0.0001 par value;

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

500,000 shares authorized, 199,920 shares outstanding as of April 30, 2022;

500,000 shares authorized, 198,834 shares outstanding as of January 31, 2022

Treasury stock, at cost:

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

8 and 7 shares as of April 30, 2022 and January 31, 2022

( 1,648 ) ( 1,532 )

Additional paid-in capital 1,835,187 1,720,013

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

Accumulated other comprehensive loss ( 19,048 ) ( 4,809 )

Accumulated deficit ( 1,465,562 ) ( 1,438,189 )

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348,949 275,503

Total liabilities and equity $ 2,410,503 $ 2,336,507

Total liabilities and stockholders' equity $ 2,574,131 $ 2,541,265

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

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

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

Three Months Ended April 30,

(in thousands, except per share data) 2022 2021

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Interest income and other income (expense), net ( 4,650 ) 6,037

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

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

Loss before provision for income taxes ( 25,525 ) ( 6,372 )

Provision for income taxes 1,848 1,982

Net loss $ ( 27,373 ) $ ( 8,354 )

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(in thousands) Shares Amount

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

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

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

Exercise of stock options 179 — 1,938 — — — 1,938

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Other comprehensive loss, net — — — — ( 14,239 ) — ( 14,239 )

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

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

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

Settlement of restricted stock units 1,015 — — — — — —

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

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

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

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

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

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

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

DocuSign, Inc.

| 2022 Form 10Q | 7

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (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 April 30, 2022 199,920 $ 20 $ 1,835,187 $ ( 1,648 ) $ ( 19,048 ) $ ( 1,465,562 ) $ 348,949

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

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Exercise of stock options 488 — 6,616 — — — 6,616

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

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

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

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

Employee stock-based compensation — — 299,099 — — — 299,099

Net loss — — — — — ( 39,531 ) ( 39,531 )

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

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

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

Exercise of stock options 1,471 — 14,983 — — — 14,983

Settlement of restricted stock units 955 — — — — — —

Tax withholding on net share settlement of restricted stock units — — ( 250,449 ) ( 1,048 ) — — ( 251,497 )

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

Issuance of common stock as consideration for acquisition 247 — 48,361 — — — 48,361

Tax withholding on net share settlement of restricted stock units and employee stock purchase plan — — ( 113,412 ) ( 171 ) — — ( 113,583 )

Employee stock purchase plans 132 — 23,167 — — — 23,167

Employee stock-based compensation — — 83,611 — — — 83,611

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Other comprehensive income, net — — — — 394 — 394

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

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

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2022 2021

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Cash flows from investing activities:

Cash paid for acquisition, net of acquired cash ( 6,388 ) ( 180,370 )

Purchases of marketable securities ( 129,735 ) ( 96,925 )

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Purchases of property and equipment ( 21,709 ) ( 12,596 )

Net cash (used in) provided by investing activities ( 157,685 ) 100,064

Net cash used in investing activities ( 62,514 ) ( 70,506 )

Cash flows from financing activities:

Repayments of convertible senior notes — ( 36,684 )

Payment of tax withholding obligation on net share settlement of restricted stock units ( 323,109 ) ( 247,277 )

Payment of tax withholding obligation on net RSU settlement and ESPP purchase ( 24,739 ) ( 106,053 )

Proceeds from exercise of stock options 1,938 6,616

Proceeds from employee stock purchase plan 24,151 23,167

Net cash used in financing activities ( 320,691 ) ( 202,435 )

Net cash (used in) provided by financing activities 1,350 ( 112,954 )

Effect of foreign exchange on cash, cash equivalents and restricted cash ( 5,180 ) 779

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$ 639,621 $ 519,252

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

(1) $ 1.4 million and $ 0.6 million of restricted cash was included in both Prepaid expenses and other current assets and Other assets—noncurrent at April 30, 2022 and January 31, 2022.

$ 0.3 million of restricted cash was included in Other assets—noncurrent at April 30, 2021 and January 31, 2021.

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

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

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2022 2021

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Property and equipment in accounts payable and accrued expenses and other current liabilities $ 5,358 $ 1,275

Operating lease right-of-use assets exchanged for lease obligations — 27,447

Fair value of shares issued as part of the repayments of convertible senior notes — 74,657

Fair value of shares issued as consideration for acquisition — 48,361

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

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Our condensed consolidated balance sheet as of January 31, 2022 was derived from audited financial statements but does not include all disclosures required by U.S.

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

The results of operations for the three months ended April 30, 2022 are not necessarily indicative of the results to be expected for the year ending January 31, 2023 .

O ur fiscal year ends on January 3 1.

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• the fair value of certain stock awards issued;

• the f air value of the liability and equity components of convertible notes;

• the f air value of convertible notes;

• the useful life and recoverability of long-lived assets;

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

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 10, 2022.

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 vaccine deployments, national and regional outbreaks and the emergence of disease variants) 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 a sublease that resulted in an impairment of $ 3.9 million on operating lease right-of-use assets recorded during the three months ended July 31, 2021.

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

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

DocuSign, Inc.

| 2022 Form 10Q | 10

condensed consolidated financial statements as soon as they become known.

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 year ended January 31, 2022.

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

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

Significant Accounting Policies

Other than as described below, there have been no changes to our significant accounting policies described in our fiscal 2021 Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.

Convertible Debt

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.

Refer to Note 1 of our 2021 Annual Report on Form 10-K for our convertible debt policy prior to the adoption of ASU 2020-06.

Recently Adopted Accounting Pronouncements

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 % and 96 % of our revenue for the three months ended October 31, 2021 and 2020 and approximately 97 % and 95 % of our revenue for the nine months ended October 31, 2021 and 2020.

There have been no changes to our significant accounting policies described in our fiscal 2022 Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.

Subscription revenue is recognized over time and accounted for approximately 97 % and 96 % of our revenue for the three months ended April 30, 2022 and 2021.

Performance Obligations

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

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

As of April 30, 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 55 % of the transaction price allocated to remaining performance obligations within the 12 months following April 30, 2022 in our condensed consolidated statement of operations and comprehensive loss.

Contract Balances

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

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

Total contract assets were $ 13.4 million and $ 12.6 million as of April 30, 2022 and January 31, 2022.

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

DocuSign, Inc.

| 2022 Form 10Q | 13

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

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

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

For the three months ended April 30, 2022 and 2021, we recognized revenue of $ 450.7 million and $ 357.8 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.

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Revenue by geographic area was as follows:

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

Three Months Ended April 30,

(in thousands) 2022 2021

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

October 31, 2021

April 30, 2022

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

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Money market funds $ 178 $ — $ — $ 178

Cash equivalents (1)

Commercial paper 66,452 — ( 13 ) 66,439

governmental securities 10,000 — — 10,000

Available-for-sale securities

Commercial paper 118,361 — ( 513 ) 117,848

169,417 3 ( 42 ) 169,378

Corporate notes and bonds 272,963 2 ( 3,147 ) 269,818

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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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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

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

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

(1) Included in “cash and cash equivalents” in our consolidated balance sheets as of April 30, 2022 and January 31, 2022, in addition to cash of $ 561.6 million and $ 394.9 million.

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

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

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

The fair value of our available-for-sale securities as of April 30, 2022, by remaining contractual maturities, were as follows (in thousands):

Due in one year or less $ 329,425

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| 2023 Form 10Q | 12

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

As of April 30, 2022 and January 31, 2022, securities in an unrealized loss position were, individually and in aggregate, not material.

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

We had no liabilities measured at fair value on a recurring basis as of April 30, 2022 and January 31, 2022.

Strategic Investments

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

During the three months ended April 30, 2022, investments in equity securities without readily determinable fair values increased by $ 0.3 million due to adjustments related to observable price changes that occurred during the quarter.

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

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Refer to Note 6 for further information.

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

(in thousands) April 30, 2022 January 31, 2022

0.5 % Convertible Senior Notes due in 2023

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Property and equipment consisted of the following:

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

(in thousands) April 30, 2022 January 31, 2022

Computer and network equipment $ 132,220 $ 127,799

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Total $ 183,704 $ 184,664

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

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

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

Depreciation and amortization expense associated with property and equipment was $ 15.7 million and $ 13.5 million for the three months ended April 30, 2022 and 2021 .

This included amortization expense related to capitalized internally-developed software costs of $ 4.3 million and $ 1.7 million for the three months ended April 30, 2022 and 2021 .

For the three months ended April 30, 2022 and 2021, we capitalized $ 10.5 million and $ 7.8 million of internally developed software, including $ 2.8 million and $ 2.0 million of capitalized stock-based compensation in the three months ended April 30, 2022 and 2021.

DocuSign, Inc.

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

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands) 2022 2021

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Amortization of deferred contract fulfillment costs ( 11,763 ) ( 5,091 )

Cumulative translation adjustment ( 627 ) —

Ending balance $ 18,924 $ 13,869

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

Based upon the reported sales price of our common stock, the 2023 Notes became convertible on August 1, 2020 and continue to be convertible through October 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 April 30, 2022.

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

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

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

As of April 30, 2022, the conversion conditions for the 2024 Notes described in our 2022 Annual Report on Form 10-K were not met.

Conversions of the 2023 Notes

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

Refer to Note 1 for further discussion of early adoption.

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

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

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

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

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

As of April 30, 2022, we received conversion notices on our 2023 Notes for an immaterial amount.

No settlements occurred during the three months ended April 30, 2022.

Additionally, from May 1, 2022 to June 8, 2022, we had not received any conversion notices on our 2023 Notes.

DocuSign, Inc.

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

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

The net carrying amounts of the Notes were as follows:

(in thousands) April 30, 2022 January 31, 2022

Principal $ 37,099 $ 37,099

unamortized debt discount (1)

unamortized transaction costs ( 255 ) ( 303 )

Net carrying value of current and noncurrent liability component $ 36,844 $ 36,796

Proceeds allocated to the conversion option (debt discount) (1)

extinguishment or conversion ( 31,933 )

transaction costs ( 3,336 )

Net carrying value of mezzanine and permanent equity component $ 99,398

Principal $ 690,000 $ 690,000

unamortized debt discount (1)

unamortized transaction costs ( 7,253 ) ( 8,309 )

Net carrying value of noncurrent liability component $ 682,747 $ 681,691

Proceeds allocated to the conversion option (debt discount) (1)

transaction costs ( 1,185 )

Net carrying value of permanent equity component $ 63,268

(1) Not applicable under ASU 2020-06

The effective interest rate on the liability component of the 2023 Notes was 5.9 % prior to the adoption of ASU 2020-06 and 1.0 % after adoption.

The effective interest rate on the liability component of the 2024 notes was 3.8 % prior to the adoption of ASU 2020-06 and 0.6 % after adoption.

The effective interest rate on the 2023 Notes was 1.0 %.

The effective interest rate on the 2024 notes was 0.6 %.

Interest expense recognized related to the Notes was as follows:

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

Three Months Ended April 30,

(in thousands) 2022 2021

Contractual interest expense $ 46 $ 36

Amortization of debt discount — 6,516 — 19,267

Amortization of transaction costs 1,101 1,181

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

DocuSign, Inc.

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Impact on Loss Per Share

After February 1, 2021, upon adoption of ASU 2020-06, 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.

As of the beginning of the fourth quarter of 2021, share settlement was presumed, and shares subject to the Notes would have been included under the if-converted method.

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

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.

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

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

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

As of April 30, 2022, the market price of our common stock did not exceed the $ 110.00 per share cap price associated with the 2023 Notes nor the $ 525.30 cap price associated with the 2024 Notes;

therefore, the 2023 Notes would not have caused economic dilution if converted.

Revolving Credit Facility

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We may use the proceeds of future borrowings under the credit facility to finance working capital, for capital expenditures and for other general corporate purposes, including permitted acquisitions.

DocuSign, Inc.

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

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

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

We were in compliance with all covenants as of April 30, 2022.

As of April 30, 2022, there were no outstanding borrowings under the Credit Facility.

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

Commitments and Contingencies

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

As of April 30, 2022, we had outstanding unused letters of credit associated with our various operating leases totaling $ 7.3 million.

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

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

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

As of April 30, 2022, the future noncancellable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows:

Fiscal Period:

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Total $ 143,994

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In May 2022, the Company entered into an agreement with a public cloud computing service provider for a five-year commitment of $ 175.0 million.

Indemnification

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

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

As a result, we believe the fair value of these indemnification agreements is not material as of April 30, 2022, and January 31, 2022.

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

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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.

DocuSign, Inc.

Securities Litigation and Related Derivative 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

DocuSign, Inc.

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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.

Three putative shareholder derivative cases have been filed containing allegations based on or similar to those in the securities class action.

The cases were filed on May 17, 2022, in the U.S.

District Court for the District of Delaware, captioned Potteti v.

Springer, et al., Case No.

1:22-cv-00652;

on May 19, 2022 in the U.S.

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

Springer, et al., Case No.

3:22-cv-02980;

and on May 20, 2022, also in the U.S.

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

Springer, et al., Case No.

3:22-cv-02987.

Each case is allegedly brought on the Company’s behalf.

The suits name the Company as a nominal defendant and, depending on the particular case, the members of our board of directors or, in certain instances, current or former officers, as defendants.

While the complaints vary, they are based largely on the same allegations as the securities class action suit described above, including allegations relating to our disclosures between June 4, 2020 and December 2, 2021 as well as, in certain instances, alleged insider trading.

Collectively, these lawsuits purport to assert claims for, among other things, breach of fiduciary duty, aiding and abetting such breach, corporate waste, unjust enrichment, and under Sections 10(b) and 21D of the Securities Exchange Act of 1934.

The Complaints seek to recover unspecified damages and other relief on the Company’s behalf.

We are not yet required to respond to any of these derivative suits.

Stockholders' Equity

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

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

As of April 30, 2022, 50.7 million shares of our common stock were available for issuance under the 2018 Plan.

Restricted Stock Units

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

Restricted stock unit (“RSU”) activity for the three months ended April 30, 2022 was as follows:

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

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Canceled ( 639 ) 139.40

Unvested at October 31, 2021 8,739 $ 137.82

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

Unvested at April 30, 2022 8,685 $ 138.68

As of April 30, 2022, our total unrecognized compensation cost related to RSUs was $ 911.6 million.

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

We have $ 49.4 million and $ 55.7 million of unvested RSUs that are subject to market-based vesting conditions as of April 30, 2022 and January 31, 2022.

DocuSign, Inc.

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Stock Options

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

Option activity for the three months ended April 30, 2022 was as follows:

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

Outstanding at January 31, 2021 4,798 $ 15.55 5.0 $ 1,042,879

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

Exercised ( 179 ) 10.94

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

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

Outstanding at April 30, 2022, all vested and exercisable 2,926 $ 16.74 4.30 $ 187,884

As of April 30, 2022, there was no remaining unrecognized compensation cost related to stock option grants.

2018 Employee Stock Purchase Plan

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

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

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

As of April 30, 2022, 9.7 million shares of our common stock were reserved for issuance under the ESPP.

Compensation expense related to the ESPP was $ 5.0 million and $ 4.3 million for the three months ended April 30, 2022 and 2021.

Net Loss per Share Attributable to Common Stockholders

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

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

Three Months Ended April 30,

(in thousands, except per share data) 2022 2021

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Total antidilutive securities 14,209 16,399

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period.

Our tax provision from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period.

Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

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

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

Our income tax provision was $ 1.8 million and $ 2.0 million for the three months ended April 30, 2022 and 2021.

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

We maintain a valuation allowance against certain deferred tax assets, including all U.S.

consolidated group deferred tax assets and certain foreign deferred tax assets as a result of our history of losses in the United States and certain foreign jurisdictions, and the variability and uncertainty of our operating results.

consolidated group deferred tax assets and certain foreign deferred tax assets as a result of our history of losses in the U.S.

and certain foreign jurisdictions, and the variability and uncertainty of our operating results.

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

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

As of April 30, 2022, our gross unrecognized tax benefits totaled $ 48.1 million, excluding related accrued interest and penalties, of which $ 14.1 million would impact the effective tax rate if recognized.

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

We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

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

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

We are subject to taxation in the U.S.

and various foreign jurisdictions.

Our tax years from inception in 2003 through April 30, 2022 remain subject to examination by U.S.

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

We are under examination by the Israel Tax Authority for tax years 2016 through 2019.

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

We are not under examination in any other material jurisdiction.

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements