Risk Factors Summary
−Removed: Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this Risk Factors Summary.
These summary risks provide an overview of many of the risks we are exposed to in the normal course of our business.
−Removed: As a result, the following summary risks do not contain all of the information that may be important to you, and you should read them together with the more detailed discussion of risks set forth following this section under the heading “Risk Factors,” and with the other information in this Annual Report on Form 10-K.
−Removed: Additional risks beyond those summary risks discussed below, in “Risk Factors” or elsewhere in this Annual Report on Form 10-K, could have an adverse effect on our business, results of operations, financial condition or prospects, and could cause the trading price of our common stock to decline.
−Removed: Our business, results of operations, financial condition or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.
−Removed: Consistent with the foregoing, we are exposed to a variety of risks, including the following significant risks:
−Removed: • The COVID-19 pandemic has materially affected and may continue to impact how we and our customers are operating our businesses, and the duration and extent to which this will impact our future business, results of operations and financial condition remain uncertain.
−Removed: • We derive a majority of our revenue from our DocuSign eSignature product, and slower or declining adoption of our DocuSign eSignature product, without a corresponding increase in the use of our other products and solutions, could cause our operating results to suffer.
−Removed: • The market for our products and solutions is relatively new and evolving.
−Removed: If the market does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected.
−Removed: • If we are unable to attract new customers and retain and expand sales to existing customers, our revenue growth will be adversely affected.
−Removed: • The market in which we participate is highly competitive, which may negatively affect our ability to add new customers, retain existing customers and grow our business.
−Removed: • We have a history of operating losses and may not achieve or sustain profitability in the future.
−Removed: • We depend on co-located data centers and third-party cloud providers, as well as our own technical operations infrastructure to provide our products and solutions to our customers in a timely manner.
−Removed: Interruptions or delays in performance of our products and solutions could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue.
−Removed: • Our systems and security measures have been, and may in the future be, compromised or subject to data breaches, cyberattacks or other malicious activity.
−Removed: Consequently, our products and solutions may be perceived as not being secure.
−Removed: This may result in customers reducing or stopping their use of our products or solutions, our reputation being harmed, our incurring significant liabilities and adverse effects on our operating results and growth prospects.
−Removed: • Our recent rapid growth may not be indicative of our future growth, and, if we continue to grow rapidly, we may not be able to manage our growth effectively.
−Removed: • Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales contracts are not immediately reflected in full in our operating results.
−Removed: • If our products and solutions fail to perform properly and if we fail to develop enhancements to resolve any defect or other problems, we could lose customers or become subject to service performance or warranty claims and our market share could decline.
−Removed: • We have incurred substantial indebtedness that may decrease our business flexibility, access to capital and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.
−Removed: • We are subject to laws and regulations affecting our business, including those related to e-signature, marketing, advertising, privacy, data protection and information security.
−Removed: Our actual or perceived failure to comply with laws or regulations could harm our business.
−Removed: Complying with laws and regulations, in particular those related to privacy and data protection, could also result in additional costs and liabilities to us or inhibit sales of our software.
+Added: As a result, the following summary risks do not contain all the information that may be important to you, and you should read them together with the more detailed discussion of risks set forth following this section under the heading “Risk Factors,” and with the other information in this Annual Report on Form 10-K.
+Added: Additional risks beyond those discussed below in “Risk Factors” or elsewhere in this Annual Report on Form 10-K that we do not currently anticipate or that we currently deem immaterial could have an adverse effect on our business, results of operations, financial condition or prospects, and could cause the trading price of our common stock to decline.
+Added: These risks include, but are not limited to, the following:
+Added: Business and Industry Risks
+Added: • Any decrease in adoption of our eSignature product, without a corresponding increase in our other products.
+Added: • Any inability to attract new customers and retain and expand sales to existing customers.
+Added: • Our inability to compete in an evolving and highly competitive market.
+Added: • Our systems and security measures being compromised or subject to data breaches, cyberattacks, or other malicious activity.
+Added: • Any real or perceived improper use of, disclosure of, or access to sensitive customer data.
+Added: • Our products and solutions not evolving to meet the needs of our customers or failing to achieve market acceptance.
+Added: • Any inability to manage our growth effectively.
+Added: • An over-estimation of the size of our total addressable market.
+Added: • Any interruption or delay in performance from our technical operations infrastructure, co-located data centers and third-party cloud providers.
+Added: • Any loss of highly skilled personnel, including our management team or other key employees, or inability to attract, integrate, and retain such employees necessary to support our business.
+Added: • Our inability to maintain successful relationships with our strategic partners or to establish and maintain relationships with partners that provide complementary technology.
+Added: • Any inability to effectively develop and expand our marketing and sales capabilities.
+Added: Financial Risks, including Taxation
+Added: • Any fluctuations in our financial results or failure to meet expectations of securities analysts or investors.
+Added: • Our long and unpredictable sales cycles, which often require considerable time and expense.
+Added: • The delay in reflecting downturns or upturns in sales contracts in our operating results due to recognition of subscription revenue.
+Added: • Any failure to forecast our revenue accurately, or failure to match our expenditures with corresponding revenue.
+Added: • Any inability to achieve or sustain profitability in the future.
+Added: • Any operational challenges in connection with our current or future international operations.
+Added: • A lack of additional capital or the availability to use it on reasonable terms to support business growth and objectives.
+Added: • Any limits on business flexibility and access to capital due to substantial indebtedness.
+Added: • Any limits on our ability to use our net operating loss carryforwards to offset future taxable income.
+Added: • A lack of sufficient cash to service our debt.
+Added: Legal and Regulatory Risks
+Added: • Any actual or perceived failure to comply with laws and regulations affecting our business.
+Added: • Legal proceedings against us by third parties for various claims, including any current or future legal proceedings.
+Added: • Any failure to adequately protect our proprietary rights, including intellectual property rights.
+Added: Risks Related to our Common Stock
+Added: • Any volatility in the market price of our common stock.
+Added: • Any future sales of our common stock in the public market may cause our common stock price to decline.
+Added: • Securities analysts publishing unfavorable or inaccurate research about us, or not publishing research.
+Added: General Risks
+Added: • Unfavorable conditions in our industry or the global economy or reductions in information technology spending.
+Added: • Natural catastrophic events and man-made problems, including the effects of climate change.
DocuSign, Inc.| 2023 Form 10-K | 13
Our business involves significant risks, some of which are described below.
−Removed: You should carefully consider the following risks, together with all of the other information in this Annual Report on Form 10-K , including in the preceding Risk Factors Summary, and our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.
−Removed: Risks Related to Our Business and Industry
−Removed: The COVID-19 pandemic has materially affected and may continue to impact how we and our customers are operating our businesses, and the duration and extent to which this will impact our future business, results of operations and financial condition remain uncertain.
−Removed: The pandemic has materially affected and may continue to impact how we and our customers are operating our businesses, and the duration and extent to which this will impact our future results remain uncertain.
−Removed: During the pandemic we experienced periods characterized by exceptionally high revenue growth, as customers rapidly shifted to remote, web-enabled operations and digital agreements.
−Removed: We later experienced periods in which the urgency of customer demand slowed.
−Removed: It can be difficult to predict customer demand, especially as their priorities, resources and economic outlook change, along with other shifting market conditions.
−Removed: These shifts have occurred and may in the future occur more quickly than we anticipate.
−Removed: If we are unable to respond quickly to rapidly changing market conditions and shifts in customer behavior, our business and results of operation could be harmed, and the trading price of our common stock could be adversely affected.
−Removed: Additionally, as a service provider to U.S.
−Removed: state and federal government agencies, we have been subject to various and fluctuating COVID-19 vaccination, testing, and related health and safety requirements.
−Removed: While we cannot predict the full impact these requirements may have on our business, our ability to retain or hire employees could be impacted;
−Removed: we could be subject to litigation by employees;
−Removed: we could incur additional costs of monitoring and compliance across our business;
−Removed: and our business and results of operations could be harmed.
−Removed: During the pandemic, we have taken a number of precautionary measures to ensure the health and safety of our employees, partners and customers, including shifting to hybrid work arrangements, imposing work-related travel restrictions for our employees and shifting most planned customer, partner and investor events to virtual-only formats.
−Removed: We are assessing the efficacy and continuation of these measures based on evolving conditions and applicable laws and regulations.
−Removed: There can be no assurance that these measures will be effective, or that we can adopt or continue them without adversely affecting our business operations and financial condition.
−Removed: For example, our management team has been focusing additional time on planning for and mitigating the pandemic and its actual and potential effects on our business, which may reduce the amount of time available for other initiatives.
−Removed: Changes in our operations in response to the pandemic may result in inefficiencies or delays that cannot be fully mitigated through succession planning, remote or hybrid work arrangements or teleconferencing technologies.
−Removed: These mitigation efforts may also lead to inefficiencies of our employees, operational and cybersecurity risks and other circumstances which could have an adverse impact to our results of operations and financial condition.
−Removed: Finally, the effects of the COVID-19 pandemic also may heighten other risks, including significant volatility in global markets and the trading price of our common stock.
−Removed: The full impact of the pandemic on our business will continue to depend on future developments, including but not limited to, 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, all of which could evolve and are difficult to predict.
−Removed: Additionally, due to our subscription-based business model, the full effects of these changes may not be fully reflected in our results of operations until future periods.
−Removed: If the COVID-19 pandemic continues to have a substantial impact on our employees, partners or customers or if the abatement of the pandemic results in decreased demand or a more challenging sales environment, our business, results of operations and financial condition may be harmed.
−Removed: To the extent that the pandemic harms our business and results of operations, many of the other risks described in this “Risk Factors” section will be exacerbated.
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−Removed: We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors, the price of our common stock could decline.
−Removed: Our operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control.
−Removed: As a result, our past results may not be indicative of our future performance and comparing our operating results on a period-to-period basis may not be meaningful.
−Removed: In addition to the other risks described herein, factors that may affect our operating results or cause our financial results to fluctuate include the following:
−Removed: • fluctuations in demand for or pricing of our products and solutions, including due to the COVID-19 pandemic, competition, and differing levels of demand for our products as our customers’ priorities, resources, financial conditions and economic outlook change;
−Removed: • our ability to attract new customers;
−Removed: • our ability to renew our subscriptions with, and expand sales of our products and solutions to, our existing customers;
−Removed: • timing of revenue recognition;
−Removed: • customer delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors;
−Removed: • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions, including cost-cutting measures or other effects of the COVID-19 pandemic;
−Removed: • the timing and success of new product and service introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation or new entrants among competitors, customers, or strategic partners ;
−Removed: • rising inflation and our ability to control costs, including our operating expenses;
−Removed: • our ability to continue operating remotely and to adapt to hybrid work arrangements combining remote and in-office work;
−Removed: • the timing of costs related to our go-to-market strategy, including expansion of our sales capacity and marketing;
−Removed: • potential accelerations of prepaid expenses and deferred costs;
−Removed: • the amount and timing of non-cash expenses, including stock-based compensation, impairments and other non-cash charges;
−Removed: • the amount and timing of costs associated with recruiting, training and integrating new employees, and retaining existing employees;
−Removed: • the time and costs related to litigation, including securities litigation;
−Removed: • issues relating to acquisitions and partnerships with third parties;
−Removed: • general economic, market, and industry conditions, including resulting from regional or global conflicts;
−Removed: • the impact of new accounting pronouncements;
−Removed: • changes in laws and regulations that affect our business;
−Removed: • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products and solutions;
−Removed: • awareness of our brand on a global basis.
−Removed: If our operating results fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class action lawsuits.
+Added: You should carefully consider the following risks, together with all the other information in this Annual Report on Form 10-K, including in the preceding Risk Factors Summary, and our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.
+Added: Business and Industry Risks
We derive a majority of our revenue from our DocuSign eSignature product, and slower or declining adoption of our DocuSign eSignature product, without a corresponding increase in the use of our other products and solutions, could cause our operating results to suffer.
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As a result, our operating results could suffer due to:
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▪ any decline in demand for our DocuSign eSignature product;
−Removed: • macro- and micro-economic effects of the COVID-19 pandemic, including its effect on the pace of the digital transformation of business and hybrid work arrangements;
▪ the failure of our DocuSign eSignature product to maintain market acceptance;
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▪ our inability to release enhanced versions of our DocuSign eSignature product on a timely basis;
+Added: ▪ macro- and micro-economic factors, including inflation, rising interest rates, increased debt and equity market volatility and the impact of regional or global conflicts or other public health crises, including the COVID-19 pandemic.
If we experience a material decline in sales of subscriptions to our DocuSign eSignature product, without a corresponding increase in subscriptions to our other products and solutions, our revenue and operating results would be harmed.
−Removed: The market for our products and solutions is relatively new and evolving.
−Removed: If the market does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected.
−Removed: The market for our products and solutions — including our DocuSign eSignature product, which is the core part of our broader DocuSign Agreement Cloud platform for automating the agreement process — is relatively new and evolving, which makes our business and future prospects difficult to evaluate.
−Removed: We have customers in a wide variety of industries, including real estate, financial services, insurance, manufacturing, and healthcare and life sciences.
−Removed: We have also expanded and intend to continue to expand our sales efforts internationally, where many countries may have less familiarity with and acceptance of e-signature products.
−Removed: It is difficult to predict customer demand for our products and solutions, customer retention and expansion rates, the size and growth rate of the market for agreement automation, the entry of competitive products or the success of existing competitive products.
−Removed: We expect that we will continue to need intensive sales efforts to educate prospective customers, particularly enterprise and commercial customers and international customers, about the uses and benefits of our products and solutions.
−Removed: The size and growth of our addressable market depends on a number of factors, including our customers’ desire to differentiate themselves through e-signature products and other products and solutions that automate the agreement process, as well as changes in the competitive landscape, technological changes, budgetary constraints of our customers, changes in business practices, changes in regulations and changes in economic and global market conditions.
−Removed: If customers do not accept the value proposition of our offerings, then a viable market for products and solutions may not develop further, or it may develop more slowly than we expect, either of which would adversely affect our business and operating results.
If we are unable to attract new customers and retain and expand sales to existing customers, our revenue growth will be adversely affected.
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Our existing customers, especially our enterprise customers, must increase their use of our products and solutions by purchasing new products, additional subscriptions and our enhanced products and solutions.
−Removed: If our efforts to expand sales to our existing customers are not successful, our business, operating results and financial condition may suffer.
+Added: We may also, from time to time, invest in products and functionalities to diversify our sales and marketing strategy.
+Added: If these or other efforts to attract new customers or expand sales to our existing customers are not successful, our business, operating results and financial condition may suffer.
Moreover, a majority of our subscription contracts are for one year.
Our customers have no obligation to renew their subscriptions and we cannot guarantee that our customers will renew their subscriptions with us for a similar or greater contract period or on the same or more favorable terms.
−Removed: Our renewal and expansion rates may decline or fluctuate as a result of a number of factors, including customer spending levels, customer dissatisfaction, decreases in the number of users at our customers, changes in the type and size of our customers, pricing, competitive conditions, customer attrition and general economic and global market conditions, including as a result of the COVID-19 pandemic.
+Added: Our renewal and expansion rates may decline or fluctuate as a result of a number of factors, including customer spending levels, customer dissatisfaction, decreases in the number of users with our customers, changes in the type and size of our customers, pricing, competitive conditions, customer attrition and general economic and global market conditions, including as a result of inflation, rising interest rates, increased debt and equity market volatility and the impact of the COVID-19 pandemic.
+Added: If our customers do not renew their subscriptions for our products and solutions or if they reduce their subscription amounts at the time of renewal, our revenue will decline, and our business will suffer.
DocuSign, Inc.| 2023 Form 10-K | 14
−Removed: customers do not renew their subscriptions for our products and solutions or if they reduce their subscription amounts at the time of renewal, our revenue will decline, and our business will suffer.
−Removed: The market in which we participate is highly competitive, which may negatively affect our ability to add new customers, retain existing customers and grow our business.
−Removed: Our products and solutions address a market that is evolving and highly competitive and face competition from different companies depending on the product or solution.
+Added: The market in which we participate is evolving and highly competitive, which may negatively affect our ability to add new customers, retain existing customers and grow our business.
+Added: Our products and solutions address a market that is evolving and highly competitive.
+Added: We have customers in a wide variety of industries, including real estate, financial services, insurance, manufacturing, and healthcare and life sciences.
+Added: We intend to continue to expand our sales efforts internationally, where many countries may have less familiarity with and acceptance of e-signature products.
+Added: It is difficult to predict customer demand for our products and solutions, customer retention and expansion rates, the size and growth rate of the market for agreement automation, the entry of competitive products or the success of existing competitive products.
+Added: We expect that we will continue to need intensive sales efforts to educate prospective customers, particularly enterprise and commercial customers and international customers, about the uses and benefits of our products and solutions.
+Added: Additionally, we face competition from different companies depending on the product or solution.
For example, our primary global e-signature competitor is currently Adobe Sign.
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Further, we could lose customers if our competitors develop new competitive products and solutions, acquire competitive products, reduce prices, form strategic alliances with other companies, are acquired by third parties with greater resources or develop and market new technologies that render our existing or future products less competitive, unmarketable or obsolete.
+Added: For example, disruptive technologies such as generative AI may fundamentally alter the market for our services in unpredictable ways and reduce customer demand.
If we are unable to effectively compete, our business, operating results and financial condition would be harmed.
−Removed: We have a history of operating losses and may not achieve or sustain profitability in the future.
−Removed: We began operations in 2003 and have experienced net losses since inception.
−Removed: We generated a net loss of $70.0 million, $243.3 million and $208.4 million in the years ended January 31, 2022, 2021 and 2020.
−Removed: As of January 31, 2022, we had an accumulated deficit of $1.4 billion.
−Removed: We will need to generate and sustain increased revenue levels in future periods to become profitable and, even if we do, we may not be able to maintain or increase our level of profitability.
−Removed: We intend to continue to incur significant expenses to support growth, further develop and enhance our products and solutions, expand our infrastructure and technology, increase our sales headcount and marketing activities, and grow our international operations and customer base.
−Removed: Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.
−Removed: We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications and delays and other unknown events.
−Removed: If we are unable to achieve and sustain profitability, the value of our business and common stock may significantly decrease.
−Removed: We depend on co-located data centers and third-party cloud providers, as well as our own technical operations infrastructure, to provide our products and solutions to our customers in a timely manner.
−Removed: Interruptions or delays in performance of our products and solutions could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue.
−Removed: We currently serve our customers from third-party data center hosting facilities.
−Removed: Our customers need to be able to access our products at any time, without interruption or degradation of performance.
−Removed: In some cases, third-party cloud providers run their own platforms that we access, and we are, therefore, vulnerable to their service interruptions.
−Removed: As a result, we depend, in part, on our data center providers’ ability to protect these facilities against damage or interruption, including from natural disasters, regional or global conflicts, power or telecommunications failures, criminal acts and similar events.
−Removed: In the event that our data center arrangements are terminated, or if there are any lapses of service or damage to a data center, we could experience lengthy interruptions in our service as well as delays and additional expenses in arranging new facilities and services.
−Removed: Even with current and planned disaster recovery arrangements, our disaster recovery planning may not account for all eventualities and our business could be harmed.
−Removed: In addition to third-party data centers and cloud providers, we also rely on our own technical operations infrastructure to support and serve our rapidly growing customer base.
−Removed: We must maintain sufficient excess capacity in our operations infrastructure to ensure that our products and solutions are accessible within an acceptable load time.
−Removed: Design and mechanical errors, spikes in usage volume and failure to follow system protocols and procedures could cause our systems to fail, resulting in interruptions in our products and solutions.
−Removed: Any interruptions or delays in our service, whether or not caused by our products, whether as a result of third-party error, our own error, natural disasters, operational disruptions related to the COVID-19 pandemic or other public health crises, or security breaches, whether accidental or willful, could harm our relationships with customers and cause our revenue to decrease and/or our expenses to increase.
−Removed: Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.
−Removed: These factors in turn could further reduce our revenue, subject us to
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−Removed: liability and cause us to issue credits or cause customers to fail to renew their subscriptions, any of which could adversely affect our business.
−Removed: Our systems and security measures have been, and may in the future be, compromised or subject to data breaches, cyberattacks, or other malicious activity.
+Added: Our systems and security measures have been, and may in the future be, compromised or subject to data breaches, cyberattacks, or other malicious activity, which could result in customers reducing or stopping their use of our products, our reputation being harmed, and significant liabilities and adverse effects on our operating results and financial condition.
Our operations involve the storage and transmission of customer data, personal data and other sensitive information, and our corporate environment contains important company data and/or business records, employee data and data from partner, vendor or other relationships, as well as a wide variety of our own internal company, partner and employee information.
−Removed: Like other organizations providing valuable technology and services, we are subject to cyberattacks from malicious third parties using a wide variety of tactics, including credential stuffing and account takeover attacks, denial or degradation of service attacks, malicious code (e.g., viruses and worms), ransomware, phishing and many other techniques.
−Removed: If bad actors gain improper access to our systems or databases or those of our partners and other third parties who have access to our data, they may be able to steal, publish, delete, copy, unlawfully or fraudulently use or modify data, including personal information and/or blackmail us to pay a ransom.
−Removed: A security breach could result in monetary and other losses for us or our customers, identity theft for our customers, the inability to expand our business, additional scrutiny, restrictions, fines or penalties from regulatory or governmental authorities, loss of customers and customer confidence in our services, on-going regulatory oversight, assessments and audits, exposure to civil litigation, a breach of our contracts with third parties, all of which could harm our business, financial condition, and operating results.
−Removed: Also, our reputation could suffer irreparable harm, causing our current and prospective clients to decline to use our solutions in the future.
−Removed: Further, we could be forced to expend significant financial and operational resources in response to a security breach, including repairing system damage, increasing security protection costs, investigating and remediating any information security vulnerabilities, complying with data breach notification obligations and applicable laws, and defending against and resolving legal and regulatory claims, all of which could divert resources and the attention of our management and key personnel away from our business operations and materially and adversely affect our business, financial condition, and operating results.
+Added: Our employees, service providers and third parties work more frequently on a remote or hybrid arrangement basis, which may involve relying on less secure systems and may increase the risk of cybersecurity related incidents.
+Added: We cannot guarantee these private work environments and electronic connections to our work environment have the same robust security measures deployed in our physical offices.
+Added: We also rely on third-party and public-cloud infrastructure, and we depend in part on third-party security measures to protect against unauthorized access, cyberattacks and the mishandling of customer data.
+Added: Our ability to monitor our third-party service providers’ data security is limited and any breach of our providers’ security measures may result in unauthorized access to, or misuse, loss or destruction of, our and our customers’ data.
While we have security measures in place designed to protect our production, development and other systems, maintain the integrity of customer, company, partner and employee information, and prevent data loss, misappropriation and other security breaches and incidents, we have faced security incidents in the past.
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Despite our prevention and response efforts, any security incident or breach, even if immaterial and properly addressed, could result in negative publicity, loss of customers, damage to our reputation and could impair our sales and harm our business.
−Removed: Additionally, as we rely on third-party and public-cloud infrastructure, we depend in part on third-party security measures to protect against unauthorized access, cyberattacks and the mishandling of customer data.
−Removed: Our ability to monitor our third-party service providers’ data security is limited and any breach of our providers’ security measures may result in unauthorized access to, or misuse, loss or destruction of, our and our customers’ data.
−Removed: Moreover, our employees, service providers and third parties work more frequently on a remote or hybrid arrangement basis, which may involve relying on less secure systems and may increase the risk of cybersecurity related incidents.
−Removed: We cannot guarantee these private work environments and electronic connections to our work environment have the same robust security measures deployed in our physical offices.
−Removed: Further, we may face additional security incidents in the future, resulting in unauthorized access to, loss of or unauthorized disclosure of sensitive and proprietary information of DocuSign or our customers, partners or employees, and such incidents may in the future result in regulatory enforcement actions or litigation.
−Removed: Cyberattacks and other malicious internet-based activity continue to increase, and cloud-based service providers have been and are expected to continue to be targeted.
−Removed: Further, advances in technology and the increasing sophistication of attackers have led to more frequent and effective cyberattacks, including advanced persistent threats by state-sponsored actors, cyberattacks relying on complex social engineering or “phishing” tactics, ransomware attacks, and other methods that may lead to the loss, theft or misuse of personal, corporate or financial information, fraudulent payments and identity theft.
−Removed: Despite significant efforts to create security barriers to such threats, it is virtually impossible for us, our service providers, our partners and our customers to entirely mitigate these risks.
−Removed: In addition, as computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks have become more prevalent, we face increased risk from these activities to maintain the performance, reliability, security and availability of our products and technical infrastructure to the satisfaction of our customers.
−Removed: If our security measures, or the security measures of our service providers, partners or customers, are compromised, our reputation could be damaged, our ability to attract and retain customers could be adversely affected and our business may be harmed.
+Added: Like other organizations providing valuable technology and services, we are subject to increasing cyberattacks from malicious third parties using a wide variety of tactics.
+Added: The frequency and sophistication of such threats continues to increase and often becomes further heightened in connection with geopolitical tensions.
+Added: In addition, we face increased
DocuSign, Inc.| 2023 Form 10-K | 15
−Removed: and foreign laws and regulations require companies to provide notice of data security breaches and/or incidents involving certain types of personal data to individuals, the media, government authorities or other third parties.
−Removed: Security compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity.
−Removed: Any security compromise in our industry, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of our security measures, negatively affect our ability to attract new customers, cause existing customers to elect not to renew their subscriptions or subject us to third-party lawsuits, regulatory fines or other action or liability, which could adversely affect our business, operating results and financial condition.
−Removed: A network or data security incident against us, whether actual, alleged, or perceived, may result in our products and solutions not being perceived as secure.
−Removed: This could result in customers reducing or stopping their use of our products or solutions, our reputation being harmed, our incurring significant liabilities and adverse effects on our operating results and growth prospects.
−Removed: Any actual, alleged or perceived security breach in our systems or networks, or any other actual, alleged or perceived data security incident we suffer, could result in damage to our reputation, negative publicity, loss of customers and sales, loss of competitive advantages over our competitors, increased costs to remedy any problems and otherwise respond to any incident, regulatory investigations and enforcement actions, costly litigation, and other liability.
−Removed: Our agreements with third parties, including customers, contain contractual commitments we are required to adhere to related to information security and data privacy compliance.
−Removed: If we experience an incident that triggers a breach of such contractual commitments, we could be exposed to significant liability or cancellation of service under these agreements.
−Removed: The damages payable to the counterparty as well as the impact to our service could be substantial and create substantial costs and loss of business.
−Removed: There can be no assurance that any limitations of liability provisions in our contracts would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim.
+Added: risk to maintain the performance, reliability, security and availability of our products and technical infrastructure to the satisfaction of our customers.
+Added: Advances in technology and the increasing sophistication of attackers have led to more frequent and effective cyberattacks, including advanced persistent threats by state-sponsored actors, cyberattacks relying on complex social engineering or “phishing” tactics, ransomware attacks and other methods including credential stuffing and account takeover attacks, denial or degradation of service attacks, malicious code (e.g., viruses and worms), ransomware, and many other techniques that may lead to the loss, theft or misuse of personal, corporate or financial information, fraudulent payments and identity theft.
+Added: If bad actors gain improper access to our systems or databases or those of our partners and other third parties who have access to our data, they may be able to steal, publish, delete, copy, unlawfully or fraudulently use or modify data, including personal information and/or blackmail us to pay a ransom.
+Added: If our security measures, or the security measures of our service providers, partners or customers, are compromised, our reputation could be damaged, our ability to attract and retain customers could be adversely affected, we could be subject to negative publicity, increased costs to remedy any problems and otherwise respond to any incident, monetary and other losses for us or our customers, identity theft for our customers, the inability to expand our business, additional scrutiny, restrictions, fines or penalties from regulatory or governmental authorities, loss of customers and customer confidence in our services, ongoing regulatory oversight, assessments and audits, exposure to civil litigation, and/or a breach of our contracts with third parties, all of which could expose us to significant liability and harm our business, financial condition, and operating results.
+Added: Despite significant efforts to create security barriers to such threats, it is virtually impossible for us, our service providers, our partners and our customers to entirely mitigate these risks.
+Added: Further, we could be forced to expend significant financial and operational resources in response to a security breach, including repairing system damage, increasing security protection costs, investigating and remediating any information security vulnerabilities, complying with data breach notification obligations and applicable laws, and defending against and resolving legal and regulatory claims, all of which could divert resources and the attention of our management and key personnel away from our business operations and materially and adversely affect our business, financial condition, and operating results.
+Added: Additionally, there can be no assurance that any limitations of liability provisions in our contracts would be enforceable or adequate in the event of a security breach or would otherwise protect us from any such liabilities or damages with respect to any particular claim.
We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that insurers will not deny coverage as to any future claim.
−Removed: Security breaches may result in increased costs for such insurance.
−Removed: One or more large, successful claims against us in excess of our available insurance coverage, or changes in our insurance policies, including premium increases or large deductible or co-insurance requirements, could have an adverse effect on our business, operating results and financial condition.
+Added: Security breaches may result in increased costs for such insurance as well.
+Added: One or more large, successful claims against us in excess of our available insurance coverage, or changes in our insurance policies, including premium increases or large deductible or coinsurance requirements, could have an adverse effect on our business, operating results and financial condition.
We obtain and process a large amount of sensitive customer data.
Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation, as well as have an adverse effect on our business.
−Removed: We receive, store and process personal information and other data from and about customers, our employees, partners and service providers.
+Added: We receive, store and process personal information and other data from and about our customers, employees, partners and service providers.
In addition, customers use our products and solutions to obtain and store personal information, health information (including protected health information) and personal financial information.
10 unchanged sentences
Complying with laws and regulations, in particular those related to privacy and data protection, could also result in additional costs and liabilities to us or inhibit sales of our software.
−Removed: ” If we are not able to comply with these laws or regulations or if we become liable under these evolving laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability.
−Removed: This may require us to expend substantial resources or to discontinue certain solutions, which would
+Added: ” If we are not able to comply with these laws or regulations or if we become liable under these evolving laws
DocuSign, Inc.| 2023 Form 10-K | 16
−Removed: negatively affect our business, operating results and financial condition.
+Added: or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability.
+Added: This may require us to expend substantial resources or to discontinue certain solutions, which would negatively affect our business, operating results and financial condition.
In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business.
1 unchanged sentence
Additionally, any failure or perceived failure by us to comply with laws, regulations, policies, legal or contractual obligations, industry standards, or regulatory guidance relating to privacy or data security, may result in governmental investigations and enforcement actions, litigation, fines and penalties or adverse publicity, and could cause our customers and partners to lose trust in us, which could have an adverse effect on our reputation and business.
−Removed: If our products and solutions do not evolve to meet the needs of our customers or fail to achieve sufficient market acceptance, our financial results and competitive position will suffer.
+Added: If our products, solutions and functionalities do not evolve to meet the needs of our customers or fail to achieve sufficient market acceptance, our financial results and competitive position will suffer.
We spend substantial amounts of time and money to research, develop and enhance our existing products, add new offerings, incorporate additional functionality, and solve new use cases to meet our customers’ rapidly evolving demands.
3 unchanged sentences
As a result, when we introduce new or enhanced products and solutions, they must achieve high levels of market acceptance to justify the amount of our investment in developing or acquiring them and bringing them to market.
−Removed: New products and solutions or enhancements to our existing products and solutions could fail to attain sufficient market acceptance for many reasons, including:
+Added: New products, solutions or enhancements to our existing products and solutions could fail to attain sufficient market acceptance for many reasons, including:
▪ failure to predict market demand for particular features or functions, or to timely meet demand;
3 unchanged sentences
▪ delays in releasing our products and solutions to the market;
+Added: ▪ negative customer perception of our sales-directed strategies;
▪ introduction or anticipated introduction of competing products by our competitors.
−Removed: If the release of our new and enhanced products and solutions do not meet customer needs or if our customers do not accept them, our business, operating results and financial conditions would be harmed.
+Added: If the release of our new and enhanced products, solutions or functionalities do not meet customer needs or if our customers do not accept them, our business, operating results and financial condition would be harmed.
The adverse effect on our financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses we will have incurred.
−Removed: Our sales cycle with enterprise and commercial customers can be long and unpredictable, and our sales efforts require considerable time and expense.
−Removed: Our ability to increase our revenue and grow our business is partially dependent on the widespread acceptance of our products and solutions by large businesses and other commercial organizations.
−Removed: We often need to spend significant time and resources to better educate and familiarize these potential customers with the value proposition of our products and solutions.
−Removed: The length of our sales cycle for these customers from initial evaluation to payment for our offerings is generally three to nine months, but can vary substantially from customer to customer and from offering to offering.
−Removed: Customers frequently require considerable time to evaluate, test and qualify our offerings prior to entering into or expanding a subscription.
−Removed: This is particularly true of DocuSign CLM and our other advanced offerings, where longer evaluation, testing and qualification processes often result in longer sales cycles than for our DocuSign eSignature product.
−Removed: The timing of our sales with our enterprise customers and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for these customers.
−Removed: During the sales cycle, we expend significant time and money on sales and marketing and contract negotiation activities, which may not result in a sale.
−Removed: Additional factors that may influence the length and variability of our sales cycle include:
−Removed: • the effectiveness of our sales force;
−Removed: • the discretionary nature of purchasing and budget cycles and decisions;
−Removed: • the obstacles placed by customers’ procurement process;
−Removed: DocuSign, Inc.| 2022 Form 10-K | 23
−Removed: • economic conditions and other factors impacting customer budgets;
−Removed: • the customer’s integration complexity;
−Removed: • the customer’s familiarity with e-signature and agreement automation processes;
−Removed: • the complexity of contracts with certain large business customers;
−Removed: • customer evaluation of competing products during the purchasing process;
−Removed: • the competitive market for our products and services;
−Removed: • evolving customer demands.
Our recent rapid growth may not be indicative of our future growth, and, if we continue to grow rapidly, we may not be able to manage our growth effectively.
−Removed: Our revenue grew from $1.5 billion in the year ended January 31, 2021 to $2.1 billion in the fiscal year ended January 31, 2022.
+Added: Our revenue grew from $2.1 billion in the fiscal year ended January 31, 2022 to $2.5 billion in the fiscal year ended January 31, 2023.
We expect that, in the future, as our revenue increases, our revenue growth rate will decline as the scale of our business increases.
−Removed: While we experienced an increase in paying customers and revenue due to the pandemic, there is no assurance that we will experience a continued increase in paying customers or that new or existing customers will utilize our products at similar levels when businesses return to more normalized, hybrid or in-person work environments.
+Added: While we experienced an increase in paying customers and revenue in the past, in part due to macro-economic conditions, including the pandemic, there is no assurance that we will experience a continued increase in paying customers or that new or existing customers will utilize our products at similar levels as businesses continue to return to more normalized, hybrid or in-person work environments.
Additionally, future revenue growth rates may fail to meet the expectations of investors or securities analysts, particularly if measured against periods of accelerated revenue growth such as those experienced during the earlier phases of the COVID-19 pandemic and the resulting increased adoption of remote work and reduced seasonality experienced during such periods.
2 unchanged sentences
▪ attract new customers, increase our existing customers’ use of our products and solutions and provide our customers with excellent customer support;
−Removed: • expand our DocuSign Agreement Cloud offerings for our customers;
+Added: DocuSign, Inc.| 2023 Form 10-K | 17
+Added: ▪ expand our DocuSign product offerings for our customers;
+Added: ▪ effectively implement our sales strategies, including the expansion of self-serve capabilities;
▪ continue to introduce our products and solutions to new markets outside of the U.S.;
−Removed: • mitigate and effectively manage the varying impacts of the COVID-19 pandemic, including its effect on the pace of the digital transformation of business and the costs of monitoring and complying with evolving governmental mandates and removal or weakening of these mandates;
−Removed: • hire, retain and train our employee base including our sales force, research and development teams, and key employees;
+Added: ▪ mitigate and effectively manage the increased pace of the digital transformation of business and the costs of monitoring and complying with evolving governmental mandates;
+Added: ▪ hire, retain, train, and integrate our employee base including our sales force, research and development teams and key employees;
▪ successfully identify and develop, acquire or invest in businesses, products or technologies that we believe could complement or expand our products and solutions;
2 unchanged sentences
We expect to continue to expend substantial financial and other resources on:
−Removed: • sales, including a significant expansion of our global sales organization and investment in training and sales enablement;
+Added: ▪ product development and innovation;
+Added: ▪ sales, including our omni channel:
+Added: direct, self-serve and partners;
▪ marketing to expand brand awareness both in the U.S.
and internationally;
−Removed: • our technology infrastructure, including systems architecture, management tools, scalability, availability, performance and security, as well as disaster recovery measures;
−Removed: • product development and innovation;
+Added: ▪ our technology infrastructure, including information technology systems, systems architecture, management tools, scalability, availability, performance and security, as well as disaster recovery measures;
▪ acquisitions or strategic investments;
1 unchanged sentence
▪ general administration, including legal and accounting expenses.
−Removed: In addition to growth in revenue, we have also experienced significant growth in the number of our customers and users, the number and complexity of the transactions we handle, and the amount of data that our infrastructure
−Removed: DocuSign, Inc.| 2022 Form 10-K | 24
+Added: In addition to growth in revenue, we have also experienced significant growth in the number of our customers and users, the number and complexity of the transactions we handle, and the amount of data that our infrastructure supports.
Our growth has placed and may continue to place significant demands on our management and our operational and financial resources.
−Removed: Finally, our business is becoming more complex as we increase our product offerings, add additional staff, expand internationally and acquire complementary companies, products and technologies.
+Added: Finally, our business is becoming more complex as we increase our product offerings, expand internationally and acquire complementary companies, products and technologies.
In connection with this increased complexity, we are working to improve our operational, financial and management controls as well as our reporting systems and procedures, including streamlining or automating manual processes, all of which requires capital expenditures and management attention.
Failure to effectively manage our growth and operations could have an adverse effect on our business, operating results and financial condition.
−Removed: Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales contracts are not immediately reflected in full in our operating results.
−Removed: We recognize revenue over the term of each of our contracts, which are typically one year in length but may be up to three years or longer.
−Removed: As a result, much of our revenue is generated from the recognition of contract liabilities from contracts entered into during previous periods.
−Removed: Consequently, a shortfall in demand for our products and solutions and professional services or a decline in new or renewed contracts in any one quarter may not significantly reduce our revenue for that quarter but could negatively affect our revenue in future quarters.
−Removed: Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through additional sales contracts in any period, as revenue from new customers is recognized over the applicable term of their contracts.
−Removed: If we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected.
−Removed: Because our recent growth has resulted in the rapid expansion of our business and product offerings, we do not have a long history upon which to base forecasts of future revenues and operating results.
−Removed: Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors.
−Removed: If we do not address these risks successfully, our operating results could differ materially from our estimates and forecasts or the expectations of investors, causing our business to suffer and our stock price to decline.
If we have overestimated the size of our total addressable market, our future growth rate may be limited.
4 unchanged sentences
Even if our total addressable market meets our size estimates and experiences growth, we may not continue to grow our share of the market.
+Added: We depend on co-located data centers and third-party cloud providers, as well as our own technical operations infrastructure, to provide our products and solutions to our customers in a timely manner.
+Added: Interruptions or delays in performance of our products and solutions could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue.
+Added: We currently serve our customers from third-party data center hosting facilities.
+Added: Our customers need to be able to access our products at any time, without interruption or degradation of performance.
+Added: In some cases, third-party cloud providers run their own platforms that we access, and we are, therefore, vulnerable to their service interruptions.
+Added: As a result, we depend, in part, on our data center providers’ ability to protect these facilities against damage or interruption, including from natural disasters, regional or global conflicts, power or telecommunications failures, criminal acts and similar events.
+Added: In the event that our data center arrangements are terminated, or if there are any lapses of service or damage to a data center, we could experience lengthy interruptions in our service as well as delays and additional expenses in arranging new facilities and services.
+Added: Even with current and planned disaster recovery arrangements, our disaster recovery planning may not account for all eventualities and our business could be harmed.
+Added: In addition to third-party data centers and cloud providers, we also rely on our own technical operations infrastructure to support and serve our rapidly growing customer base.
+Added: We must maintain sufficient excess capacity in our operations
+Added: DocuSign, Inc.| 2023 Form 10-K | 18
+Added: infrastructure to ensure that our products and solutions are accessible within an acceptable load time.
+Added: Design and mechanical errors, spikes in usage volume and failure to follow system protocols and procedures could cause our systems to fail, resulting in interruptions in our products and solutions.
+Added: Any interruptions or delays in our service, whether or not caused by our products, whether as a result of third-party error, our own error, natural disasters and the effects of climate change, operational disruptions related to labor shortages or public health crises, including the COVID-19 pandemic, or security breaches, whether accidental or willful, could harm our relationships with customers and cause our revenue to decrease and/or our expenses to increase.
+Added: Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.
+Added: These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause customers to fail to renew their subscriptions, any of which could adversely affect our business.
+Added: We rely on the performance of highly skilled personnel, including our management and other key employees, and failing to attract, integrate, or retain such employees could harm our business.
+Added: Our success and future growth depend upon the continued services of highly skilled personnel, including our management team and other key employees.
+Added: Changes in our management team resulting from the hiring or departure of executives and key employees from time to time could disrupt our business.
+Added: In the last 12 months, there have been significant changes to our senior leadership team.
+Added: For example, in June 2022, Dan Springer, our President and Chief Executive Officer resigned from the Company, and in October 2022, Allan Thygesen was appointed as our new President and Chief Executive Officer.
+Added: In March 2023, we announced that Cynthia Gaylor, our Chief Financial Officer, gave notice of her intention to resign effective June 15, 2023, following a transition period.
+Added: There have been several other transitions in our senior leadership team in recent months.
+Added: These changes and any future significant leadership changes or senior management transitions involve inherent risk.
+Added: Any failure to find a timely and suitable replacement and ensure an effective transition, including the effective onboarding, assimilation, and retention of our management team and key employees, could hinder our strategic planning, business execution and future performance.
+Added: In addition, executive leadership transition periods can be disruptive and may result in a loss of personnel with deep institutional or technical knowledge, or result in changes to business strategy or objectives, and may negatively impact our operations and relationships with employees and customers due to increased or unanticipated expenses, operational inefficiencies, uncertainty regarding changes in strategy, decreased employee morale and productivity, and increased turnover.
+Added: Our future success, and our ability to achieve our operational and business objectives, depends in large part on the successful recruitment, integration and continued service of senior management and other key personnel.
+Added: In particular, we are highly dependent on the services of our senior management team, many of whom are essential to the development of our technology, platform, future vision, and strategic direction.
+Added: Our senior management and key employees are employed on an at-will basis, meaning that we may terminate their employment at any time, with or without cause, and they may resign at any time, with or without cause.
+Added: If we lose one or more of our senior management or other key employees and are unable to find adequate replacements, or if we fail to attract, integrate, retain and motivate members of our senior management team and key employees or otherwise fail to retain a significant portion of our workforce, our business could be harmed.
+Added: For example, in September 2022, in response to changing economic conditions and in an effort to reduce our operational costs and improve our organizational efficiency, we authorized a restructuring plan, which included a restructuring and reduction of the current workforce by approximately 9%.
+Added: The execution of this restructuring plan was substantially completed at the end of fiscal 2023.
+Added: Additionally, in February 2023, in an effort to support our growth, scale and profitability objectives, we authorized an additional restructuring plan, which included a restructuring and reduction of the current workforce by approximately 10%.
+Added: We expect that the execution of this restructuring plan will be substantially complete by the end of the second quarter of fiscal 2024.
+Added: These restructuring plans could negatively impact our ability to attract, integrate, retain and motivate key employees.
+Added: We also are dependent on the continued service of our existing software engineers because of the complexity of our products and solutions.
+Added: In particular, we compete with many other companies for software developers with high levels of experience and skilled sales and operations professionals in an increasingly tight U.S.
+Added: labor market.
+Added: We also require skilled product development, marketing, sales, finance and operations professionals, and we may not be successful in attracting and retaining the professionals we need, particularly in our principal U.S.
+Added: locations in the San Francisco Bay Area and Seattle.
+Added: Additionally, while we currently employ a hybrid model where employees have the flexibility to work from home, changes to our workplace arrangements could impact our ability to maintain our corporate culture or productivity, increase attrition or limit our ability to attract employees if individuals prefer to work full time at home or in the office.
+Added: Competition for employees in our industry (and especially in our principal U.S.
+Added: locations) is intense, and many of the companies we compete with for experienced personnel have greater resources than we do.
+Added: To remain competitive, we may experience increased compensation-related expenses.
+Added: DocuSign, Inc.| 2023 Form 10-K | 19
+Added: Our sales to government entities and highly regulated organizations are subject to a number of challenges and risks.
+Added: We sell to U.S.
+Added: federal, state and local, as well as foreign, government agencies and public sector customers, as well as to customers in highly regulated industries such as financial services, pharmaceuticals, insurance, healthcare and life sciences.
+Added: Sales to such entities are subject to a number of challenges and risks, including those related to our status as a service provider to U.S.
+Added: state and federal governmental agencies.
+Added: Selling to such entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale.
+Added: These longer sale cycles make the timing of future revenue from these entities difficult to predict.
+Added: Further, government certification requirements may change, restricting our ability to sell into the government sector until we have met those revised requirements.
+Added: Government demand and payment for our offerings are affected by public sector budgetary cycles and funding authorizations, and funding reductions or delays, including as a result of macro-economic factors, including inflation, rising interest rates, regional or global conflicts and public health crises, may adversely affect public sector demand for our products and solutions.
+Added: In addition, both government agencies and entities in highly regulated industries may demand shorter subscription periods or other contract terms that differ from our standard arrangements, including terms that can lead those customers to obtain broader rights in our offerings than would be standard.
+Added: Such agencies and entities may have statutory, contractual or other legal rights to terminate contracts with us or our partners due to a default or for other reasons, and any such termination may adversely affect our business, operating results and financial condition.
+Added: If we are unable to maintain successful relationships with our partners, our business, operating results and financial condition could be harmed.
+Added: In addition to our direct sales force and our website, we use strategic partners, such as global system integrators, value-added resellers and independent software vendors, to sell our subscription offerings and solutions.
+Added: Our agreements with our partners are generally nonexclusive, meaning our partners may offer their customers products and services of several different companies, including products and services that compete with ours, or may themselves be or become competitors.
+Added: If our partners do not effectively market and sell our subscription offerings and solutions, choose to use greater efforts to market and sell their own products and services or those of our competitors, or fail to meet the needs of our customers, our ability to grow our business and sell our subscription offerings and solutions may be harmed.
+Added: Our partners may cease marketing our subscription offerings or solutions with limited or no notice and with little or no penalty.
+Added: In addition, acquisitions of our partners by our competitors could result in a decrease in the number of our current and potential customers, as our partners may no longer facilitate the adoption of our products and solutions by potential customers.
+Added: The loss of a substantial number of our partners, our possible inability to replace them or the failure to recruit additional partners could harm our growth objectives and operating results.
+Added: Even if we are successful in maintaining and recruiting new partners, we cannot assure you that these relationships will result in increased customer usage of our products and solutions or increased revenue.
+Added: Additionally, as the scale of our partnership efforts increases with our growth, the successful implementation of these relationships may become more time-consuming, difficult and costly to realize, which could negatively impact our business performance or our brand reputation.
+Added: Failure to establish and maintain relationships with partners that can provide complementary technology offerings and software integrations could limit our ability to grow our business.
+Added: Our products and solutions seamlessly integrate with hundreds of other software applications, including Salesforce, Google and Microsoft.
+Added: Our growth strategy includes expanding the use of our products and solutions through complementary technology offerings and software integrations, such as third-party APIs.
+Added: While we have established partnerships with providers of complementary offerings and software integrations, we cannot guarantee that we will be successful in continuing to maintain and scale these partnerships or establishing partnerships with additional providers as we grow.
+Added: In the future, third-party providers of complementary technology offerings and software integrations may decline to enter into, or may later terminate, relationships with us;
+Added: change their features or platforms;
+Added: restrict our access to their applications and platforms;
+Added: alter the terms governing use of and access to their applications and APIs;
+Added: or implement other changes that could functionally limit or terminate our ability to use these third-party technology offerings and software integrations with our platform, any of which could negatively impact our offerings and harm our business.
We have in the past, and may in the future, engage in acquisition and investment activities, which could divert the attention of management, disrupt our business, dilute stockholder value and adversely affect our operating results and financial condition.
As part of our business strategy, we continually evaluate opportunities to acquire or invest in businesses, products or technologies that we believe could complement or expand our products and solutions, enhance our technical capabilities or otherwise offer growth opportunities.
−Removed: For example, in May 2020, we acquired Seal Software Group Ltd., a provider of contract analytics software, and in July 2020, we acquired Liveoak Technologies, Inc., a provider of a secure agreement-collaboration and identity verification platform.
+Added: For example, in May 2020, we acquired Seal Software Group Ltd., a
+Added: DocuSign, Inc.| 2023 Form 10-K | 20
+Added: provider of contract analytics software, and in July 2020 we acquired Liveoak Technologies, Inc., a provider of a secure agreement-collaboration and identity verification platform.
In the future, we may be unable to identify suitable acquisition candidates and, even if we do, we may not be able to complete desired acquisitions on favorable terms, if at all.
7 unchanged sentences
▪ cause us to incur liabilities for activities of the acquired company before the acquisition;
−Removed: DocuSign, Inc.| 2022 Form 10-K | 25
▪ cause us to record impairment charges associated with goodwill and other acquired intangible assets;
4 unchanged sentences
If we are unable to achieve the anticipated strategic benefits of an acquisition or if the integration or the anticipated financial and strategic benefits, including any anticipated cost savings, revenue opportunities or operational synergies, of such an acquisition are not realized as rapidly as or to the extent anticipated by us, our business, operating results and financial condition could suffer.
−Removed: Our sales to government entities and highly regulated organizations are subject to a number of challenges and risks.
−Removed: We sell to U.S.
−Removed: federal, state and local, as well as foreign, government agencies and public sector customers, as well as to customers in highly regulated industries such as financial services, pharmaceuticals, insurance, healthcare and life sciences.
−Removed: Sales to such entities are subject to a number of challenges and risks, including those related to the COVID-19 pandemic and our status as a service provider to U.S.
−Removed: state and federal governmental agencies.
−Removed: Selling to such entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale.
−Removed: These longer sale cycles make the timing of future revenue from these entities difficult to predict.
−Removed: Further, government certification requirements may change, restricting our ability to sell into the government sector until we have met those revised requirements.
−Removed: Government demand and payment for our offerings are affected by public sector budgetary cycles and funding authorizations, and funding reductions or delays, including as a result of the COVID-19 pandemic, may adversely affect public sector demand for our products and solutions.
−Removed: In addition, both government agencies and entities in highly regulated industries may demand shorter subscription periods or other contract terms that differ from our standard arrangements, including terms that can lead those customers to obtain broader rights in our offerings than would be standard.
−Removed: Such agencies and entities may have statutory, contractual or other legal rights to terminate contracts with us or our partners due to a default or for other reasons, and any such termination may adversely affect our business, operating results and financial condition.
+Added: Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and solutions.
+Added: Our ability to increase our customer base and achieve broader market acceptance of our products and solutions depends to a significant extent on our ability to expand our marketing and sales operations.
+Added: We continue to make investments in our sales force and strategic partnerships, including expansion and training, both domestically and internationally.
+Added: We also dedicate significant resources to our sales and marketing efforts by investing in advertising campaigns on a variety of media platforms, including online and social media.
+Added: The effectiveness of our online advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use and changes in the search algorithms used by major search engines.
+Added: If we cannot cost-effectively deploy our expanding sales force, both domestically and internationally, and use our marketing tools, or if we fail to promote our products and solutions efficiently and effectively, our ability to acquire new customers and our financial condition may suffer.
We may need to reduce or change our pricing model to remain competitive.
−Removed: Different pricing structures apply to our Agreement Cloud products.
+Added: Different pricing structures apply to our DocuSign product offerings.
For DocuSign eSignature, we price our subscriptions based on the functionality required by our customers and the quantity of Envelopes provisioned.
4 unchanged sentences
As a result, we may be required or choose to reduce our prices or otherwise change our pricing model, which could adversely affect our business, operating results and financial condition.
−Removed: Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and solutions.
−Removed: Our ability to increase our customer base and achieve broader market acceptance of our products and solutions depends to a significant extent on our ability to expand our marketing and sales operations.
−Removed: We continue to make investments in our sales force and strategic partnerships, including expansion and training, both domestically and internationally.
−Removed: We also dedicate significant resources to our sales and marketing efforts by investing in advertising campaigns on a variety of media platforms, including online and social media.
−Removed: The effectiveness of our online advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use and changes in the search algorithms used by major search engines.
−Removed: If we cannot cost-effectively deploy our expanding sales force, both domestically and internationally, and use our marketing tools, or if we fail to promote our products and solutions efficiently and effectively, our ability to acquire new customers and our financial condition may suffer.
−Removed: DocuSign, Inc.| 2022 Form 10-K | 26
We may not be able to scale our business quickly enough to meet the growing needs of our customers and if we are not able to grow efficiently, our operating results could be harmed.
−Removed: As use of our products and solutions grows and as customers use them for more types of transactions, we will need to devote additional resources to improving our application architecture, integrating with third-party systems and maintaining infrastructure performance.
−Removed: In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support and professional services, to serve our growing customer base.
+Added: As use of our products and solutions grows and as customers use them for more types of transactions, we will need to devote additional resources to improving our application architecture, integrating with third-party systems and maintaining or scaling our technology infrastructure and performance.
+Added: In addition, we will need to appropriately scale
+Added: DocuSign, Inc.| 2023 Form 10-K | 21
+Added: our internal business systems and our services organization, including customer support and professional services, to serve our growing customer base.
Any failure of or delay in these efforts could cause impaired system performance and reduced customer satisfaction.
5 unchanged sentences
These efforts may be costly and could adversely affect our financial results.
+Added: For example, we recently launched a new enterprise resource planning, or ERP system, which is designed to accurately maintain our financial records, enhance the flow of financial information, improve data management, and provide timely information to our management team.
+Added: ERP system implementations are complex projects that require significant investment of capital and human resources, the reengineering of many business processes and the attention of many employees who would otherwise be focused on other aspects of our business.
+Added: While we have implemented our new ERP system, we may experience difficulties as part of this transition, which could disrupt our operations, the management of our finances and the reporting of our financial results.
+Added: Our failure to improve our systems and processes or complete such system implementations or enhancements on a timely basis, or their failure to operate in the intended manner, could harm our business, financial condition, and operating results.
+Added: Additionally, if the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected.
+Added: Additionally, from time to time, we realign our resources and talent to implement stage-appropriate business strategies, which could include furloughs, layoffs and reductions in force.
+Added: For example, in September 2022, in response to changing economic conditions and in an effort to support our growth, scale and profitability objectives, reduce our operational costs and improve our organizational efficiency, we authorized a restructuring plan, which included a restructuring and reduction of the current workforce by approximately 9%.
+Added: The execution of this restructuring plan was substantially completed at the end of fiscal 2023.
+Added: Additionally, in February 2023, in an effort to support our growth, scale and profitability objectives, we authorized an additional restructuring plan which included a restructuring and reduction of the current workforce by approximately 10%, primarily in our sales organization.
+Added: We expect that the execution of this additional restructuring plan will be substantially completed by the end of the second quarter of fiscal 2024.
+Added: If there are unforeseen expenses associated with such realignments in our business strategies, and we incur unanticipated charges or liabilities, then we may not be able to effectively realize the expected cost savings or other benefits of such actions.
+Added: Failure to manage any growth or any scaling back of our operations could have an adverse effect on our business, operating results, and financial condition.
If our products and solutions fail to perform properly and if we fail to develop enhancements to resolve any defect or other problems, we could lose customers or become subject to service performance or warranty claims and our market share could decline.
7 unchanged sentences
The costs incurred in addressing and correcting any material defects or errors in our software and expanding our infrastructure and architecture in order to accommodate increased demand for our products and solutions may be substantial and could adversely affect our operating results.
−Removed: If we fail to offer high-quality support, our business and reputation could suffer.
−Removed: Many of our customers rely on our customer support and professional services personnel to deploy and use our products and solutions successfully.
−Removed: High-quality support is important for the renewal and expansion of our agreements with existing customers.
−Removed: The importance of high-quality support will increase as we expand our business and pursue new customers.
−Removed: If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell our products and solutions to existing and new customers could suffer and our reputation with existing or potential customers could be harmed.
−Removed: If we are unable to maintain successful relationships with our partners, our business, operating results and financial condition could be harmed.
−Removed: In addition to our direct sales force and our website, we use strategic partners, such as global system integrators, value-added resellers and independent software vendors, to sell our subscription offerings and solutions.
−Removed: Our agreements with our partners are generally nonexclusive, meaning our partners may offer their customers products and services of several different companies, including products and services that compete with ours, or may themselves be or become competitors.
−Removed: If our partners do not effectively market and sell our subscription offerings and solutions, choose to use greater efforts to market and sell their own products and services or those of our competitors, or fail to meet the needs of our customers, our ability to grow our business and sell our subscription offerings and solutions may be harmed.
−Removed: Our partners may cease marketing our subscription offerings or solutions with limited or no notice and with little or no penalty.
−Removed: In addition, acquisitions of our partners by our competitors could result in a decrease in the number of our current and potential customers, as our partners may no longer facilitate the adoption of our products and solutions by potential customers.
−Removed: The loss of a substantial number of our partners, our possible inability to replace them, or the
DocuSign, Inc.| 2023 Form 10-K | 22
−Removed: failure to recruit additional partners could harm our growth objectives and operating results.
−Removed: Even if we are successful in maintaining and recruiting new partners, we cannot assure you that these relationships will result in increased customer usage of our products and solutions or increased revenue.
−Removed: Additionally, as the scale of our partnership efforts increases with our growth, the successful implementation of these relationships may become more time-consuming, difficult and costly to realize, which could negatively impact our business performance or our brand reputation.
−Removed: Failure to establish and maintain relationships with partners that can provide complementary technology offerings and software integrations could limit our ability to grow our business.
−Removed: Our products and solutions seamlessly integrate with hundreds of other software applications, including Salesforce, Google and Microsoft.
−Removed: Our growth strategy includes expanding the use of our products and solutions through complementary technology offerings and software integrations, such as third-party APIs.
−Removed: While we have established partnerships with providers of complementary offerings and software integrations, we cannot guarantee that we will be successful in continuing to maintain and scale these partnerships or establishing partnerships with additional providers as we grow.
−Removed: In the future, third-party providers of complementary technology offerings and software integrations may decline to enter into, or may later terminate, relationships with us;
−Removed: change their features or platforms;
−Removed: restrict our access to their applications and platforms;
−Removed: alter the terms governing use of and access to their applications and APIs;
−Removed: or implement other changes that could functionally limit or terminate our ability to use these third-party technology offerings and software integrations with our platform, any of which could negatively impact our offerings and harm our business.
−Removed: Unfavorable conditions in our industry or the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect our operating results.
−Removed: Our operating results may vary based on the impact of changes in our industry or the global economy on us and our existing and prospective customers.
−Removed: The revenue growth and potential profitability of our business depend on demand for our products and solutions.
−Removed: Current or future economic and global market uncertainties or downturns could adversely affect our business and operating results.
−Removed: Economic uncertainty and associated macroeconomic conditions make it difficult for our customers and us to accurately forecast and plan future business activities, and could cause our customers to slow spending on our products.
−Removed: Negative conditions in the general economy both in the U.S.
−Removed: and abroad, including conditions resulting from changes in interest rates, gross domestic product growth, financial and credit market fluctuations, inflation, political turmoil, natural catastrophes, regional and global conflicts and terrorist attacks on the U.S., Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including spending on information technology, and negatively affect the growth of our business.
−Removed: To the extent our products and solutions are perceived by customers and potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in general information technology spending.
−Removed: Also, competitors, many of whom are larger and more established than we are, may respond to market conditions by lowering prices and attempting to lure away our customers.
−Removed: In addition, the increased pace of consolidation in certain industries may result in reduced overall spending on our products and solutions.
−Removed: We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry.
−Removed: If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, operating results and financial condition could be adversely affected.
−Removed: We may require additional capital to support business growth and objectives, and this capital might not be available to us on reasonable terms, if at all, and may result in stockholder dilution.
−Removed: We fund our operations through payments by our customers for use of our product offerings and related services.
−Removed: In addition, as of January 31, 2022 , we had outstanding $37.1 million aggregate principal amount of 0.5% Convertible Senior Notes due 2023 (the “2023 Notes ” ), $690.0 million aggregate principal amount of 0.0% Convertible Senior Notes due 2024 (the “2024 Notes,” and together with the 2023 Notes, the “Notes”) and available borrowing capacity of $500.0 million under our credit facility.
−Removed: We cannot be certain when or if our operations will generate sufficient cash to fund our ongoing operations or the growth of our business.
−Removed: We intend to continue to make investments to support our business and, in the future, we may require additional funds.
−Removed: Additional financing may not be available on favorable terms, if at all.
−Removed: In addition, in the event that we incur additional debt, including under the credit facility, the debt holders would have rights senior to holders of common stock to make claims on our assets.
−Removed: Additionally, the credit facility restricts our ability to pay dividends on common stock and the terms of any future debt could restrict our operations.
−Removed: Further, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock.
−Removed: If adequate funds are not available on acceptable terms when we require it, we may be unable to invest in future growth opportunities, which could harm our business, operating results and financial condition.
−Removed: We have incurred substantial indebtedness that may decrease our business flexibility, access to capital and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.
−Removed: DocuSign, Inc.| 2022 Form 10-K | 28
−Removed: As of January 31, 2022, we had $37.1 million principal amount of indebtedness outstanding under our 2023 Notes, $690.0 million principal amount of indebtedness outstanding under our 2024 Notes and available borrowing capacity of $500.0 million under our credit facility.
−Removed: Our indebtedness may:
−Removed: • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;
−Removed: • limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;
−Removed: • require us to use a substantial portion of our cash flow from operations to make debt service payments;
−Removed: • limit our flexibility to plan for, or react to, changes in our business and industry;
−Removed: • place us at a competitive disadvantage compared to our less leveraged competitors;
−Removed: • increase our vulnerability to the impact of adverse economic and industry conditions.
If we fail to promote or maintain our brand, our ability to expand our customer base will be impaired and our financial condition may suffer.
1 unchanged sentence
We also believe that the importance of our brand will increase as competition in our market increases.
−Removed: Successfully promoting and maintaining our brand will depend largely on the effectiveness of our marketing efforts, and our ability to provide reliable and useful solutions to meet the needs of our customers at competitive prices, maintain our customers’ trust, continue to develop new functionality and solutions and successfully differentiate our products and solutions from our competitors’.
+Added: Successfully promoting and maintaining our brand will depend largely on the effectiveness of our marketing efforts, and our ability to provide reliable and useful solutions to meet the needs of our customers at competitive prices, maintain our customers’ trust, continue to develop new functionality and solutions and successfully differentiate our products and solutions from those of our competitors’.
Additionally, the performance of our partners may affect our brand and reputation if customers do not have a positive experience with our partners’ services.
1 unchanged sentence
If we fail to successfully promote and maintain our brand, we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business could suffer.
−Removed: We have also made public commitments to our corporate environmental, social, and governance (“ESG”) and human capital management initiatives, including to the recruitment of a diverse workforce.
−Removed: Any perceived changes in our dedication to these commitments or our failure to achieve progress in these areas on a timely basis, or at all, could adversely impact our relationships with our customers and employees, affect our reputation and the value of our brand.
−Removed: We could incur substantial costs in protecting or defending our proprietary rights, and any failure to adequately protect our rights could impair our competitive position and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.
−Removed: Our success is dependent, in part, upon protecting our proprietary technology.
−Removed: We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and contractual provisions in an effort to establish and protect our proprietary rights.
−Removed: However, the steps we take to protect our intellectual property may be inadequate.
−Removed: While we have been issued patents in the U.S.
−Removed: and other countries and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications.
−Removed: In addition, any patents issued in the future may not provide us with competitive advantages or may be successfully challenged by third parties.
−Removed: Any of our patents, trademarks or other intellectual property rights may be challenged or circumvented by others or invalidated through administrative process or litigation.
−Removed: There can be no guarantee that others will not independently develop similar products, duplicate any of our products or design around our patents.
−Removed: Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain.
−Removed: Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and solutions that compete with ours.
−Removed: Some license provisions protecting against unauthorized use, copying, transfer and disclosure of our products may be unenforceable under the laws of jurisdictions outside the U.S.
−Removed: To the extent we expand our international activities, our exposure to unauthorized copying and use of our products and proprietary information may increase.
−Removed: We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances.
−Removed: No assurance can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information.
−Removed: Further, these agreements do not prevent our competitors or partners from independently developing technologies that are substantially equivalent or superior to our products and solutions.
−Removed: DocuSign, Inc.| 2022 Form 10-K | 29
−Removed: In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect and enforce these rights, including through litigation.
−Removed: Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property.
−Removed: Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights.
−Removed: Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and solutions, impair the functionality of our products and solutions, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our products and solutions or injure our reputation.
−Removed: We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property.
−Removed: Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property may be difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the U.S.
−Removed: and where mechanisms for enforcement of intellectual property rights may be weak.
−Removed: If we fail to adequately protect our intellectual property and proprietary rights, our business, operating results and financial condition could be adversely affected.
−Removed: We may be subject to legal proceedings and litigation for a variety of claims, including labor and employment issues, intellectual property disputes, securities law violations and other matters, which may be costly and may subject us to significant liability and increased costs of doing business.
−Removed: Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others or if the cost and time-commitment of litigation diverts resources from our other business activities.
−Removed: From time to time, we may be involved as a party or an indemnitor in disputes or regulatory inquiries that arise in the ordinary course of business.
−Removed: These may include alleged claims, lawsuits and proceedings regarding labor and employment issues, commercial disagreements, securities law violations and other matters.
−Removed: In particular, companies in the software industry are often required to defend against litigation claims based on allegations of infringement or other violations of intellectual property rights.
−Removed: We have from time to time been subject to intellectual property claims and disputes and may be subject to such claims in the future.
−Removed: In addition, many of these companies have the capability to dedicate substantially greater resources to enforce their alleged intellectual property rights and to defend claims that may be brought against them.
−Removed: Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue and against which our patents may therefore provide little or no deterrence.
−Removed: If a third party is able to obtain an injunction preventing us from utilizing such third-party intellectual property rights, or if we cannot license or develop technology for any infringing aspect of our business, we would be forced to limit or stop sales of our software or cease business activities employed by such intellectual property and may be unable to compete effectively.
−Removed: Any inability to license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete.
−Removed: Such disputes may require the Company to redesign our products, delay releases, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling our products and solutions.
−Removed: Requiring us to change one or more aspects of the way we deliver our products and solutions may harm our business.
−Removed: We may also be contractually obligated to indemnify our customers in the event of infringement of a third party’s intellectual property rights.
−Removed: Responding to such claims, including those currently pending, regardless of their merit, can be time consuming and costly to defend in litigation and damage our reputation and brand.
−Removed: For example, on February 8, 2022, a putative securities class action was filed in the U.S.
−Removed: District Court for the Northern District of California, captioned Weston v.
−Removed: DocuSign, Inc., et al., Case No.
−Removed: 3:22-cv-00824, naming DocuSign and certain of our current and former officers as defendants.
−Removed: 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.
−Removed: The suit is purportedly brought on behalf of purchasers of our securities between June 4, 2020 and December 2, 2021.
−Removed: We are not yet required to respond to the complaint, but believe it is devoid of merit.
−Removed: An earlier action alleging similar claims against the same defendants, captioned Collins v.
−Removed: DocuSign, Inc., et al., Case No.
−Removed: 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.
−Removed: Regardless of the merits or ultimate outcome of any claims that have been or may be brought against us or that we may bring against others, lawsuits are time-consuming and expensive to resolve, divert management’s time and attention, and could harm our reputation.
−Removed: Although we carry general liability and other forms of insurance, our insurance may not cover potential claims that arise or may not be adequate to indemnify us for all liability that may be imposed.
−Removed: We may also determine that the most cost-effective way to resolve a dispute is to enter into a settlement agreement.
−Removed: Litigation is inherently unpredictable and we cannot predict the timing, nature, controversy or outcome of lawsuits or assure you that the results of any of these actions will not have an adverse effect on our business, operating results or financial condition.
+Added: Further, we have also made public commitments to our corporate environmental, social, and governance (“ESG”) and human capital management initiatives, including to the recruitment of a diverse workforce and reductions in carbon emissions.
+Added: Any perceived changes in our dedication to these commitments or our failure to achieve progress in these areas on a timely basis, or at all, could adversely impact our relationships with our customers and employees and affect our reputation and the value of our brand.
+Added: If we fail to offer high-quality support, our business and reputation could suffer.
+Added: Many of our customers rely on our customer support and professional services personnel to deploy and use our products and solutions successfully.
+Added: High-quality support is important for the renewal and expansion of our agreements with existing customers.
+Added: The importance of high-quality support will increase as we expand our business and pursue new customers.
+Added: If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell our products and solutions to existing and new customers could suffer and our reputation with existing or potential customers could be harmed.
+Added: Financial Risks, including Taxation
+Added: We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors, the price of our common stock could decline.
+Added: Our operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control.
+Added: As a result, our past results may not be indicative of our future performance and comparing our operating results on a period-to-period basis may not be meaningful.
+Added: In addition to the other risks described herein, factors that may affect our operating results or cause our financial results to fluctuate include the following:
+Added: ▪ general economic, market and industry conditions, including resulting from regional or global conflicts and as a result of inflation, rising interest rates and increased debt and equity market volatility;
+Added: ▪ fluctuations in demand for, or pricing of, our products and solutions, including due to the effects of global macro-economic conditions, and differing levels of demand for our products as our customers’ priorities, resources, financial conditions and economic outlook change;
+Added: ▪ our ability to attract new customers;
+Added: ▪ our ability to renew our subscriptions with, and expand sales of our products and solutions to, our existing customers;
+Added: ▪ timing of revenue recognition;
+Added: ▪ customer delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors;
+Added: ▪ changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions, including cost-cutting measures or other effects of macro-economic conditions;
+Added: ▪ the timing and success of new product and service introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation or new entrants among competitors, customers, or strategic partners ;
+Added: ▪ our ability to control costs, including our operating expenses, and related impact to our operating margin;
+Added: ▪ the timing of costs related to our go-to-market strategy including expansion of our sales capacity and marketing;
DocuSign, Inc.| 2023 Form 10-K | 23
−Removed: We use open source software in our products, which could subject us to litigation or other actions.
−Removed: We use open source software in our products and solutions.
−Removed: Any use of open source software may expose us to greater risks than the use of commercial software because open source licensors generally do not provide warranties or controls on the functionality or origin of the software.
−Removed: Any use of open source software may involve security risks, making it easier for hackers and other third parties to determine how to compromise our platform.
−Removed: From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products.
−Removed: As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software.
−Removed: Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our products.
−Removed: In addition, if we were to combine our proprietary software products with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary software products.
−Removed: If we inappropriately use or incorporate open source software subject to certain types of open source licenses that challenge the proprietary nature of our software products, we may be required to re-engineer our products, discontinue the sale of our products and solutions or take other remedial actions.
−Removed: Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection and other losses.
−Removed: Our agreements with some customers and other third parties include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our offerings, solutions or other contractual obligations.
−Removed: Some of these indemnity agreements provide for uncapped liability for which we would be responsible, and some indemnity provisions survive termination or expiration of the applicable agreement.
−Removed: Large indemnity payments could harm our business, operating and financial condition.
−Removed: Although we normally contractually limit our liability with respect to such obligations, we may still incur substantial liability related to them and we may be required to cease use of certain functions of our products and solutions as a result of any such claims.
−Removed: In addition, our customer agreements generally include a warranty that the proper use of DocuSign by a customer in accordance with the agreement and applicable law will be sufficient to meet the definition of an “electronic signature” as defined in the Electronic Signatures in Global and National Commerce Act (“ESIGN Act”) and eIDAS.
−Removed: Any warranty or indemnification claim brought by our customers could result in damage to our reputation and harm our business and operating results.
−Removed: We rely on the performance of highly skilled personnel, including our management and other key employees, and failing to attract or retain such employees could harm our business.
−Removed: Our success and future growth depend upon the continued services of highly skilled personnel, including our management team and other key employees.
−Removed: Changes in our management team resulting from the hiring or departure of executives and key employees from time to time could disrupt our business.
−Removed: For example, in March 2022, Loren Alhadeff, our Chief Revenue Officer, notified the Company of his intention to resign and transition his responsibilities to a new global leader of the Company’s sales and customer success functions.
−Removed: Our senior management and key employees are employed on an at-will basis meaning that we may terminate their employment at any time, with or without cause, and they may resign at any time, with or without cause.
−Removed: If we lose one or more of our senior management or other key employees and are unable to find adequate replacements, or if we fail to attract, retain and motivate members of our senior management team and key employees or otherwise fail to retain a significant portion of our workforce, our business could be harmed.
−Removed: We also are dependent on the continued service of our existing software engineers because of the complexity of our products and solutions.
−Removed: In particular, we compete with many other companies for software developers with high levels of experience and skilled sales and operations professionals in an increasingly tight U.S.
−Removed: labor market.
−Removed: We also require skilled product development, marketing, sales, and operations professionals, and we may not be successful in attracting and retaining the professionals we need, particularly in our principal U.S.
−Removed: locations in the San Francisco Bay Area and Seattle.
−Removed: Competition for these employees in our industry (and especially in our principal U.S.
−Removed: locations) is intense, and many of the companies we compete with for experienced personnel have greater resources than we do.
−Removed: To remain competitive, we may experience increased compensation-related expenses.
−Removed: Additionally, as a service provider to U.S.
−Removed: state and federal government agencies, we have been subject to various and fluctuating COVID-19 vaccination, testing, and related health and safety requirements.
−Removed: While we cannot predict the full impact these requirements may have on our business, our ability to retain or hire employees could be impacted;
−Removed: we could be subject to litigation by employees;
−Removed: we could incur additional costs of monitoring and compliance across our business;
−Removed: and our business and results of operations could be harmed.
+Added: ▪ potential accelerations of prepaid expenses and deferred costs;
+Added: ▪ the amount and timing of non-cash expenses, including stock-based compensation, impairments and other non-cash charges;
+Added: ▪ the amount and timing of costs associated with recruiting, training and integrating new employees, and retaining existing employees;
+Added: ▪ the amount and timing of costs associated with our restructuring plans;
+Added: ▪ the time and costs related to litigation, including securities litigation and litigation and claims involving our former CEO;
+Added: ▪ issues relating to acquisitions and partnerships with third parties;
+Added: ▪ the impact of new accounting pronouncements;
+Added: ▪ changes in laws and regulations that affect our business;
+Added: ▪ significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products and solutions;
+Added: ▪ awareness of our brand on a global basis.
+Added: If our operating results fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class action lawsuits.
+Added: Our sales cycle with enterprise and commercial customers can be long and unpredictable, and our sales efforts require considerable time and expense.
+Added: Our ability to increase our revenue and grow our business is partially dependent on the widespread acceptance of our products and solutions by large businesses and other commercial organizations.
+Added: We often need to spend significant time and resources to better educate and familiarize these potential customers with the value proposition of our products and solutions.
+Added: The length of our sales cycle for these customers from initial evaluation to payment for our offerings is generally three to nine months, but can vary substantially from customer to customer and from offering to offering.
+Added: Customers frequently require considerable time to evaluate, test and qualify our offerings prior to entering into or expanding a subscription.
+Added: This is particularly true of DocuSign CLM and our other advanced offerings, where longer evaluation, testing and qualification processes often result in longer sales cycles than for our DocuSign eSignature product.
+Added: The timing of our sales with our enterprise customers and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for these customers.
+Added: During the sales cycle, we expend significant time and money on sales and marketing and contract negotiation activities, which may not result in a sale.
+Added: Additional factors that may influence the length and variability of our sales cycle include:
+Added: ▪ the effectiveness of our sales force;
+Added: ▪ the discretionary nature of purchasing and budget cycles and decisions;
+Added: ▪ the obstacles placed by customers’ procurement process;
+Added: ▪ economic conditions, including inflation, rising interest rates and increased debt and equity market volatility, and other factors impacting customer budgets;
+Added: ▪ the customer’s integration complexity;
+Added: ▪ the customer’s familiarity with e-signature and agreement automation processes;
+Added: ▪ the complexity of contracts with certain large business customers, including customers in the public sector or other highly regulated industries;
+Added: ▪ customer evaluation of competing products during the purchasing process;
+Added: ▪ the competitive market for our products and services;
+Added: ▪ evolving customer demands.
+Added: Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales contracts are not immediately reflected in full in our operating results.
+Added: We recognize revenue over the term of each of our contracts, which are typically one year in length but may be up to three years or longer.
+Added: As a result, much of our revenue is generated from the recognition of contract liabilities from contracts entered into during previous periods.
+Added: Consequently, a shortfall in demand for our products and solutions and professional services or a decline in new or renewed contracts in any one quarter may not significantly reduce our revenue for that quarter but could negatively affect our revenue in future quarters.
+Added: Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through additional sales contracts in any period, as revenue from new customers is recognized over the applicable term of their contracts.
+Added: If we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected.
DocuSign, Inc.| 2023 Form 10-K | 24
+Added: You should not rely on the revenue growth of any prior quarterly or annual period as an indication of our future performance.
+Added: As a result of our historical rapid growth and limited operating history, our ability to accurately forecast our future operating results is limited.
+Added: Future growth rates are also subject to a number of assumptions and uncertainties, including the effectiveness of our sales and growth strategy and general macro-economic conditions.
+Added: For example, it has been, and may continue to be, difficult for us to forecast our operating results due to recent macro-economic events, including interest rate hikes and rising rates of inflation and concerns about a potential economic downturn.
+Added: Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors.
+Added: If we do not address these risks successfully, our operating results could differ materially from our estimates and forecasts or the expectations of investors, causing our business to suffer and our stock price to decline.
+Added: We have a history of operating losses and may not achieve or sustain profitability in the future.
+Added: We began operations in 2003 and have experienced net losses since inception.
+Added: We generated a net loss of $97.5 million, $70.0 million, and $243.3 million in the years ended January 31, 2023, 2022, and 2021, and as of January 31, 2023, we had an accumulated deficit of $1.6 billion.
+Added: We will need to generate and sustain increased revenue levels in future periods to become profitable and, even if we do, we may not be able to maintain or increase our level of profitability.
+Added: We intend to continue to incur significant expenses to support growth, further develop and enhance our products and solutions, expand our infrastructure and technology, increase our sales headcount and marketing activities, and grow our international operations and customer base.
+Added: Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.
+Added: We may incur significant losses in the future for a number of reasons, including the other risks described in this “Risk Factors” section, and unforeseen expenses, difficulties, complications and delays and other unknown events.
+Added: If we are unable to achieve and sustain profitability, the value of our business and common stock may significantly decrease.
Our current operations are international in scope and we plan further geographic expansion, creating a variety of operational challenges.
7 unchanged sentences
▪ changes in a specific country’s or region’s political or economic conditions, including the pace of the digital transformation of business in that country or region;
−Removed: • exposure to regional or global public health issues, such as the COVID-19 pandemic, and to travel restrictions and other measures undertaken by governments in response to such issues;
▪ the need to adapt and localize our products for specific countries, including providing customer support in different languages;
4 unchanged sentences
▪ more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe;
−Removed: • differing labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the U.S., including deemed hourly wage and overtime regulations in these locations;
+Added: ▪ differing labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to those in the U.S., including deemed hourly wage and overtime regulations in these locations;
▪ challenges inherent in efficiently managing an increased number of employees;
−Removed: • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;
+Added: ▪ difficulties in managing a business in new markets with diverse cultures, languages, and customs, as well as legal, alternative dispute and regulatory systems;
▪ increased travel, real estate, infrastructure and legal compliance costs associated with international operations;
4 unchanged sentences
▪ regional or global conflicts, including sanctions or other laws and regulations prohibiting or limiting operations in certain jurisdictions;
+Added: DocuSign, Inc.| 2023 Form 10-K | 25
▪ political instability or terrorist activities;
6 unchanged sentences
▪ adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash;
+Added: ▪ exposure to regional or global public health issues, such as the COVID-19 pandemic, and to travel restrictions and other measures undertaken by governments in response to such issues.
Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we undertake may not be successful.
2 unchanged sentences
Our credit facility restricts our ability to, among other things:
−Removed: DocuSign, Inc.| 2022 Form 10-K | 32
▪ use our accounts receivable, inventory, trademarks and most of our other assets as security in other borrowings or transactions, unless the value of the assets subject thereto does not exceed a certain threshold;
5 unchanged sentences
Our credit facility also requires that our Consolidated Leverage Ratio (as defined in the credit facility) not exceed specified levels, or that our Consolidated Interest Coverage Ratio (as defined in the credit facility) be less than specified levels.
−Removed: Our ability to comply with this and other covenants is dependent upon several factors, some of which are beyond our control.
+Added: Our ability to comply with these and other covenants is dependent upon several factors, some of which are beyond our control.
Our failure to comply with the covenants or payment requirements, or the occurrence of other events specified in our credit facility, could result in an event of default under the credit facility, which would give our lenders the right to terminate their commitments to provide additional loans under the credit facility and to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
2 unchanged sentences
If the debt under our credit facility was to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.
−Removed: Risks Related to Governmental Regulation including Taxation
−Removed: The requirements of being a public company, including developing and maintaining proper and effective disclosure controls and procedures and internal control over financial reporting, may strain our resources and divert management’s attention away from other business concerns.
−Removed: As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations that impose various requirements on public companies.
−Removed: Our management and other personnel devote a substantial amount of time to compliance with these requirements and such compliance has increased, and will continue to increase, our legal, accounting and financial costs.
−Removed: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
−Removed: In order to maintain and improve the effectiveness of such controls, we have expended, and anticipate that we will continue to expend, significant resources.
−Removed: For example, since our IPO, we have hired additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to assist in our compliance efforts.
−Removed: We have incurred and expect to continue to incur significant expenses and devote substantial management effort toward compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
−Removed: To assist us in complying with these requirements we may need to hire more employees in the future, or engage outside consultants, which will increase our operating expenses.
−Removed: Despite significant investment, our current controls and any new controls that we develop may become inadequate because of changes in business conditions.
−Removed: For example, because we have acquired companies in the past and may continue to do so in the future, we need to effectively expend resources to integrate the controls of these acquired entities with ours.
−Removed: Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
−Removed: Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that are required to be included in the periodic reports that we file with the SEC.
−Removed: If our management team or independent registered public accounting firm were to furnish an adverse report, or if it is determined that we have a material weakness or significant deficiency in our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities or shareholder litigation.
−Removed: In addition, most of our employees (including those critical to maintaining an effective system of disclosure controls and internal control over financial reporting) are working, and are expected to continue to work for the near term, in either a fully remote or a hybrid environment and not solely in the office environment from which they have historically performed
+Added: We may require additional capital to support business growth and objectives, and this capital might not be available to us on reasonable terms, if at all, and may result in stockholder dilution.
+Added: We fund our operations through payments by our customers for use of our product offerings and related services.
+Added: In addition, as of January 31, 2023, we had outstanding $37.1 million aggregate principal amount of the 2023 Notes, $690.0 million aggregate principal amount of the 2024 Notes (the 2023 Notes together with the 2024 Notes, the “Notes”) and available borrowing capacity of $500.0 million under our credit facility.
+Added: We cannot be certain when or if our operations will generate sufficient cash to fund our ongoing operations or the growth of our business.
+Added: Based upon our current operating plan, we believe that our existing cash, cash equivalents and investments are sufficient to fund our current operating expenses and capital expenditure requ irements based on historical forecasts.
+Added: We have based this assessment on assumptions that may prove to be wrong, and it is possible that we could use our capital resources sooner than we currently expect.
+Added: This estimate does not reflect the possibility that we may not be able to access a material portion of our existing cash, cash equivalents and investments due to market conditions.
+Added: For example, on March 10, 2023, the Federal Deposit Insurance Corporation (“FDIC”) was appointed receiver of Silicon Valley Bank (“SVB”), and SVB’s parent company subsequently filed for Chapter 11 protection.
+Added: Our cash and cash equivalents are distributed across several l arge financial institutions, and our exposure to SVB was immaterial.
+Added: However, if other banks and financial institutions wind down and liquidate, enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our
DocuSign, Inc.| 2023 Form 10-K | 26
−Removed: their duties.
−Removed: We have limited experience maintaining effective control systems with our employees working in remote or hybrid environments, and risks that we have not contemplated may arise and result in our failure to maintain effective disclosure controls or internal control over financial reporting.
+Added: existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.
+Added: We also intend to continue to make investments to support our business and, in the future, we may require additional funds.
+Added: Additional financing may not be available on favorable terms, if at all.
+Added: In addition, in the event that we incur additional debt, including under the credit facility, the debt holders would have rights senior to holders of common stock to make claims on our assets.
+Added: Additionally, the credit facility restricts our ability to pay dividends on common stock and the terms of any future debt could restrict our operations.
+Added: Further, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock.
+Added: If adequate funds are not available on acceptable terms when we require it, we may be unable to invest in future growth opportunities, which could harm our business, operating results and financial condition.
+Added: We have incurred substantial indebtedness that may decrease our business flexibility, access to capital and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.
+Added: As of January 31, 2023, we had $37.1 million principal amount of indebtedness outstanding under our 2023 Notes, $690.0 million principal amount of indebtedness outstanding under our 2024 Notes and available borrowing capacity of $500.0 million under our credit facility.
+Added: Our indebtedness may:
+Added: ▪ limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;
+Added: ▪ limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;
+Added: ▪ require us to use a substantial portion of our cash flow from operations to make debt service payments;
+Added: ▪ limit our flexibility to plan for, or react to, changes in our business and industry;
+Added: ▪ place us at a competitive disadvantage compared to our less leveraged competitors;
+Added: ▪ increase our vulnerability to the impact of adverse economic and industry conditions, including inflation and rising interest rates;
+Added: ▪ require us to consume a portion of our liquidity to settle the Notes in the next 12 months.
+Added: Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
+Added: As of January 31, 2023 , we had accumulated net operating loss carryforwards and research tax credits in our federal, state and foreign jurisdictions with varying expiration dates.
+Added: Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” An “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
+Added: Similar rules may apply under state and foreign tax laws.
+Added: Future issuances of our stock could cause an “ownership change.” It is possible that any future ownership change could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.
+Added: If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
+Added: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.
+Added: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.
+Added: We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.
+Added: Our sales contracts are primarily denominated in U.S.
+Added: dollars, and therefore substantially all of our revenue is not subject to foreign currency risk.
+Added: However, a strengthening of the U.S.
+Added: dollar could increase the real cost of our offerings to our customers outside of the U.S., which could adversely affect our operating results.
+Added: In addition, an increasing
+Added: DocuSign, Inc.| 2023 Form 10-K | 27
+Added: portion of our operating revenues and operating expenses are earned or incurred outside of the U.S., and an increasing portion of our assets is held outside of the U.S.
+Added: These operating revenues, expenses and assets are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates.
+Added: If we are not able to successfully hedge against the risks associated with currency fluctuations, our operating results could be adversely affected.
+Added: Additionally, global events as well as geopolitical developments, including regional conflicts in Europe, fluctuating commodity prices, trade tariff developments and inflation have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which could amplify the volatility of currency fluctuations.
+Added: We have not engaged in the hedging of foreign currency transactions to date, so we may not be able to effectively offset the adverse financial impacts that may result from unfavorable movements in foreign currency exchange rates, which could adversely affect our operating results.
+Added: We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our clients would have to pay for our offering and adversely affect our operating results.
+Added: A successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.
+Added: Any imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our future sales, which could have a material adverse impact on our business and operating results.
+Added: Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow or cash on hand to pay our debt, to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.
+Added: Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the amounts payable under the Notes, any borrowings including under our credit facility or other future indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
+Added: Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
+Added: If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.
+Added: Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.
+Added: Any new or refinanced debt may be subject to substantially higher interest rates, which could adversely affect our financial condition and impact our business.
+Added: We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
+Added: Subject to certain conditions, holders of the Notes may require us to repurchase for cash all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid regular or special interest, if any.
+Added: In addition, if a make-whole fundamental change (as defined in the respective indentures for the Notes) occurs prior to the respective maturity dates of the Notes, we will in some cases be required to increase the conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change.
+Added: Upon a conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted.
+Added: However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with respect to Notes being converted.
+Added: As of January 31, 2023, both sets of our Notes will mature in the next 12 months, which could require us to consume a significant portion of our liquidity or raise additional financing in adverse capital markets conditions.
+Added: In addition, our credit facility prohibits us from making any cash payments on the conversion or repurchase of the Notes if an event of default exists under the credit facility or if, after giving effect to such conversion or repurchase (and any additional indebtedness incurred in connection with such conversion or a repurchase), we would not be in compliance with our financial covenants under the credit facility.
+Added: Further, our ability to repurchase or to pay cash upon conversion of the Notes may be limited by law, regulatory authority or agreements governing our future indebtedness.
+Added: Our failure to repurchase the Notes at a time when the repurchase is required by the indenture governing the Notes or to pay cash upon conversion of the Notes as required by the indenture would constitute a default under the indenture.
+Added: A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
+Added: If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or to pay cash upon conversion of the Notes.
+Added: DocuSign, Inc.| 2023 Form 10-K | 28
+Added: Legal and Regulatory Risks
We are subject to laws and regulations affecting our business, including those related to e-signature, marketing, advertising, privacy, data protection and information security.
9 unchanged sentences
▪ Additionally, the FTC and many state attorney generals are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data.
−Removed: For example, California has enacted the California Consumer Privacy Act (the “CCPA”) and later the California Privacy Rights Act (the “CPRA”) which will take effect on January 1, 2023 and supersede the CCPA.
−Removed: The CPRA and the CCPA may lead other states to pass comparable legislation, with potentially greater penalties, and more rigorous compliance requirements relevant to our business.
+Added: For example, California has enacted the California Consumer Privacy Act (the “CCPA”), most recently amended by the California Privacy Rights Act (the “CPRA”) as of January 1, 2023, with enforcement beginning on July 1, 2023, subject to regulations promulgated through a newly created enforcement agency called the California Privacy Protection Agency.
+Added: Other states have passed comparable legislation, and some may pass similar legislation with potentially greater penalties, and more rigorous compliance requirements relevant to our business.
▪ The Health Insurance Portability and Accountability Act (“HIPAA”) in the U.S.
14 unchanged sentences
entities who had self-certified under the Privacy Shield scheme prior to invalidation.
−Removed: To safeguard data transfers from the EEA to other jurisdictions, including the U.S., we currently utilize respective Binding Corporate Rules
+Added: To safeguard data transfers from the EEA to other jurisdictions, including the U.S., we currently utilize respective Binding Corporate Rules and Standard Contractual Clauses as the approved data transfer mechanisms by the EU Commission for corresponding
DocuSign, Inc.| 2023 Form 10-K | 29
−Removed: and standard contractual contracts as the approved data transfer mechanisms by the EU Commission for corresponding applicable data transfer activity.
+Added: applicable data transfer activity.
The EU Commission has also published revised Standard Contractual Clauses for data transfers from the EEA:
−Removed: the revised clauses must be used for relevant new data transfers from September 27, 2021;
−Removed: existing standard contractual clauses arrangements must be migrated to the revised clauses by December 27, 2022.
+Added: the revised Standard Contractual Clauses must be used for relevant new data transfers since September 27, 2021;
+Added: existing Standard Contractual Clauses arrangements were required to be migrated to the revised Standard Contractual Clauses by December 27, 2022.
We expect that new laws, regulations and industry standards will continue to be proposed and enacted relating to privacy, data protection, marketing, advertising, electronic signatures, consumer communications and information security in the U.S., the EU and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards may have on our business.
1 unchanged sentence
Future restrictions on the collection, use, sharing or disclosure of data or additional requirements for the express or implied consent of our customers, partners or end consumers for the use and disclosure of such information could require us to incur additional costs or modify our products and solutions, possibly in a material manner, and could limit our ability to develop new functionality.
+Added: We have been and may in the future be subject to legal proceedings and litigation for a variety of claims, including labor and employment issues, intellectual property disputes, securities law violations, derivative litigation and other matters, which may be costly and may subject us to significant liability and increased costs of doing business.
+Added: Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others or if the cost and time-commitment of litigation diverts resources from our other business activities.
+Added: From time to time, we have been and may in the future be involved as a party or an indemnitor in legal proceedings, disputes or regulatory inquiries that arise in the ordinary course of business.
+Added: These may include alleged claims, lawsuits and proceedings regarding labor and employment issues, commercial disagreements, securities law violations and other matters.
+Added: In particular, companies in the software industry are often required to defend against litigation claims based on allegations of infringement or other violations of intellectual property rights.
+Added: We have from time to time been subject to intellectual property claims and disputes and may be subject to such claims in the future.
+Added: In addition, many of these companies have the capability to dedicate substantially greater resources to enforce their alleged intellectual property rights and to defend claims that may be brought against them.
+Added: Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue and against which our patents may therefore provide little or no deterrence.
+Added: If a third party is able to obtain an injunction preventing us from utilizing such third-party intellectual property rights, or if we cannot license or develop technology for any infringing aspect of our business, we would be forced to limit or stop sales of our software or cease business activities employed by such intellectual property and may be unable to compete effectively.
+Added: Any inability to license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete.
+Added: Such disputes may require us to redesign our products, delay releases, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling our products and solutions.
+Added: Requiring us to change one or more aspects of the way we deliver our products and solutions may harm our business.
+Added: We may also be contractually obligated to indemnify our customers in the event of infringement of a third party’s intellectual property rights.
+Added: Responding to such claims, including those currently pending, regardless of their merit, can be time consuming and costly to defend in litigation and damage our reputation and brand.
+Added: For more information on our pending legal proceedings, se e Item 3 .
+Added: Legal Proceedings of this Form 10-K.
+Added: Regardless of the merits or ultimate outcome of any claims that have been or may be brought against us or that we may bring against others, lawsuits are time-consuming and expensive to resolve, divert management’s time and attention, and could harm our reputation.
+Added: Although we carry general liability and other forms of insurance, our insurance may not cover potential claims that arise or may not be adequate to indemnify us for all liability that may be imposed.
+Added: We may also determine that the most cost-effective way to resolve a dispute is to enter into a settlement agreement.
+Added: Litigation is inherently unpredictable and we cannot predict the timing, nature, controversy or outcome of lawsuits or assure you that the results of any of these actions will not have an adverse effect on our business, operating results or financial condition.
+Added: We could incur substantial costs in protecting or defending our proprietary rights, and any failure to adequately protect our rights could impair our competitive position and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.
+Added: Our success is dependent, in part, upon protecting our proprietary technology.
+Added: We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and contractual provisions in an effort to establish and protect our proprietary rights.
+Added: However, the steps we take to protect our intellectual property may be inadequate.
+Added: While we have
+Added: DocuSign, Inc.| 2023 Form 10-K | 30
+Added: been issued patents in the U.S.
+Added: and other countries and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications.
+Added: In addition, any patents issued in the future may not provide us with competitive advantages or may be successfully challenged by third parties.
+Added: Any of our patents, trademarks or other intellectual property rights may be challenged or circumvented by others or invalidated through administrative process or litigation.
+Added: There can be no guarantee that others will not independently develop similar products, duplicate any of our products or design around our patents.
+Added: Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain.
+Added: Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and solutions that compete with ours.
+Added: Some license provisions protecting against unauthorized use, copying, transfer and disclosure of our products may be unenforceable under the laws of jurisdictions outside the U.S.
+Added: To the extent we expand our international activities, our exposure to unauthorized copying and use of our products and proprietary information may increase.
+Added: We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances.
+Added: No assurance can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information.
+Added: Further, these agreements do not prevent our competitors or partners from independently developing technologies that are substantially equivalent or superior to our products and solutions.
+Added: In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect and enforce these rights, including through litigation.
+Added: Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property.
+Added: Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights.
+Added: Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and solutions, impair the functionality of our products and solutions, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our products and solutions or injure our reputation.
+Added: We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property.
+Added: Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property may be difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the U.S.
+Added: and where mechanisms for enforcement of intellectual property rights may be weak.
+Added: If we fail to adequately protect our intellectual property and proprietary rights, our business, operating results and financial condition could be adversely affected.
+Added: We use open source software in our products, which could subject us to litigation or other actions.
+Added: We use open source software in our products and solutions.
+Added: Any use of open source software may expose us to greater risks than the use of commercial software because open source licensors generally do not provide warranties or controls on the functionality or origin of the software.
+Added: Any use of open source software may involve security risks, making it easier for hackers and other third parties to determine how to compromise our platform.
+Added: From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products.
+Added: As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software.
+Added: Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our products.
+Added: In addition, if we were to combine our proprietary software products with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary software products.
+Added: If we inappropriately use or incorporate open source software subject to certain types of open source licenses that challenge the proprietary nature of our software products, we may be required to re-engineer our products, discontinue the sale of our products and solutions or take other remedial actions.
+Added: Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection and other losses.
+Added: Our agreements with some customers and other third parties include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our offerings, solutions or other contractual obligations.
+Added: Some of these indemnity provisions provide for uncapped liability for which we would be responsible, and some indemnity provisions survive termination or expiration of the applicable agreement.
+Added: Large indemnity payments could harm our business, operating results and financial condition.
+Added: Although we normally contractually limit our liability with respect to such obligations, we may still incur substantial liability related to them and we may be required to cease use of certain functions of our products and solutions as a result of any such claims.
+Added: DocuSign, Inc.| 2023 Form 10-K | 31
+Added: addition, our customer agreements generally include a warranty that the proper use of DocuSign by a customer in accordance with the agreement and applicable law will be sufficient to meet the definition of an “electronic signature” as defined in the Electronic Signatures in Global and National Commerce Act (“ESIGN Act”) and eIDAS.
+Added: Any warranty or indemnification claim brought by our customers could result in damage to our reputation and harm our business and operating results.
Many of our customers deploy our products and solutions globally, and our products and solutions must comply with certain legal and regulatory requirements in varying countries.
4 unchanged sentences
If a court or regulatory body determines that our products and solutions are inadequate to meet these requirements, documents executed through our products and solutions could, in some instances, be rendered unenforceable, resulting in potential loss of customers, liability under customer contracts, and brand and reputational damage.
−Removed: Our international operations and updates to tax legislation may subject us to potential adverse tax consequences.
−Removed: We are expanding our international operations and staff to better support our growth into international markets.
−Removed: Our corporate structure and associated transfer pricing policies contemplate future growth into international markets, and consider the functions, risks and assets of the various entities involved in the intercompany transactions.
+Added: Changes in tax laws, rulings and interpretations may subject us to potential adverse tax consequences, which could negatively affect our financial position and results of operations.
+Added: We operate globally and are subject to taxes in the U.S.
+Added: and numerous other jurisdictions throughout the world, and the tax regimes we are subject to or operate under, including income and non-income taxes, are unsettled and may be subject to significant change.
+Added: Changes in tax laws (including provisions of the recently enacted federal tax legislation titled the Inflation Reduction Act (the “IRA”)), certain Organization for Economic Co-operation and Development (“OECD”) proposals, regulations, or rulings, changes in interpretations of existing laws and regulations, or changes in accounting principles could negatively and materially affect our financial position and results of operations.
+Added: Additionally, our corporate structure and associated transfer pricing policies contemplate future growth into international markets, and consider the functions, risks and assets of the various entities involved in the intercompany transactions.
We may be subject to taxation in international jurisdictions with increasingly complex tax laws and precedents which could have an adverse effect on our liquidity and operating results.
−Removed: The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of those jurisdictions, including the U.S., to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
−Removed: Tax authorities in the jurisdictions in which we operate may challenge our transfer pricing policies and intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
+Added: The amount of taxes we pay in these different jurisdictions may depend on the application of the tax laws of those jurisdictions, including the U.S., to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
+Added: Furthermore, tax authorities in the jurisdictions in which we operate may challenge our transfer pricing policies and intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
1 unchanged sentence
In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or to our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries which could have a material impact on us and the results of our operations.
+Added: Further, in August 2022, President Biden signed into law the IRA, which includes a 15% corporate alternative minimum tax for companies with modified GAAP net income in excess of $1 billion, a 1% excise tax on certain stock repurchases.
+Added: We are not currently subject to the corporate alternative minimum tax, and do not currently expect the IRA provisions to have a material impact on our results of operations.
+Added: Such changes, however, could result in an increase in the effective tax rate applicable to all or a portion of our income, which would negatively affect our financial results.
+Added: The requirements of being a public company, including developing and maintaining proper and effective disclosure controls and procedures and internal control over financial reporting, may strain our resources and divert management’s attention away from other business concerns.
+Added: As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations that impose various requirements on public companies.
+Added: Our management and other personnel devote a substantial amount of time to compliance with these requirements and such compliance has increased, and will continue to increase, our legal, accounting and financial costs.
+Added: DocuSign, Inc.| 2023 Form 10-K | 32
+Added: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
+Added: In order to maintain and improve the effectiveness of such controls, we have expended, and anticipate that we will continue to expend, significant resources.
+Added: For example, since our IPO, we have hired additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to assist in our compliance efforts.
+Added: We have incurred and expect to continue to incur significant expenses and devote substantial management effort toward compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
+Added: To assist us in complying with these requirements we may need to hire more employees in the future, or engage outside consultants, which will increase our operating expenses.
+Added: Despite significant investment, our current controls and any new controls that we develop may become inadequate because of changes in business conditions.
+Added: For example, because we have acquired companies in the past and may continue to do so in the future, we need to effectively expend resources to integrate the controls of these acquired entities with ours.
+Added: Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
+Added: Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that are required to be included in the periodic reports that we file with the SEC.
+Added: If our management team or independent registered public accounting firm were to furnish an adverse report, or if it is determined that we have a material weakness or significant deficiency in our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities or shareholder litigation.
+Added: In addition, as we continue to scale and improve our operations, including our internal systems and processes, we currently utilize, and in the future may seek to implement, a variety of critical systems, such as billing, human resource, financial reporting and accounting systems.
+Added: The implementation and transition to any new critical system, such as our new ERP system, may be disruptive to our business if they do not work as planned or if we experience issues related to such implementation or transition, which could have a material adverse effect on our operations and result in compromised internal reporting and processes.
+Added: Moreover, since most of our employees (including those critical to maintaining an effective system of disclosure controls and internal control over financial reporting) are working and are expected to continue to work for the near term, in either a fully remote or a hybrid environment, risks that we have not contemplated may arise and result in our failure to maintain effective disclosure controls or internal control over financial reporting.
We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls.
9 unchanged sentences
While we take precautions to prevent our products and solutions from being exported in violation of these laws, including obtaining authorizations for our encryption products, implementing IP address blocking and screenings against U.S.
−Removed: government and international lists of restricted and prohibited persons, we cannot guarantee that the
−Removed: DocuSign, Inc.| 2022 Form 10-K | 35
−Removed: precautions we take will prevent violations of export control and sanctions laws.
+Added: government and international lists of restricted and prohibited persons, we cannot guarantee that the precautions we take will prevent violations of export control and sanctions laws.
Violations of U.S.
3 unchanged sentences
however, no assurance can be given that our strategic partners will comply with such requirements.
+Added: DocuSign, Inc.| 2023 Form 10-K | 33
Foreign governments also regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to distribute our products and solutions or could limit our end-customers’ ability to implement our products and solutions in those countries.
11 unchanged sentences
In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.
−Removed: We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
+Added: We can be held liable for the corrupt or other illegal activities of these third-party intermediaries and our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
While we have policies and procedures to address compliance with such laws, we cannot assure you that our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
5 unchanged sentences
Enforcement actions and sanctions could further harm our business, operating results and financial condition.
−Removed: We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our clients would have to pay for our offering and adversely affect our operating results.
−Removed: A successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.
−Removed: Any imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our future sales, which could have a material adverse impact on our business and operating results.
−Removed: Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
−Removed: DocuSign, Inc.| 2022 Form 10-K | 36
−Removed: As of January 31, 2022 , we had accumulated net operating loss carryforwards and research tax credits in our federal, state, and foreign jurisdictions with varying expiration dates.
−Removed: Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” An “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
−Removed: Similar rules may apply under state and foreign tax laws.
−Removed: Future issuances of our stock could cause an “ownership change.” It is possible that any future ownership change could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.
−Removed: Risks Related to Ownership of Our Common Stock
+Added: Risks Related to our Common Stock
Our stock price may be volatile, and the value of our common stock may decline.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including:
−Removed: • the COVID-19 pandemic, including its effects on customer demand for our solutions and the pace of the digital transformation of business and hybrid work arrangements;
▪ actual or anticipated fluctuations in our financial condition and operating results;
+Added: ▪ customer demand for our solutions and the pace of the digital transformation of business;
+Added: ▪ changes in senior management or key personnel;
+Added: ▪ general economic, regulatory and market conditions, including inflation and interest rate fluctuations;
▪ variance in our financial performance from expectations of securities analysts;
6 unchanged sentences
▪ future sales of our common stock or other securities by us or our stockholders;
+Added: DocuSign, Inc.| 2023 Form 10-K | 34
▪ the consummation, and the anticipated benefits, of our stock repurchase program;
−Removed: • changes in senior management or key personnel;
▪ the trading volume of our common stock;
1 unchanged sentence
▪ changes in the political climate in the U.S.;
−Removed: • terrorist attacks, natural disasters, regional and global conflicts, sanctions, laws and regulations that prohibit or limit operations in certain jurisdictions, public health crises (such as the COVID-19 pandemic) or other such events impacting countries where we have operations;
−Removed: • general economic, regulatory and market conditions, including interest rate fluctuations.
+Added: ▪ terrorist attacks, natural disasters and the effects of climate change, regional and global conflicts, sanctions, laws and regulations that prohibit or limit operations in certain jurisdictions, public health crises (such as the COVID-19 pandemic) or other such events impacting countries where we have operations.
In addition, broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may negatively impact the market price of our common stock.
3 unchanged sentences
Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
−Removed: We have a currently effective Registration Statement on Form S-3 registering for sale approximately 247,030 shares of our common stock in connection with our acquisition of Liveoak.
−Removed: We also provide eligible employees with the opportunity to purchase shares of our common stock at a discounted price per share through our Employee Stock Purchase Plan (“ESPP”) and pursuant to our 2018 Plan, our management is authorized to grant stock options, restricted stock units and other equity awards to our employees, directors and consultants.
+Added: We also provide eligible employees with the opportunity to purchase shares of our common stock at a discounted price per share through our ESPP and pursuant to our 2018 Plan, our management is authorized to grant stock options, restricted stock units (“RSUs”) and other equity awards to our employees, directors and consultants.
We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.
−Removed: DocuSign, Inc.| 2022 Form 10-K | 37
−Removed: Under our investors’ rights agreement, certain stockholders can require us to register shares owned by them for public sale in the U.S.
In addition, we filed a registration statement to register shares reserved for future issuance under our equity compensation plans.
−Removed: As a result, subject to the satisfaction of applicable exercise periods and the expiration or waiver of the market standoff agreements and lock-up agreements referred to above, the shares issued upon exercise of outstanding stock options or upon settlement of outstanding restricted stock units (“RSU”) awards will be available for immediate resale in the U.S.
+Added: As a result, the shares issued upon exercise of outstanding stock options or upon settlement of outstanding RSU awards will be available for immediate resale in the U.S.
in the open market.
14 unchanged sentences
▪ establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;
+Added: DocuSign, Inc.| 2023 Form 10-K | 35
▪ establish that our board of directors is divided into three classes, with each class serving three-year staggered terms;
4 unchanged sentences
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
−Removed: In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations
−Removed: DocuSign, Inc.| 2022 Form 10-K | 38
−Removed: with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
+Added: In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
Any delay or prevention of a change of control transaction or changes in our management could cause the market price of our common stock to decline.
16 unchanged sentences
These provisions may limit a stockholder’s ability to bring a claim in a judicial forum of the stockholder's choosing for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees.
−Removed: Risks Related to Our Notes
−Removed: Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow or cash on hand to pay our debt, to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.
−Removed: Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the amounts payable under the Notes, any borrowings including under our credit facility or other future indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
−Removed: Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
−Removed: If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.
−Removed: Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.
−Removed: We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
−Removed: Subject to certain conditions, holders of the Notes may require us to repurchase for cash all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the respective indentures governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid regular or special interest, if any, to, but excluding, the fundamental change repurchase date.
−Removed: In addition, if a make-
+Added: General Risks
DocuSign, Inc.| 2023 Form 10-K | 36
−Removed: whole fundamental change (as defined in the respective indentures for the Notes) occurs prior to the respective maturity dates of the Notes, we will in some cases be required to increase the conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change.
−Removed: Upon a conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted.
−Removed: However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with respect to Notes being converted.
−Removed: In addition, our credit facility prohibits us from making any cash payments on the conversion or repurchase of the Notes if an event of default exists under the credit facility or if, after giving effect to such conversion or repurchase (and any additional indebtedness incurred in connection with such conversion or a repurchase), we would not be in pro forma compliance with our financial covenants under the credit facility.
−Removed: Further, our ability to repurchase or to pay cash upon conversion of the Notes may be limited by law, regulatory authority or agreements governing our future indebtedness.
−Removed: Our failure to repurchase the Notes at a time when the repurchase is required by the indenture governing the Notes or to pay cash upon conversion of the Notes as required by the indenture would constitute a default under the indenture.
−Removed: A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
−Removed: If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or to pay cash upon conversion of the Notes.
−Removed: The conditional conversion feature of the Notes may adversely affect our financial condition and operating results.
−Removed: The conditional conversion feature of the 2023 Notes entitles (and equivalent features of the 2024 Notes may in future entitle) holders of the Notes to convert them at any time during specified periods at their option.
−Removed: When one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than by paying cash in lieu of delivering any fractional share), we may settle all or a portion of our conversion obligation in cash, which could adversely affect our liquidity.
−Removed: In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
−Removed: General Risk Factors
−Removed: If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
−Removed: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.
−Removed: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.
−Removed: We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.
−Removed: Our sales contracts are primarily denominated in U.S.
−Removed: dollars, and therefore substantially all of our revenue is not subject to foreign currency risk.
−Removed: However, a strengthening of the U.S.
−Removed: dollar could increase the real cost of our offerings to our customers outside of the U.S., which could adversely affect our operating results.
−Removed: In addition, an increasing portion of our operating revenues and operating expenses are earned or incurred outside of the U.S., and an increasing portion of our assets is held outside of the U.S.
−Removed: These operating revenues, expenses and assets are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates.
−Removed: If we are not able to successfully hedge against the risks associated with currency fluctuations, our operating results could be adversely affected.
−Removed: Natural catastrophic events and man-made problems such as power disruptions, computer viruses, data security breaches, and terrorism may disrupt our business.
−Removed: We rely heavily on our network infrastructure and information technology systems for our business operations.
−Removed: A disruption or failure of these systems in the event of online attack, earthquake, fire, terrorist attack, public health crisis (such as the COVID-19 pandemic), power loss, telecommunications failure or other similar catastrophic event could cause system interruptions, delays in accessing our service, reputational harm and loss of critical data or could prevent us from providing our products and solutions to our customers.
−Removed: A catastrophic event that results in the destruction or
+Added: Unfavorable conditions in our industry or the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect our operating results.
+Added: Our operating results may vary based on the impact of changes in our industry or the global economy on us and our existing and prospective customers.
+Added: The revenue growth and potential profitability of our business depend on demand for our products and solutions.
+Added: Current or future economic and global market uncertainties or downturns could adversely affect our business and operating results.
+Added: Economic uncertainty and associated macro-economic conditions make it difficult for our customers and us to accurately forecast and plan future business activities, and could cause our customers to slow spending on our products.
+Added: Negative conditions in the general economy both in the U.S.
+Added: and abroad, including conditions resulting from inflation, changes in interest rates, gross domestic product growth, financial and credit market fluctuations, political turmoil, natural catastrophes and the effects of climate change, public health crises, regional and global conflicts and terrorist attacks in the U.S., Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including spending on information technology, and negatively affect the growth of our business.
+Added: In addition, unfavorable conditions in certain industry sectors could impact customers or partners disproportionately, which could also impact the demand for our products.
+Added: To the extent our products and solutions are perceived by customers and potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in general information technology spending.
+Added: Also, competitors, many of whom are larger and more established than we are, may respond to market conditions by lowering prices and attempting to lure away our customers.
+Added: In addition, the increased pace of consolidation in certain industries may result in reduced overall spending on our products and solutions.
+Added: We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry.
+Added: If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, operating results and financial condition could be adversely affected.
+Added: Natural catastrophic events and man-made problems such as power disruptions, computer viruses, data security breaches, regional or global conflicts, and terrorism may disrupt our business.
+Added: We rely heavily on our network infrastructure and information technology systems, including our ERP system, for our business operations.
+Added: A disruption or failure of these systems in the event of online attack, earthquake, fire, terrorist attack, public health crisis, power loss, telecommunications failure or other similar catastrophic event, including as a result of the effects of climate change, could cause system interruptions, delays in accessing our service, reputational harm and loss of critical data or could prevent us from providing our products and solutions to our customers.
+Added: A catastrophic event that results in the destruction or disruption of our data centers, or our network infrastructure or information technology systems, including any errors, defects or failures in third-party hardware, could affect our ability to conduct normal business operations and adversely affect our operating results.
+Added: Additionally, while we believe our exposure from the recent conflict in Ukraine is limited, we could experience unanticipated disruptions to our business as a result of current or future regional and global conflicts, including sanctions or other laws and regulations prohibiting or limiting operations in certain jurisdictions, increased risks of potential cyberattacks, related impacts to our customers, or micro- or macro-economic effects on the global economy.
DocuSign, Inc.| 2023 Form 10-K | 37
−Removed: disruption of our data centers, or our network infrastructure or information technology systems, including any errors, defects or failures in third-party hardware, could affect our ability to conduct normal business operations and adversely affect our operating results.
UNRESOLVED STAFF COMMENTS
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.