DOCUSIGN, INC. 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in foreign currency exchange and interest rates. Interest Rate Risk As of January 31, 2023, we had cash, cash equivalents and investments totaling $1.2 billion, which consisted primarily of bank deposits, money market funds, commercial paper, corporate notes and bonds and U.S. Treasury and government agency securities. Interest-earning instruments carry a degree of interest rate risk. Our investment portfolio is composed of highly rated securities and limits the amount of credit exposure to any one issuer. A hypothetical 100 basis point increase in interest rates would result in an approximate $3.8 million decrease of the fair value of our investment portfolio as of January 31, 2023. Such losses would only be realized if we sold the investments prior to maturity. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We had no exposure to changes in interest rates from debt obligations at January 31, 2023 as our 2023 Notes and 2024 Notes (the “Notes”) were issued at fixed rates of 0.5% and 0.0%, respectively. The fair value of the Notes changes when the market price of our stock fluctuates or interest rates change. However, we carry the Notes at face value less unamortized discount on our balance sheet and present the fair value for required disclosure purposes only. Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar, and the functional currency of each of our subsidiaries is either its local currency or the U.S. dollar, depending on the circumstances. The assets and liabilities of each of our subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date. Operations accounts are translated using the average exchange rate for the relevant period. A strengthening or weakening of the U.S. dollar against the other currencies may negatively or positively affect our operating results as expressed in U.S. dollars. Foreign currency translation adjustments are accounted for as a component of “Accumulated other comprehensive loss” within “Stockholders’ equity”. Gains or losses due to remeasurements of transactions denominated in foreign currencies are included in “Interest income and other income, net” in our consolidated statements of operations and comprehensive loss. We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future. We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on our operating results. DocuSign, Inc.| 2023 Form 10-K | 55 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS Index Report of Independent Registered Public Accounting Firm (PC AO B ID 238 ) 57 Consolidated Financial Statements 59 Consolidated Balance Sheets as of January 31, 2023 and 2022 59 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended January 31, 2023 , 2022 and 2021 60 Consolidated Statements of Stockholders’ Equity for the Years Ended January 31, 2023 , 2022 and 2021 61 Consolidated Statements of Cash Flows for the Years Ended January 31, 2023 , 2022 and 2021 63 Notes to Consolidated Financial Statements 65 Note 1 Summary of Significant Accounting Policies 65 Note 2 Revenue and Performance Obligations 74 Note 3 Fair Value Measurements 74 Note 4 Property and Equipment, Net 76 Note 5 Acquisitions 76 Note 6 Goodwill and Intangible Assets, Net 77 Note 7 Deferred Contract Acquisition and Fulfillment Costs 79 Note 8 Debt 79 Note 9 Leases 83 Note 10 Commitments and Contingencies 83 Note 11 Stockholders' Equity 85 Note 12 Restructuring and Other Related Charges 88 Note 1 3 Net Loss Per Share Attributable to Common Stockholders 88 Note 1 4 Employee Benefit Plan 88 Note 1 5 Income Taxes 89 Note 1 6 Geographic Information 92 Note 17 Subsequent Events 92 DocuSign, Inc.| 2023 Form 10-K | 56 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of DocuSign, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of DocuSign, Inc. and its subsidiaries (the “Company”) as of January 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for each of the three years in the period ended January 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible debt effective February 1, 2021. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely DocuSign, Inc.| 2023 Form 10-K | 57 detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition - Identifying and Evaluating Terms and Conditions in Contracts As described in Note 1 to the consolidated financial statements, revenue recognition is determined by management through the following steps: (i) identification of the contract, or contracts, with the customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligation in the contract; and (v) recognition of the revenue when, or as, the Company satisfies a performance obligation. Management applies significant judgment in identifying and evaluating any terms and conditions in contracts which may impact revenue recognition. For the year ended January 31, 2023, the Company’s revenue was $2.52 billion. The principal considerations for our determination that performing procedures relating to revenue recognition, specifically identifying and evaluating terms and conditions in contracts, is a critical audit matter are the significant judgment by management in identifying and evaluating terms and conditions, especially non-standard terms, in contracts that impact revenue recognition. This in turn led to significant auditor judgment and effort in performing procedures and evaluating audit evidence to determine whether terms and conditions were appropriately identified and evaluated by management. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls related to the identification and evaluation of terms and conditions that impact the determination of revenue recognition. These procedures also included, among others, testing the completeness and accuracy of management’s identification and evaluation of the specific terms and conditions in contracts with customers by examining revenue contracts on a test basis and testing management’s process for identifying and evaluating the terms and conditions in contracts, including management’s determination of the impact of those terms and conditions on revenue recognition. /s/ PricewaterhouseCoopers LLP San Jose, California March 27, 2023 We have served as the Company’s auditor since 2009, which includes periods before the Company became subject to SEC reporting requirements. DocuSign, Inc.| 2023 Form 10-K | 58 DOCUSIGN, INC. CONSOLIDATED BALANCE SHEETS January 31, (in thousands, except per share data) 2023 2022 Assets Current assets Cash and cash equivalents $ 721,895 $ 509,059 Investments—current 309,771 293,763 Accounts receivable, net of allowance for doubtful accounts of $ 6,011 and $ 5,807 as of January 31, 2023 and 2022 516,914 440,950 Contract assets—current 12,437 12,588 Prepaid expenses and other current assets 69,987 63,236 Total current assets 1,631,004 1,319,596 Investments—noncurrent 186,049 94,938 Property and equipment, net 199,892 184,664 Operating lease right-of-use assets 141,493 126,021 Goodwill 353,619 355,058 Intangible assets, net 70,280 98,816 Deferred contract acquisition costs—noncurrent 350,899 311,835 Other assets—noncurrent 79,484 50,337 Total assets $ 3,012,720 $ 2,541,265 Liabilities and Equity Current liabilities Accounts payable $ 24,393 $ 52,804 Accrued expenses and other current liabilities 100,987 91,377 Accrued compensation 163,133 160,163 Convertible senior notes—current 722,887 — Contract liabilities—current 1,172,867 1,029,891 Operating lease liabilities—current 24,055 37,404 Total current liabilities 2,208,322 1,371,639 Convertible senior notes, net—noncurrent — 718,487 Contract liabilities—noncurrent 16,925 16,725 Operating lease liabilities—noncurrent 141,348 126,340 Deferred tax liability—noncurrent 10,723 9,316 Other liabilities—noncurrent 18,115 23,255 Total liabilities 2,395,433 2,265,762 Commitments and contingencies (Note 10) Stockholders’ equity Preferred stock, $ 0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding as of January 31, 2023 and 2022 — — Common stock, $ 0.0001 par value; 500,000 shares authorized, 201,904 shares outstanding as of January 31, 2023; 500,000 shares authorized, 198,834 shares outstanding as of January 31, 2022 20 20 Treasury stock, at cost: 10 shares as of January 31, 2023; 7 shares as of January 31, 2022 ( 1,785 ) ( 1,532 ) Additional paid-in capital 2,240,732 1,720,013 Accumulated other comprehensive loss ( 22,996 ) ( 4,809 ) Accumulated deficit ( 1,598,684 ) ( 1,438,189 ) Total stockholders’ equity 617,287 275,503 Total liabilities and equity $ 3,012,720 $ 2,541,265 The accompanying notes are an integral part of these consolidated financial statements. DocuSign, Inc.| 2023 Form 10-K | 59 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Year Ended January 31, (in thousands, except per share data) 2023 2022 2021 Revenue: Subscription $ 2,442,177 $ 2,037,272 $ 1,381,397 Professional services and other 73,738 69,941 71,650 Total revenue 2,515,915 2,107,213 1,453,047 Cost of revenue: Subscription 426,077 343,661 259,992 Professional services and other 110,011 122,790 104,066 Total cost of revenue 536,088 466,451 364,058 Gross profit 1,979,827 1,640,762 1,088,989 Operating expenses: Sales and marketing 1,242,711 1,076,527 798,625 Research and development 480,584 393,362 271,522 General and administrative 316,228 232,757 192,697 Restructuring and other related charges 28,335 — — Total operating expenses 2,067,858 1,702,646 1,262,844 Loss from operations ( 88,031 ) ( 61,884 ) ( 173,855 ) Interest expense ( 6,389 ) ( 6,443 ) ( 30,799 ) Loss on extinguishment of debt — — ( 33,752 ) Interest income and other income, net 4,539 1,413 8,914 Loss before provision for income taxes ( 89,881 ) ( 66,914 ) ( 229,492 ) Provision for income taxes 7,573 3,062 13,775 Net loss $ ( 97,454 ) $ ( 69,976 ) $ ( 243,267 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.49 ) $ ( 0.36 ) $ ( 1.31 ) Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted 200,903 196,675 185,760 Other comprehensive income (loss): Foreign currency translation gains (losses), net of tax $ ( 15,336 ) $ ( 7,935 ) $ 7,468 Unrealized losses on investments, net of tax ( 2,851 ) ( 1,838 ) ( 831 ) Other comprehensive income (loss) ( 18,187 ) ( 9,773 ) 6,637 Comprehensive loss $ ( 115,641 ) $ ( 79,749 ) $ ( 236,630 ) Stock-based compensation expense included in costs and expenses: Cost of revenue—subscription $ 46,916 $ 31,152 $ 20,793 Cost of revenue—professional services and other 25,758 27,347 21,865 Sales and marketing 222,334 186,759 131,041 Research and development 149,967 108,523 65,890 General and administrative 88,125 54,761 47,288 Restructuring and other related charges 5,626 — — The accompanying notes are an integral part of these consolidated financial statements. DocuSign, Inc.| 2023 Form 10-K | 60 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity (in thousands) Shares Amount Balances at January 31, 2020 181,254 $ 18 $ 1,685,167 $ — $ ( 1,673 ) $ ( 1,137,185 ) $ 546,327 Settlement of convertible senior notes due in 2023 4,698 1 ( 31,933 ) — — — ( 31,932 ) Reclassification to mezzanine equity for convertible senior notes due in 2023 — — ( 3,390 ) — — — ( 3,390 ) Equity component of issued convertible senior notes due in 2024 — — 63,268 — — — 63,268 Purchase of capped calls related to issuance of convertible senior notes due in 2024 — — ( 31,395 ) — — — ( 31,395 ) Issuance of common stock as consideration for acquisition 247 — 48,361 — — — 48,361 Exercise of stock options 2,072 — 24,305 — — — 24,305 Settlement of restricted stock units 4,072 — — — — — — Tax withholding on net share settlement of restricted stock units and employee stock purchase plan — — ( 376,542 ) ( 1,048 ) — — ( 377,590 ) Employee stock purchase plan 464 — 29,859 — — — 29,859 Employee stock-based compensation expense — — 294,554 — — — 294,554 Net loss — — — — — ( 243,267 ) ( 243,267 ) Other comprehensive income, net — — — — 6,637 — 6,637 Balances at January 31, 2021 192,807 19 1,702,254 ( 1,048 ) 4,964 ( 1,380,452 ) 325,737 Cumulative impact of Accounting Standards Update 2020-06 adoption — — ( 86,144 ) — — 12,239 ( 73,905 ) Settlement of convertible senior notes due in 2023 749 — ( 873 ) — — — ( 873 ) Exercise of stock options 1,693 — 23,729 — — — 23,729 Settlement of restricted stock units 5,071 1 ( 1 ) — — — — Tax withholding on net share settlement of restricted stock units and employee stock purchase plan ( 1,760 ) — ( 388,915 ) ( 484 ) — — ( 389,399 ) Employee stock purchase plan 264 — 46,077 — — — 46,077 Charitable donation of common stock 10 — 3,000 — — — 3,000 Employee stock-based compensation expense — — 420,886 — — — 420,886 Net loss — — — — — ( 69,976 ) ( 69,976 ) Other comprehensive income, net — — — — ( 9,773 ) — ( 9,773 ) Balances at January 31, 2022 198,834 $ 20 $ 1,720,013 $ ( 1,532 ) $ ( 4,809 ) $ ( 1,438,189 ) $ 275,503 The accompanying notes are an integral part of these consolidated financial statements. DocuSign, Inc.| 2023 Form 10-K | 61 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued) Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity (in thousands) Shares Amount Balances at January 31, 2022 198,834 20 1,720,013 ( 1,532 ) ( 4,809 ) ( 1,438,189 ) 275,503 Exercise of stock options 868 — 12,678 — — — 12,678 Settlement of restricted stock units 4,230 — — — — — — Tax withholding on net share settlement of restricted stock units and employee stock purchase plan ( 1,428 ) — ( 88,900 ) ( 253 ) — — ( 89,153 ) Employee stock purchase plan 535 — 36,526 — — — 36,526 Repurchases of common stock ( 1,135 ) — — — — ( 63,041 ) ( 63,041 ) Employee stock-based compensation expense — — 560,415 — — — 560,415 Net loss — — — — — ( 97,454 ) ( 97,454 ) Other comprehensive loss, net — — — — ( 18,187 ) — ( 18,187 ) Balances at January 31, 2023 201,904 $ 20 $ 2,240,732 $ ( 1,785 ) $ ( 22,996 ) $ ( 1,598,684 ) $ 617,287 The accompanying notes are an integral part of these consolidated financial statements. DocuSign, Inc.| 2023 Form 10-K | 62 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended January 31, (in thousands) 2023 2022 2021 Cash flows from operating activities: Net loss $ ( 97,454 ) $ ( 69,976 ) $ ( 243,267 ) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 86,255 81,913 71,090 Amortization of deferred contract acquisition and fulfillment costs 185,045 144,442 99,384 Amortization of debt discount and transaction costs 4,970 5,098 28,001 Loss on extinguishment of debt — — 33,752 Operating cash flow related to repayments of convertible senior notes — — ( 75,165 ) Non-cash operating lease costs 27,501 26,819 26,728 Stock-based compensation expense 538,726 408,542 286,877 Deferred income taxes 1,697 1,369 ( 2,410 ) Other 15,723 9,871 ( 210 ) Changes in operating assets and liabilities Accounts receivable ( 75,964 ) ( 117,380 ) ( 73,913 ) Prepaid expenses and other current assets ( 5,038 ) ( 7,074 ) ( 1,155 ) Deferred contract acquisition and fulfillment costs ( 232,315 ) ( 207,393 ) ( 208,510 ) Other assets ( 22,319 ) ( 11,496 ) ( 4,094 ) Accounts payable ( 26,440 ) 12,148 12,128 Accrued expenses and other liabilities 7,340 10,828 37,155 Accrued compensation ( 1,781 ) 1,128 64,586 Contract liabilities 143,177 250,482 267,750 Operating lease liabilities ( 42,364 ) ( 32,854 ) ( 21,773 ) Net cash provided by operating activities 506,759 506,467 296,954 Cash flows from investing activities: Cash paid for acquisition, net of acquired cash — ( 6,388 ) ( 180,370 ) Purchases of marketable securities ( 533,710 ) ( 384,128 ) ( 164,989 ) Sales of marketable securities — 7,569 28,986 Maturities of marketable securities 423,917 283,184 488,538 Purchases of strategic and other investments ( 3,750 ) ( 1,750 ) ( 8,541 ) Purchases of property and equipment ( 77,654 ) ( 61,396 ) ( 82,395 ) Net cash (used in) provided by investing activities ( 191,197 ) ( 162,909 ) 81,229 Cash flows from financing activities: Proceeds from issuance of convertible senior notes, net of initial purchasers' discounts and transaction costs — — 677,370 Purchase of capped calls related to issuance of convertible senior notes — — ( 31,395 ) Repayments of convertible senior notes ( 16 ) ( 77,906 ) ( 384,199 ) Repurchases of common stock ( 63,041 ) — — Payment of revolving credit facility costs — — ( 2,453 ) Payment of tax withholding obligation on RSU settlement and ESPP purchase ( 84,403 ) ( 386,521 ) ( 372,463 ) Proceeds from exercise of stock options 12,678 23,729 24,305 Proceeds from employee stock purchase plan 36,526 46,077 29,859 Net cash used in financing activities ( 98,256 ) ( 394,621 ) ( 58,976 ) Effect of foreign exchange on cash, cash equivalents and restricted cash ( 3,784 ) ( 5,594 ) 5,646 Net increase (decrease) in cash, cash equivalents and restricted cash 213,522 ( 56,657 ) 324,853 Cash, cash equivalents and restricted cash at beginning of period 509,679 566,336 241,483 Cash, cash equivalents and restricted cash at end of period $ 723,201 $ 509,679 $ 566,336 The accompanying notes are an integral part of these consolidated financial statements. DocuSign, Inc.| 2023 Form 10-K | 63 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Year Ended January 31, (in thousands) 2023 2022 2021 Supplemental disclosure: Cash paid for interest $ 185 $ 349 $ 78,040 Cash paid for operating lease liabilities 38,873 40,552 35,176 Cash paid for income taxes 10,416 6,940 3,503 Non-cash investing and financing activities: Property and equipment in accounts payable and accrued expenses and other current liabilities $ 4,757 $ 11,285 $ 3,903 Operating lease right-of-use assets exchanged for lease obligations 63,086 2,749 30,816 Fair value of shares issued as consideration for acquisition — — 48,361 Fair value of shares issued as part of the repayments of convertible senior notes 2 174,230 1,233,990 The accompanying notes are an integral part of these consolidated financial statements. DocuSign, Inc.| 2023 Form 10-K | 64 DOCUSIGN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 . Summary of Significant Accounting Policies Organization and Description of Business DocuSign, Inc. (“we,” “our” or “us”) was incorporated in the State of Washington in April 2003. We merged with and into DocuSign, Inc., a Delaware corporation, in March 2015. DocuSign is the global leader in the eSignature category. We offer products that address broader agreement workflows, and digital transformation, including the world’s leading electronic signature product, enabling agreements to be signed electronically on a wide variety of devices, from virtually anywhere in the world, securely. Basis of Presentation and Principles of Consolidation Our consolidated financial statements include those of DocuSign, Inc. and our subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Our fiscal year ends on January 31. References to fiscal 2023, for example, are to the fiscal year ended January 31, 2023. Certain prior year amounts have been reclassified to conform to current year presentation. These amounts were not material to any of the periods presented. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the consolidated financial statements and notes thereto. Significant items subject to such estimates and assumptions made by management include, but are not limited to, the determination of: • the average period of benefit associated with deferred contract acquisition costs and fulfillment costs; • the valuation of strategic investments; • the fair value of certain stock awards issued; • the f air value of convertible notes; • the useful life and recoverability of long-lived assets; • the discount rate used for operating leases; and • the recognition, measurement and valuation of deferred income taxes. Concentration of Credit Risk Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities and accounts receivable. Although we deposit our cash with multiple financial institutions, the deposits, at times, may exceed federally insured limits. We have not experienced any losses on our deposits of cash and cash equivalents. Cash equivalents consist of money market funds, which are invested through financial institutions in the U.S. Management believes that the institutions are financially stable and, accordingly, minimal credit risk exists. No customer individually accounted for more than 10% of our revenues in the years ended January 31, 2023, 2022 and 2021 or for more than 10% of our accounts receivable as of January 31, 2023 and 2022. We perform ongoing credit evaluations of our customers, do not require collateral and maintain allowances for potential credit losses on customers’ accounts using the expected loss model. Revenue Recognition We recognize revenue when a customer obtains control of promised services. We apply significant judgment in identifying and evaluating any terms and conditions in contracts which may impact revenue recognition. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these services. To achieve the core principle of this standard, we apply the following steps: DocuSign, Inc.| 2023 Form 10-K | 65 1. Identification of the contract, or contracts, with the customer We consider the terms and conditions of the contract and our customary business practices in identifying our contracts under ASC 606. We determine we have a contract with a customer when the contract is approved, we can identify each party’s rights regarding the services to be transferred, we can identify the payment terms for the services, we have determined the customer has the ability and intent to pay and the contract has commercial substance. At contract inception we evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer. 2. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the services and the products that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract. Our performance obligations consist of (i) subscription services, (ii) professional services, (iii) on-premises solutions, and (iv) maintenance and support for on-premises solutions. 3. Determination of the transaction price The transaction price is determined based on the consideration to which we expect to be entitled in exchange for transferring services to the customer. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of our contracts contain a significant financing component. 4. Allocation of the transaction price to the performance obligation in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price ("SSP"). 5. Recognition of the revenue when, or as, we satisfy a performance obligation Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Revenue is recognized as control of the service is transferred to the customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. We generate all our revenue from contracts with customers. Subscription Revenue We generate revenue primarily from sales of subscriptions to access our software platform and related subscriptions of our customers. Our subscription revenue is driven by our go-to-market model, which includes a combination of direct sales, partner-assisted sales and web-based self-service purchasing. Subscription arrangements with customers do not provide the customer with the right to take possession of our software operating platform at any time. Instead, customers are granted continuous access to our software platform over the contractual period. A time-elapsed method is used to measure progress because we transfer control evenly over the contractual period. Accordingly, the fixed consideration related to subscription revenue is generally recognized on a straight-line basis over the contract term beginning on the date access to our software platform is provided. Professional Services and Other Revenue Professional services and other revenue consists of fees associated with consulting and training services from assisting customers in implementing and expanding the use of our software platform. These services are generally distinct from subscription services. Professional services do not result in significant customization of the subscription service. Revenue from professional services provided on a time and materials basis is recognized as the services are performed. Other revenue includes amounts derived from the sale of our on-premises solutions, which are recognized upon passage of control, which occurs upon shipment of the product. The maintenance and support on the on-premises solutions is a stand-ready obligation to perform this service over the term of the arrangement and, as a result, is accounted for ratably over the term of the arrangement. DocuSign, Inc.| 2023 Form 10-K | 66 Contracts with Multiple Performance Obligations Most of our contracts with customers contain multiple performance obligations that are distinct and accounted for separately. The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine SSP for our performance obligations based on our observable inputs, such as standalone sales and historical contract pricing. SSP is consistent with our overall pricing objectives, taking into consideration the type of subscription services and professional and other services. Variable Consideration Revenue from sales is recorded at the net sales price, which is the transaction price, and includes estimates of variable consideration. The amount of variable consideration that is included in the transaction price is constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue will not occur when the uncertainty is resolved. If our services do not meet certain service level commitments, our customers are entitled to receive service credits, and in certain cases, refunds, each representing a form of variable consideration. We have historically not experienced any significant incidents affecting the defined levels of reliability and performance as required by our subscription contracts. Accordingly, the amount of any estimated refunds related to these agreements in the consolidated financial statements is not material during the periods presented. Deferred Contract Acquisition Costs We capitalize sales commissions, certain parts of the company bonus and associated payroll taxes paid to internal sales personnel that are incremental to the acquisition of customer contracts as deferred contract acquisition costs in "Prepaid expenses and other current assets" and "Deferred contract acquisition costs—noncurrent" on our consolidated balance sheets. We determine whether costs should be deferred based on our sales compensation plans, if the commissions are in fact incremental and would not have occurred absent the customer contract. These deferred commissions are amortized on a straight-line basis over the periods of benefit, commensurate with the pattern of revenue recognition. Commissions paid for renewal of a subscription contract are not considered commensurate with the commissions paid for the acquisition of the initial subscription contract given the substantive difference in commission rates between new and renewal contracts. The period of benefit for commissions paid for the acquisition of the initial subscription contract, of five years , is determined by taking into consideration our initial estimated customer life and the technological life of our software platform and related significant features. The period of benefit for renewal subscription contracts, of two years , is determined by considering the average contractual term for renewal contracts. Commissions paid on professional services contracts are amortized over the period of benefit, being the period the associated revenue is earned as the commissions paid on new and renewal professional services contracts are commensurate with each other. Amortization of deferred contract acquisition costs is primarily included in the “Sales and marketing” expense in the consolidated statements of operations and comprehensive loss. We periodically review these deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred contract acquisition costs. There were no material impairment losses recorded during the periods presented. Deferred Contract Fulfillment Costs We capitalize third-party costs to fulfill contracts with a customer in “Prepaid expenses and other current assets” and “Other assets—noncurrent” on our consolidated balance sheets. We amortize these costs on a straight-line basis consistent with the ratable revenue recognition of the performance obligations in the associated contracts. Cost of Revenue “Subscription” cost of revenue primarily consists of personnel and related costs to support our software platform, amortization expense associated with capitalized internally-developed software and technology-related intangible assets, property and equipment depreciation, allocated overhead expenses, merchant processing fees and server hosting costs. DocuSign, Inc.| 2023 Form 10-K | 67 “Professional services and other” cost of revenue consists primarily of personnel costs for our professional services delivery team, travel-related costs and allocated overhead. Advertising Advertising costs are expensed as incurred and are included in “Sales and marketing” expense in our consolidated statements of operations and comprehensive loss. Advertising expense was $ 128.3 million, $ 115.7 million and $ 78.6 million in the years ended January 31, 2023, 2022 and 2021. Research and Development Research and development costs are expensed as incurred and consist primarily of personnel costs, including salaries, bonuses and benefits, and stock-based compensation. Stock-Based Compensation Compensation cost for stock-based awards issued to employees, including stock options, ESPP purchase rights and RSUs, is measured at fair value on the date of grant and recognized over the service period, generally on a straight-line basis. The fair value of stock options and ESPP purchase rights is estimated on the date of grant using a Black-Scholes option-pricing model. The fair value of RSUs is estimated on the date of grant based on the fair value of our underlying common stock. From time to time, we grant RSUs that also include performance-based or market-based conditions. For RSUs granted with a market condition, we use a Monte Carlo option-pricing model to determine the fair value of the RSUs. Compensation expense for RSUs granted with a market or a performance condition is recognized on a graded vesting basis over the requisite service period. The amount of compensation expense related to the RSUs granted with a performance condition is determined after assessing the probability of achieving requisite performance criteria. We recognize compensation expense related to shares issued pursuant to the 2018 ESPP on a straight-line basis over the offering period of six months . Compensation expense is recognized net of forfeitures that are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. We capitalize stock-based compensation costs incurred as a result of qualifying internally-developed software development activities. We may elect to issue shares on the settlement dates net of the statutory tax withholding requirements to be paid by us on behalf of our employees. In these instances, we record the liability for withholding amounts to be paid by us as treasury stock or as a reduction to additional paid-in capital, and include these payments as a reduction of cash flows from financing activities. Restructuring charges Restructuring liabilities arise when management commits to a restructuring plan, the restructuring plan identifies all significant actions, the period of time to complete the restructuring plan indicates that significant changes to the plan are not likely and employees who are impacted have been notified of the pending involuntary termination. Restructuring charges are accrued in the period in which it is probable that the employees are entitled to the restructuring benefits and the amounts can be reasonably estimated. Income Taxes We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carryforwards. We record a valuation allowance to reduce our deferred tax assets to an amount for which realization is more likely than not. DocuSign, Inc.| 2023 Form 10-K | 68 Foreign Currency The functional currency of our foreign entities and branches is generally the local currency. Monetary assets and liabilities and transactions denominated in currencies other than an entity's functional currency are remeasured into its functional currency using current exchange rates at each balance sheet date. Nonmonetary assets and liabilities are not remeasured. We recognize gains and losses from such adjustments within “Interest income and other income, net” in the consolidated statements of operations and comprehensive loss in the period of occurrence. We present our financial statements in U.S. dollars. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on our consolidated statements of comprehensive loss, net of tax. All assets and liabilities denominated in a foreign currency are translated at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Equity transactions are translated using the historical exchange rate. Net Loss Per Share Attributable to Common Stockholders In periods when we have net income, we compute basic and diluted net loss per share in conformity with the two-class method required for participating securities. The undistributed earnings are allocated between common stock and participating securities as if all earnings had been distributed during the period presented. We consider any shares issued on the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock. The holders of early exercised shares do not have a contractual obligation to share in our losses. As such, our net losses in all the years presented were not allocated to these participating securities. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potential shares of common stock, including shares underlying our convertible senior notes, unvested RSUs, early exercised or outstanding stock options, ESPP purchase rights, convertible preferred stock, and warrants to purchase common stock and convertible preferred stock, to the extent they are dilutive. Since we have reported net losses for all periods presented, dilutive common shares are not assumed to have been issued as their effect would have been antidilutive. Therefore, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders. Cash and Cash Equivalents Cash and cash equivalents consist of money market funds, highly liquid investments with original maturities of three months or less at the date of purchase and deposits with financial institutions and are carried at fair value. Investments Investments in marketable securities consist of commercial paper, corporate notes and bonds, as well as U.S. Treasury and government agency securities. Management determines the appropriate classification of investments at the time of purchase and reevaluates such determination at each balance sheet date. Marketable securities are classified as available-for-sale and are carried at fair value in the consolidated balance sheet and are classified as short-term or long-term based on their remaining contractual maturities. We evaluate our investments with unrealized loss positions at the individual security level to determine whether the unrealized loss was related to credit or noncredit factors. We consider whether a credit loss exists based on the extent of the unrealized loss position, any adverse conditions specifically related to the security or the issuer's operating environment, pay structure of the security, the issuer's payment history and any changes in the issuer's credit rating. Estimated credit losses are determined using a discounted cash flow model and recorded as an allowance, with changes in expected credit losses on our investments recorded in “Interest income and other income, net” in the consolidated statements of operations and comprehensive loss. Unrealized gains and losses related to noncredit factors are reflected in “Accumulated other comprehensive loss” on the consolidated balance sheets. DocuSign, Inc.| 2023 Form 10-K | 69 Strategic Investments Our strategic investments consist of non-marketable equity investments in privately-held companies and investment companies in which we do not have a controlling interest or significant influence. We have elected to apply the measurement alternative for equity investments in privately-held companies that do not have readily determinable fair values, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. We have elected to measure our equity investments in investment companies that do not have readily determinable fair values based on the investment’s net asset value. An impairment loss is recorded when an event or circumstance indicates a decline in value has occurred. As of January 31, 2023 and 2022, we held equity investments in privately-held companies totaling $ 12.5 million and $ 12.4 million that were classified in “Other assets—noncurrent” on our consolidated balance sheets. Restricted Cash Restricted cash consists of certificates of deposits collateralizing our operating lease agreements for office space and cash withheld from employees to fund claims and program expenses related to the Voluntary Disability Plans in California and Washington. The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows as of January 31, 2023, 2022, and 2021: January 31, (in thousands) 2023 2022 2021 Cash and cash equivalents $ 721,895 $ 509,059 $ 566,055 Restricted cash included in prepaid expense and other current assets 37 280 — Restricted cash included in other assets - noncurrent 1,269 340 281 Total cash, cash equivalents, and restricted cash $ 723,201 $ 509,679 $ 566,336 Fair Value of Financial Instruments We measure assets and liabilities at fair value based on an expected exit price, which represents the amount that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities being measured within the fair value hierarchy. The carrying values of cash, accounts receivable and accounts payable approximate their respective fair values due to the short period of time to maturity, receipt or payment. DocuSign, Inc.| 2023 Form 10-K | 70 Accounts Receivable and Allowance for Doubtful Accounts and Credit Losses Accounts receivable primarily consist of amounts billed currently due from customers. Our accounts receivable are subject to collection risk. Gross accounts receivable are reduced for this risk by an allowance for doubtful accounts. This allowance is for estimated losses resulting from the inability of our customers to make required payments. Our allowance for doubtful accounts includes balances that are specifically identified for adequacy based on a regular evaluation of such factors as age of the receivable balance, current economic conditions, credit quality of the customer, and past collection experience. We also include in our allowance for doubtful accounts an estimate for future credit losses, based on historical experience, which is recorded in the period in which we invoice our customers. We do not have any off-balance-sheet credit exposure related to our customers. We do not typically offer right of refund in our contracts and do not require collateral from our customers. Changes in the allowance for doubtful accounts were not material in all periods presented. Property and Equipment Property and equipment, including costs incurred to bring to the location and condition necessary for intended use, are recorded at cost and depreciated over their estimated useful lives using the straight-line method and the following estimated useful lives: Estimated Useful Life Computer and network equipment 3 years Software, including capitalized software development costs 3 - 5 years Furniture and office equipment 3 - 4 years Leasehold improvements Lesser of lease term and 10 years Disposals are removed at cost less accumulated depreciation, and any gain or loss from disposition is reflected in the statement of operations and comprehensive loss in the year of disposition. Additions and improvements that increase the value or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Leases Leases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. We determine whether an arrangement is or contains a lease at inception, based on whether there is an identified asset and whether we control the use of the identified asset throughout the period of use. At lease commencement date, we determine lease classification between finance and operating, allocate the consideration to the lease and nonlease components and recognize a right-of-use asset and corresponding lease liability for each lease component. A right-of-use asset represents our right to use an underlying asset and a lease liability represents our obligation to make payments during the lease term. The lease liability is initially measured as the present value of the remaining lease payments over the lease term. The discount rate used to determine the present value is our incremental borrowing rate unless the interest rate implicit in the lease is readily determinable. We estimate our incremental borrowing rate based on the information available at lease commencement date for borrowings with a similar term. The right-of-use asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments to lessors and lease incentives. We do not recognize right-of-use assets and liabilities for leases with a term of twelve months or less. Additionally, we do not separate nonlease components from the associated lease components for our office leases and certain other asset classes. The total consideration includes fixed payments and contractual escalation provisions. We are responsible for maintenance, insurance, property taxes and other variable payments, which are expensed as incurred. Our leases include options to renew or terminate. We include the option to renew or terminate in our determination of the lease term when the option is deemed to be reasonably certain to be exercised. Operating leases are classified in “Operating lease right-of-use assets”, “Operating lease liabilities—current”, and “Operating lease liabilities—noncurrent” on our consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the expected lease term and included in “Loss from operations” in our consolidated statements of operations and comprehensive loss. DocuSign, Inc.| 2023 Form 10-K | 71 Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations accounted for using the acquisition method of accounting and is not amortized. We test goodwill for impairment at least annually, on November 1, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Such events and changes may include: significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in our business strategy. Our test for goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test. If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount, then a quantitative goodwill impairment test is performed. For the purposes of impairment testing, we have determined that we have one operating segment and one reporting unit. We performed a qualitative assessment for the fiscal year ended January 31, 2023, and concluded that it is more likely than not that the fair value of the reporting unit significantly exceeds its carrying value. There was no impairment of goodwill recorded in the years ended January 31, 2022 and 2021. Intangible Assets Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives. The estimated useful lives of intangible assets, estimated based on our expected period of benefit, are as follows: Estimated Useful Life Existing technology 3 - 5 years Customer contracts & related relationships 5 - 10 years Other (1) 1 - 5 years (1) Includes certifications, maintenance contracts and related relationships, subscription backlog and tradenames and trademarks We evaluate the estimated remaining useful lives of intangible assets and other long-lived assets to assess whether a revision to the remaining periods of amortization is required. Impairment of Long-Lived Assets We review long-lived assets, including property and equipment and intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset group may not be fully recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. We recognized an impairment of $ 5.1 million on operating lease right-of-use assets as part of General and administrative expense during the year ended January 31, 2022. There was no impairment recognized in the other periods presented. Software Development and Cloud Computing Arrangement Implementation Costs We capitalize qualifying internally-developed software development costs incurred during the application development stage, as long as it is probable the project will be completed and the software will be used to perform the function intended. Capitalization of such costs ceases once the project is substantially complete and ready for its intended use. Capitalized software development costs are included in “Property and equipment, net” on our consolidated balance sheets and are amortized on a straight-line basis over their expected useful lives of approximately three to five years . We also capitalize qualifying implementation costs under cloud computing arrangements (“CCA”). Capitalization of such costs ceases once the software of the hosting arrangement is ready for its intended use. The CCA implementation costs balance was $ 49.5 million and $ 22.6 million as of January 31, 2023 and 2022, and is included in “Other assets—noncurrent” on our consolidated balance sheets and amortized on a straight-line basis over the term of the associated hosting arrangement. Business Combinations We account for our acquisitions using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. DocuSign, Inc.| 2023 Form 10-K | 72 Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations and comprehensive loss. Acquisition costs, such as legal and consulting fees, are expensed as incurred. Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by our Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our Chief Executive Officer is our CODM. Our CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, we have determined that we operate in one operating and one reportable segment. Convertible Debt Prior to February 1, 2021, we accounted for our convertible debt instruments as separate liability and equity components. We determined the carrying amount of the liability component as the present value of its cash flows using a discount rate based on comparable convertible transactions for similar companies. The carrying amount of the equity component representing the conversion option was calculated by deducting the fair value of the liability component from the principal amount of the convertible debt instruments as a whole. This difference represented a debt discount that was amortized to interest expense over the term of the convertible debt instruments using the effective interest rate method. The equity component was not remeasured as long as it continued to meet the conditions for equity classification. The transaction costs incurred related to the issuance of the convertible debt instruments were allocated to the liability and equity components based on their relative initial carrying value of the convertible debt instruments. Transaction costs attributable to the liability component were being amortized to interest expense over the respective terms of the convertible debt instruments, and transaction costs attributable to the equity component were netted against the equity component of the convertible debt instruments in stockholders’ equity. Effective February 1, 2021, we account for our convertible debt instruments as a single liability measured at its amortized cost. At issuance, the carrying amount is calculated as the proceeds, net of initial purchasers’ discounts and transaction costs. The difference between the principal amount and carrying value is amortized to interest expense over the term of the convertible debt instruments using the effective interest rate method. At settlement, the carrying amount of the liability is derecognized and the excess of the cash consideration, if any, over the carrying amount is recorded as a reduction to additional paid-in capital. Capped calls entered into in connection with the offering of the convertible debt instruments are considered indexed to our own stock and are considered equity classified. They are recorded in stockholders’ equity and are not accounted for as derivatives. The cost incurred in connection with the capped calls was recorded as a reduction to additional paid-in capital. Legal Contingencies We evaluate contingent liabilities including threatened or pending litigation and make provisions for such liabilities when it is both probable that a loss has been incurred and its amount can be reasonably estimated. We periodically assess the likelihood of any adverse judgments or outcomes from potential claims or legal proceedings, as well as potential ranges of probable losses, when the outcomes of the claims or proceedings are probable and reasonably estimable. A determination of the amount of the liabilities required, if any, for these contingencies is made after the analysis of each separate matter. Recently Adopted Accounting Pronouncements We have not adopted accounting pronouncements during the year ended January 31, 2023. DocuSign, Inc.| 2023 Form 10-K | 73 Note 2. Revenue Subscription revenue is recognized over time and accounted for approximately 97 %, 97 % and 95 % of our revenue for the years ended January 31, 2023, 2022 and 2021. Performance Obligations As of January 31, 2023, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $ 1.9 billion. We expect to recognize 57 % of the transaction price allocated to remaining performance obligations within the 12 months following January 31, 2023 in our consolidated statement of operations and comprehensive loss. Contract Balances Contract assets represent amounts for which we have recognized revenue, pursuant to our revenue recognition policy, for contracts that have not yet been invoiced to our customers where there is a remaining performance obligation, typically for multi-year arrangements. Total contract assets were $ 12.4 million and $ 12.6 million as of January 31, 2023 and 2022. The change in contract assets reflects the difference in timing between our satisfaction of remaining performance obligations and our contractual right to bill our customers. Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are generally recognized as revenue over the contractual period. For the years ended January 31, 2023 , 2022 and 2021, we recognized revenue of $ 1.0 billion , $ 773.7 million and $ 499.5 million that was included in the corresponding contract liability balance at the beginning of the periods presented. We receive payments from customers based upon contractual billing schedules. We record accounts receivable when the right to consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 days. Note 3 . Fair Value Measurements The following table summarizes our financial assets that are measured at fair value on a recurring basis: January 31, 2023 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Level 1: Cash equivalents (1) Money market funds $ 133,009 $ — $ — $ 133,009 Level 2: Cash equivalents (1) Commercial paper 9,992 — ( 2 ) 9,990 Available-for-sale securities Commercial paper 85,957 — ( 258 ) 85,699 Corporate notes and bonds 367,930 101 ( 3,771 ) 364,260 Municipal notes and bonds 7,983 — ( 65 ) 7,918 U.S. governmental securities 38,344 4 ( 405 ) 37,943 Level 2 total 510,206 105 ( 4,501 ) 505,810 Total $ 643,215 $ 105 $ ( 4,501 ) $ 638,819 DocuSign, Inc.| 2023 Form 10-K | 74 January 31, 2022 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Level 1: Cash equivalents (1) Money market funds $ 110,716 $ — $ — $ 110,716 Level 2: Cash equivalents (1) Commercial paper 3,499 — — 3,499 Available-for-sale securities Commercial paper 126,371 1 ( 175 ) 126,197 Corporate notes and bonds 243,840 — ( 1,296 ) 242,544 U.S. governmental securities 20,036 — ( 76 ) 19,960 Level 2 total 393,746 1 ( 1,547 ) 392,200 Total $ 504,462 $ 1 $ ( 1,547 ) $ 502,916 (1) Included in "cash and cash equivalents" in our consolidated balance sheets as of January 31, 2023 and 2022, in addition to cash of $ 578.9 million and $ 394.9 million We use quoted prices in active markets for identical assets to determine the fair value of our Level 1 investments. The fair value of our Level 2 investments is determined using pricing based on quoted market prices or alternative market observable inputs . The fair value of our available-for-sale securities as of January 31, 2023, by remaining contractual maturities, were as follows (in thousands): Due in one year or less $ 309,771 Due in one to two years 186,049 $ 495,820 As of January 31, 2023 and 2022, securities in an unrealized loss position were, individually and in aggregate, not material. An allowance for credit losses was deemed unnecessary for these securities, given the extent of the unrealized loss positions as well as the issuers' high credit ratings and consistent payment history. We had no liabilities measured at fair value on a recurring basis as of January 31, 2023 and 2022. Strategic Investments As of January 31, 2023 and 2022, we held equity investments in privately-held companies totaling $ 12.5 million and $ 12.4 million. The carrying value of strategic investments is adjusted to fair value on a non-recurring basis for observable transactions of identical or similar investments of the same issuer or for impairment. Strategic investments measured at fair value on a non-recurring basis are classified as Level 3 in the fair value hierarchy because nonrecurring fair value measurements may include observable and unobservable inputs. During the year ended January 31, 2023, the value of these investments decreased $ 3.7 million, net. During the year ended January 31, 2022, the value of these investments increased $ 4.8 million. Convertible Senior Notes We estimated the fair value based on the estimated or actual bids and offers of the Notes in an over-the-counter market on the last trading day of the reporting period (Level 2). The Notes are recorded at face value less unamortized debt discount and transaction costs as “Convertible senior notes, net—noncurrent” and “Convertible senior notes—current.” Refer to Note 8 for further information. DocuSign, Inc.| 2023 Form 10-K | 75 January 31, (in thousands) 2023 2022 0.5 % Convertible Senior Notes due in 2023 Aggregate principal amount $ 37,083 $ 37,099 Fair value amount 38,981 65,440 0.0 % Convertible Senior Notes due in 2024 Aggregate principal amount $ 690,000 $ 690,000 Fair value amount 655,666 656,363 Note 4 . Property and Equipment, Net Property and equipment, net consisted of the following: January 31, (in thousands) 2023 2022 Computer and network equipment $ 138,869 $ 127,799 Software, including capitalized software development costs 114,524 82,537 Furniture and office equipment 20,897 20,939 Leasehold improvements 73,415 79,811 347,705 311,086 Less: Accumulated depreciation ( 210,781 ) ( 170,261 ) 136,924 140,825 Work in progress 62,968 43,839 $ 199,892 $ 184,664 Depreciation and amortization expenses associated with property and equipment was $ 65.5 million, $ 57.1 million and $ 45.5 million in the years ended January 31, 2023, 2022 and 2021. This included amortization expense related to capitalized internally-developed software costs of $ 19.7 million, $ 10.3 million and $ 6.2 million in the respective years . We capitalized $ 66.1 million, $ 39.0 million and $ 29.3 million of internally developed software costs, including $ 19.2 million, $ 9.8 million and $ 7.2 million of capitalized stock-based compensation in the years ended January 31, 2023, 2022 and 2021. Note 5. Acquisitions Acquisition of Seal Software Group Limited On May 1, 2020, we completed the acquisition of Seal Software Group Limited (“Seal”), a contract analytics and artificial intelligence (“AI”) technology provider headquartered in Walnut Creek, California. The acquisition allows us to integrate Seal's technology comprehensively across the DocuSign Agreement Cloud to deliver increased functionality to companies using the Agreement Cloud to prepare, sign, act on and manage agreements. Under the terms of the purchase agreement, we paid $ 184.7 million in cash, net of cash acquired, transaction costs and working capital adjustments, for Seal’s outstanding stock. We accounted for the transaction as a business combination using the acquisition method of accounting. We allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date. Fair values were determined using the income and cost approaches. Excess purchase price consideration was recorded as goodwill and is primarily attributable to the assembled workforce and expanded market opportunities when integrating Seal’s AI and analytics capabilities within our existing product offering. DocuSign, Inc.| 2023 Form 10-K | 76 In the year ended January 31, 2021, we recognized revenues from Seal of $ 16.3 million and net losses of $ 20.1 million, excluding the impact of acquired intangible asset amortization. The results of operations of Seal were included in our consolidated statements of operations from the acquisition date. The following unaudited pro forma information has been prepared for illustrative purposes only and assumes the acquisition occurred on February 1, 2019. It includes pro forma adjustments related to the amortization of acquired intangible assets, share-based compensation expense, professional services revenue and contract acquisitions costs adjustments under the new revenue recognition standard, and contract liabilities fair value adjustment. The unaudited pro forma results have been prepared based on estimates and assumptions, which we believe are reasonable, however, they are not necessarily indicative of the consolidated results of operations had the acquisition occurred on February 1, 2019, or of future results of operations: Year Ended January 31, (in thousands) (unaudited) 2021 Revenue $ 1,464,424 Net loss ( 246,819 ) Acquisition of Liveoak Technologies, Inc. On July 6, 2020, we completed the acquisition of Liveoak Technologies, Inc. (“Liveoak”), a virtual customer engagement and business platform based in Austin, Texas. The company’s platform includes several technologies specific to remote agreements, such as video conferencing, video identity verification, collaborative form-filling, an integration with DocuSign eSignature, and a detailed audit trail. The acquisition enables us to leverage Liveoak’s technology and expertise to accelerate the launch of DocuSign Notary, a new product for remote online notarization, where signers and the notary public are in different places. The consideration to acquire Liveoak’s outstanding stock was $ 48.4 million, which consisted primarily of the fair value of our common stock issued and the fair value of stock options issued to substitute vested Liveoak options. We included the results of operations of Liveoak in our consolidated statements of operations from the acquisition date. These results, including pro forma information, were not material to our consolidated statements of operations for the year ended January 31, 2021 . Note 6 . Goodwill and Intangible Assets, Net The changes in the carrying amount of goodwill were as follows (in thousands): Balance at January 31, 2021 $ 350,151 Additions—Seal 1,185 Additions—Clause 4,100 Foreign currency translation ( 378 ) Balance at January 31, 2022 355,058 Foreign currency translation ( 1,439 ) Balance at January 31, 2023 $ 353,619 DocuSign, Inc.| 2023 Form 10-K | 77 Intangible assets consisted of the following: As of January 31, 2023 As of January 31, 2022 (in thousands, except years) Weighted-average Remaining Useful Life (Years) Acquisition-related Intangibles, Gross Accumulated Amortization Acquisition-related Intangibles, Net Acquisition-related Intangibles, Gross Accumulated Amortization Acquisition-related Intangibles, Net Existing technology 2.2 $ 76,194 $ ( 56,920 ) $ 19,274 $ 76,194 $ ( 47,307 ) $ 28,887 Customer contracts & related relationships 6.0 110,082 ( 50,429 ) 59,653 110,082 ( 39,911 ) 70,171 Other 0.0 22,534 ( 22,534 ) — 22,534 ( 21,959 ) 575 5.1 $ 208,810 $ ( 129,883 ) 78,927 $ 208,810 $ ( 109,177 ) 99,633 Cumulative translation adjustment ( 8,647 ) ( 817 ) Total $ 70,280 $ 98,816 Amortization of finite-lived intangible assets was as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Cost of subscription revenue $ 9,613 $ 11,670 $ 11,052 Sales and marketing 11,093 13,100 14,566 Total $ 20,706 $ 24,770 $ 25,618 As of January 31, 2023, future amortization of finite-lived intangible assets that will be recorded in cost of revenue and operating expenses is estimated as follows, excluding cumulative translation adjustment: Fiscal Period Amount (in thousands) 2024 $ 19,375 2025 18,798 2026 12,655 2027 10,518 2028 8,058 Thereafter 9,523 Total $ 78,927 DocuSign, Inc.| 2023 Form 10-K | 78 Note 7 . Deferred Contract Acquisition and Fulfillment Costs The following table represents a rollforward of our deferred contract acquisition and fulfillment costs: Year Ended January 31, (in thousands) 2023 2022 Deferred Contract Acquisition Costs Beginning balance $ 315,158 $ 262,519 Additions to deferred contract acquisition costs 179,898 169,322 Amortization of deferred contract acquisition costs ( 134,964 ) ( 112,931 ) Cumulative translation adjustment ( 4,703 ) ( 3,752 ) Ending balance $ 355,389 $ 315,158 Deferred Contract Fulfillment Costs Beginning balance $ 19,088 $ 12,506 Additions to deferred contract fulfillment costs 52,417 38,071 Amortization of deferred contract fulfillment costs ( 50,081 ) ( 31,489 ) Cumulative translation adjustment ( 348 ) — Ending balance $ 21,076 $ 19,088 Note 8. Debt Convertible Senior Notes In September 2018, we issued $ 575.0 million in aggregate principal amount of the 0.5 % Convertible Senior Notes due in 2023, which included the initial purchasers’ exercise in full of their option to purchase an additional $ 75.0 million aggregate principal amount of the 2023 Notes. The net proceeds from the issuance of the 2023 Notes were $ 560.8 million after deducting the initial purchasers’ discounts and transaction costs. In January 2021, we issued $ 690.0 million in aggregate principal amount of the 0 % Convertible Senior Notes due in 2024, which included the initial purchasers’ exercise in full of their option to purchase an additional $ 90.0 million aggregate principal amount of the 2024 Notes. The net proceeds from the issuance of the 2024 Notes were $ 677.3 million after deducting the initial purchasers’ discounts and transaction costs. The Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of our unsecured indebtedness then existing and future liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. Upon conversion of the Notes, holders will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The 2023 Notes are governed by an indenture dated September 18, 2018 (the “2018 Indenture”). The 2024 Notes are governed by an indenture dated January 15, 2021 (the “2021 Indenture,” and together with the 2018 Indenture, the “Indentures”). The Indentures are between us, as the issuer, and U.S. Bank National Association, as trustee. The Indentures do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness, or the issuance or repurchase of securities by us or any of our subsidiaries. The 2023 Notes mature on September 15, 2023, unless earlier repurchased or redeemed by us or earlier converted in accordance with their terms prior to the maturity date. Interest on the 2023 Notes is payable semi-annually in arrears on March 15 and September 15 of each year. The Notes are subject to additional interest in certain events of default. The 2024 Notes mature on January 15, 2024 unless earlier repurchased by us or earlier converted in accordance with their terms prior to the maturity date. DocuSign, Inc.| 2023 Form 10-K | 79 Conversion terms The 2023 Notes have an initial conversion rate of 13.9860 shares of our common stock per $1,000 principal amount of the 2023 Notes, which is equal to an initial conversion price of approximately $ 71.50 per share of our common stock. The 2024 Notes have an initial conversion rate of 2.3796 shares of our common stock per $1,000 principal amount of the 2024 Notes, which is equal to an initial conversion price of approximately $ 420.24 per share of our common stock. The initial conversation rates are subject to adjustment in some events. Following certain corporate events that occur prior to the maturity date or, with respect to the 2023 Notes, following our issuance of a notice of redemption, we will increase the conversion rate for a holder who elects to convert its Notes in connection with such corporate event or during the related redemption period in certain circumstances. Additionally, upon the occurrence of a corporate event that constitutes a “fundamental change” as defined within the respective Indentures, holders of the Notes may require us to repurchase for cash all or a portion of their Notes at a purchase price equal to 100 % of the principal amount of the Notes plus accrued and unpaid interest, if any. No such corporate events have occurred as of January 31, 2023. Holders of the 2023 Notes may convert all or any portion of their 2023 Notes at any time on or after June 15, 2023, until the close of business on September 13, 2023. Prior to the close of business on the business day immediately preceding June 15, 2023, holders of the 2023 Notes may convert all or any portion of their 2023 Notes, in integral multiples of $1,000 principal amount, only under the following circumstances (the “2023 Notes conversion conditions”): • During any fiscal quarter commencing after the fiscal quarter ending on January 31, 2019 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; • During the 5 -business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price as defined in the 2018 Indenture per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; • If we call any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or • Upon the occurrence of specified corporate events described in the 2018 Indenture. Based upon the reported sales price of our common stock, the 2023 Notes became convertible on August 1, 2020 and continued to be convertible through July 31, 2022. As of January 31, 2023, the 2023 Notes did not meet the conversion terms and are not convertible. Holders of the 2024 Notes may convert all or any portion of their 2024 Notes at any time on or after October 15, 2023, until the close of business on January 11, 2024. Prior to the close of business on the business day immediately preceding October 15, 2023, holders of the 2024 Notes may convert all or any portion of their 2024 Notes, in integral multiples of $1,000 principal amount, only under the following circumstances (the “2024 Notes conversion conditions”): • During any fiscal quarter commencing after the fiscal quarter ending on April 30, 2021 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; • During the 5 -business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price as defined in the 2021 Indenture per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or • Upon the occurrence of specified corporate events described in the 2021 Indenture. As of January 31, 2023, the 2024 Notes conversion conditions described above were not met and therefore the 2024 Notes are not yet convertible. Redemption terms We may redeem for cash or shares all or any portion of the 2023 Notes, at our option, at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, beginning on or after September 20, 2021 if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive trading days ending on, and including, the trading day immediately preceding the date on which the Company provides the notice of redemption is greater than or equal to 130 % of the conversion price on each applicable trading day. DocuSign, Inc.| 2023 Form 10-K | 80 We may not redeem the 2024 Notes prior to the maturity date. Repurchases of the 2023 Notes In connection with our issuance of the 2024 Notes in fiscal 2021, we used a portion of the proceeds to repurchase $ 460.0 million aggregate principal amount of the 2023 Notes in privately negotiated transactions for an aggregate consideration of $ 1.7 billion, consisting of $ 459.2 million in cash and 4.7 million shares of our common stock with a value of $ 1.2 billion, a non-cash financing activity. We recorded an extinguishment loss of $ 33.8 million as a result of the transaction. In our consolidated statement of cash flows, the cash paid to repurchase the 2023 Notes was bifurcated into two components: the portion of the repayment attributable to accreted interest related to debt discount is classified as cash outflows from operating activities, and the portion of the repayment attributable to the principal is classified as cash outflows from financing activities. Conversions of the 2023 Notes In January 2021, certain holders of the 2023 Notes exercised their option to convert $ 23.9 million aggregate amount of the principal of the 2023 Notes. As the principal was settled in cash in March 2021, we reclassified $ 20.5 million of the carrying value to “Convertible senior notes—current” and $ 3.4 million, representing the difference between the aggregate principal and the carrying value, to mezzanine equity from permanent equity on our consolidated balance sheet as of January 31, 2021. During the year ended January 31, 2022, we settled $ 77.9 million aggregate amount of the principal of 2023 Notes, for aggregate consideration of $ 252.1 million, consisting of $ 77.9 million in cash and 0.7 million shares of our common stock with a value of $ 174.2 million. The $ 0.9 million excess of the cash consideration over the corresponding carrying value was recorded as a reduction to additional paid-in capital. Net Carrying Amounts of the Liability Components The 2023 Notes and 2024 Notes are within one year of maturity and are therefore classified as current liabilities in our consolidated balance sheets as of January 31, 2023. January 31, (in thousands) 2023 2022 2023 Notes (effective interest rate of 5.9 %): Principal $ 575,000 $ 575,000 Less: extinguishment or conversion ( 537,917 ) ( 537,901 ) Unpaid principal 37,083 37,099 Less: unamortized transaction costs ( 118 ) ( 303 ) Net carrying value of liability component $ 36,965 $ 36,796 Excess of if-converted value over principal $ — $ 28,159 2024 Notes (effective interest rate of 3.8 %): Principal $ 690,000 $ 690,000 Less: unamortized transaction costs ( 4,078 ) ( 8,309 ) Net carrying value of liability component $ 685,922 $ 681,691 Excess of if-converted value over principal $ — $ — DocuSign, Inc.| 2023 Form 10-K | 81 Interest expense recognized related to the Notes was as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Contractual interest expense $ 185 $ 168 $ 2,773 Amortization of debt discount — — 25,828 Amortization of transaction costs 4,415 4,544 2,173 Total $ 4,600 $ 4,712 $ 30,774 Capped Calls To minimize the potential economic dilution to our common stock upon conversion of the Notes, we entered into privately-negotiated capped call transactions ("Capped Calls") with certain counterparties. The capped call transactions were as follows: (in thousands, except per share amounts) 2023 Notes 2024 Notes Aggregate cost of capped calls $ 67,563 $ 31,395 Initial strike price per share (1) $ 71.50 $ 420.24 Initial cap price per share (1) $ 110.00 $ 525.30 Shares of our common stock covered by the capped calls (1) 8,042 1,642 (1) Subject to adjustments for certain events, such as merger events and tender offers, and anti-dilution adjustments Impact on Loss Per Share Upon adoption of ASU 2020-06 on February 1, 2021, in periods when we have net income, the shares of our common stock subject to the Notes outstanding during the period are included in our diluted earnings per share under the if-converted method. Prior to the adoption of ASU 2020-06, had we had net income, the shares of our common stock subject to the Notes outstanding during the period would have been included in our diluted earnings per share. In the fourth quarter of 2021, share settlement was presumed leading to the application of the if-converted method. In periods before that, cash settlement was presumed and shares subject to the Notes would have been included under the treasury stock method. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive. However, upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the cap prices listed above in the Capped Calls section, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price. As of January 31, 2022, the market price of our common stock exceeded the $ 110.00 per share cap price associated with the 2023 Notes but not the $ 525.30 cap price associated with the 2024 notes. Therefore, the 2023 Notes would have caused economic dilution if converted as of January 31, 2022. As of January 31, 2023, the market price of our common stock did not exceed the $ 110.00 per share cap price associated with the 2023 Notes or the $ 525.30 cap price associated with the 2024 notes. Therefore, the Notes would not have caused economic dilution if converted as of January 31, 2023. Revolving Credit Facility In January 2021, we entered into a credit agreement with a syndicate of banks. The credit agreement extended a senior secured revolving credit facility to us in an aggregate principal amount of $ 500.0 million, which amount may be increased by an additional $ 250.0 million subject to the terms of the credit agreement. We may use the proceeds of future borrowings under the credit facility to finance working capital, capital expenditures and for other general corporate purposes, including permitted acquisitions. The facility matures in January 2026 and requires us to comply with customary affirmative and negative covenants. We were in compliance with all covenants as of January 31, 2023. As of January 31, 2023, there were no outstanding borrowings under the revolving credit facility. The facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate between 0.25 % and 0.30 % per annum on the daily undrawn balance. DocuSign, Inc.| 2023 Form 10-K | 82 Note 9. Leases We lease offices under noncancelable operating lease agreements that expire at various dates through the end of July 2034. As of January 31, 2023, we had no finance leases. Some of our operating leases contain escalation provisions for adjustments in the consumer price index and options to renew. We include a renewal option in the lease terms for calculating our lease liability when we are reasonably certain that we will exercise the renewal option. Operating lease expense for the fiscal years ended January 31, 2023 , 2022 and 2021 was $ 33.2 million, $ 34.4 million and $ 34.0 million. Future lease payments under operating leases as of January 31, 2023, were as follows: Fiscal Period: Amount (in thousands) 2023 $ 31,092 2024 26,478 2025 23,335 2026 21,002 2027 16,988 Thereafter 83,587 Total undiscounted cash flows $ 202,482 Less: imputed interest ( 37,079 ) Present value of lease liabilities $ 165,403 The weighted average remaining lease terms as of January 31, 2023 and 2022 were 8.5 years and 5.7 years. The discount rates for operating leases as of January 31, 2023 and 2022 were 4.6 % and 4.3 %. Note 10 . Commitments and Contingencies As of January 31, 2023, we had unused letters of credit outstanding totaling $ 5.3 million, the majority of which are associated with our various operating leases. We have entered into certain noncancelable contractual arrangements that require future purchases of goods and services. These arrangements primarily relate to cloud infrastructure support and sales and marketing activities. As of January 31, 2023, our future noncancelable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows: Fiscal Period: Amount (in thousands) 2024 $ 47,803 2025 27,091 2026 11,625 2027 4,899 2028 1,663 Thereafter 1,622 Total $ 94,703 In May 2022, we entered into an agreement with a public cloud computing service provider. Under the agreement, the minimum commitment is $ 175.0 million through fiscal 2028. As of January 31, 2023, the remaining commitment was $ 157.1 million. The remaining commitment is excluded from the table above. DocuSign, Inc.| 2023 Form 10-K | 83 Indemnification We enter into indemnification provisions under our agreements with customers and other companies in the ordinary course of business, including business partners, contractors and parties performing our research and development. Pursuant to these arrangements, we agree to indemnify and defend the indemnified party for certain claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claims because of our activities. The duration of these indemnification agreements is generally perpetual. The maximum potential amount of future payments we could be required to make under these indemnification clauses or agreements is not determinable. Historically, we have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the fair value of these indemnification agreements is not material as of January 31, 2023 and 2022 . We maintain commercial general liability insurance and product liability insurance to offset certain of our potential liabilities under these indemnification agreements. We have entered into indemnification agreements with each of our directors, executive officers and certain other officers. These agreements require us to indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with us. Claims and Litigation From time to time, we may be subject to legal proceedings, claims and litigation made against us in the ordinary course of business. All legal costs associated with litigation are expensed as incurred. We believe the final outcome of these matters, including the case described below, will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows. DocuSign, Inc. Securities Litigation and Related Derivative Litigation On February 8, 2022, a putative securities class action was filed in the U.S. District Court for the Northern District of California, captioned Weston v. DocuSign, Inc., et al., Case No. 3:22-cv-00824, naming DocuSign and certain of our current and former officers as defendants. An amended complaint was filed on July 8, 2022. As amended, the suit 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. As amended, the suit is purportedly brought on behalf of purchasers of our securities between June 4, 2020 and June 9, 2022. We moved to dismiss the amended complaint on September 16, 2022. An earlier action alleging similar claims against the same defendants, captioned Collins v. DocuSign, Inc., et al., Case No. 3:22-cv-00851, filed in the Eastern District of New York and subsequently transferred to the Northern District of California, was voluntarily dismissed on February 14, 2022. Four putative shareholder derivative cases have been filed containing allegations based on or similar to those in the securities class action (Weston). The cases were filed on May 17, 2022, in the U.S. District Court for the District of Delaware, captioned Potteti v. Springer, et al., Case No. 1:22-cv-00652; on May 19, 2022 in the U.S. District Court for the Northern District of California, captioned Lapin v. Springer, et al., Case No. 3:22-cv-02980; on May 20, 2022, in the U.S. District Court for the Northern District of California, captioned Votto v. Springer, et al., Case No. 3:22-cv-02987; and on September 20, 2022 in the U.S. District Court for the Northern District of California, captioned Fox v. Springer, et al., Case No. 3:22-cv-05343. Each case is allegedly brought on the Company’s behalf. The suits name the Company as a nominal defendant and, depending on the particular case, the members of our board of directors or, in certain instances, current or former officers, as defendants. While the complaints vary, they are based largely on the same underlying allegations as the securities class action suit described above (Weston), as well as, in certain instances, alleged insider trading. Collectively, these lawsuits purport to assert claims for, among other things, breach of fiduciary duty, aiding and abetting such breach, corporate waste, unjust enrichment, and under Sections 10(b) and 21D of the Securities Exchange Act of 1934. The complaints seek to recover unspecified damages and other relief on the Company’s behalf. By court order dated July 19, 2022, the two cases in the Northern District of California (Lapin and Votto) have been consolidated and stayed in light of the securities class action and no response to the complaints in the action will be due unless and until the stay is lifted. The third case in the Northern District of California (Fox) was related to the other derivative suits and assigned to the same judge, and was similarly stayed by order of the court on December 2, 2022. The Delaware suit (Potteti) was voluntarily dismissed on September 1, 2022, and then re-filed in the Delaware Court of Chancery on September 22, 2022, under the caption Pottetti v. Springer, et al., Case No. C.A. 2022-0852-PAF. The Delaware Court of Chancery issued an order on September 30,2022 staying the action in light of the securities class action and no response to the complaint will be due unless and until the stay is lifted. DocuSign, Inc.| 2023 Form 10-K | 84 DocuSign Civil Litigation On October 25, 2022, an action was filed in the Delaware Court of Chancery, captioned Daniel D. Springer v. Mary Agnes Wilderotter and DocuSign, Inc., Civil Action No. 2022-0963-LWW, concerning Mr. Springer’s resignation from our board of directors. Mr. Springer’s complaint sought relief determining that he did not resign from his position on our board of director and remains a director, and for an award of attorneys’ fees and costs associated with the civil action. To avoid the cost and distraction of further litigation with Mr. Springer, the Company offered to stipulate to entry of judgment in favor of Mr. Springer as to his disputed resignation and his status as a member of our Board. Following our offer, on January 11, 2023, the Chancery Court issued an order declaring and confirming that (i) Mr. Springer has not resigned from the Board and (ii) Mr. Springer is currently a member of the Board. Mr. Springer subsequently filed a motion seeking payment of his attorneys’ fees. DocuSign has opposed this motion, which remains pending before the Chancery Court. In addition, on January 26, 2023, Mr. Springer delivered a demand for arbitration before JAMS, a private alternative dispute resolution firm, captioned Daniel D. Springer v. DocuSign, Inc. and Mary Agnes Wilderotter. In the demand, Mr. Springer alleges that he was wrongfully terminated as CEO; asserts related claims against DocuSign and Ms. Wilderotter, including defamation, withholding promised compensation and breach of contract; and seeks unspecified damages and other relief. DocuSign has engaged legal counsel to defend the matter, and on March 10, 2023 submitted a motion to dismiss several of the causes of action asserted in the demand. Note 11. Stockholders' Equity Common Stock Reserved for Future Issuance We have reserved the following shares of common stock, on an as-if converted basis, for future issuance as follows: January 31, (in thousands) 2023 2022 RSUs outstanding 17,801 7,993 Options issued and outstanding 2,228 3,105 Remaining shares available for future issuance under the Equity Incentive Plans 39,538 42,199 Remaining shares available for future issuance under the ESPP 9,447 7,993 Total shares of common stock reserved 69,014 61,290 Equity Incentive Plans We maintain three stock-based compensation plans: the 2018 Equity Incentive Plan (the “2018 Plan”), the Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”) and the Amended and Restated 2003 Stock Plan (the “2003 Plan”). Our board of directors adopted, and our stockholders approved, the 2018 Plan during the year ended January 31, 2019. The 2018 Plan went into effect in April 2018, upon the effectiveness of our IPO Registration Statement. The 2018 Plan serves as a successor to the 2011 Plan and 2003 Plan and provides for the grant of stock-based awards to our employees, directors and consultants. Shares available for grant under the 2011 Plan that were reserved but not issued as of the effective date of the 2018 Plan were added to the reserves of the 2018 Plan. No additional awards under the 2011 Plan or 2003 Plan have been made since the effective date of the 2018 Plan. Outstanding awards under these two plans continue to be subject to the terms and conditions of the respective plans. Additionally, any shares subject to outstanding awards originally granted under the 2011 Plan that: (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise returned to DocuSign, Inc.; or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award are added to the reserves of the 2018 Plan. The 2018 Plan permits the granting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards and other stock awards. RSUs granted under the 2018 Plan generally vest over a four-year period, either quarterly or with 25 % vesting at the end of one year and the remainder quarterly thereafter. Additionally, the Company grants performance-based and market-based RSUs to its executives on an annual basis. DocuSign, Inc.| 2023 Form 10-K | 85 Shares available for grant under the 2018 Plan for the year ended January 31, 2023 was as follows: (in thousands) Year Ended January 31, 2023 Available at beginning of fiscal year 42,199 Awards authorized 9,942 Shares granted ( 17,757 ) Shares cancelled/expired 3,731 Shares withheld for taxes 1,423 Available at end of fiscal year 39,538 The 2018 Plan provides that the number of shares reserved will automatically increase on the first day of each fiscal year, beginning on February 1, 2019, and ending on February 1, 2028, by 5 % of the total number of shares of our capital stock outstanding on the immediately preceding January 31st (or such lesser number of shares as our board of directors or a committee of our board of directors may approve). The most recent automatic increase of 10.1 million shares occurre d o n February 1, 2023. RSUs The majority of RSUs vest upon the satisfaction of a service-based vesting condition. From time to time, we may also grant RSUs that are subject to either a performance-based or market-based vesting condition. The performance-based conditions will be satisfied upon satisfaction of certain financial performance targets. The market-based conditions will be satisfied if certain milestones based on our common stock price or relative total shareholder return are met. The weighted-average grant date fair value for RSUs granted during the years ended January 31, 2023, 2022 and 2021 was $ 66.50 , $ 226.20 and $ 144.80 per share. The total grant date fair value of RSUs vested during the years ended January 31, 2023, 2022 and 2021 was $ 461.8 million, $ 367.1 million and $ 282.3 million. RSU activity for the year ended January 31, 2023 was as follows: (in thousands, except per share data) Number of Units Weighted-Average Grant Date Fair Value Unvested at January 31, 2022 7,843 $ 146.52 Granted 17,757 66.50 Vested ( 4,256 ) 108.50 Canceled ( 3,723 ) 115.63 Unvested at January 31, 2023 17,621 $ 81.30 As of January 31, 2023, our total unrecognized compensation cost related to RSUs was $ 1.0 billion. We expect to recognize this expense over the remaining weighted-average period of approximately 3.1 years. As of January 31, 2023, the grant date fair value of unvested RSUs that are subject to market-based vesting conditions was $ 97.5 million. We calculated the fair value of the RSU with market conditions using Monte Carlo option-pricing model based on the following assumptions: Year Ended January 31, 2023 2022 2021 Risk-free interest rate 3.21 % - 4.42 % 0.30 % 0.22 % Expected dividend yield — % — % — % Expected life (in years) 1.0 - 6.7 3.0 3.0 Expected volatility 54 % - 66 % 46 % 40 % DocuSign, Inc.| 2023 Form 10-K | 86 Stock Options There were no options granted during the years ended January 31, 2023, 2022 and 2021 . Option activity for the year ended January 31, 2023 was as follows: (in thousands, except per share data and years) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at January 31, 2022, all vested and exercisable 3,105 $ 16.41 4.45 $ 339,286 Exercised ( 868 ) 14.60 Canceled/expired ( 9 ) 17.25 Outstanding at January 31, 2023, all vested and exercisable 2,228 $ 17.11 3.60 $ 96,839 As of January 31, 2023, there was no remaining unrecognized compensation cost related to stock option grants. The aggregate intrinsic value of options exercised during the years ended January 31, 2023, 2022 and 2021 was $ 48.1 million, $ 391.2 million and $ 302.4 million. 2018 Employee Stock Purchase Plan During the year ended January 31, 2019, our board of directors adopted, and our stockholders approved the ESPP. In April 2018, the ESPP went into effect upon the effectiveness of our IPO Registration Statement. The ESPP allows eligible employees to purchase shares of our common stock at a discounted price by accumulating funds, normally through payroll deductions, of up to 15 % of their earnings. The purchase price for common stock under the ESPP is equal to 85 % of the fair market value of our common stock on the first or last day of the offering period, whichever is lower. The ESPP provides for separate six-month offering periods that begin in the first and third quarter of each year. We calculated the fair value of the ESPP purchase right using the Black-Scholes option-pricing model, based on the following assumptions: Year Ended January 31, 2023 2022 2021 Risk-free interest rate 1.15 % - 4.04 % 0.04 % - 0.06 % 0.11 %-0.17% Expected dividend yield — % — % — % Expected life of purchase right (in years) 0.5 0.5 0.5 Expected volatility 83 % - 102 % 43 % - 58 % 47 % - 58 % The expected term for the ESPP purchase rights is based on the duration of the offering period. Estimated volatility for ESPP purchase rights is based on the historical volatility of our common stock price. The interest rate is derived from government bonds with a similar term to the ESPP purchase right granted. We have not declared, nor do we expect to declare dividends. Compensation expense related to the ESPP was $ 22.2 million, $ 18.6 million and $ 12.6 million for the years ended January 31, 2023, 2022 and 2021. The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2019 and continuing through February 1, 2028, in an amount equal to the lesser of (i) 1 % of the total number of shares of our common stock outstanding on January 31 of the preceding fiscal year, (ii) 3.8 million shares, or (iii) a lesser number of shares determined by our board of directors. As of January 31, 2023, 9.4 million shares of common stock were reserved for issuance under the ESPP. Stock Repurchase Program In March 2022, our board of directors authorized a stock repurchase program of up to $ 200.0 million of our outstanding common stock. During the year ended January 31, 2023, we repurchased and cancelled 1.1 million shares of common stock at an average price of $ 55.52 per share, for an aggregate amount of $ 63.0 million. DocuSign, Inc.| 2023 Form 10-K | 87 Note 12. Restructuring and Other Related Charges During fiscal 2023 , the board of directors authorized a restructuring plan (the “2023 Restructuring Plan”) in response to changing economic conditions and in an effort to reduce our operational costs and improve our organizational efficiency. We expect to incur costs associated with the Restructuring Plan related to employee termination benefits and other costs mainly in the third and fourth quarters of fiscal 2023. These amounts are recorded to the Restructuring and other related charges within our consolidated statements of operations and comprehensive loss as they are incurred. For the year ended January 31, 2023, restructuring and other related charges were $ 28.3 million, and primarily composed of $ 27.4 million for employee termination benefits, which included stock-based compensation expense of $ 5.6 million. The following table summarizes our restructuring liabilities during the year ended January 31, 2023: (in thousands) January 31, 2022 Accruals Cash Payments January 31, 2023 Employee termination benefits $ — $ 21,748 $ ( 21,364 ) $ 384 Other — 1,058 ( 900 ) 158 Total $ — $ 22,806 $ ( 22,264 ) $ 542 Note 13 . Net Loss per Share Attributable to Common Stockholders The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for periods presented: Year Ended January 31, (in thousands, except per share data) 2023 2022 2021 Numerator: Net loss attributable to common stockholders $ ( 97,454 ) $ ( 69,976 ) $ ( 243,267 ) Denominator: Weighted-average common shares outstanding 200,903 196,675 185,760 Net loss per share attributable to common stockholders: Basic and diluted $ ( 0.49 ) $ ( 0.36 ) $ ( 1.31 ) Outstanding potentially dilutive securities that were excluded from the diluted per share calculations because they would have been antidilutive are as follows: January 31, (in thousands) 2023 2022 2021 RSUs 15,129 7,843 10,586 Stock options 2,228 3,105 4,798 ESPP 516 287 130 Convertible senior notes 2,161 2,161 3,250 Total antidilutive securities 20,034 13,396 18,764 Note 14. Employee Benefit Plan We have a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code (the “Plan”). This Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. In the fourth quarter of fiscal 2019, we began to match 50 % of each participant’s contribution up to a maximum of 6 % of the participant’s base salary and commissions paid during the period. During the year ended January 31, 2023, 2022 and 2021, we recognized expenses of $ 32.3 million, $ 25.5 million and $ 18.9 million related to matching contributions. DocuSign, Inc.| 2023 Form 10-K | 88 Note 15 . Income Taxes The domestic and foreign components of pre-tax loss were as follows: Year Ended January 31, (in thousands) 2023 2022 2021 U.S. $ 19,673 $ ( 93,356 ) $ ( 240,175 ) International ( 109,554 ) 26,442 10,683 Loss before income taxes $ ( 89,881 ) $ ( 66,914 ) $ ( 229,492 ) The components of our income tax provision (benefit) were as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Current Federal $ ( 464 ) $ ( 931 ) $ ( 35 ) State 1,666 ( 108 ) 269 Foreign 4,674 3,407 15,951 Total current 5,876 2,368 16,185 Deferred Federal 21 213 ( 243 ) State ( 21 ) 184 5 Foreign 1,697 297 ( 2,172 ) Total deferred 1,697 694 ( 2,410 ) Provision for income taxes $ 7,573 $ 3,062 $ 13,775 The reconciliation of the statutory federal income tax rate to our effective tax rate was as follows: Year Ended January 31, (in percentage) 2023 2022 2021 U.S. statutory rate 21.0 % 21.0 % 21.0 % State taxes ( 2.4 ) 2.1 2.7 Foreign tax rate differential 16.4 ( 3.4 ) 0.1 Increase (decrease) unrecognized tax benefit ( 0.5 ) 1.0 ( 5.6 ) Stock-based compensation ( 55.1 ) 309.6 87.1 Change in valuation allowance ( 35.5 ) ( 386.4 ) ( 118.4 ) Dual Jurisdiction Deferred Taxes 39.2 — — Research and development credits 20.1 58.2 9.1 Lapse of Statute of Limitations 0.6 1.4 — Other deferred adjustment ( 10.7 ) ( 9.9 ) ( 1.1 ) Other ( 1.5 ) 1.8 ( 0.9 ) Effective tax rate ( 8.4 ) % ( 4.6 ) % ( 6.0 ) % DocuSign, Inc.| 2023 Form 10-K | 89 The significant components of net deferred tax balances were as follows: January 31, (in thousands) 2023 2022 Deferred tax assets Net operating loss carryforwards $ 711,532 $ 891,414 Accruals and reserves 18,330 15,566 Stock-based compensation 49,615 35,319 Research and development credits 118,183 99,353 Capitalized research and development expenses 204,501 — Other 55,087 57,049 Total deferred tax assets 1,157,248 1,098,701 Less: Valuation allowance ( 1,032,016 ) ( 999,191 ) Deferred tax assets, net of valuation allowance 125,232 99,510 Deferred tax liabilities Deferred contract acquisition costs ( 103,185 ) ( 74,727 ) Other ( 30,646 ) ( 31,765 ) Total deferred tax liabilities ( 133,831 ) ( 106,492 ) Net deferred tax liabilities $ ( 8,599 ) $ ( 6,982 ) We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts. Therefore, no deferred tax liabilities for foreign withholding taxes have been recorded relating to the earnings of our foreign subsidiaries. Recognized tax benefits on total stock-based compensation expense, which are reflected in the "Provision for income taxes" in the consolidated statements of operations and comprehensive loss, were $ 3.3 million, $ 1.6 million and $ 2.2 million in the years ended January 31, 2023, 2022 and 2021, respectively. Our tax provision includes a $ 2.2 million tax shortfall, and $ 1.9 million and $ 2.0 million of excess tax benefits from stock-based compensation for the years ended January 31, 2023, 2022 and 2021, respectively. As of January 31, 2023, we had accumulated net operating loss carryforwards of $ 2.9 billion for federal and $ 1.4 billion for state. Of the federal net operating losses, $ 2.7 billion is carried forward indefinitely, but is limited to 80% of taxable income. The remaining federal and state net operating loss carryforwards will begin to expire in 2025 and 2027, respectively. As of January 31, 2023, we also had total foreign net operating loss carryforwards of $ 171.9 million, which do not expire under local law. As of January 31, 2023, we had accumulated U.S. research tax credits of $ 126.3 million for federal, $ 33.3 million for California and $ 1.4 million for Illinois. The U.S. federal and Illinois research tax credits will begin to expire in 2033 and 2027, respectively. The California research tax credits do not expire. Available net operating losses may be subject to annual limitations due to ownership change limitations provided by the Internal Revenue Code, as amended (the "Code"), and similar state provisions. Under Section 382 of the Code, substantial changes in our ownership and the ownership of acquired companies may limit the amount of net operating loss carryforwards that are available to offset taxable income. Our ability to carry forward our federal and state net operating losses is limited due to an ownership change that occurred in a prior fiscal year. This limitation has been accounted for in calculating the available net operating loss carryforwards. The foreign jurisdictions in which we operate may have similar provisions that may limit our ability to use net operating loss carryforwards incurred by entities that we have acquired. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examination from various taxing authorities. DocuSign, Inc.| 2023 Form 10-K | 90 A reconciliation of the beginning and ending balance of total unrecognized tax benefits was as follows: January 31, (in thousands) 2023 2022 Unrecognized tax benefits balance at February 1 $ 46,729 $ 33,779 Gross increase for tax positions of prior years 333 5,287 Gross decrease for tax positions of prior years ( 1,734 ) ( 1,513 ) Settlements ( 2,484 ) — Gross increase for tax positions of current year 5,102 9,176 Unrecognized tax benefits balance at January 31 $ 47,946 $ 46,729 As of January 31, 2023, the Company had $ 47.9 million of unrecognized tax benefits, of which $ 10.8 million could affect the Company’s effective tax rate, if recognized. The remainder of the unrecognized tax benefits would not affect the effective tax rate due to a significant portion of the unrecognized tax benefit being recorded as a reduction in our gross deferred tax asset, offset by a reduction in our valuation allowance. We have net uncertain tax positions of $ 11.3 million, $ 16.2 million and $ 16.7 million included in other liabilities on our consolidated balance sheet as of January 31, 2023, 2022 and 2021. We do not expect our gross unrecognized tax benefit to change significantly within the next 12 months. We recognize interest and penalties related to uncertain tax positions in provision for income taxes. As of January 31, 2023, accrued interest and penalties was $ 0.6 million. We are subject to taxation in the U.S. and various foreign jurisdictions. Our tax years from inception in 2003 through January 31, 2023 remain subject to examination by U.S. and California taxing authorities, as well as taxing authorities in various other state and foreign jurisdictions. We are not under examination in any material jurisdictions. We recognize valuation allowances on deferred tax assets if it is more likely than not that some or all the deferred tax assets will not be realized. Due to our history of losses in the U.S., the net cumulative U.S. deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $ 32.8 million in the year ended January 31, 2023 and by $ 275.4 million in the year ended January 31, 2022. The following table represents the rollforward of our valuation allowance: Year Ended January 31, (in thousands) 2023 2022 2021 Beginning balance $ 999,191 $ 723,767 $ 445,746 Valuation allowance charged to income tax provision 32,825 256,017 269,135 Valuation allowance from acquisitions — — 9,354 Convertible senior notes settled — — 14,985 Convertible senior notes issued — — ( 15,453 ) Adoption of ASU 2020-06 — 19,407 — Ending balance $ 1,032,016 $ 999,191 $ 723,767 DocuSign, Inc.| 2023 Form 10-K | 91 Note 16 . Geographic Information We operate in one operating segment and one reportable segment as we only report financial information on an aggregate and consolidated basis to the Chief Executive Officer, who is our CODM. Revenue by geography is based on the address of the customer as specified in our master subscription agreement. Revenue by geographic area was as follows: Year Ended January 31, (in thousands) 2023 2022 2021 U.S. $ 1,895,932 $ 1,625,966 $ 1,166,004 International 619,983 481,247 287,043 Total revenue $ 2,515,915 $ 2,107,213 $ 1,453,047 No single country other than the U.S. had revenue greater than 10% of total revenue in the years ended January 31, 2023, 2022 and 2021. Our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows: January 31, (in thousands) 2023 2022 U.S. $ 266,328 $ 218,048 Ireland 44,019 55,061 All other countries 31,038 37,576 Total long-lived assets $ 341,385 $ 310,685 Note 17 . Subsequent Events On February 16, 2023, we announced a restructuring plan (“2024 Restructuring Plan”) that was designed to support our growth, scale and profitability objectives. As part of the 2024 Restructuring Plan, we expect it will restructure and reduce our current workforce by approximately 10 %, primarily in our worldwide field organization. We currently estimate that we will incur charges of approximately $ 25 million to $ 35 million in connection with the 2024 Restructuring Plan, consisting primarily of cash expenditures for employee transition, notice period severance payments, employee benefits, and related costs as well as non-cash expenses related to vesting of share-based awards. We expect that the majority of the restructuring charges will be incurred in the first quarter of fiscal 2024 and that the execution of the 2024 Restructuring Plan will be substantially complete by the end of the second quarter of fiscal 2024. On March 9, 2023, we announced that Cynthia Gaylor, our Chief Financial Officer, notified us of her intention to resign. Ms. Gaylor will continue to provide services in her current capacities to provide for the orderly transition of her duties through June 15, 2023, the effective date of her resignation. On March 10, 2023, the Federal Deposit Insurance Corporation (“FDIC”) issued a press release stating that Silicon Valley Bank, Santa Clara, California, (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Thereafter, the FDIC transferred all deposits of SVB to a newly created bridge bank, named Silicon Valley Bridge Bank, N.A., providing all depositors access to their money beginning on March 13, 2023,and committing to the resolution of SVB in a manner that fully protects all depositors. We maintain operating accounts at SVB with immaterial balances and therefore believe that our exposure to loss because of SVB’s receivership is immaterial. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. DocuSign, Inc.| 2023 Form 10-K | 92