What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-18 compared with 2024-03-21 · 155 added, 126 removed, 331 unchanged (46% of the section changed)

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Executive Overview of Fiscal 2025 Results

DocuSign offers products that address agreement workflows and digital transformation as part of its agreement management platform, enabling agreements to be signed electronically on a wide variety of devices, from virtually anywhere in the world, securely.

DocuSign’s core product offerings, including the world’s leading electronic signature product, allow organizations to do business faster with less risk and at a lower cost, while providing a better experience for customers.

As a result, over 1.5 million customers and more than a billion users worldwide utilize our platform to accelerate and simplify the process of doing business.

We generally offer access to our products on a subscription basis with prices based on the functionality our customers require and the quantity of Envelopes provisioned.

Similar to the physical envelopes historically used to mail paper documents, an Envelope is a digital container used to send one or more documents for signature or approval to one or more recipients.

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

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

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

Docusign solutions bring agreements to life, accelerating and simplifying the process of doing business .

Docusign’s core offerings — our IAM platform, the world’s leading eSignature solution, and CLM solution — allow organizations to boost productivity, accelerate contract review cycles, and transform agreement data into insights and actions, while providing a better customer experience.

For example, Docusign’s innovative IAM platform automates agreement workflows, uncovers actionable insights, and leverages AI capabilities, which enables organizations to create, commit to, and manage agreements, from virtually anywhere in the world, securely.

As of January 31, 2025 , nearly 1.7 million customers and more than a billion users worldwide utilize Docusign to accelerate and simplify the process of doing business.

We generate substantially all our revenue from sales of subscriptions, which accounted for 97% of our revenue in each of the years ended January 31, 2025, 2024 and 2023.

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Subscriptions generally range from one to three years, and substantially all our multi-year customers pay in annual installments, one year in advance.

DocuSign, Inc.| 2024 Form 10-K | 43

We also generate revenue from professional and other non-subscription services, which consists primarily of fees associated with providing new customers deployment and integration services.

We also generate revenue from professional and other non-subscription services, which consists primarily of fees associated with providing new customers with deployment and integration services.

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

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We anticipate continuing to invest in customer success through our professional services offerings as we believe it plays an important role in accelerating our customers’ adoption of our products, which helps drive customer retention and expansion.

One pillar of our long-term strategy is to evolve our GTM channels from the historically direct sales-driven approach.

We are currently investing in three routes to market, including direct sales, partner-assisted sales, and digital self-service purchasing.

We expect that Docusign’s IAM platform will increasingly be offered across all three channels.

We offer subscriptions to our products to businesses at all scales, from global enterprise down to local VSBs.

We have an omnichannel go-to-market approach that consists of direct sales, partners to sell to our customers, and digital self-serve.

We offer more than 1,000 active partner integrations with the applications that many of our customers already use so that they can create, commit, and manage agreements directly within these applications.

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VSBs typically become customers by quickly utilizing our digital and self-serve channels and generate smaller average contract values, while commercial and enterprise customers typically involve longer sales cycles, larger contract values and greater expansion opportunities for us.

Docusign, Inc.

| 2025 Form 10-K | 42

Financial Results for the Year Ended January 31, 2025

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Investing for Growth

We believe that our market opportunity is large, and we plan to invest to support further growth.

This includes optimizing our go-to-market efforts to focus on attractive growth opportunities and investing in research and development to drive product innovation and meet customer needs at scale.

We also continue to assess and evaluate strategic acquisitions and investments.

As we focus on infrastructure and technology that best serve our customers across industries, we will prioritize initiatives that accelerate our product capabilities and expand our product solutions.

We believe these collective activities will help us retain and expand within our current customers’ organizations and attract new customers.

DocuSign, Inc.| 2024 Form 10-K | 44

We believe that our market opportunity is large, and we plan to invest to support long-term growth.

We have three growth pillars in our long-term strategy.

The first is to accelerate product innovation through research and development investments for our IAM platform.

We aim to deliver category-leading value in the agreement management market while evolving into a platform company.

This includes supporting a community of developers, builders, and partners to create new solutions that extend the capabilities of our IAM platform.

The second growth pillar is to strengthen our omnichannel go-to-market by refining our direct sales, partner, and digital e-commerce and self-service channels to better address customer needs.

By optimizing these routes with a more efficient cost structure, we aim to target growth opportunities and expand our reach in the market.

Finally, our third growth pillar is to enhance operational and financial efficiency to scale effectively and sustainably.

This includes prioritizing the infrastructure and technology investments that best serve our diverse customer base, as well as generating incremental revenue and growth with a lower cost profile.

Additionally, we continue to evaluate strategic acquisitions and partnerships that align with our growth objectives and expand our product offerings.

We believe these combined efforts will strengthen our ability to retain and grow within our existing customer base, while also attracting new customers.

Growing Customer Base

We are highly focused on continuing to acquire new customers to support our long-term growth.

We have invested, and expect to continue to invest in our go-to-market efforts involving an omnichannel approach that consists of direct sales, partner-assisted sales and digital self-service purchasing.

As of January 31, 2024, we had a total of over 1.5 million customers, including approximately 242,000 enterprise and commercial customers, compared to over 1.3 million customers and approximately 211,000 enterprise and commercial customers as of January 31, 2023.

As of January 31, 2025, we had a total of nearly 1.7 million customers, including over 260,000 small and medium-sized businesses (“SMBs”), mid-market companies, and large enterprise customers served by our direct sales force.

We had a total of over 1.5 million customers and approximately 242,000 customers served by our direct sales force as of January 31, 2024.

We define enterprise customers as companies generally included in the Global 2000.

We define commercial customers to include both mid-market companies, which includes companies outside the Global 2000 that have greater than 250 employees, and medium-sized businesses (“SMBs”) which are companies with between 10 and 249 employees, in each case excluding any enterprise customers.

We define VSBs as companies with fewer than 10 employees.

We refer to total customers as all enterprises, commercial businesses and VSBs.

We define mid-market customers as companies outside the Global 2000 that have more than 250 employees, and define SMBs as companies with between 10 and 249 employees, in each case excluding any enterprise customers.

We define very small businesses (“VSBs”) as companies with fewer than 10 employees.

VSBs are our most numerous group of customers, and we typically serve them through digital and self-service resources outside of our direct sales channels.

We refer to total customers as all enterprises, mid-market, SMBs, and VSBs.

We believe that our ability to increase the number of customers using our products, particularly the number of enterprise and commercial customers, is an indicator of our market penetration, the growth of our business and our potential future business opportunities.

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

Retaining and Expanding Contracts with Existing Enterprise and Commercial Customers

Many of our customers have increased spend with us as they have expanded their use of our offerings in both existing and new use cases across their front or back office operations.

Our enterprise and commercial customers may start with just one use case and gradually implement additional use cases across their organization once they see the benefits of our products.

Several of our largest enterprise customers have deployed our software platform for hundreds of use cases across their organizations.

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

Docusign, Inc.

| 2025 Form 10-K | 43

Increasing International Revenue

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

DocuSign, Inc.| 2024 Form 10-K | 45

Docusign, Inc.

| 2025 Form 10-K | 44

Components of Results of Operations

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We expect that gross profit and gross margin will continue to be affected by various factors including our pricing, timing and amount of investment to maintain or expand our hosting capability, the growth of our software platform support and professional services team, stock-based compensation expenses, amortization of costs associated with capitalized internal use software and acquired intangible assets and allocated overhead costs.

DocuSign, Inc.| 2024 Form 10-K | 46

Docusign, Inc.

| 2025 Form 10-K | 45

Operating Expenses

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Interest Expense

Interest expense consists primarily of contractual interest expense and amortization of debt issuance costs on our Convertible Senior Notes due 2023 and our Convertible Senior Notes due 2024 (collectively, the “Notes”).

In fiscal 2023 and 2024, interest expense consisted primarily of contractual interest expense and amortization of debt issuance costs on our Convertible Senior Notes due 2023 (the “2023 Notes”) and our Convertible Senior Notes due 2024 (the “2024 Notes”).

The 2023 Notes and the 2024 Notes (collectively, the “Notes”) were extinguished during fiscal 2024.

In fiscal 2025, interest expense consisted primarily of commitment fees on the undrawn balance of our revolving credit facility and the amortization of the associated issuance costs.

Interest Income and Other Income, Net

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

Provision for Income Taxes

Our provision for income taxes consists primarily of income taxes in certain foreign jurisdictions where we conduct business and U.S.

income taxes from a tax law change related to mandatory capitalization of research and development expenses for tax years starting January 1, 2022.

We have a valuation allowance against our U.S.

consolidated group and certain foreign deferred tax assets and will release the valuation allowance when there is sufficient positive evidence to support a conclusion that it is more likely than not the deferred tax assets will be realized.

Depending on our operating results in the future, we may release the valuation allowance associated with the U.S.

deferred tax assets within the next year.

The timing and amount of the valuation allowance release could vary based on our assessment of all available evidence.

Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and may result in a material decrease to income tax expense for the period the release is recorded.

DocuSign, Inc.| 2024 Form 10-K | 47

Provision for (Benefit from) Income Taxes

Our income tax benefit consisted primarily of the release of a valuation allowance related to our U.S.

deferred tax assets.

We regularly assess the need for a valuation allowance on our deferred tax assets.

In making this assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized.

As of January 31, 2025, based on all available positive and negative evidence, having demonstrated sustained U.S.

profitability, which is objective and verifiable, and taking into account anticipated future earnings, we have concluded it is more likely than not that we will realize our U.S.

federal and U.S.

states deferred tax assets, with the exception of certain federal deferred tax assets subject to limitation on use and our California deferred tax assets.

We continue to maintain a valuation allowance against these deferred tax assets as they have not met the “more likely than not” realization criterion.

Docusign, Inc.

| 2025 Form 10-K | 46

Discussion of Results of Operations

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Total operating expenses 2,155,152 72 2,157,627 78

Income (loss) from operations 31,634 1 (88,031) (3)

Income from operations 199,928 7 31,634 1

Interest expense (1,550) — (6,844) —

Interest income and other income, net 49,563 1 68,889 2

Income (loss) before provision for income taxes

93,679 3 (89,881) (4)

Provision for income taxes 19,699 — 7,573 —

Net income (loss) $ 73,980 3 % $ (97,454) (4) %

Income before provision for (benefit from) income taxes 247,941 8 93,679 3

Provision for (benefit from) income taxes (819,944) (28) 19,699 —

Net income $ 1,067,885 36 % $ 73,980 3 %

For a comparison of our results of operations for the fiscal years ended January 31, 2024 and 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, filed with the SEC on March 21, 2024.

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Subscription revenue increased $214.6 million, or 8%, in the year ended January 31, 2025.

The increase was primarily due to the expansion of revenue from existing customers and the addition of new customers, as well as an increase in sales to our commercial and enterprise customers through our direct and indirect go-to-market initiatives.

The increase was due to the expansion of revenue from existing customers, primarily within our commercial and enterprise segments and the addition of new customers, primarily from our digital channel.

We continue to invest in a variety of customer programs and initiatives, which, along with expanded customer use cases, have helped increase our subscription revenue over time.

DocuSign, Inc.| 2024 Form 10-K | 48

Docusign, Inc.

| 2025 Form 10-K | 47

Cost of Revenue and Gross Margin

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Increases primarily consisted of:

• $13.3 million in operating costs to support our platform and revenue growth, including increases in hosting costs as well as processing and authentication costs;

• $7.1 million due to higher information technology costs;

• $6.9 million in depreciation on our capitalized software projects.

• $42.1 million in information technology costs, including a $33.8 million increase in hosting costs as we transition from co-located data centers to public cloud infrastructure to support future growth;

• $18.0 million in personnel costs and $6.7 million in stock-based compensation expense due to higher headcount;

• $7.9 million in depreciation and amortization of our capitalized software projects and technology acquired in the Lexion acquisition.

Cost of professional services revenue decreased by $23.5 million, or 21% , in the year ended January 31, 2025, primarily driven by lower headcount resulting in lower personnel costs and stock-based compensation expense.

In the year ended January 31, 2025, stock-based compensation expense decreased by $9.7 million, and personnel costs decreased by $7.7 million.

Sales and Marketing

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Percentage of revenue 39 % 42 %

Sales and marketing expenses decreased $74.6 million, or 6%, in the year ended January 31, 2024, primarily driven by savings on personnel costs from the restructuring plans implemented during the third quarter of fiscal 2023 and the first quarter of fiscal 2024 as well as shifts in the allocation of resources for our go-to-market initiatives.

Decreases primarily consisted of:

• $31.5 million in marketing and advertising costs due to reduced spending on paid media in line with our go-to-market strategy and expansion of our self-serve experience;

• $21.3 million in personnel costs and $18.5 million in stock-based compensation expense due to lower headcount, partially offset by higher commissions in line with higher sales and annual merit increases.

Sales and marketing expenses decreased $7.1 million, or 1%, in the year ended January 31, 2025, primarily due to a decrease in marketing and advertising costs due to shifts in line with our go-to-market strategy.

Main drivers primarily consisted of:

• $12.4 million decrease in marketing and advertising costs, including a reduction in paid search, in line with cost efficiency measures;

partially offset by

• $9.0 million increase in depreciation on our capitalized software projects.

Research and Development

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Increases primarily consisted of:

• $34.2 million in stock-based compensation expense and $15.1 million in personnel costs due to annual merit increases;

• $11.9 million due to higher information technology costs to drive product innovation.

DocuSign, Inc.| 2024 Form 10-K | 49

• $23.6 million in personnel costs due to higher headcount, including the Lexion acquisition;

• $20.0 million in stock-based compensation expense due to annual merit increases, and higher headcount, offset partially by lower executive costs.

Docusign, Inc.

| 2025 Form 10-K | 48

General and Administrative

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Percentage of revenue 12 % 15 %

General and administrative expenses increased $103.4 million, or 33%, in the year ended January 31, 2024, primarily due to investments in workforce and information technology.

Increases primarily consisted of:

• $55.6 million in stock-based compensation expense driven by charges due to executive new hire grants and transitions and annual merit increases;

• $27.8 million in personnel costs driven by annual salary increases to align with the increasing cost of labor;

• $11.4 million due to higher information technology costs.

General and administrative expenses decreased $43.6 million, or 10%, in the year ended January 31, 2025.

Decreases primarily consisted of:

• $23.9 million in professional fees and related expenses, including the receipt of insurance reimbursements for defense costs and the release of litigation related accruals in the current year;

• $22.1 million in stock-based compensation expense mainly due to executive transitions that occurred in fiscal 2024 and lower headcount.

Other Income and Expense

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Percentage of revenue 1 % 2 %

Interest income and other income, net increased by $64.4 million in the year ended January 31, 2024.

Increases primarily consisted of:

• $44.3 million increase in interest income due to rising interest rates;

• $8.8 million increase in accretion of investments purchased at a discount as the investments near maturity;

• $7.4 million reduction of our net foreign currency exchange loss due to the strengthening of the euro and British pound compared to the U.S.

Provision for Income Taxes

Interest income and other income, net decreased by $19.3 million in the year ended January 31, 2025.

Decreases primarily consisted of $13.1 million decrease in interest income due to lower average investment balances.

Provision for (benefit from) Income Taxes

Year Ended January 31, 2025 vs 2024

(in thousands) 2025 2024

Provision for income taxes $ 19,699 $ 7,573 160 %

Provision for (benefit from) income taxes $ (819,944) $ 19,699 (4,262) %

Percentage of revenue (28) % — %

The provision for income taxes increased by $12.1 million in the year ended January 31, 2024 .

The increase in the provision for income taxes in the current year is a result of higher pre-tax income and limitations on net operating losses allowed to reduce taxable income.

DocuSign, Inc.| 2024 Form 10-K | 50

The change in income tax benefit for the year ended January 31, 2025 was primarily due to the release of $837.3 million of valuation allowance related to U.S.

federal and certain state deferred tax assets.

Docusign, Inc.

| 2025 Form 10-K | 49

Liquidity and Capital Resources

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

As of January 31, 2024, we had $1.0 billion in cash and cash equivalents and short-term investments.

As of January 31, 2025, we had $963.5 million in cash and cash equivalents and short-term investments.

We also had $134.1 million in long-term investments that provide additional capital resources.

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

We finance our operations primarily through payments by our customers for use of our product offerings and related services, and we have additional borrowing capacity available from our credit facility.

In January 2021 we entered into a $500.0 million credit facility, as amended in May 2023, which may be increased by an additional $250.0 million subject to customary terms and conditions.

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

There were no outstanding borrowings under the credit facility as of January 31, 2024.

In September 2018, we issued and sold $575.0 million in aggregate principal amount of 0.5% Convertible Senior Notes due 2023 (the “2023 Notes”).

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

We fully settled the outstanding principal of the 2023 Notes and 2024 Notes and during the year ended January 31, 2024.

We believe that our sources of liquidity, including our cash, cash equivalents and investments, and expected future operating cash flows, and borrowing capacity available to us from our credit facility, are adequate to meet the potential cash commitments for the foreseeable future, including upcoming maturities in the next 12 months related to our lease obligations.

Further details of these transactions are described in Not e 7 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K.

We were in compliance with all debt covenants at January 31, 2024.

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

While we generated positive cash flows from operations in the recent years, we have generated losses from operations in the past as reflected in our accumulated deficit of $1.7 billion as of January 31, 2024.

We may continue to incur operating losses in the foreseeable future due to the investments we intend to make and may require additional capital resources to execute strategic initiatives to grow our business.

As of January 31, 2025, there were no outstanding borrowings under the credit facility, and we were in compliance with related covenants.

We believe that our sources of liquidity, including our cash, cash equivalents and investments, and expected future operating cash flows, and borrowing capacity available to us from our credit facility, are adequate to meet our potential cash commitments as well as meet our working capital and capital expenditure needs for the foreseeable future, including upcoming maturities of our contractual obligations over the next 12 months.

We typically invoice our customers annually in advance.

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If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.

DocuSign, Inc.| 2024 Form 10-K | 51

Our principal contractual obligations and commitments consist of obligations under operating leases, as well as noncancelable contractual commitments that primarily relate to cloud infrastructure support and sales and marketing activities.

Refer to Note 9 and Note 10 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K.

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

In addition to our contractual commitments, our board of directors has authorized a stock repurchase program, which commenced in March 2022.

During the year ended January 31, 2025, we repurchased 11.0 million shares of common stock for $685.0 million through our stock repurchase program.

Included in the repurchase amount is the 1% excise tax as a result of the IRA.

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

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

We expect that our existing sources of liquidity, including our existing cash, cash equivalents and investments, expected future operating cash flows, and borrowing capacity of our credit facility, will finance the repurchase of common stock at management’s discretion.

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

Docusign, Inc.

| 2025 Form 10-K | 50

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

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Cash Flows from Operating Activities

Cash provided by operating activities was $1.0 billion for the year ended January 31, 2025.

Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income.

Our primary uses of cash include the payment of employee salaries and benefits, including the payment of termination benefits under the restructuring plan authorized in fiscal 2025 (the “2025 Restructuring Plan”), in addition to vendor payments.

Additionally, in connection with the acquisition of Lexion, we agreed to pay $19.1 million in deferred compensation for key employees, which we paid into an escrow account.

Cash provided by operating activities was $979.5 million for the year ended January 31, 2024.

Our primary sources of cash provided by operating activities were billings and the related cash collections in addition to interest income due to favorable interest rates.

Our primary uses of cash include the payment of employee salaries and benefits, including the payment of termination benefits under the 2024 Restructuring plan, in addition to vendor payments.

Cash provided by operating activities was $506.8 million for the year ended January 31, 2023.

Cash provided by operating activities increased slightly due to increases in collections of accounts receivable and higher revenues, partially offset by a decrease in amounts billed to customers and recognized as contract liabilities.

Our primary uses of cash include the payment of employee salaries and benefits, including the payment of termination benefits under the restructuring plan authorized during fiscal 2024 (the “2024 Restructuring Plan”), in addition to vendor payments.

Cash Flows from Investing Activities

For the year ended January 31, 2024, cash provided by investing activities of $44.6 million was primarily driven by $137.6 million net maturities of marketable securities.

The increase was partially offset by purchases of property and equipment of $92.4 million as we continue to support operations at our data centers and invest in capitalized software development projects.

For the year ended January 31, 2023, cash used in investing activities of $191.2 million was primarily driven by $109.8 million net purchases of marketable securities and $77.7 million purchases of property and equipment as we continued to invest in data center build outs to support our growing operations and capitalized software development projects.

For the year ended January 31, 2025, net cash used in investing activities of $312.9 million was primarily driven by the acquisition of Lexion, which totaled $143.6 million, net of acquired cash.

Additionally, net purchases of marketable securities were $70.9 million, and purchases of property and equipment were $97.0 million as we continued to support operations at our data centers and invest in capitalized software development projects.

For the year ended January 31, 2024, net cash provided by investing activities of $44.6 million was primarily driven by $137.6 million net maturities of marketable securities.

These inflows were partially offset by purchases of property and equipment of $92.4 million as we continued to support operations at our data centers and invest in capitalized software development projects.

Cash Flows from Financing Activities

For the year ended January 31, 2024, cash used in financing activities of $946.0 million was primarily driven by the maturity of the Notes, stock repurchase program, and payments related to our equity plans.

For the year ended January 31, 2025, net cash used in financing activities of $838.8 million was primarily driven by $683.5 million to repurchase 11.0 million shares of common stock through our stock repurchase program and $155.3 million payments for tax withholding on share settlements, net of proceeds associated with our equity plans.

For the year ended January 31, 2024, net cash used in financing activities of $946.0 million was primarily driven by the maturity of the Notes, our stock repurchase program, and payments related to our equity plans.

We fully repaid the 2023 Notes and 2024 Notes during fiscal 2024 for $727.0 million.

We also used $145.5 million to repurchase 3.1 million shares of common stock at an average of $47.57 per share through our stock repurchase program.

In addition, we made $97.2 million payments for tax withholding on share settlements, net of proceeds associated with our equity plans.These cash outflows were partially offset by $23.7 million received in connection with the settlement of our Capped Calls in relation to our 2023 Notes.

For the year ended January 31, 2023, cash used in financing activities of $98.3 million was primarily driven by $63.0 million used to repurchase 1.1 million shares of common stock at an average of $55.52 per share through our stock repurchase program which commenced in fiscal 2023, and $35.2 million payments for tax withholding on share settlements, net of proceeds associated with our equity plans.

Obligations and Commitments

Our principal contractual obligations and commitments consist of operating leases, as well as noncancelable contractual commitments that primarily relate to cloud infrastructure support and sales and marketing activities .

Refer to Not e 7 , Not e 8 and Note 9 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information.

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

DocuSign, Inc.| 2024 Form 10-K | 52

We also used $145.5 million to repurchase 3.1 million shares of common stock through our stock repurchase program.

In addition, we made $97.2 million payments for tax withholding on share settlements, net of proceeds associated with our equity plans.

These cash outflows were partially offset by $23.7 million received in connection with the settlement of capped call transactions in relation to our 2023 Notes.

Docusign, Inc.

| 2025 Form 10-K | 51

Critical Accounting Policies and Estimates

W e prepare our financial statements in accordance with generally accepted accounting principles (“GAAP”).

W e prepare our financial statements in accordance with U.S.

Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures.

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We measure the fair value of these awards at the grant date and recognize such fair value as expense over the service period.

The fair value of RSUs is determined by 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.

The fair value of stock options and ESPP purchase rights are determined by the Black-Scholes option pricing model.

The fair value of RSUs, including those granted with a performance condition, is estimated on the date of grant based on the fair value of our underlying common stock.

For RSUs with a performance condition, we assess the probability that such performance conditions will be met or achieved every reporting period.

For RSUs granted with a market condition, we use a Monte Carlo option-pricing model to determine the fair value of the RSUs.

The fair value of stock options and ESPP purchase rights is estimated on the date of grant using a Black-Scholes option pricing model.

Judgment is required to estimate the expected life of the stock awards, the volatility of the underlying common stock, forfeiture rates and probability of achievement of performance conditions.

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Changes to the estimates we make from time to time may have a significant impact on our stock-based compensation expense and could materially impact our results of operations.

DocuSign, Inc.| 2024 Form 10-K | 53

We recognize compensation expense net of forfeitures that are estimated at the time of grant based on historical experience and our expectations regarding future pre-vesting termination behavior of employees and revise in subsequent periods if actual forfeitures differ from those estimates.

Docusign, Inc.

| 2025 Form 10-K | 52

subsequent periods if actual forfeitures differ from those estimates.

To the extent our actual forfeiture rate is different from our estimate, stock-based compensation expense is adjusted accordingly.

Valuation of Acquired Intangible Assets in Business Combinations

At the acquisition date, we make significant estimates and assumptions when we determine the fair value of acquired assets and liabilities, especially with respect to acquired intangible assets.

Key assumptions include, but are not limited to, time and resources required to recreate the assets acquired.

Although we believe the assumptions and estimates we have made are reasonable and appropriate, they are based in part on information obtained from the management of the acquired companies, our assessment of the information, and historical experience.

Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain.

During the measurement period of up to one year, from the acquisition date, based on new information obtained that relates to the facts and circumstances that existed as of the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

We record adjustments identified, if any, subsequent to the end of the measurement period in our consolidated statement of operations.

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

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Management must make assumptions, judgments and estimates to determine our current provision for income taxes and our deferred tax assets and liabilities.

We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized.

Accordingly, the need to establish such allowance is assessed periodically by considering matters such as future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and results of recent operations.

The evaluation of recoverability of the deferred tax assets requires that we weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The weight given to the evidence is commensurate with the extent to which it can be objectively verified.

We regularly assess the need for a valuation allowance against our deferred tax assets.

In making this assessment, we weigh both positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and results of recent operations, to determine whether it is more likely than not that a deferred tax asset will be realized.

This assessment requires significant judgement and is performed for each jurisdiction in which we operate.

In the event we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

In recognizing tax benefits from uncertain tax positions, we assess whether it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

12 unchanged sentences

Refer to Note 1 in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for recently issued accounting pronouncements not yet adopted as of the date of this report.

DocuSign, Inc.| 2024 Form 10-K | 54

Docusign, Inc.

| 2025 Form 10-K | 53

Non-GAAP Financial Measures and Other Key Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance.

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S.

GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance.

These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

3 unchanged sentences

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin and non-GAAP net income :

We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs, acquisition-related expenses, fair value adjustments to strategic investments, executive transition costs, lease-related impairment and lease-related charges, restructuring and other related charges and, as applicable, other special items.

The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business.

3 unchanged sentences

We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods.

For fiscal 2023 and fiscal 2024, we have determined the projected non-GAAP tax rate to be 20%.

For each of the years ended January 31, 2025, 2024 and 2023, we have determined the projected non-GAAP tax rate to be 20%.

Free cash flow :

8 unchanged sentences

Given that most of our customers pay in annual installments one year in advance, but we typically recognize a majority of the related revenue ratably over time, we use billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers.

DocuSign, Inc.| 2024 Form 10-K | 55

Docusign, Inc.

| 2025 Form 10-K | 54

Reconciliation of gross profit (loss) and gross margin:

23 unchanged sentences

Lease-related impairment and lease-related charges — 216 643

Non-GAAP professional services and other gross loss $ (8,192) $ (9,081) $ (21,681)

Non-GAAP professional services and other gross income (loss) $ 5,882 $ (8,192) $ (9,081)

GAAP professional services and other gross margin (18.3) % (49.9) % (49.2) %

1 unchanged sentence

Non-GAAP professional services and other gross margin 7.8 % (10.9) % (12.3) %

Docusign, Inc.

| 2025 Form 10-K | 55

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

5 unchanged sentences

Employer payroll tax on employee stock transactions 21,793 13,682 12,921

Acquisition-related expenses 4,340 — —

Restructuring and other related charges 29,721 30,381 28,335

1 unchanged sentence

Executive transition costs — — 2,634

Acquisition-related expenses — — 387

Non-GAAP income from operations $ 885,998 $ 711,367 $ 516,846

2 unchanged sentences

Non-GAAP operating margin 29.8 % 25.8 % 20.5 %

DocuSign, Inc.| 2024 Form 10-K | 56

Reconciliation of net income (loss):

Year Ended January 31,

(in thousands, except per share data) 2024 2023 2022

(in thousands)

2025 2024 2023

GAAP net income (loss) $ 1,067,885 $ 73,980 $ (97,454)

2 unchanged sentences

Employer payroll tax on employee stock transactions 21,793 13,682 12,921

Acquisition-related expenses 4,340 — —

Restructuring and other related charges 29,721 30,381 28,335

Amortization of debt discount and issuance costs — 5,175 4,970

Fair value adjustments to strategic investments — 22 3,689

Restructuring and other related charges 30,381 28,335 —

Lease-related impairment and lease-related charges — 4,460 7,181

Executive transition costs — — 2,634

Acquisition-related expenses — — 387

Income Tax effect of non-GAAP adjustments (1)

Income tax and other tax adjustments

(1,006,746) (136,023) (97,158)

Non-GAAP net income $ 747,209 $ 622,887 $ 418,924

(1) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%.

Estimating a non-GAAP tax rate of 20%, the income tax effect of non-GAAP adjustments was $79.7 million for the year ended January 31, 2022.

Computation of free cash flow:

6 unchanged sentences

Net cash used in financing activities $ (838,791) $ (946,039) $ (98,256)

Docusign, Inc.

| 2025 Form 10-K | 56

Computation of billings:

6 unchanged sentences

Contract assets and unbilled accounts receivable, end of period (17,825) (20,189) (16,615)

Contract assets and unbilled accounts receivable contributed by acquisitions 53 — —

Contract liabilities and refund liability contributed by acquisitions (5,071) — —

Non-GAAP billings $ 3,109,559 $ 2,910,831 $ 2,659,736

DocuSign, Inc.| 2024 Form 10-K | 57

Docusign, Inc.

| 2025 Form 10-K | 57

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

What changed 10-K

Item 7. Management’s Discussion and Analysis