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, 2025, we had cash, cash equivalents and investments totaling $1.1 billion, which consisted primarily of bank deposits, money market funds, commercial paper, corporate notes and bonds and U.S. 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 $2.9 million decrease of the fair value of our investment portfolio as of January 31, 2025. 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. Additionally, our revolving credit facility, which is undrawn as of January 31, 2025, can be borrowed based on floating interest rate indexes, thus exposing us to potential interest rate fluctuations should we decide to access the facility. 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 income (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. | 2025 Form 10-K | 58 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS Index Report of Independent Registered Public Accounting Firm (PC AO B ID 238 ) 60 Consolidated Financial Statements 62 Consolidated Balance Sheets as of January 31, 2025 and 2024 62 Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended January 31, 2025 , 2024 and 2023 63 Consolidated Statements of Stockholders’ Equity for the Years Ended January 31, 2025 , 2024 and 2023 64 Consolidated Statements of Cash Flows for the Years Ended January 31, 2025 , 2024 and 2023 66 Notes to Consolidated Financial Statements 68 Note 1 Summary of Significant Accounting Policies 68 Note 2 Revenue and Performance Obligations 78 Note 3 Fair Value Measurements 79 Note 4 Property and Equipment, Net 80 N ote 5 A cquisitions 81 Note 6 Goodwill and Intangible Assets, Net 83 Note 7 Deferred Contract Acquisition and Fulfillment Costs 84 Note 8 Debt 84 Note 9 Leases 86 Note 10 Commitments and Contingencies 86 Note 1 1 Stockholders' Equity 89 Note 1 2 Restructuring and Other Related Charges 92 Note 1 3 Net Income ( Loss ) Per Share Attributable to Common Stockholders 93 Note 1 4 Employee Benefit Plan 93 Note 1 5 Income Taxes 94 Note 1 6 Segment and Geogr aph ic Information 97 Docusign, Inc. | 2025 Form 10-K | 59 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, 2025 and 2024, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended January 31, 2025, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2025 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, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. 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 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 Docusign, Inc. | 2025 Form 10-K | 60 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, 2025, the Company’s revenue was $2.98 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 18, 2025 We have served as the Company’s auditor since 2009, which includes periods before the Company became subject to SEC reporting requirements. Docusign, Inc. | 2025 Form 10-K | 61 DOCUSIGN, INC. CONSOLIDATED BALANCE SHEETS January 31, (in thousands, except per share data) 2025 2024 Assets Current assets Cash and cash equivalents $ 648,623 $ 797,060 Investments—current 314,924 248,402 Accounts receivable, net of allowance for doubtful accounts of $ 8,828 and $ 5,499 as of January 31, 2025 and 2024 429,582 439,299 Contract assets—current 13,764 15,922 Prepaid expenses and other current assets 82,368 66,984 Total current assets 1,489,261 1,567,667 Investments—noncurrent 134,105 121,977 Property and equipment, net 299,370 245,173 Operating lease right-of-use assets 109,630 123,188 Goodwill 454,477 353,138 Intangible assets, net 76,388 50,905 Deferred contract acquisition costs—noncurrent 467,201 409,627 Deferred tax assets—noncurrent 840,470 2,031 Other assets—noncurrent 141,803 97,584 Total assets $ 4,012,705 $ 2,971,290 Liabilities and Equity Current liabilities Accounts payable $ 30,697 $ 19,029 Accrued expenses and other current liabilities 99,579 104,037 Accrued compensation 227,115 195,266 Contract liabilities—current 1,455,442 1,320,059 Operating lease liabilities—current 19,077 22,230 Total current liabilities 1,831,910 1,660,621 Contract liabilities—noncurrent 21,523 21,980 Operating lease liabilities—noncurrent 105,350 120,823 Deferred tax liability—noncurrent 20,596 16,795 Other liabilities—noncurrent 30,634 21,332 Total liabilities 2,010,013 1,841,551 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, 2025 and 2024 — — Common stock, $ 0.0001 par value; 500,000 shares authorized, 202,477 shares outstanding as of January 31, 2025; 500,000 shares authorized, 205,326 shares outstanding as of January 31, 2024 20 21 Treasury stock, at cost: 30 shares as of January 31, 2025; 18 shares as of January 31, 2024 ( 2,871 ) ( 2,164 ) Additional paid-in capital 3,321,242 2,821,461 Accumulated other comprehensive loss ( 28,376 ) ( 19,360 ) Accumulated deficit ( 1,287,323 ) ( 1,670,219 ) Total stockholders’ equity 2,002,692 1,129,739 Total liabilities and equity $ 4,012,705 $ 2,971,290 The accompanying notes are an integral part of these consolidated financial statements. Docusign, Inc. | 2025 Form 10-K | 62 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Year Ended January 31, (in thousands, except per share data) 2025 2024 2023 Revenue: Subscription $ 2,901,309 $ 2,686,708 $ 2,442,177 Professional services and other 75,430 75,174 73,738 Total revenue 2,976,739 2,761,882 2,515,915 Cost of revenue: Subscription 532,445 459,905 426,077 Professional services and other 89,214 112,716 110,011 Total cost of revenue 621,659 572,621 536,088 Gross profit 2,355,080 2,189,261 1,979,827 Operating expenses: Sales and marketing 1,160,993 1,168,137 1,242,711 Research and development 588,455 539,488 480,584 General and administrative 375,983 419,621 316,228 Restructuring and other related charges 29,721 30,381 28,335 Total operating expenses 2,155,152 2,157,627 2,067,858 Income (loss) from operations 199,928 31,634 ( 88,031 ) Interest expense ( 1,550 ) ( 6,844 ) ( 6,389 ) Interest income and other income, net 49,563 68,889 4,539 Income (loss) before provision for income taxes 247,941 93,679 ( 89,881 ) Provision for (benefit from) income taxes ( 819,944 ) 19,699 7,573 Net income (loss) $ 1,067,885 $ 73,980 $ ( 97,454 ) Net income (loss) per share attributable to common stockholders: Basic $ 5.23 $ 0.36 $ ( 0.49 ) Diluted $ 5.08 $ 0.36 $ ( 0.49 ) Weighted-average shares used in computing net income (loss) per share: Basic 204,329 204,070 200,903 Diluted 210,339 208,950 200,903 Other comprehensive income (loss): Foreign currency translation losses, net of tax $ ( 9,651 ) $ ( 254 ) $ ( 15,336 ) Unrealized gains (losses) on investments, net of tax 635 3,890 ( 2,851 ) Other comprehensive income (loss) ( 9,016 ) 3,636 ( 18,187 ) Comprehensive income (loss) $ 1,058,869 $ 77,616 $ ( 115,641 ) Stock-based compensation expense included in costs and expenses: Cost of revenue—subscription $ 58,348 $ 51,660 $ 46,916 Cost of revenue—professional services and other 18,639 28,336 25,758 Sales and marketing 202,609 203,855 222,334 Research and development 204,238 184,211 149,967 General and administrative 121,665 143,773 88,125 Restructuring and other related charges 4,836 5,012 5,626 The accompanying notes are an integral part of these consolidated financial statements. Docusign, Inc. | 2025 Form 10-K | 63 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, 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 — — 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 Settlement of convertible senior notes due in 2024 — — 104 — — — 104 Exercise of stock options 840 — 13,991 — — — 13,991 Settlement of restricted stock units 7,523 1 — — — — 1 Tax withholding on net share settlement of restricted stock units and employee stock purchase plan ( 2,722 ) — ( 141,994 ) ( 379 ) — — ( 142,373 ) Employee stock purchase plan 839 — 32,993 — — — 32,993 Repurchases of common stock ( 3,058 ) — — — — ( 145,515 ) ( 145,515 ) Settlement of capped calls, net of related costs — — 23,688 — — — 23,688 Employee stock-based compensation — — 651,947 — — — 651,947 Net income — — — — — 73,980 73,980 Other comprehensive income, net — — — — 3,636 — 3,636 Balances at January 31, 2024 205,326 $ 21 $ 2,821,461 $ ( 2,164 ) $ ( 19,360 ) $ ( 1,670,219 ) $ 1,129,739 The accompanying notes are an integral part of these consolidated financial statements. Docusign, Inc. | 2025 Form 10-K | 64 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued) Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity (in thousands) Shares Amount Balances at January 31, 2024 205,326 21 2,821,461 ( 2,164 ) ( 19,360 ) ( 1,670,219 ) 1,129,739 Exercise of stock options 1,301 — 22,705 — — — 22,705 Settlement of restricted stock units 9,275 — — — — — — Tax withholding on net share settlement of restricted stock units and employee stock purchase plan ( 3,333 ) — ( 215,112 ) ( 707 ) — — ( 215,819 ) Employee stock purchase plan 862 — 35,314 — — — 35,314 Repurchases of common stock ( 10,954 ) ( 1 ) — — — ( 684,989 ) ( 684,990 ) Employee stock-based compensation — — 656,874 — — — 656,874 Net income — — — — — 1,067,885 1,067,885 Other comprehensive loss, net — — — — ( 9,016 ) — ( 9,016 ) Balances at January 31, 2025 202,477 $ 20 $ 3,321,242 $ ( 2,871 ) $ ( 28,376 ) $ ( 1,287,323 ) $ 2,002,692 The accompanying notes are an integral part of these consolidated financial statements. Docusign, Inc. | 2025 Form 10-K | 65 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended January 31, (in thousands) 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 1,067,885 $ 73,980 $ ( 97,454 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization 107,804 95,062 86,255 Amortization of deferred contract acquisition and fulfillment costs 237,217 200,163 185,045 Amortization of debt discount and transaction costs 554 4,749 4,970 Non-cash operating lease costs 19,065 21,310 27,501 Stock-based compensation expense 610,335 616,847 538,726 Deferred income taxes ( 839,989 ) 6,292 1,697 Other 6,111 ( 1,904 ) 15,723 Changes in operating assets and liabilities Accounts receivable 2,075 71,681 ( 75,964 ) Prepaid expenses and other current assets ( 17,634 ) ( 657 ) ( 5,038 ) Deferred contract acquisition and fulfillment costs ( 302,166 ) ( 255,159 ) ( 232,315 ) Other assets ( 22,002 ) ( 15,432 ) ( 22,319 ) Accounts payable 7,638 ( 4,826 ) ( 26,440 ) Accrued expenses and other liabilities 2,935 6,473 7,340 Accrued compensation 29,236 33,979 ( 1,781 ) Contract liabilities 129,854 152,247 143,177 Operating lease liabilities ( 21,646 ) ( 25,279 ) ( 42,364 ) Net cash provided by operating activities 1,017,272 979,526 506,759 Cash flows from investing activities: Cash paid for acquisition, net of acquired cash ( 143,611 ) — — Purchases of marketable securities ( 411,236 ) ( 336,221 ) ( 533,710 ) Maturities of marketable securities 340,334 473,869 423,917 Purchases of strategic and other investments ( 1,375 ) ( 645 ) ( 3,750 ) Purchases of property and equipment ( 96,988 ) ( 92,391 ) ( 77,654 ) Net cash provided by (used in) investing activities ( 312,876 ) 44,612 ( 191,197 ) Cash flows from financing activities: Repayments of convertible senior notes — ( 726,979 ) ( 16 ) Repurchases of common stock ( 683,528 ) ( 145,515 ) ( 63,041 ) Settlement of capped calls, net of related costs — 23,688 — Payment of tax withholding obligation on net RSU settlement and ESPP purchase ( 213,282 ) ( 144,218 ) ( 84,403 ) Proceeds from exercise of stock options 22,705 13,991 12,678 Proceeds from employee stock purchase plan 35,314 32,994 36,526 Net cash used in financing activities ( 838,791 ) ( 946,039 ) ( 98,256 ) Effect of foreign exchange on cash, cash equivalents and restricted cash ( 7,550 ) 199 ( 3,784 ) Net increase (decrease) in cash, cash equivalents and restricted cash ( 141,945 ) 78,298 213,522 Cash, cash equivalents and restricted cash at beginning of period 801,499 723,201 509,679 Cash, cash equivalents and restricted cash at end of period $ 659,554 $ 801,499 $ 723,201 The accompanying notes are an integral part of these consolidated financial statements. Docusign, Inc. | 2025 Form 10-K | 66 DOCUSIGN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Year Ended January 31, (in thousands) 2025 2024 2023 Supplemental disclosure: Cash paid for interest $ — $ 185 $ 185 Cash paid for operating lease liabilities 26,500 34,845 38,873 Cash paid for income taxes 24,324 10,460 10,416 Non-cash investing and financing activities: Property and equipment in accounts payable and accrued expenses and other current liabilities $ 5,687 $ 2,879 $ 4,757 Operating lease right-of-use assets exchanged for lease obligations 5,586 3,149 63,086 Excise tax payable on net stock repurchase 1,461 — — Fair value of shares issued as part of the repayments of convertible senior notes — — 2 The accompanying notes are an integral part of these consolidated financial statements. Docusign, Inc. | 2025 Form 10-K | 67 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 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. 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 2025, for example, are to the fiscal year ended January 31, 2025. 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 fair value of intangible assets acquired in business combinations; • the average period of benefit associated with deferred contract acquisition costs and fulfillment costs; • the fair value of certain stock awards issued; • the useful life and recoverability of long-lived assets; • the discount rate used for operating leases; • the recognition and measurement of loss contingencies; 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, 2025, 2024, and 2023 or for more than 10% of our accounts receivable as of January 31, 2025 and 2024. 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. | 2025 Form 10-K | 68 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. 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. Docusign, Inc. | 2025 Form 10-K | 69 Professional Services and Other Revenue Professional services and other revenue consists of fees associated with consulting and training services from assisting customers in implementing and expanding the use of our software 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. 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 the weighted 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 income (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. Docusign, Inc. | 2025 Form 10-K | 70 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. “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 income (loss). Advertising expense was $ 79.0 million, $ 95.0 million and $ 128.3 million in the years ended January 31, 2025, 2024 and 2023. 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. From time to time, we grant RSUs that also include performance-based or market-based conditions. 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 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 our 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. Docusign, Inc. | 2025 Form 10-K | 71 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 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. 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. We recognize the tax benefit of an uncertain tax position only if it is more-likely-than-not that, based on the technical merits, the position is sustainable upon examination by the taxing authority. The tax benefit recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement with the taxing authority. We recognize accrued interest and penalties related to unrecognized tax benefits in the provision for (benefit from) income taxes. 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 income (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 income (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 Income (Loss) Per Share Attributable to Common Stockholders In periods when we have net income, we compute basic and diluted net income 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. Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders is computed by giving effect to all potential shares of common stock, including, as applicable, shares underlying our convertible senior notes, unvested stock awards, 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. The dilutive potential shares of common stock are computed using the treasury stock method or the as-if converted method, as applicable. For periods presented in which we have reported net losses, 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. Docusign, Inc. | 2025 Form 10-K | 72 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, municipal 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. 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, 2025 and 2024, we held equity investments in privately-held companies totaling $ 14.7 million and $ 13.2 million that were classified in “Other assets—noncurrent” on our consolidated balance sheets. Restricted Cash Restricted cash consists primarily 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. 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, 2025, 2024, and 2023: January 31, (in thousands) 2025 2024 2023 Cash and cash equivalents $ 648,623 $ 797,060 $ 721,895 Restricted cash included in prepaid expense and other current assets 952 1,332 37 Restricted cash included in other assets - noncurrent 9,979 3,107 1,269 Total cash, cash equivalents, and restricted cash $ 659,554 $ 801,499 $ 723,201 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: Docusign, Inc. | 2025 Form 10-K | 73 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. Accounts Receivable 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 credit losses. This allowance is for estimated losses resulting from the inability of our customers to make required payments. Our allowance for credit losses 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 an allowance for 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 credit losses 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 income (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 Docusign, Inc. | 2025 Form 10-K | 74 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 “Income (loss) from operations” in our consolidated statements of operations and comprehensive income (loss). We did not have material finance leases for all periods presented. 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 year ended January 31, 2025, 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, 2024 and 2023. 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 as well as 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. There was no impairment of long-lived assets recognized in all periods presented. Docusign, Inc. | 2025 Form 10-K | 75 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 $ 83.6 million and $ 64.8 million as of January 31, 2025 and 2024, 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. Management’s estimates of fair value are based upon assumptions, including, in the case of acquired intangible assets, the time and resources required to recreate the assets acquired. The assumptions 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 based upon such assumptions are believed to be reasonable, but 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 income (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 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. Subsequent unwinding of capped calls was recorded as an increase to cash and additional paid-in capital upon settlement. Docusign, Inc. | 2025 Form 10-K | 76 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 adopted Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which enhances disclosures required for operating segments. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. Refer to Not e 16 in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retrospective basis. We are currently evaluating the effect of adopting ASU 2023-09 on our income tax disclosures. In November 2024, the FASB issued Accounting Standards Update 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)" (“ASU 2024-03”), which requires more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of operations. Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses. ASU 2024-03 is effective for annual filings for our fiscal year beginning February 1, 2027, and interim filings for the fiscal year beginning February 1, 2028, and can be applied either prospectively or retrospectively. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2024-03 on our financial statements. Docusign, Inc. | 2025 Form 10-K | 77 Note 2. Revenue Subscription revenue is recognized over time and accounted for approximately 97 % of our revenue in each of the years ended January 31, 2025, 2024 and 2023. Performance Obligations As of January 31, 2025, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $ 2.4 billion. We expect to recognize 55 % of the transaction price allocated to remaining performance obligations within the 12 months following January 31, 2025 in our consolidated statement of operations and comprehensive income (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 $ 13.8 million and $ 15.9 million as of January 31, 2025 and 2024. 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 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, 2025 , 2024 and 2023, we recognized reve nue of $ 1.3 billion, $ 1.2 billion and $ 1.0 billion 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. Docusign, Inc. | 2025 Form 10-K | 78 Note 3 . Fair Value Measurements The following table summarizes our financial assets that are measured at fair value on a recurring basis: January 31, 2025 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Level 1: Cash equivalents (1) Money market funds $ 183,885 $ — $ — $ 183,885 Level 2: Available-for-sale securities Commercial paper 31,367 12 ( 8 ) 31,371 Corporate notes and bonds 399,034 522 ( 378 ) 399,178 U.S. governmental securities 18,500 1 ( 21 ) 18,480 Level 2 total 448,901 535 ( 407 ) 449,029 Total $ 632,786 $ 535 $ ( 407 ) $ 632,914 January 31, 2024 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Level 1: Cash equivalents (1) Money market funds $ 298,517 $ — $ — $ 298,517 Level 2: Cash equivalents (1) Commercial paper 43,845 — ( 9 ) 43,836 U.S. government agency securities 9,968 — ( 1 ) 9,967 Available-for-sale securities Commercial paper 42,958 2 ( 25 ) 42,935 Corporate notes and bonds 299,166 262 ( 670 ) 298,758 U.S. governmental securities 28,752 — ( 66 ) 28,686 Level 2 total 424,689 264 ( 771 ) 424,182 Total $ 723,206 $ 264 $ ( 771 ) $ 722,699 (1) Included in "cash and cash equivalents" in our consolidated balance sheets as of January 31, 2025 and 2024, in addition to cash of $ 464.7 million and $ 444.8 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, 2025, by remaining contractual maturities, were as follows (in thousands): Due in one year or less $ 314,924 Due in one to two years 134,105 $ 449,029 Docusign, Inc. | 2025 Form 10-K | 79 As of January 31, 2025 and 2024, 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, 2025 and 2024. Strategic Investments As of January 31, 2025 and 2024, we held equity investments in privately-held companies totaling $ 14.7 million and $ 13.2 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. Note 4 . Property and Equipment, Net Property and equipment, net consisted of the following: January 31, (in thousands) 2025 2024 Computer and network equipment $ 133,486 $ 142,241 Software, including capitalized software development costs 278,918 168,584 Furniture and office equipment 20,360 18,196 Leasehold improvements 64,012 58,230 496,776 387,251 Less: Accumulated depreciation ( 303,676 ) ( 244,270 ) 193,100 142,981 Work in progress 106,270 102,192 $ 299,370 $ 245,173 Depreciation and amortization expenses associated with property and equipment was $ 83.1 million, $ 75.7 million and $ 65.5 million in the years ended January 31, 2025, 2024 and 2023. This included amortization expense related to capitalized internally-developed software costs of $ 55.2 million, $ 35.1 million and $ 19.7 million in the respective years . We capitalized $ 114.7 million, $ 95.3 million and $ 66.1 million of internally developed software costs, including $ 38.9 million, $ 30.8 million and $ 19.2 million of capitalized stock-based compensation in the years ended January 31, 2025, 2024 and 2023, respectively. Docusign, Inc. | 2025 Form 10-K | 80 Note 5. Acquisitions Acquisition of DocuSmart, Inc. d/b/a Lexion On May 31, 2024 (“Acquisition Date”), we acquired 100 % of the outstanding equity interests of DocuSmart, Inc. (“Lexion”), an AI-powered contract management platform which features intelligent contract repository and agreement workflow automation and reporting. We are integrating Lexion’s technology and capabilities comprehensively across Docusign solutions, including advanced document understanding for contract reviews, negotiations, insights and analysis, to better enable organizations to create, commit to, and manage agreements. The results of Lexion’s operations have been included in the accompanying consolidated financial statements since the Acquisition Date. The acquisition purchase consideration totaled $ 154.0 million and was paid in cash. We paid $ 17.4 million of the consideration to an escrow account held for 18 months by a third party for post-closing indemnification obligations. 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 replacement cost method. Excess purchase price consideration was recorded as goodwill and is primarily attributable to the assembled workforce and expanded market opportunities when integrating Lexion’s intelligent contract repository and agreement workflow automation capabilities within Docusign’s IAM platform. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Annual Report on Form 10-K. We continue to collect information with regards to our estimates and assumptions, including potential liabilities, contingencies, and the allocation of the purchase price. We will record adjustments to the fair value of the net assets acquired, liabilities assumed and goodwill within the measurement period, if necessary. The following table summarizes preliminary allocation of purchase consideration to assets acquired and liabilities assumed based on their respective estimated fair values as of the date of acquisition: (in thousands) As Adjusted Cash and cash equivalents $ 10,409 Accounts receivable, net 1,741 Goodwill 102,152 Intangible assets, net 50,200 Contract liabilities — current ( 5,071 ) Deferred tax liability ( 4,661 ) Accrued expenses and other current liabilities ( 750 ) Total purchase consideration $ 154,020 None of the goodwill recognized upon acquisition is deductible for U.S. federal income tax purposes. The estimated useful lives of intangible assets, primarily based on the expected period of benefit to us, and fair values of the identifiable intangible assets at Acquisition Date were as follows: (in thousands, except years) Estimated Fair Value Expected Useful Life Existing technology $ 29,900 5.0 years Customer relationships—subscription 20,300 7.0 years Total intangible assets $ 50,200 5.8 years Additionally, the purchase agreement provides for $ 19.1 million of deferred compensation for key employees for which post acquisition employment service is required. The deferred compensation was paid into an escrow account at closing and recorded as prepaid asset that will amortize into compensation expense on a straight-line basis over the three year term of the arrangement. We granted certain continuing employees and founders of Lexion RSUs with an aggregate grant date fair value of $ 34.8 million that are being accounted for as a post-acquisition compensation expense over the vesting period. During the year ended January 31, 2025, we incurred acquisition related expenses of $ 4.3 million which are recognized within general and administrative expenses in the consolidated statement of operations. Docusign, Inc. | 2025 Form 10-K | 81 The following unaudited pro forma information has been prepared for illustrative purposes only and assumes the acquisition occurred on February 1, 2023. It includes pro forma adjustments related to the amortization of acquired intangible assets, share-based compensation expense, deferred compensation, and transaction related expenses. The impact of pro forma adjustments during the year ended January 31, 2025 is not material. For the purpose of computing the pro forma tax effects of the acquisition, we applied the historical annual effective tax rate for the year ended January 31, 2024 to the combined entity results. 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, 2023, or of future results of operations: Year Ended January 31, (in thousands) (unaudited) 2024 Net income $ 37,199 Docusign, Inc. | 2025 Form 10-K | 82 Note 6 . Goodwill and Intangible Assets, Net The changes in the carrying amount of goodwill were as follows (in thousands): Balance at January 31, 2023 $ 353,619 Foreign currency translation ( 481 ) Balance at January 31, 2024 353,138 Additions—Lexion 102,152 Foreign currency translation ( 813 ) Balance at January 31, 2025 $ 454,477 Intangible assets consisted of the following: As of January 31, 2025 As of January 31, 2024 (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 4.0 $ 104,694 $ ( 76,644 ) $ 28,050 $ 76,194 $ ( 65,777 ) $ 10,417 Customer contracts & related relationships 4.9 124,112 ( 67,127 ) 56,985 110,082 ( 60,947 ) 49,135 Other 0.0 7,516 ( 7,516 ) — 22,534 ( 22,534 ) — 4.6 $ 236,322 $ ( 151,287 ) 85,035 $ 208,810 $ ( 149,258 ) 59,552 Cumulative translation adjustment ( 8,647 ) ( 8,647 ) Total $ 76,388 $ 50,905 Amortization of finite-lived intangible assets was as follows: Year Ended January 31, (in thousands) 2025 2024 2023 Cost of subscription revenue $ 12,267 $ 8,857 $ 9,613 Sales and marketing 12,450 10,518 11,093 Total $ 24,717 $ 19,375 $ 20,706 As of January 31, 2025, 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) 2026 $ 21,535 2027 19,398 2028 16,938 2029 13,191 2030 9,063 Thereafter 4,910 Total $ 85,035 Docusign, Inc. | 2025 Form 10-K | 83 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) 2025 2024 Deferred Contract Acquisition Costs Beginning balance $ 409,658 $ 355,389 Additions to deferred contract acquisition costs 261,088 209,353 Amortization of deferred contract acquisition costs ( 197,832 ) ( 155,807 ) Cumulative translation adjustment ( 5,713 ) 723 Ending balance $ 467,201 $ 409,658 Deferred Contract Fulfillment Costs Beginning balance $ 22,525 $ 21,076 Additions to deferred contract fulfillment costs 41,078 45,806 Amortization of deferred contract fulfillment costs ( 39,385 ) ( 44,356 ) Cumulative translation adjustment ( 561 ) ( 1 ) Ending balance $ 23,657 $ 22,525 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. When outstanding, the Notes were senior unsecured obligations and ranked senior in right of payment to any of our indebtedness that was 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. The 2023 Notes were governed by an indenture dated September 18, 2018 (the “2018 Indenture”). The 2024 Notes were governed by an indenture dated January 15, 2021 (the “2021 Indenture,” and together with the 2018 Indenture, the “Indentures”). The Indentures were between us, as the issuer, and U.S. Bank National Association, as trustee. The Indentures did 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 matured on September 15, 2023. Interest on the 2023 Notes was payable semi-annually in arrears on March 15 and September 15 of each year. The Notes were subject to additional interest in certain events of default. The 2024 Notes matured on January 15, 2024. Extinguishment of the 2023 Notes and 2024 Notes We repaid in cash $ 37.1 million and $ 689.9 million in aggregate principal amount of the 2023 Notes and 2024 Notes respectively during the year ended January 31, 2024. Docusign, Inc. | 2025 Form 10-K | 84 The effective interest rate on the 2023 Notes was 5.9 %. The effective interest rate on the 2024 Notes was 3.8 %. Interest expense recognized related to the Notes was as follows: Year Ended January 31, (in thousands) 2025 2024 2023 Contractual interest expense $ — $ 425 $ 185 Amortization of transaction costs — 4,197 4,415 Total $ — $ 4,622 $ 4,600 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. In the first quarter of fiscal 2024, we unwound $ 23.7 million of the Capped Calls in relation to our 2023 Notes and received cash from the counterparties. All remaining Capped Calls associated with the 2023 Notes and 2024 Notes expired during the year ended January 31, 2024. Impact on Net Income (Loss) Per Share In periods when we have net income, the shares of our common stock subject to the Notes outstanding during the period are included in our diluted earnings per share under the if-converted method. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive. However, upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the initial $ 110.00 per share cap price associated with the 2023 Notes and $ 525.30 per share cap price associated with the 2024 Notes, 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, 2024 and 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, 2024 and 2023. Revolving Credit Facility In January 2021, we entered into a credit agreement, as subsequently amended in May 2023, 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, 2025. As of January 31, 2025, 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. | 2025 Form 10-K | 85 Note 9. Leases We lease offices under noncancelable operating lease agreements that expire at various dates through the end of July 2034. 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 years ended January 31, 2025 , 2024 and 2023 was $ 25.6 million, $ 28.5 million and $ 33.2 million. Future lease payments under operating leases as of January 31, 2025, were as follows: Fiscal Period: Amount (in thousands) 2026 $ 24,480 2027 22,357 2028 18,010 2029 15,494 2030 14,968 Thereafter 54,223 Total undiscounted cash flows $ 149,532 Less: imputed interest ( 25,105 ) Present value of lease liabilities $ 124,427 The weighted average remaining lease terms as of January 31, 2025 and 2024 were 7.5 years and 8.1 years. The discount rates for operating leases as of January 31, 2025 and 2024 were 4.8 % and 4.7 %. Note 10 . Commitments and Contingencies 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, 2025, 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) 2026 $ 38,504 2027 23,732 2028 9,448 2029 1,838 2030 484 Thereafter — Total $ 74,006 We entered into agreements, which include minimum commitments, with public cloud computing service providers. As of January 31, 2025, our remaining minimum commitments under these agreements are $ 11.1 million through fiscal 2027 and $ 51.8 million through fiscal 2028, which are excluded from the table above. Docusign, Inc. | 2025 Form 10-K | 86 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, 2025 and 2024 . 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, investigations or other contingencies in the ordinary course of business. If we are unsuccessful in defending, or if we determine to settle, any of these matters, we may be required to pay substantial sums, be subject to injunction and/or be required to change how we operate our business, which could have a material adverse impact on our financial position or results of operations. Legal costs associated with litigation are expensed as incurred. Unless otherwise stated, we are unable to reasonably estimate the loss or a range of possible loss for the matters described below. In certain instances, we may be unable to determine that a loss is probable, or to reasonably estimate the amount of loss or a range of loss, for a claim because of the limited information available and the potential effects of future events and decisions by third parties, such as courts and regulators, that will determine the ultimate resolution of the claim. We review loss contingencies at least quarterly to determine whether the likelihood of loss has changed and whether we can make a reasonable estimate of the loss or range of loss. When we determine that a loss from a claim is probable and reasonably estimable, we record a liability for an estimated amount. We also provide disclosure when we determine it is reasonably possible that a loss may be incurred or when it is reasonably possible that the amount of a loss will exceed its recorded liability. Because these issues are often subject to substantial uncertainty, the probability of a loss (if any) and/or the estimated amount of a loss are difficult to ascertain. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, we believe the final outcome of these matters, including the cases 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 then-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, as amended, 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. Our motion to dismiss was denied by the U.S. District Court on April 18, 2023 and we have continued to defend the case since that time. Eight putative shareholder derivative cases have been filed containing allegations based on or similar to those in the securities class action. The cases were filed on May 17, 2022, in the U.S. District Court for the District of Delaware, captioned Pottetti 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; 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; on March 7, 2024 in the Delaware Court of Chancery, captioned Roy v. Alhadeff, et al., Case No. C.A. 2024-0223-PAF; on April 9, 2024, in the U.S. District Court for the Northern District of California, captioned Alexander v. Springer, et al., Case No. 3:24-cv-02139; on April 11, 2024, in the Delaware Court of Chancery, captioned Ingrao v. Beer, et al., Case No. C.A. 2024-0382-PAF; and on May 28, 2024, in the Delaware Court of Chancery, captioned Jordan v. Springer, et al., Case No. C.A. 2024-0564-PAF. 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, then-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, as well Docusign, Inc. | 2025 Form 10-K | 87 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, gross mismanagement, 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 first 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 most recent case in the Northern District of California (Alexander) was also related to the other derivative suits and assigned to the same judge, and subsequently consolidated with Lapin and Votto and stayed by order of the court on May 8, 2024. The Delaware suit (Pottetti) 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. On May 28, 2024, plaintiff filed a notice seeking to voluntarily dismiss the Delaware Court of Chancery Pottetti action. On June 14, 2024, the plaintiff in Pottetti moved to voluntarily dismiss that action and the Court granted the dismissal on June 17, 2024. On September 30, 2024, the newly filed suits (Roy, Ingrao, and Jordan) were consolidated and stayed in light of the securities class action, such that no response to the complaints would be due unless and until the stay is lifted. Docusign Civil Litigation On January 26, 2023, Docusign’s former Chief Executive Officer, Daniel 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. The demand alleged that Mr. Springer was wrongfully terminated as CEO; asserted related claims against Docusign and Ms. Wilderotter, including defamation, withholding promised compensation and breach of contract. The arbitration hearing for this case took place in March 2024. On August 28, 2024, the arbitrator issued a final, non-appealable order which decided against Mr. Springer on all of his claims, and did not award him any relief. Docusign considers the matter closed. Docusign, Inc. | 2025 Form 10-K | 88 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) 2025 2024 RSUs outstanding 27,268 26,965 Options issued and outstanding 83 1,385 Remaining shares available for future issuance under the Equity Incentive Plans 39,387 35,663 Remaining shares available for future issuance under the ESPP 11,819 10,628 Total shares of common stock reserved 78,557 74,641 Equity Incentive Plans We maintain two stock-based compensation plans: the 2018 Equity Incentive Plan (the “2018 Plan”) and the Amended and Restated 2011 Equity Incentive Plan (the “2011 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 the Amended and Restated 2003 Stock Plan (the “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 the 2011 plan continue to be subject to the terms and conditions of the respective plan. There are no outstanding awards under the 2003 plan. 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, we grant performance stock awards to our executives on an annual basis. Shares available for grant under the 2018 Plan for the year ended January 31, 2025 was as follows: (in thousands) Year Ended January 31, 2025 Available at beginning of fiscal year 35,663 Awards authorized 10,266 Shares granted ( 13,892 ) Shares canceled/expired 4,029 Shares withheld for taxes 3,321 Available at end of fiscal year 39,387 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, 2025. Docusign, Inc. | 2025 Form 10-K | 89 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 conditions. 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, 2025, 2024 and 2023 was $ 60.89 , $ 54.15 and $ 66.50 per share. The total grant date fair value of RSUs vested during the years ended January 31, 2025, 2024 and 2023 was $ 627.9 million, $ 631.8 million and $ 461.8 million. RSU activity for the year ended January 31, 2025 was as follows: (in thousands, except per share data) Number of Units Weighted-Average Grant Date Fair Value Unvested at January 31, 2024 26,700 $ 60.70 Granted 13,892 60.89 Vested ( 9,296 ) 67.55 Canceled ( 4,028 ) 64.83 Unvested at January 31, 2025 27,268 $ 57.62 As of January 31, 2025, our total unrecognized compensation cost related to RSUs was $ 1.2 billion. We expect to recognize this expense over the remaining weighted-average period of approximately 2.7 years. As of January 31, 2025, the grant date fair value of unvested RSUs subject to market-based and performance-based vesting conditions was $ 147.1 million. The number of RSUs granted or canceled included in the table above reflects shares that could be eligible to vest at 100 % of target for PSUs and includes adjustments for over or under achievement for PSUs granted in prior periods. We calculated the fair value of the RSU with market conditions using a Monte Carlo option-pricing model based on the following assumptions: Year Ended January 31, 2025 2024 2023 Risk-free interest rate 3.85 % - 4.41 % 4.12 % 3.21 % - 4.42 % Expected dividend yield — % — % — % Expected life (in years) 2.8 - 3.0 3.0 1.0 - 6.7 Expected volatility 69 % - 70 % 71 % 54 % - 66 % Stock Options There were no options granted during the years ended January 31, 2025, 2024 and 2023 . Option activity for the year ended January 31, 2025 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, 2024, all vested and exercisable 1,385 $ 17.39 2.63 $ 60,117 Exercised ( 1,301 ) 17.43 Canceled/expired ( 1 ) 13.43 Outstanding at January 31, 2025, all vested and exercisable 83 $ 16.82 0.44 $ 6,187 Docusign, Inc. | 2025 Form 10-K | 90 As of January 31, 2025, 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, 2025, 2024 and 2023 was $ 73.6 million, $ 23.6 million and $ 48.1 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. 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, 2025 2024 2023 Risk-free interest rate 4.45 % - 5.35 % 4.93 % - 5.59 % 1.15 %- 4.04 % Expected dividend yield — % — % — % Expected life of purchase right (in years) 0.5 0.5 0.5 Expected volatility 32 % - 41 % 31 % - 76 % 83 % - 102 % 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 $ 13.4 million, $ 16.0 million and $ 22.2 million for the years ended January 31, 2025, 2024 and 2023. 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, 2025, 11.8 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. Subsequently, in September 2023, our board of directors authorized an increase to its existing stock repurchase program for an additional amount of up to $ 300.0 million of our outstanding common stock. Most recently, in May 2024, our board of directors authorized an increase to our existing stock repurchase program for an additional amount of up to $ 1.0 billion of our outstanding common stock. The following table summarizes the share repurchase activity under our stock repurchase program: Year Ended January 31, (in thousands) 2025 2024 2023 Number of shares repurchased 10,954 3,058 1,135 Aggregate purchase price $ 684,989 $ 145,515 $ 63,041 Docusign, Inc. | 2025 Form 10-K | 91 Note 12. Restructuring and Other Related Charges 2023 Restructuring Plan 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. As of the fourth quarter of fiscal 2023, the 2023 Restructuring Plan had been substantially completed. 2024 Restructuring Plan During fiscal 2024 , the board of directors authorized the 2024 Restructuring Plan designed to support our growth, scale and profitability objectives. As of the second quarter of fiscal 2024, the 2024 Restructuring Plan had been substantially completed. 2025 Restructuring Plan During fiscal 2025 , the board of directors authorized the 2025 Restructuring Plan designed to strengthen and support our financial and operational efficiency while continuing to invest in product and related initiatives. As of the second quarter of fiscal 2025, the 2025 Restructuring Plan had been substantially completed. The amounts associated with our restructuring plans are recorded to the Restructuring and other related charges within our consolidated statements of operations and comprehensive income (loss) as they are incurred. For the year ended January 31, 2025, restructuring and other related charges were $ 29.7 million for employee termination benefits, which included stock-based compensation expense of $ 4.8 million. For the year ended January 31, 2024, restructuring and other related charges were $ 30.4 million, and primarily composed of $ 28.8 million for employee termination benefits, which included stock-based compensation expense of $ 5.0 million. 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, 2025: (in thousands) January 31, 2024 Accruals Cash Payments January 31, 2025 2024 Restructuring Plan Other $ 122 $ — $ ( 122 ) $ — Total $ 122 $ — $ ( 122 ) $ — 2025 Restructuring Plan Employee termination benefits $ — $ 24,874 $ ( 24,796 ) $ 78 Total $ — $ 24,874 $ ( 24,796 ) $ 78 Docusign, Inc. | 2025 Form 10-K | 92 Note 13 . Net Income (Loss) per Share Attributable to Common Stockholders The following table presents the calculation of basic and diluted net income (loss) per share attributable to common stockholders for periods presented: Year Ended January 31, (in thousands, except per share data) 2025 2024 2023 Numerator: Net income (loss) attributable to common stockholders, basic $ 1,067,885 $ 73,980 $ ( 97,454 ) Add: Interest expense on convertible senior notes — 425 — Net income (loss) attributable to common stockholders, diluted $ 1,067,885 $ 74,405 $ ( 97,454 ) Denominator: Weighted-average common shares outstanding, basic 204,329 204,070 200,903 Effect of dilutive securities 6,010 4,880 — Weighted-average common shares outstanding, diluted 210,339 208,950 200,903 Net income (loss) per share attributable to common stockholders: Basic $ 5.23 $ 0.36 $ ( 0.49 ) Diluted $ 5.08 $ 0.36 $ ( 0.49 ) 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) 2025 2024 2023 RSUs 1,048 6,430 15,129 Stock options — — 2,228 ESPP — — 516 Convertible senior notes — — 2,161 Total antidilutive securities 1,048 6,430 20,034 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, 2025, 2024 and 2023, we recognized expenses of $ 34.7 million, $ 33.2 million and $ 32.3 million related to matching contributions. Docusign, Inc. | 2025 Form 10-K | 93 Note 15 . Income Taxes The domestic and foreign components of pre-tax income (loss) were as follows: Year Ended January 31, (in thousands) 2025 2024 2023 U.S. $ 179,128 $ 54,551 $ 19,673 International 68,813 39,128 ( 109,554 ) Income (loss) before income taxes $ 247,941 $ 93,679 $ ( 89,881 ) The components of our income tax provision were as follows: Year Ended January 31, (in thousands) 2025 2024 2023 Current Federal $ 4,758 $ 6,390 $ ( 464 ) State 7,936 2,018 1,666 Foreign 6,105 4,974 4,674 Total current 18,799 13,382 5,876 Deferred Federal ( 747,082 ) 21 21 State ( 94,945 ) 2 ( 21 ) Foreign 3,284 6,294 1,697 Total deferred ( 838,743 ) 6,317 1,697 Provision for income taxes $ ( 819,944 ) $ 19,699 $ 7,573 The reconciliation of the statutory federal income tax rate to our effective tax rate was as follows: Year Ended January 31, (in percentage) 2025 2024 2023 U.S. statutory rate 21.0 % 21.0 % 21.0 % State taxes 4.0 2.4 ( 2.4 ) Foreign tax rate differential 0.5 37.9 16.4 Foreign-derived intangible income deduction ( 3.8 ) ( 11.7 ) — Stock-based compensation 7.9 81.8 ( 55.1 ) Change in valuation allowance ( 331.7 ) ( 102.5 ) ( 35.5 ) Dual Jurisdiction Deferred Taxes ( 2.9 ) 36.0 39.2 Research and development credits ( 17.3 ) ( 46.0 ) 20.1 Other deferred adjustment ( 10.7 ) ( 1.2 ) ( 10.7 ) Other 2.3 3.3 ( 1.4 ) Effective tax rate ( 330.7 ) % 21.0 % ( 8.4 ) % Docusign, Inc. | 2025 Form 10-K | 94 The significant components of net deferred tax balances were as follows: January 31, (in thousands) 2025 2024 Deferred tax assets Net operating loss carryforwards $ 486,505 $ 570,152 Accruals and reserves 16,772 14,895 Stock-based compensation 42,949 39,320 Research and development credits 179,275 147,959 Capitalized research and development expenses 350,729 246,945 Other 54,286 53,140 Total deferred tax assets 1,130,516 1,072,411 Less: Valuation allowance ( 112,847 ) ( 934,816 ) Deferred tax assets, net of valuation allowance 1,017,669 137,595 Deferred tax liabilities Deferred contract acquisition costs ( 121,678 ) ( 100,806 ) Fixed Assets and Intangible Assets ( 54,137 ) ( 26,258 ) Other ( 21,980 ) ( 25,242 ) Total deferred tax liabilities ( 197,795 ) ( 152,306 ) Net deferred tax assets / (liabilities) $ 819,874 $ ( 14,711 ) Our income tax benefit was $ 819.9 million for the year ended January 31, 2025. The benefit was primarily attributable to the release of valuation allowances related to U.S. federal and certain state deferred tax assets of $ 837.3 million. 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. 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. Recognized tax benefits on total stock-based compensation expense, which are reflected in the "Provision for (benefit from) income taxes" in the consolidated statements of operations and comprehensive income (loss), were $ 143.0 million, $ 7.1 million and $ 3.3 million in the years ended January 31, 2025, 2024 and 2023, respectively. Our tax provision includes $ 16.0 million of excess tax benefits, $ 3.8 million tax shortfall and $ 2.2 million tax shortfall from stock-based compensation for the years ended January 31, 2025, 2024 and 2023, respectively. As of January 31, 2025, we had accumulated net operating loss carryforwards of $ 1.8 billion for federal and $ 1.3 billion for state. Of the federal net operating losses, $ 1.8 billion is carried forward indefinitely, but utilization is limited to 80% of taxable income. The remaining federal and state net operating loss carryforwards will begin to expire in 2027 and 2029, respectively. As of January 31, 2025, we also had total foreign net operating loss carryforwards of $ 145.4 million, which do not expire under local law. As of January 31, 2025, we had accumulated U.S. research tax credits of $ 190.5 million for federal and $ 61.5 million for California. The U.S. federal research tax credits will begin to expire in 2039. The California research tax credits do not expire. Docusign, Inc. | 2025 Form 10-K | 95 A reconciliation of the beginning and ending balance of total unrecognized tax benefits was as follows: January 31, (in thousands) 2025 2024 2023 Unrecognized tax benefits balance at February 1 $ 60,744 $ 47,946 $ 46,729 Gross increase for tax positions of prior years — 4,368 333 Gross decrease for tax positions of prior years ( 307 ) ( 156 ) ( 1,734 ) Settlements — — ( 2,484 ) Gross increase for tax positions of current year 15,109 8,586 5,102 Unrecognized tax benefits balance at January 31 $ 75,546 $ 60,744 $ 47,946 As of January 31, 2025, we had $ 75.5 million of unrecognized tax benefits, of which $ 60.9 million could affect the Company’s effective tax rate, if recognized. 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, 2025, accrued interest and penalties was $ 2.2 million. We are subject to taxation in the U.S. and various foreign jurisdictions. Our tax years from inception in 2003 through January 31, 2025 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. The following table represents the rollforward of our valuation allowance: Year Ended January 31, (in thousands) 2025 2024 2023 Beginning balance $ 934,816 $ 1,032,016 $ 999,191 Valuation allowance charged to income tax provision ( 821,969 ) ( 97,200 ) 32,825 Ending balance $ 112,847 $ 934,816 $ 1,032,016 Docusign, Inc. | 2025 Form 10-K | 96 Note 16 . Segment and Geographic Information We operate in one operating segment and one reportable segment as we report financial information, including net income determined in accordance with U.S. GAAP among other measures, on a consolidated basis to our CODM, the Chief Executive Officer. The CODM uses consolidated financial information to make operating decisions, allocate resources, and evaluate financial performance, primarily by monitoring actual results compared to forecasted results as well as by reviewing year-over-year results and trending historical performance. The CODM also reviews significant segment expenses for our single reportable segment. Significant segment expenses include cost of subscription revenue, cost of professional services and other revenue, sales and marketing expenses, research and development expenses, general and administrative expenses, and restructuring and other related charges, all of which are presented in our consolidated statements of operations and comprehensive income (loss). Other segment items include interest expense, interest and other income, and provision for (benefit from) income taxes, which are also presented in our consolidated statements of operations and comprehensive income (loss). We generate revenue primarily from sales of subscriptions to access our software platform and related subscriptions of our customers. 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. Segment assets are reported on the consolidated balance sheets as total assets. Our reported measure of segment profit or loss is as follows: Year Ended January 31, (in thousands) 2025 2024 2023 Net income (loss) $ 1,067,885 $ 73,980 $ ( 97,454 ) The following amounts are included in our reported measure of profit or loss: Year Ended January 31, (in thousands) 2025 2024 2023 Revenues from external customers $ 2,976,739 $ 2,761,882 $ 2,515,915 Depreciation and amortization $ 107,804 $ 95,062 $ 86,255 Interest income $ 45,516 $ 58,584 $ 14,269 Interest expense $ ( 1,550 ) $ ( 6,844 ) $ ( 6,389 ) Provision for (benefit from) income taxes $ ( 819,944 ) $ 19,699 $ 7,573 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) 2025 2024 2023 U.S. $ 2,142,777 $ 2,032,950 $ 1,895,932 International 833,962 728,932 619,983 Total revenue $ 2,976,739 $ 2,761,882 $ 2,515,915 No single country other than the U.S. had revenue greater than 10% of total revenue in the years ended January 31, 2025, 2024 and 2023. Docusign, Inc. | 2025 Form 10-K | 97 Our long-lived assets by geographic area, which consist of property and equipment, net and right-of-use assets were as follows: January 31, (in thousands) 2025 2024 U.S. $ 335,472 $ 296,609 Ireland 37,294 39,899 All other countries 37,700 31,853 Total long-lived assets $ 410,466 $ 368,361 Docusign, Inc. | 2025 Form 10-K | 98 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.