DocuSign recently released their earnings report for the second quarter of 2025, with revenue reaching $801 million, a year-on-year increase of 9%. The billing amount also performed well, reaching $818 million, with a growth rate of 13%. Furthermore, the company achieved a non-GAAP operating profit margin of 30%. The highlight of this quarter was the significant progress made in AI-native Intelligent Agreement Management (IAM), with the influence of international markets and enterprise clients continuing to expand, while management remains focused on driving profit growth and delivering capital returns to shareholders.

The significant growth in enterprise billing has notably boosted DocuSign's enterprise momentum. While achieving a 13% annual billing growth, the company's dollar net retention rate also reached 102%, with an increase in average deal size driven by improvements in gross retention and strong early renewals. International revenue accounted for 29% of total revenue, growing 13% year-over-year.

As Allan C. Thygesen (CEO) stated, the performance in the second quarter exceeded expectations. With improvements in the electronic signature and contract lifecycle management (CLM) customer base, as well as growth in IAM demand, the company has seen signs of acceleration not just in a particular quarter but in the overall annual billing, especially after adjusting for early renewals. Profitability benefited from strong revenue and a continued pursuit of efficiency, with a non-GAAP operating profit margin remaining at 30%. Free cash flow margin slightly increased year-over-year to 27%, and the company completed a $200 million stock buyback this quarter.

The growth in revenue and profitability, coupled with the capital returns achieved through stock buybacks, demonstrates the strong execution capability of the company, particularly as the stronger billing and net retention rates indicate an improvement in customer health and a sustainable expansion in the high-value segment.

The adoption of IAM is accelerating, combining with enterprise and AI leadership. IAM is expected to account for a small double-digit percentage of the company’s subscription ledger by the end of the year, with over 50% of enterprise account representatives having completed at least one IAM transaction. Fortune 1000 clients like Sensata Technologies and T-Mobile are beginning to adopt advanced contract lifecycle management and AI-driven analytics. DocuSign recently launched AI features, such as DocuSign Navigator, agreement preparation, and SCIM user management, enhancing product differentiation.

The momentum of IAM's development and its penetration into corporate accounts, coupled with advanced AI integration, have brought substantial significance to the company's competitive advantages and scalable opportunities, while also solidifying its position as an emerging leader in the field of digital protocols and contract analysis.

During the process of cloud migration, operational discipline maintained a high profit margin. The non-GAAP gross profit margin remained at 82%, despite persistent cloud migration costs bringing about a year-over-year headwind of approximately 100 basis points, as well as a temporary decline in operating margin due to changes in compensation structure and a one-time benefit from last year. The company maintains a strong cash position, with $1.1 billion in cash and no debt, and continues to take a cautious approach to hiring and investment in marketing excellence and IAM expansion R&D.

DocuSign has demonstrated the resilience of its business model in the face of headwinds to operating profit margins, supporting further investment and capital returns, although the expansion of non-GAAP profit margins will be temporarily constrained before the pressure from cloud migration costs eases.

Looking ahead, management expects revenue for the third quarter of fiscal year 2026 to be between $804 million and $808 million, representing a year-over-year growth of approximately 7%. The full-year revenue for fiscal year 2026 is expected to be between $3.189 billion and $3.201 billion, with total billing also expected to be between $3.325 billion and $3.355 billion, reflecting a year-over-year growth of about 7%. The non-GAAP operating margin is expected to be between 28% and 29% for the third quarter, and between 28.6% and 29.6% for the full year, while the full-year non-GAAP gross margin is facing an impact of about one percentage point, which is expected to alleviate starting from the next fiscal year. The company reiterated that IAM customers are expected to contribute low double-digit percentages to the subscription book by the end of the year, and emphasized that it will continue to achieve capital returns through opportunistic stock buybacks.