US ▾
DOCU
Earnings call · Jul 2026 (Q2 FY27)

DOCUSIGN Q2 FY27 earnings call DOCU

Sep 3, 2026 Source

Executive summary

DocuSign Q2 FY27 — Strong IAM Adoption and Raised ARR Guidance

DocuSign delivered a strong Q2 FY27, driven by accelerated innovation and adoption of its Intelligent Agreement Management (IAM) platform, which is increasingly contributing to ARR. The company demonstrated robust financial performance with significant revenue growth and margin expansion, while also returning capital to shareholders. Management is confident in continued execution, raising full-year ARR guidance and focusing on expanding IAM's value proposition.

Highlights

6

  • Intelligent Agreement Management (IAM) now accounts for 15.1% of total ARR, up from 12.6% in Q1.

  • Revenue reached $876 million, representing a 9% year-over-year increase.

  • Non-GAAP operating margin expanded to 31.6%, an increase of 180 basis points year-over-year.

  • Free cash flow was $296 million, up over 35% from the prior year.

  • Total customer growth accelerated to nearly 10% year-over-year, reaching over 1.9 million customers.

  • The number of customers spending over $300,000 in ACV grew 14% year-over-year to nearly 1,300.

Concerns

3

  • Non-GAAP gross margins were 81.7%, down slightly compared to the prior year due to ongoing cloud migration investment.

  • Fiscal 2027 gross margins are expected to decline slightly year-over-year due to the cloud migration.

  • Full year revenue guidance includes incremental foreign currency headwinds of approximately $4 million.

Guidance & targets

CategoryTargetConfidence
Q3 FY27 Revenue
$886 million to $890 million
high materiality
High
Q3 FY27 Non-GAAP Gross Margin
81.5% to 81.9%
medium materiality
High
Q3 FY27 Non-GAAP Operating Margin
31.3% to 31.7%
medium materiality
High
Q3 FY27 Non-GAAP Fully Diluted Weighted Average Shares Outstanding
191 million and 196 million
low materiality
High
FY27 Revenue
$3.499 billion to $3.507 billion
high materiality
High
FY27 Non-GAAP Gross Margin
81.5% and 82.0%
medium materiality
High
FY27 Non-GAAP Operating Margin
31.0% and 31.5%
high materiality
High
FY27 Non-GAAP Fully Diluted Weighted Average Shares Outstanding
190 million and 195 million
low materiality
High
FY27 ARR Growth
8.5% to 9.0% year-over-year
high materiality
High
IAM ARR as % of Total ARR
18% and 19%
high materiality
High
Dollar Net Retention (DNR)
modest improvement
medium materiality
Medium

DOCU operating KPIs by quarter

DOCU operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q4 FY26 Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
Customers above an annual spend threshold
1,205 We ended the quarter with 1,205 customers spending over $300,000 annually, a 7% increase year-over-year. Source transcript
1,258 We also saw the number of customers spending over $300,000 in ACV grow to 1,258, accelerating to 12% year-over-year growth the first time in 3 years that we have seen double-digit growth in this metric. Source transcript
<1,300 We also saw the number of customers spending over $300,000 in ACV grow 14% year-over-year to nearly 1,300, the second quarter in a row of double-digit growth. Source transcript
—
Employees
7,044 We ended fiscal 2026 with 7,044 employees, up modestly from 6,838 a year ago, as we continue to invest deliberately in roles focused on growing the IAM platform. Source transcript
6,991 We ended Q1 with 6,991 employees, down sequentially from Q4. Source transcript
7,137 We ended Q2 with 7,137 employees, up 3% year-over-year. Source transcript
+2.1%
Net revenue retention rate Direct—
102%+ Dollar net retention or DNR with our direct customers was over 102%, a greater than 1 percentage point improvement versus Q1 of fiscal 2026. Source transcript
103% Dollar net retention, or DNR, from our Direct customers was 103% on a rounded basis, up modestly from last quarter and the prior year. Source transcript
—

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Dollar Net Retention (DNR) from Direct customers 103% Q2 FY27

up modestly from last quarter

Rounded basis

Product announcements

ProductTypeDetails
AI Assistant and Agentic Capabilitieslaunch
Docusign app for Slack Marketplacelaunch
Integration with Perplexitylaunch
Google Cloud's Gemini Enterprise for Legalexpansion
IAM Agreement Manager's integration into Docusign CLMlaunch
AI-Assisted Web Formslaunch
Docusign MCP serverlaunch

Deals & partnerships

Salesforce Deployment of IAM as a trusted system of record for agreements.

Salesforce is deploying IAM as a trusted system of record for agreements.

Oppenheimer Using IAM to streamline onboarding, build AI-powered workflows, and empower advisors.

Oppenheimer is using IAM to streamline onboarding, build AI-powered workflows.

SailPoint Deploying IAM across its organization to accelerate sales contract processing and gain greater visibility.

SailPoint, a leader in adaptive identity security, is deploying IAM across its organization.

Upstart Automating customer and borrower workflows.

Upstart, an AI lending company, is automating customer and borrower workflows.

Optimizely Adopting Docusign IAM to streamline sales agreements and accelerate quote to revenue.

Optimizely, a leading digital experience platform, is adopting Docusign IAM to streamline sales agreements.

HydroCorp Adopted IAM for sales integrated with Salesforce.

HydroCorp, a leading provider of water safety compliance services, has adopted IAM for sales integrated with Salesforce.

Risks & headwinds

Cloud migration investment impact on gross margin Q2 FY27 and FY27

Non-GAAP gross margins down slightly YoY in Q2; expected to decline slightly YoY for FY27

Mitigation:Migration remains on track to be largely complete by the end of this fiscal year.

Foreign currency headwinds FY27

Approximately $4 million

Mitigation:Partially offset by outperformance in Q2 and additional assumed outperformance in H2.

What to watch in Q3 FY27

IAM ARR as % of Total ARR

Q4 FY27
Current 15.1%
Target 18%-19%

Why it matters

This metric indicates the success of DocuSign's strategic shift towards its Intelligent Agreement Management platform and its contribution to overall growth.

We now expect that IAM ARR will represent between 18% and 19% of total ARR exiting Q4 of fiscal 2027.

Q&A highlights

Which products are outperforming expectations and how are they contributing to the improvement in dollar net retention (DNR) to 103%?

Outperformance was seen across both eSign and IAM, with IAM being the primary driver of growth acceleration. The improvement in DNR is increasingly driven by expansion, making it more balanced with retention gains.

“the contribution from expansion is contributing a larger portion of our improvement in dollar net retention as we've seen previously.”

asked by Bill McNamara · answered by Blake Grayson

2 min read 5 chapters

Detailed narrative

IAM Platform Strategy and Innovation

DocuSign's Intelligent Agreement Management (IAM) platform is central to its strategy, aggregating and analyzing agreement data to improve business decisioning. IAM's AI-native architecture processes workloads efficiently, contributing to high gross margins by operating at significantly lower marginal cost than external LLMs. The platform is expanding functionality with new AI assistant and agentic capabilities, including prebuilt agents and an Agent Studio for custom workflows, which in user testing cut agreement review times in half.

Ecosystem Integration and Adoption

IAM is extending its reach through integrations with platforms like Slack, Perplexity, and Google Cloud's Gemini Enterprise for Legal, alongside existing connectors with Anthropic, Gemini, OpenAI, and Microsoft Copilot. The Docusign MCP server is going Generally Available (GA) at the end of the month, opening Docusign as an agreement layer for various agents. IAM Agreement Manager's integration with Docusign CLM unifies fragmented data and reduces manual processes for CLM customers, connecting robust workflow capabilities with next-generation AI functionality.

Product Launches and Customer Value

Key product launches include AI-Assisted Web Forms, now generally available, enabling users to transform static documents into interactive, shareable forms. This capability is a 'game changer' for unlocking value from hundreds of millions of legacy documents in document-intensive industries like financial services, government, and healthcare. These innovations are driving customer value by shifting from merely managing agreements to actively acting on them across every function that touches a contract.

Sales Execution and Customer Wins

Direct sales teams performed well in the quarter, with IAM showing strength across all geographic regions and customer segments. Notable Q2 customer wins include Salesforce, Oppenheimer, SailPoint, Upstart, Optimizely, and HydroCorp. These examples demonstrate broad industry adoption and significant efficiency gains, such as HydroCorp reducing contract preparation time from 2-3 hours to 20 minutes, highlighting IAM's ability to transform businesses across the global economy.

Financial Discipline and Capital Allocation

The company maintains strong operational discipline, balancing targeted investments in IAM with expense management. This approach has led to expanded operating margins and robust free cash flow generation, with $296 million in Q2 and $1.2 billion over the trailing 12-month period. DocuSign is also opportunistically returning capital to shareholders through share repurchases, executing $307 million in Q2 and reducing diluted shares outstanding by 8% year-over-year.

AI-generated summary of the company's earnings call. Not investment advice.