DocuSign's revenue in Q2 reaches $801 million

DocuSign (NASDAQ:DOCU) reported its fiscal results for the second quarter of 2026 on September 4, 2025, with revenues of $801 million, a 9% year-over-year increase, and billings of $818 million, a 13% year-over-year increase, while achieving a non-GAAP operating margin of 30%. The quarter showed significant progress in the Intelligent Agreement Management (IAM) based on AI, greater international and enterprise traction, reinforcing management's focus on sustained profitable growth and capital returns for shareholders.

Billing acceleration drives DocuSign's business momentum

While accelerating revenue growth to 13% year-over-year, the company also achieved a higher net customer retention rate of 102% and an increase in the average deal size, driven by improvements in gross retention and strong early renewals. International revenues accounted for 29% of the total, growing 13% year-over-year.

“The Q2 business results exceeded our expectations. Revenue was $801 million, a 9% year-over-year increase, and billing was $818 million, a 13% year-over-year increase. The performance in Q2 accelerated and represented one of our highest growth quarters in the last two years. With improved fundamentals in eSignature and CLM customers, and a growing contribution from IAM demand. We are excited to see how billing begins to accelerate year-over-year, especially when adjusting for early renewals. Profitability benefited from strong revenue, combined with our ongoing commitment to drive efficiency. Non-GAAP operating margins were 30% while we maintained strong profitability. Free cash flow margins improved modestly year-over-year to 27%, supporting significant share buybacks with $200 million this quarter.”

– Allan C. Thygesen, CEO

This combination of revenue growth and profitability, along with a disciplined capital return through share buybacks, demonstrates strength in execution and signals greater returns for investors, especially when stronger billing and net retention indicate an improvement in customer health and sustainable expansion in higher value segments.

The adoption of IAM accelerates alongside business leadership and AI

IAM is expected to reach a low double-digit percentage of the company's subscription book by the end of the year, with more than 50% of business account representatives closing at least one IAM deal and Fortune 1000 clients like Sensata Technologies and T-Mobile adopting advanced contract lifecycle management (CLM) and AI-driven analytics. The recent launch of AI-driven features such as DocuSign Navigator, agreement preparation, and SCIM user management reinforces product differentiation.

The push of IAM in the upward market and the growing penetration in business accounts, along with the advanced integration of AI, create significant competitive differentiation, expand addressable opportunities, and reinforce the company's thesis as an emerging leader in the digital deals and contract analysis space.

Operational discipline maintains high margins during the migration to the cloud

The non-GAAP gross margin remained stable at 82%, despite ongoing cloud migration costs representing a year-over-year obstacle of approximately 100 basis points and a temporary decline in operating margin due to changes in compensation and unique benefits from the previous year. The company maintained a strong cash position with $1.1 billion and no debt, continuing with measured hiring and investing in business excellence and R&D for IAM scalability.

The persistence of high profitability even in the face of obstacles in margins highlights the resilience of DocuSign's business model, supporting further investments and capital returns while temporarily limiting the incremental expansion of non-GAAP margin until cloud migration cost pressures ease.

Perspectives

The guidance projects revenues of $804 million to $808 million for Q3 FY2026, ( mid-point year-over-year growth of 7% ) and annual revenues of $3.189 billion to $3.201 billion for FY2026, ( mid-point year-over-year growth of 7% ), with expected billing of $3.325 billion to $3.355 billion for FY2026, ( mid-point growth of 7% ). The non-GAAP operating margin is estimated between 28% and 29% for Q3 and 28.6% to 29.6% for the full year, while the annual non-GAAP gross margin faces a headwind of approximately one percentage point due to the ongoing cloud migration, which is expected to decrease starting next fiscal year.