DocuSign Inc reported QQ3 2025 revenue of $754.82 million, up 7.8% year-over-year and 2.6% quarter-over-quarter. The company delivered a robust gross margin of approximately 79.3%, producing a net income of $62.42 million and EPS of $0.31 in the quarter, supported by disciplined operating expense management and a strong free cash flow generation of about $210.7 million. Operating income was $59.03 million with an 7.82% operating margin, while EBITDA stood at $99.61 million. Notably, DocuSign remains cash-rich with a net cash position (net debt negative) of about $480.2 million, and total liquidity comprising cash and short-term investments near $943 million. Free cash flow yield sits near 28% of revenue, underscoring the company’s ability to convert subscription revenue into durable cash flow.
Strategically, the quarter reflects continued traction in high-value growth engines: CLM and AI-driven insights (AI-enabled analysis of agreements), deepening Salesforce integrations (Gen for Salesforce, Negotiate for Salesforce), and industry-specific cloud offerings (Rooms for Real Estate, Rooms for Mortgage, FedRAMP for federal usage). Deferred revenue remains a meaningful driver of revenue visibility, with current deferred revenue of approximately $1.308 billion signaling long-duration ARR growth and upcoming revenue realization. The results imply a sustainable model with compelling profitability and cash generation, albeit with a premium valuation given elevated software multiples.
Risks and considerations include the impact of macro conditions on enterprise software spend, potential competitive pressure from adjacent e-signature and CLM platforms, and ongoing scrutiny of growth versus profitability as valuation remains elevated. Management commentary, though not captured in the provided transcript, typically emphasizes product diversification, cross-sell potential across ecosystem partnerships, and regulatory/compliance milestones as key catalysts. Investors should monitor ARR growth, churn, product adoption in CLM and AI features, and the pace of share repurchases and capital allocation.
Cost structure and expense trends
- Cost of revenue: $156.537M; gross profit retained despite growth.
- R&D: $151.101M; invests in CLM, AI capabilities, and product enhancements.
- SG&A (G&A + Selling): $388.152M; balanced investments with efficiency gains.
- Total operating expenses: $539.253M; reflects disciplined cost management.
Cash flow and liquidity
- Net cash provided by operating activities: $234.326M.
- Capital expenditures: $(23.613)M.
- Free cash flow: $210.713M, representing ~28.0% of revenue.
- Net change in cash: $(7.269)M; cash at end of period: $620.758M.
- Stock repurchases: $(172.665)M; no cash dividends reported.
- Financing: net cash used in financing activities $(198.335)M.
Balance sheet health
- Total assets: $3.770B; cash and cash equivalents: $610.870M; short-term investments: $331.506M; total cash and short-term investments: $942.376M.
- Net receivables: $314.089M; deferred revenue current: $1.307749B; other current liabilities: $253.370M; total current liabilities: $1.59877B.
- Long-term debt: $111.132M; total debt: $130.639M; net debt: $(480.231)M (net cash).
- Equity: $1.989378B; goodwill: $455.678M; intangible assets: $83.307M; total intangible and goodwill: $538.985M.
- Deferred revenue non-current: $22.931M; other long-term liabilities: $28.695M.
- Key leverage and coverage: debt to capitalization ≈ 6.16%, interest coverage ≈ 127.77x, cash flow to debt ratio ≈ 1.79x.
Operational efficiency and metrics
- Days sales outstanding (DSO): 37.45 days; inventory turnover: not applicable; current ratio: 0.83; quick ratio: 0.83; cash conversion cycle: 27.24 days.
- Asset utilization: revenue to asset ratio ≈ 0.20x; fixed asset turnover ≈ 1.93x.
- Valuation proxies (as of the report): P/S ≈ 18.85x; P/E ≈ 56.98x; EV/Sales ≈ 138.02x; EV/FCF ≈ 67.52x. Price to book ≈ 7.15x; enterprise value to capitalized earnings and other metrics reflect premium multiples typical for high-growth SaaS platforms with strong ARR visibility.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
754.82M
7.77%
2.55%
Gross Profit
598.28M
7.26%
3.05%
Operating Income
59.03M
199.07%
2.13%
Net Income
62.42M
60.86%
-92.97%
EPS
0.31
63.16%
-92.86%
Key Financial Ratios
currentRatio
0.83
grossProfitMargin
78.8%
operatingProfitMargin
7.82%
netProfitMargin
8.27%
returnOnAssets
1.66%
returnOnEquity
3.14%
debtEquityRatio
0.07
operatingCashFlowPerShare
$1.15
freeCashFlowPerShare
$1.04
priceToBookRatio
7.15
priceEarningsRatio
56.98
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided in the supplied material. Consequently, management quotes and theme-based highlights could not be extracted. If a transcript becomes available, a structured synthesis should cover themes such as product roadmap, AI-enabled CLM capabilities, cross-sell execution, customer concentration dynamics, and any updated guidance.
N/A
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Forward Guidance
Forward-looking commentary is not explicitly provided in the supplied data. Based on industry trends and DocuSign’s trajectory, potential catalysts include: (1) continued expansion of CLM and AI-driven agreement insights, (2) higher attachment across Salesforce ecosystems (Gen for Salesforce, Negotiate for Salesforce) driving expansion of ARR and higher net retention, (3) monetization of Rooms platforms in Real Estate and Mortgage, (4) sustained demand for FedRAMP-compliant eSignature solutions for U.S. federal and regulated industries, (5) cross-border expansion to international markets with localized compliance. Risks to watch include macroeconomic slowdowns affecting enterprise software budgets, competitive pricing pressure, evolving data privacy/regulatory regimes, and any slowing in up-selling to existing customers. Management commentary (if available) would typically address ARR growth trajectories, churn reduction, product pipeline progress, and capital allocation plans (share buybacks vs. acquisitions). Given current metrics, the company appears to be in a strong cash-generative position with low leverage, suggesting potential for continued deleveraging or opportunistic buybacks if cash generation remains robust.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0XNH.L Focus
79.26%
7.82%
3.14%
56.98%
0HCK.L
70.10%
16.60%
2.94%
41.01%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
DocuSign exhibits a compelling combination of durable gross margins, strong free cash flow, and a net cash balance, which supports a constructive medium-term investment thesis. The QQ3 2025 results show solid topline growth with improving profitability and robust cash conversion. The key growth catalysts reside in expanding CLM adoption, leveraging AI features, and expanding vertical-specific platforms (Rooms) and government-focused offerings (FedRAMP).
Valuation remains elevated relative to many software peers, reflecting the market's confidence in DocuSign’s platform moat and ARR visibility. Investors should balance the upside from cross-sell and product expansion against the premium valuation, monitoring ARR growth, customer retention, length of contract, and any potential changes in mix that could influence gross margins. In a scenario where ARR expansion accelerates and operating leverage improves, upside could be meaningful; conversely, if enterprise spending slows or competitive dynamics intensify, multiple compression could pressure returns. Key indicators to watch include ARR growth rate, net revenue retention, gross margin stability, cash conversion efficiency, and the pace of share repurchases versus reinvestment in product development.
Key Investment Factors
Growth Potential
High potential from cross-sell of CLM and AI features across existing DocuSign customers, expansion of Rooms verticals (Real Estate, Mortgage) and FedRAMP deployments, plus Salesforce integration that enhances platform stickiness and ARR growth.
Profitability Risk
Valuation remains elevated relative to broad SaaS peers; execution risk in sustaining high ARR growth; competition from alternative eSignature and CLM platforms; dependence on large enterprise contracts; macro headwinds impacting enterprise IT budgets; potential regulatory changes affecting digital signing and data privacy.
Financial Position
Healthy liquidity with net cash position (~$480.2M net cash) and ample operating cash flow ($234.3M) in the quarter. Solid balance sheet with manageable indebtedness, strong gross margins (~79%), and sizable deferred revenue indicating durable ARR. Free cash flow generation (~$210.7M) provides capital allocation optionality.
SWOT Analysis
Strengths
High gross margin (~79%) and durable profitability with positive operating margin (~7.8%).
Strong cash generation: free cash flow of ~$210.7M in QQ3 2025 and a net cash position (~$480.2M).