10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File Number: 001-38465

______________________________________

DOCUSIGN, INC.

(Exact name of registrant as specified in its charter)

______________________________________

Delaware			91-2183967
(State or Other Jurisdiction of Incorporation)			(I.R.S. Employer Identification Number)
221 Main St.	Suite 1550	San Francisco	California	94105
(Address of Principal Executive Offices) (Zip Code)

(415) 489-4940

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	DOCU	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☒	Large accelerated filer	☐	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

The registrant has 194,835,125 shares of common stock, par value $0.0001, outstanding at May 28, 2021.

DOCUSIGN, INC.

TABLE OF CONTENTS

	Note Regarding Forward-Looking Statements
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of April 30, 2021 and January 31, 2021	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended April 30, 2021 and 2020	6
	Condensed Consolidated Statement of Stockholders' Equity for the Three Months Ended April 30, 2021 and 2020	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2021 and 2020	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 6.	Exhibits	63
	Exhibit Index	64
Signatures		65

DocuSign, Inc. | 2022 Form 10Q | 2

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations, and the impact of the ongoing coronavirus pandemic (the “COVID-19 pandemic”) on our financial conditions and results of operations are forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

▪our ability to effectively sustain and manage our growth and future expenses, and our ability to achieve and maintain future profitability;

▪our expectations regarding the impact of the ongoing COVID-19 pandemic on our business, the businesses of our customers, partners and suppliers, and the economy;

▪our ability to attract new customers and to maintain and expand our existing customer base;

▪our ability to scale and update our software suite to respond to customers’ needs and rapid technological change;

▪the effects of increased competition on our market and our ability to compete effectively;

▪our ability to expand use cases within existing customers and vertical solutions;

▪our ability to expand our operations and increase adoption of our software suite internationally;

▪our ability to strengthen and foster our relationship with developers;

▪our ability to expand our direct sales force, customer success team and strategic partnerships around the world;

▪our ability to identify targets for and execute potential acquisitions;

▪our ability to successfully integrate the operations of businesses we may acquire, or to realize the anticipated benefits of such acquisitions;

▪our ability to maintain, protect and enhance our brand;

▪the sufficiency of our cash and cash equivalents to satisfy our liquidity needs;

▪our failure or the failure of our software suite of services to comply with applicable industry standards, laws and regulations;

▪our ability to maintain, protect and enhance our intellectual property;

▪our ability to successfully defend litigation against us;

▪our ability to attract large organizations as users;

▪our ability to maintain our corporate culture;

▪our ability to offer high-quality customer support;

▪our ability to hire, retain and motivate qualified personnel;

▪our ability to estimate the size and potential growth of our target market; and

▪our ability to maintain proper and effective internal controls.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, including risks and uncertainties related to the COVID-19 pandemic. Many risks and uncertainties are currently elevated by, and may or will continue to be elevated by, the COVID-19 pandemic. It is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

DocuSign, Inc. | 2022 Form 10Q | 3

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law.

DocuSign, Inc. | 2022 Form 10Q | 4

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DOCUSIGN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)	April 30, 2021		January 31, 2021
Assets
Current assets
Cash and cash equivalents	$	518,972	$	566,055
Investments—current	261,660		207,450
Accounts receivable, net of allowance for doubtful accounts of $5,393 and $5,362 as of April 30, 2021 and January 31, 2021	250,365		323,570
Contract assets—current	15,267		16,883
Prepaid expenses and other current assets	65,172		48,390
Total current assets	1,111,436		1,162,348
Investments—noncurrent	94,930		92,717
Property and equipment, net	164,128		165,039
Operating lease right-of-use assets	152,185		159,352
Goodwill	351,511		350,151
Intangible assets, net	115,009		121,828
Deferred contract acquisition costs—noncurrent	274,039		260,130
Other assets—noncurrent	33,882		24,942
Total assets	$	2,297,120	$	2,336,507
Liabilities and Equity
Current liabilities
Accounts payable	$	14,870	$	37,367
Accrued expenses and other current liabilities	75,438		66,566
Accrued compensation	129,640		156,158
Convertible senior notes—current	13,343		20,469
Contract liabilities—current	829,844		779,642
Operating lease liabilities—current	34,777		32,971
Total current liabilities	1,097,912		1,093,173
Convertible senior notes, net—noncurrent	742,577		693,219
Contract liabilities—noncurrent	17,938		16,492
Operating lease liabilities—noncurrent	155,998		165,704
Deferred tax liability—noncurrent	6,484		6,464
Other liabilities—noncurrent	32,974		32,328
Total liabilities	2,053,883		2,007,380
Commitments and contingencies (Note 8)
Convertible senior notes (Note 7)	—		3,390
Stockholders’ equity
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding as of April 30, 2021 and January 31, 2021	—		—
Common stock, $0.0001 par value; 500,000 shares authorized, 194,734 shares outstanding as of April 30, 2021; 500,000 shares authorized, 192,807 shares outstanding as of January 31, 2021	19		19
Treasury stock, at cost: 5 shares as of April 30, 2021 and 5 shares as of January 31, 2021	(1,219)		(1,048)
Additional paid-in capital	1,615,646		1,702,254
Accumulated other comprehensive income	5,358		4,964
Accumulated deficit	(1,376,567)		(1,380,452)
Total stockholders’ equity	243,237		325,737
Total liabilities and equity	$	2,297,120	$	2,336,507

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DocuSign, Inc. | 2022 Form 10Q | 5

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

	Three Months Ended April 30,
(in thousands, except per share data)	2021		2020
Revenue:
Subscription	$	451,935	$	280,922
Professional services and other	17,143		16,095
Total revenue	469,078		297,017
Cost of revenue:
Subscription	78,071		52,010
Professional services and other	27,171		22,022
Total cost of revenue	105,242		74,032
Gross profit	363,836		222,985
Operating expenses:
Sales and marketing	239,119		171,793
Research and development	85,416		54,234
General and administrative	50,038		38,811
Total operating expenses	374,573		264,838
Loss from operations	(10,737)		(41,853)
Interest expense	(1,672)		(7,560)
Interest income and other income, net	6,037		3,742
Loss before provision for income taxes	(6,372)		(45,671)
Provision for income taxes	1,982		2,133
Net loss	$	(8,354)	$	(47,804)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.04)	$	(0.26)
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted	194,342		182,978
Other comprehensive income (loss):
Foreign currency translation gain (loss), net of tax	$	636	$	(5,189)
Unrealized gains (losses) on investments, net of tax	(242)		159
Other comprehensive income (loss)	394		(5,030)
Comprehensive loss	$	(7,960)	$	(52,834)
Stock-based compensation expense included in costs and expenses:
Cost of revenue—subscription	$	6,018	$	3,864
Cost of revenue—professional services and other	5,535		4,125
Sales and marketing	38,135		24,665
Research and development	20,462		11,885
General and administrative	10,986		9,012

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

	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, 2021	192,807	$	19	$	1,702,254	$	(1,048)	$	4,964	$	(1,380,452)	$	325,737
Cumulative impact of Accounting Standards Update 2020-06 adoption	—	—		(86,144)		—		—		12,239		(73,905)
Settlement of convertible senior notes due in 2023	352	—		(446)		—		—		—		(446)
Exercise of stock options	488	—		6,616		—		—		—		6,616
Settlement of restricted stock units	955	—		—		—		—		—		—
Tax withholding on net share settlement of restricted stock units and employee stock purchase plan	—	—		(113,412)		(171)		—		—		(113,583)
Employee stock purchase plan	132	—		23,167		—		—		—		23,167
Employee stock-based compensation	—	—		83,611		—		—		—		83,611
Net loss	—	—		—		—		—		(8,354)		(8,354)
Other comprehensive income, net	—	—		—		—		394		—		394
Balances at April 30, 2021	194,734	$	19	$	1,615,646	$	(1,219)	$	5,358	$	(1,376,567)	$	243,237
Balances at January 31, 2020	181,254	$	18	$	1,685,167	$	—	$	(1,673)	$	(1,137,185)	$	546,327
Exercise of stock options	840	—		7,635		—		—		—		7,635
Settlement of restricted stock units	1,078	—		—		—		—		—		—
Tax withholding on net share settlement of restricted stock units	—	—		(46,723)		—		—		—		(46,723)
Employee stock purchase plan	256	—		13,590		—		—		—		13,590
Employee stock-based compensation	—	—		54,793		—		—		—		54,793
Net loss	—	—		—		—		—		(47,804)		(47,804)
Other comprehensive loss, net	—	—		—		—		(5,030)		—		(5,030)
Balances at April 30, 2020	183,428	$	18	$	1,714,462	$	—	$	(6,703)	$	(1,184,989)	$	522,788

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended April 30,
(in thousands)	2021		2020
Cash flows from operating activities:
Net loss	$	(8,354)	$	(47,804)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	20,037		14,039
Amortization of deferred contract acquisition and fulfillment costs	30,933		21,360
Amortization of debt discount and transaction costs	1,319		6,842
Fair value adjustments to strategic investments	(5,119)		—
Non-cash operating lease costs	6,943		6,324
Stock-based compensation expense	81,637		53,551
Deferred income taxes	264		(104)
Other	(1,240)		504
Changes in operating assets and liabilities
Accounts receivable	73,205		17,239
Contract assets	1,607		(740)
Prepaid expenses and other current assets	(15,670)		(9,660)
Deferred contract acquisition and fulfillment costs	(46,154)		(41,037)
Other assets	(3,167)		(1,364)
Accounts payable	(21,593)		(2,554)
Accrued expenses and other liabilities	11,080		(916)
Accrued compensation	(34,048)		(1,536)
Contract liabilities	51,648		44,594
Operating lease liabilities	(7,731)		406
Net cash provided by operating activities	135,597		59,144
Cash flows from investing activities:
Purchases of marketable securities	(96,925)		—
Sales of marketable securities	2,002		28,986
Maturities of marketable securities	37,513		170,071
Purchases of strategic investments	(500)		—
Purchases of other investments	—		(3,000)
Purchases of property and equipment	(12,596)		(26,389)
Net cash (used in) provided by investing activities	(70,506)		169,668
Cash flows from financing activities:
Repayments of convertible senior notes	(36,684)		—
Payment of tax withholding obligation on net share settlement of restricted stock units	(106,053)		(46,723)
Proceeds from exercise of stock options	6,616		7,635
Proceeds from employee stock purchase plan	23,167		13,590
Net cash used in financing activities	(112,954)		(25,498)
Effect of foreign exchange on cash, cash equivalents and restricted cash	779		(2,280)
Net increase (decrease) in cash, cash equivalents and restricted cash	(47,084)		201,034
Cash, cash equivalents and restricted cash at beginning of period (1)	566,336		241,483
Cash, cash equivalents and restricted cash at end of period (1)	$	519,252	$	442,517

(1) $0.3 million of restricted cash was included in Other assets—noncurrent at April 30, 2021, and January 31, 2021.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

DOCUSIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)

	Three Months Ended April 30,
(in thousands)	2021		2020
Supplemental disclosure:
Cash paid for interest	$	212	$	1,438
Cash paid for operating lease liabilities	9,888		6,389
Cash paid for income taxes	2,507		416
Non-cash investing and financing activities:
Property and equipment in accounts payable and accrued expenses and other current liabilities	$	1,275	$	3,445
Operating lease right-of-use assets exchanged for lease obligations	—		18,745
Fair value of shares issued as part of the repayments of convertible senior notes	74,657		—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9

DOCUSIGN, INC.

Index for Notes to the Condensed Consolidated Financial Statements

Note 1	Summary of Significant Accounting Policies	11
Note 2	Revenue	12
Note 3	Fair Value Measurements	14
Note 4	Property and Equipment, Net	15
Note 5	Intangible Assets, Net	16
Note 6	Deferred Contract Acquisition and Fulfillment Costs	17
Note 7	Debt	17
Note 8	Commitments and Contingencies	19
Note 9	Stockholders' Equity	20
Note 10	Net Loss Per Share Attributable to Common Stockholders	22
Note 11	Income Taxes	22
Note 12	Geographic Information	22

10

DOCUSIGN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

We provide a platform that enables businesses of all sizes to digitally prepare, sign, act on and manage agreements, thereby simplifying and accelerating the process of doing business.

Basis of Presentation and Principles of Consolidation

Our condensed consolidated financial statements include those of DocuSign, Inc. and our subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our fiscal 2021 Annual Report on Form 10-K.

Our condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and, in our opinion, include all adjustments of a normal recurring nature necessary for the fair statement of our financial position, results of operations and cash flows. Our condensed consolidated balance sheet as of January 31, 2021 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the three months ended April 30, 2021 are not necessarily indicative of the results to be expected for the year ending January 31, 2022.

Our fiscal year ends on January 31. References to fiscal 2022, for example, are to the fiscal year ending January 31, 2022.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the condensed 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 assets acquired and liabilities assumed in business combinations;

•the average period of benefit associated with deferred contract acquisition costs and fulfillment costs;

•the valuation of strategic investments;

•the fair value of certain stock awards issued;

•the fair value of the liability and equity components of convertible notes;

•the useful life and recoverability of long-lived assets;

•the discount rate used for operating leases; and

•the recognition, measurement and valuation of deferred income taxes.

Since the emergence of the COVID-19 pandemic, we have undertaken measures to protect our employees, partners and customers, including providing the majority of our employees the option to work remotely until at least October 4, 2021. However, there can be no assurance that these measures will be effective, that we will be able to adopt new measures as needed, or that we will be able to discontinue these measures without adversely affecting our business operations. In addition, the COVID-19 pandemic and related recent developments (including, for example, vaccine deployments, national and regional outbreaks, and the emergence of disease variants) have created and may continue to create significant uncertainty in global financial markets, which may decrease technology spending, depress demand for our products and harm our business and results of operations. As of the date of issuance of the financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they

11

become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

Significant Accounting Policies

Other than as described below, there have been no changes to our significant accounting policies described in our fiscal 2021 Annual Report on Form 10-K that have had a material impact on our consolidated financial statements and related notes.

Convertible Debt

On February 1, 2021, we early adopted Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) using the modified retrospective approach.

Effective February 1, 2021, 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.

Refer to Note 1 of our 2021 Annual Report on Form 10-K for our convertible debt policy prior to the adoption of ASU 2020-06.

Recently Adopted Accounting Pronouncements

On February 1, 2021, we early adopted ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU removes separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. Such convertible debt is accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. The ASU also requires the if-converted method to be used for convertible instruments and the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares. The adoption of the ASU using the modified retrospective method resulted in:

•an increase of $77.3 million to the total carrying value of our convertible senior notes to reflect the full principal amount of the convertible notes outstanding net of issuance costs,

•reductions of $86.1 million to additional paid-in capital and $3.4 million to mezzanine equity to remove the equity component separately recorded for the conversion features associated with the convertible notes, and

•a cumulative-effect adjustment of $12.2 million to the beginning balance of accumulated deficit as of February 1, 2021.

Other Recent Accounting Pronouncements

Other recently issued accounting pronouncements are not expected to have a material impact on our consolidated financial statements.

Note 2. Revenue

Subscription revenue is recognized over time and accounted for approximately 96% and 95% of our revenue for the three months ended April 30, 2021 and 2020.

Performance Obligations

As of April 30, 2021, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $1.2 billion. We expect to recognize 53% of the transaction price allocated to remaining performance obligations within the 12 months following April 30, 2021 in our consolidated statement of operations and comprehensive loss.

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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 fully invoiced to our customers where there remains a performance obligation, typically for our multi-year arrangements. Total contract assets were $15.9 million and $17.5 million as of April 30, 2021 and January 31, 2021, of which $0.6 million and $0.6 million were noncurrent and included within “Other assets—noncurrent” on our condensed consolidated balance sheets. The change in contract assets reflects the difference in timing between the satisfaction of our remaining performance obligations and our contractual right to bill our customers.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are generally recognized as revenue over the contractual period. For the three months ended April 30, 2021 and 2020, we recognized revenue of $357.8 million and $224.7 million 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.

Note 3. Fair Value Measurements

The following table summarizes our financial assets that are measured at fair value on a recurring basis:

	April 30, 2021
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Level 1:
Cash equivalents(1)
Money market funds	$	147,875	$	—	$	—	$	147,875
Level 2:
Available-for-sale securities
Commercial paper	100,804		2		(22)		100,784
Corporate notes and bonds	199,701		164		(95)		199,770
U.S. Treasury securities	4,999		1		—		5,000
U.S. government agency securities	50,535		8		(7)		50,536
Level 2 total	356,039		175		(124)		356,090
Level 3:
Available-for-sale securities
Corporate notes and bonds	500		—		—		500
Total	$	504,414	$	175	$	(124)	$	504,465
	January 31, 2021
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Level 1:
Cash equivalents(1)
Money market funds	$	284,312	$	—	$	—	$	284,312
Level 2:
Available-for-sale securities
Commercial paper	42,048		1		(23)		42,026
Corporate notes and bonds	199,277		375		(67)		199,585
U.S. Treasury securities	4,998		—		—		4,998
U.S. government agency securities	53,052		12		(6)		53,058
Level 2 total	299,375		388		(96)		299,667
Level 3:
Available-for-sale securities
Corporate notes and bonds	500		—		—		500
Total	$	584,187	$	388	$	(96)	$	584,479

(1)    Included in “cash and cash equivalents” in our consolidated balance sheets as of April 30, 2021, and January 31, 2021, in addition to cash of $371.1 million and $281.7 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 Level 3 investments is determined based on an income approach using unobservable inputs.

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The fair value of our available-for-sale securities as of April 30, 2021, by remaining contractual maturities, were as follows (in thousands):

Due in one year or less	$	261,660
Due in one to two years	94,930
	$	356,590

As of April 30, 2021 and January 31, 2021, 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 the issuers' high credit ratings and consistent payment history.

We had no liabilities measured at fair value on a recurring basis as of April 30, 2021 and January 31, 2021.

Strategic Investments

During the three months ended April 30, 2021, investments in equity securities without readily determinable fair values increased by $5.1 million due to adjustments related to observable price changes. Such investments are recorded in “Other assets—noncurrent” on our condensed consolidated balance sheets.

Convertible Senior Notes

We estimated the fair value of the Notes based on the quoted market prices in an inactive market on the last trading day of the reporting period (Level 2). The Notes are recorded at face value less unamortized debt discount and transaction costs as “Convertible senior notes—current” and “Convertible senior notes, net—noncurrent” on our condensed consolidated balance sheets. Refer to Note 7 for further information.

(in thousands)	April 30, 2021		January 31, 2021
0.5% Convertible Senior Notes due in 2023
Aggregate principal amount	$	78,318	$	115,000
Fair value amount	245,245		373,928
0% Convertible Senior Notes due in 2024
Aggregate principal amount	$	690,000	$	690,000
Fair value amount	684,825		725,100

Note 4. Property and Equipment, Net

Property and equipment consisted of the following:

(in thousands)	April 30, 2021		January 31, 2021
Computer and network equipment	$	104,017	$	102,163
Software, including capitalized software development costs	66,282		56,858
Furniture and office equipment	21,575		21,682
Leasehold improvements	79,749		79,892
	271,623		260,595
Less: Accumulated depreciation	(131,924)		(121,029)
	139,699		139,566
Work in progress	24,429		25,473
	$	164,128	$	165,039

Depreciation and amortization expense associated with property and equipment was $13.5 million and $9.8 million for the three months ended April 30, 2021 and 2020.

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For the three months ended April 30, 2021 and 2020, we capitalized $7.8 million and $5.1 million of internally developed software.

Note 5. Intangible Assets, Net

Intangible assets consisted of the following:

	As of April 30, 2021							As of January 31, 2021
(in thousands, except years)	Weighted-average Remaining Useful Life (Years)	Estimated Fair Value		Accumulated Amortization		Acquisition-related Intangibles, Net		Estimated Fair Value		Accumulated Amortization		Acquisition-related Intangibles, Net
Existing technology	3.7	$	72,994	$	(38,808)	$	34,186	$	72,994	$	(35,613)	$	37,381
Customer contracts & related relationships	7.7	110,082		(32,022)		78,060		110,082		(29,393)		80,689
Other	1.0	22,534		(20,107)		2,427		22,534		(19,356)		3,178
	6.4	$	205,610	$	(90,937)	114,673		$	205,610	$	(84,362)	121,248
Cumulative translation adjustment						336						580
Total						$	115,009					$	121,828

Amortization of finite-lived intangible assets was as follows:

	Three Months Ended April 30,
(in thousands)	2021		2020
Cost of subscription revenue	$	3,171	$	1,348
Sales and marketing	3,358		2,911
Total	$	6,529	$	4,259

As of April 30, 2021, future amortization of finite-lived intangibles that will be recorded is estimated as follows, excluding cumulative translation adjustment:

Fiscal Period:	Amount (in thousands)
2022, remainder	$	17,707
2023	19,906
2024	18,575
2025	17,998
2026	12,388
Thereafter	28,099
Total	$	114,673

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Note 6. Deferred Contract Acquisition and Fulfillment Costs

The following table represents a rollforward of our deferred contract acquisition and fulfillment costs:

	Three Months Ended April 30,
(in thousands)	2021		2020
Deferred Contract Acquisition Costs
Beginning balance	$	262,519	$	155,697
Additions to deferred contract acquisition costs	39,700		34,158
Amortization of deferred contract acquisition costs	(25,842)		(16,941)
Cumulative translation adjustment	240		(1,533)
Ending balance	$	276,617	$	171,381
Deferred Contract Fulfillment Costs
Beginning balance	$	12,506	$	8,218
Additions to deferred contract fulfillment costs	6,454		6,879
Amortization of deferred contract fulfillment costs	(5,091)		(4,419)
Ending balance	$	13,869	$	10,678

Note 7. 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 (“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 each fiscal quarter since the quarter ended July 31, 2020, the last reported sales price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on, and including, the last trading day was greater than or equal to 130% of the conversion price of the 2023 Notes. The 2023 Notes therefore became convertible on August 1, 2020 and continue to be convertible through April 30, 2021.

In January 2021, we issued $690.0 million in aggregate principal amount of the 0% Convertible Senior Notes due in 2024 (“2024 Notes,” and together with the 2023 Notes, the “Notes”). The net proceeds from the issuance of the 2024 Notes were $677.3 million after deducting the initial purchasers’ discounts and transaction costs. As of April 30, 2021, the conversion conditions for the 2024 Notes described in our 2021 Annual Report on Form 10-K were not met.

Conversions of the 2023 Notes

Early conversions and settlements of the Notes during the three months ended April 30, 2021 were accounted for under ASU 2020-06. Refer to Note 1 for further discussion of early adoption.

During the three months ended April 30, 2021, we settled $36.7 million aggregate amount of the principal of 2023 Notes, including $23.9 million elected for conversion as of January 31, 2021, for aggregate consideration of $111.3 million, consisting of $36.7 million in cash and 0.4 million shares of our common stock with a value of $74.7 million. The $0.4 million excess of the cash consideration over the corresponding carrying value was recorded as a reduction to additional paid-in capital.

Additionally, as of April 30, 2021, we had received conversion notices on our 2023 Notes for $13.5 million in aggregate principal amount to be settled in the following quarter. The corresponding carrying value is reflected in Convertible senior notes—current on our condensed consolidated balance sheet.

From May 1, 2021 through June 3, 2021, we received conversion notices on our 2023 Notes for $10.0 million in aggregate principal amount, for which we elected to settle the principal amount in cash during the three months ended July 31, 2021.

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The net carrying amounts of the liability and equity components of the Notes were as follows:

(in thousands)	April 30, 2021		January 31, 2021
2023 Notes:
Principal	$	78,318	$	115,000
Less: unamortized debt discount (1)	—		(15,116)
Less: unamortized transaction costs	(928)		(1,224)
Net carrying value of current and noncurrent liability component	$	77,390	$	98,660
Proceeds allocated to the conversion option (debt discount) (1)			$	134,667
Less: extinguishment or conversion			(31,933)
Less: transaction costs			(3,336)
Net carrying value of mezzanine and permanent equity component			$	99,398
2024 Notes:
Principal	$	690,000	$	690,000
Less: unamortized debt discount (1)	—		(63,619)
Less: unamortized transaction costs	(11,464)		(11,353)
Net carrying value of noncurrent liability component	$	678,536	$	615,028
Proceeds allocated to the conversion option (debt discount) (1)			$	64,453
Less: transaction costs			(1,185)
Net carrying value of permanent equity component			$	63,268

(1) Not applicable under ASU 2020-06

The effective interest rate on the liability component of the 2023 Notes was 5.9% prior to the adoption of ASU 2020-06 and 1.0% after adoption. The effective interest rate on the liability component of the 2024 notes was 3.8% prior to the adoption of ASU 2020-06 and 0.6% after adoption. Interest expense recognized related to the Notes was as follows:

	Three Months Ended April 30,
(in thousands)	2021		2020
Contractual interest expense	$	36	$	718
Amortization of debt discount	—		6,329
Amortization of transaction costs	1,181		513
Total	$	1,217	$	7,560

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.

The material terms of the capped call transactions were as follows:

(in thousands, except per share amounts)	2023 Notes		2024 Notes
Aggregate cost of capped calls	$	67,563	$	31,395
Initial strike price per share (1)	$	71.50	$	420.24
Initial cap price per share (1)	$	110.00	$	525.30
Shares of our common stock covered by the capped calls (1)	8,042		1,642

(1) Subject to adjustments for certain events, such as merger events and tender offers, and anti-dilution adjustments

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Impact on Loss Per Share

After February 1, 2021, the date of the adoption of ASU 2020-06, 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. As of the beginning of the fourth quarter of 2021, share settlement was presumed, and shares subject to the Notes would have been included under the if-converted method. In periods prior to that, cash settlement was presumed and shares subject to the Notes would have been included under the treasury stock method. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive.

Upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the cap prices listed above in the Capped Calls section, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price. As of April 30, 2021, the market price of our common stock exceeded the $110.00 per share cap price associated with the 2023 Notes but not the $525.30 cap price associated with the 2024 Notes; therefore, the 2023 Notes would have caused economic dilution if converted.

Revolving Credit Facility

In January 2021, we entered into a credit agreement with a syndicate of banks. The credit agreement extended a senior secured revolving credit facility (the “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 Credit 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 April 30, 2021. As of April 30, 2021, there were no outstanding borrowings under the Credit Facility. The Credit 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.

Note 8. Commitments and Contingencies

As of April 30, 2021, we had unused letters of credit outstanding associated with our various operating leases totaling $7.7 million.

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 April 30, 2021, the 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)
2022, remainder	$	15,698
2023	33,368
2024	19,091
2025	9,783
2026	8,178
Thereafter	3,145
Total	$	89,263

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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 April 30, 2021, and January 31, 2021. 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 and litigation made against us in the ordinary course of business. We believe the final outcome of these matters will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.

Note 9. Stockholders' Equity

Equity Incentive Plans

We maintain three stock-based compensation plans: the 2018 Equity Incentive Plan (the “2018 Plan”), the Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”) and the Amended and Restated 2003 Stock Plan (the “2003 Plan”).

The 2018 Plan serves as a successor to the 2011 Plan and 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 these two plans continue to be subject to the terms and conditions of the respective plans.

As of April 30, 2021, 43.1 million shares of our common stock were available for issuance under the 2018 Plan.

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 9.6 million shares occurred on February 1, 2021.

Restricted Stock Units

Restricted stock units (“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. The majority of RSUs vest upon the satisfaction of a service-based vesting condition. From time to time, we also grant RSUs that are subject to either a performance-based or market-based vesting condition. 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.

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RSU activity for the three months ended April 30, 2021 was as follows:

(in thousands, except per share data)	Number of Units	Weighted-Average Grant Date Fair Value
Unvested at January 31, 2021	10,586	$	83.98
Granted	436	227.30
Vested	(1,375)	60.04
Canceled	(453)	$	85.88
Unvested at April 30, 2021	9,194	$	94.26

As of April 30, 2021, our total unrecognized compensation cost related to RSUs was $671.2 million. We expect to recognize this expense over the remaining weighted-average period of approximately 2.2 years.

Stock Options

Option activity for the three months ended April 30, 2021 was as follows:

(in thousands, except years and per share data)	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at January 31, 2021	4,798	$	15.55	5.0	$	1,042,879
Exercised	(488)	13.48
Outstanding at April 30, 2021, all vested and exercisable	4,310	$	15.78	4.9	$	892,949

As of April 30, 2021, there was no remaining unrecognized compensation cost related to stock option grants.

2018 Employee Stock Purchase Plan

The Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of our common stock at a discounted price, normally through payroll deductions, of up to 15% of their earnings, subject to the terms of the ESPP and applicable law. 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. In the three months ended April 30, 2021, 0.1 million shares of our common stock were purchased under the ESPP. Compensation expense related to the ESPP was $4.3 million and $1.9 million for the three months ended April 30, 2021 and 2020.

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 April 30, 2021, 8.1 million shares of our common stock were reserved for issuance under the ESPP.

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Note 10. Net Loss per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for periods presented:

	Three Months Ended April 30,
(in thousands, except per share data)	2021		2020
Numerator:
Net loss attributable to common stockholders	$	(8,354)	$	(47,804)
Denominator:
Weighted-average common shares outstanding	194,342		182,978
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.04)	$	(0.26)

Outstanding potentially dilutive securities that were excluded from the diluted per share calculations because they would have been antidilutive are as follows:

	April 30,
(in thousands)	2021	2020
RSUs	9,194	12,550
Stock options	4,310	6,030
ESPP	158	227
Convertible senior notes	2,737	2,553
Total antidilutive securities	16,399	21,360

Note 11. Income Taxes

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. There were no material discrete items in the quarter.

Our income tax provision was $2.0 million and $2.1 million for the three months ended April 30, 2021 and 2020.

We review the likelihood that we will realize the benefit of our deferred tax assets and, therefore, the need for valuation allowances, on a quarterly basis. We maintain a valuation allowance against certain deferred tax assets, including all U.S. consolidated group deferred tax assets and certain foreign deferred tax assets as a result of our history of losses in the United States and certain foreign jurisdictions, and the variability and uncertainty of our operating results. In the event we determine our deferred tax assets are realizable based on our assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made.

As of April 30, 2021, our gross unrecognized tax benefits totaled $35.7 million, excluding related accrued interest and penalties, of which $16.3 million would impact the effective tax rate if recognized. Our policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

We are subject to taxation in the United States and various foreign jurisdictions. Our tax years from inception in 2003 through April 30, 2021 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 under examination by the Israel Tax Authority for tax years 2016 through 2019. We are not under examination in any other material jurisdiction. We believe that adequate amounts have been reserved in all jurisdictions.

Note 12. Geographic Information

We operate in one operating segment and one reportable segment as we only report financial information on an aggregate and consolidated basis to the Chief Executive Officer, who is our chief operating decision maker.

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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:

	Three Months Ended April 30,
(in thousands)	2021		2020
U.S.	$	368,423	$	242,168
International	100,655		54,849
Total revenue	$	469,078	$	297,017

No single country other than the U.S. had revenue greater than 10% of total revenue in the three months ended April 30, 2021 and 2020.

Our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows:

(in thousands)	April 30, 2021		January 31, 2021
U.S.	$	216,952	$	221,549
Ireland	64,842		66,670
International	34,519		36,172
Total long-lived assets	$	316,313	$	324,391

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our 2021 Annual Report on Form 10-K. As discussed in the section titled “Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report on Form 10-Q and in our 2021 Annual Report on Form 10-K. Our fiscal year ends January 31.

Executive Overview of First Quarter Results

Overview

DocuSign accelerates the process of doing business for companies and simplifies life for their customers and employees. We accomplish this by transforming the foundational element of business: the agreement.

We offer the world’s #1 e-signature solution as the core part of our broader software suite for automating the agreement process, which we call the DocuSign Agreement Cloud. It is designed to allow companies of all sizes and across all industries to quickly and easily make nearly every agreement, approval process or transaction digital. It provides comprehensive functionality across e-signature and addresses the broader agreement process. As a result, over 980,000 customers and hundreds of millions of users worldwide utilize DocuSign to create, upload and send documents for multiple parties to sign electronically. The DocuSign Agreement Cloud allows users to complete approvals, agreements and transactions faster by building end-to-end processes. DocuSign eSignature integrates with popular business apps, and our functionality can also be embedded using our API. Finally, the DocuSign Agreement Cloud allows our customers to automate and streamline their business-critical workflows to save time and money, while staying secure and legally compliant.

We generally offer access to our platform on a subscription basis with prices based on the functionality our customers require and the quantity of Envelopes provisioned. Similar to the physical envelopes historically used to mail paper documents, an Envelope is a digital container used to send one or more documents for signature or approval to one or more recipients. Our customers have the flexibility to put a large number of documents in an Envelope. For a number of use cases, such as buying a home, multiple Envelopes are used over the course of the process. To drive customer reach and adoption, we also offer for free certain limited-time or feature-constrained versions of our platform.

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We generate substantially all our revenue from sales of subscriptions, which accounted for 96% and 95% of our revenue in the three months ended April 30, 2021 and 2020. Our subscription fees include the use of our software suite and access to customer support. Subscriptions generally range from one to three years, and substantially all our multi-year customers pay in annual installments, one year in advance.

We also generate revenue from professional and other non-subscription services, which consists primarily of fees associated with providing new customers deployment and integration services. Other revenue includes amounts derived from sales of on-premises solutions. Professional services and other revenue accounted for the remainder of total revenue in the three months ended April 30, 2021 and 2020. We anticipate continuing to invest in customer success through our professional services offerings as we believe it plays an important role in accelerating our customers’ deployment of our software suite, which helps drive customer retention and expansion of the use of the DocuSign Agreement Cloud.

We offer subscriptions to our software suite to enterprise businesses, commercial businesses and very small businesses (“VSBs”), which we define as companies with fewer than 10 employees and includes professionals, sole proprietorships and individuals. We sell to customers through multiple channels. Our go-to-market strategy relies on our direct sales force and partnerships to sell to enterprises and commercial businesses and our web-based self-service channel to sell to VSBs, which we believe is the most cost-effective way to reach our smallest customers. We offer more than 350 off-the-shelf, prebuilt integrations with the applications that many of our customers already use—including those offered by Google, Microsoft, NetSuite, Oracle, Salesforce, SAP, SAP SuccessFactors and Workday—so that they can create, sign, send and manage agreements from directly within these applications. We have a diverse customer base spanning various industries and countries with no significant customer concentration. No single customer accounted for more than 10% of total revenue in any of the periods presented.

We focused initially on selling our e-signature solutions to commercial businesses and VSBs, and later expanded our focus to target enterprise customers. To demonstrate this growth over time, the number of our customers with greater than $300,000 in annual contract value (measured in billings) has increased from approximately 30 customers as of January 31, 2013 to 673 customers as of April 30, 2021. Each of our customer types has a different purchasing pattern. VSBs tend to become customers quickly with very little to no direct sales or customer support interaction and generate smaller average contract values, while commercial and enterprise customers typically involve longer sales cycles, larger contract values and greater expansion opportunities for us.

COVID-19 Update

The COVID-19 pandemic has spread across the world including the United States, where we are headquartered and the majority of our workforce is located. The pandemic and the public health measures taken in response to it have adversely affected workforces, organizations, customers, economies, and financial markets globally, leading to an economic downturn and increased market volatility. We are continuing to monitor the actual and potential effects of the pandemic across our business. Because these effects are dependent on highly uncertain future developments — including the duration, spread and severity of the pandemic, the actions taken to contain the virus, the distribution of vaccines, and how quickly and to what extent normal economic and operating conditions can or will resume — they are extremely difficult to predict. While our revenue, billings and earnings are relatively predictable as a result of our subscription-based business model, the effects of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods.

Since March 2020, we have taken a number of precautionary measures to ensure the health and safety of our employees, partners and customers. DocuSign has shifted to a largely remote work environment, providing nearly all employees the opportunity to work from home until at least October 4, 2021. We have suspended all business travel other than for essential functions. We have cancelled or replaced planned events, such as our Momentum conferences, with virtual-only experiences. We have incurred expenses to support our employees working from home, including reimbursements for home office equipment and a stipend for other qualifying expenses, as well as expenses associated with planning and risk mitigation for potential and actual reopening of our offices, and may incur similar expenses in the future. The impact of these and any other operational changes we may implement is uncertain, but as of the date of this filing they have not materially affected our ability to maintain operations.

We have experienced a substantial increase in overall demand for our products, particularly DocuSign eSignature, as the shift to remote, digital business operations has caused more organizations to adopt or expand their use of digital agreements. This acceleration of the digital transformation of agreements has resulted in growth in our customer base and a significant increase in customer spending across almost all industries and regions we serve.

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We believe that businesses that have shifted to digital agreement processes will not return to manual ones. However, if our expectations are incorrect, and if demand for our products decreases as the COVID-19 pandemic lessens in severity and businesses resume in-person operations, our business could suffer. See the section below titled “Risk Factors” for further discussion of the potential impact of the COVID-19 pandemic, including the conclusion or tapering of the pandemic, on our business, financial condition and results of operations.

Financial Results for the Three Months Ended April 30, 2021 and 2020

	Three Months Ended April 30,
(in thousands)	2021		2020
Total revenue	$	469,078	$	297,017
Total costs and expenses	479,815		338,870
Total stock-based compensation expense	81,136		53,551
Loss from operations	(10,737)		(41,853)
Net loss	(8,354)		(47,804)
Net cash provided by operating activities	135,597		59,144
Purchases of property and equipment	(12,596)		(26,389)

Cash, cash equivalents, restricted cash and investments were $875.8 million as of April 30, 2021.

Key Factors Affecting Our Performance

We believe that our future performance will depend on many factors, including the following:

Growing Customer Base

We are highly focused on continuing to acquire new customers to support our long-term growth. We have invested, and expect to continue to invest, heavily in our sales and marketing efforts to drive customer acquisition. As of April 30, 2021, we had a total of over 980,000 customers, including over 135,000 enterprise and commercial customers, compared to over 660,000 customers and over 85,000 enterprise and commercial customers as of April 30, 2020. We define a customer as a separate and distinct buying entity, such as a company, an educational or government institution, or a distinct business unit of a large company that has an active contract to access our software suite. We define enterprise customers as companies generally included in the Global 2000. We define commercial customers to include both mid-market companies, which includes companies outside the Global 2000 that have greater than 250 employees, and small-to-medium-sized businesses, which are companies with between 10 and 249 employees, in each case excluding any enterprise customers. We refer to total customers as all enterprises, commercial businesses and VSBs.

We believe that our ability to increase the number of customers using our software suite, particularly the number of enterprise and commercial customers, is an indicator of our market penetration, the growth of our business and our potential future business opportunities. By increasing awareness of our software suite, further developing our sales and marketing expertise and continuing to build features tuned to different industry needs, we have expanded the diversity of our customer base to include organizations of all sizes across nearly every industry.

Retaining and Expanding Contracts with Existing Enterprise and Commercial Customers

Many of our customers have increased spend with us as they have expanded their use of our offerings in both existing and new use cases across their front or back office operations. Our enterprise and commercial customers may start with just one use case and gradually implement additional use cases across their organization once they see the benefits of our software suite. Several of our largest enterprise customers have deployed our software suite for hundreds of use cases across their organizations. We believe there is significant expansion opportunity with our customers following their initial adoption of our software suite.

Increasing International Revenue

Our international revenue represented 21% and 18% of our total revenue in the three months ended April 30, 2021 and 2020.

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We started our international selling efforts in English-speaking common law countries, such as Canada, the United Kingdom and Australia, where we were able to leverage our core technologies due to similar approaches to e-signature in these jurisdictions and the United States (“U.S.”). We have since made significant investments to be able to offer our products in select civil law countries. For example, in Europe, we have Standards-Based Signature (“SBS”) technology tailored for electronic IDentification, Authentication and trust Services (“eIDAS”). SBS supports signatures that involve digital certificates, including those specified in the European Union’s (“EU”) eIDAS regulations for advanced and qualified electronic signatures. In addition, to follow longstanding tradition in Japan, we enable signers to upload and apply their personal eHanko stamp to represent their signatures on an agreement.

We plan to increase our international revenue by leveraging and continuing to expand the investments we have already made in our technology, direct sales force and strategic partnerships, as well as helping existing U.S.-based customers manage agreements across their international businesses. We have experienced increased demand in Latin America and are expanding our sales and marketing resources to capitalize on the potential growth of these markets. Additionally, we expect to continue to develop and enhance our strategic partnerships in key international markets as we grow internationally.

Investing for Growth

We believe that our market opportunity is large, and we plan to invest to continue to support further growth. This includes expanding our sales headcount and increasing our marketing initiatives. We also plan to continue to invest in expanding the functionality of our software suite and underlying infrastructure and technology to meet the needs of our customers across industries. Our acquisitions of Seal Software and Liveoak Technologies, intended to bring additional functionality to our DocuSign Agreement Cloud and further expand our eNotary offerings, as well as the continuous development of new features internally, are examples of our commitment to investing for ongoing growth.

Components of Results of Operations

Revenue

We derive revenue primarily from the sale of subscriptions and, to a lesser extent, professional services.

Subscription Revenue

Subscription revenue consists of fees for the use of our software suite and our technical infrastructure and access to customer support, which includes phone or email support. We typically invoice customers in advance on an annual basis. We recognize subscription revenue ratably over the term of the contract subscription period beginning on the date access to our software suite is provided.

Professional Services and Other Revenue

Professional services revenue includes fees associated with new customers requesting deployment and integration services. We price professional services on a time and materials basis and on a fixed fee basis. We generally have standalone value for our professional services and recognize revenue based on standalone selling price as services are performed or upon completion of services for fixed fee contracts. Other revenue includes amounts derived from sales of on-premises solutions.

Overhead Allocation

We allocate shared overhead costs, such as facilities (including rent, utilities and depreciation on equipment shared by all departments), information technology, information security and recruiting costs to all departments based on headcount. As such, these allocated overhead costs are reflected in each cost of revenue and operating expense category.

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Cost of Revenue

Cost of Subscription Revenue

Cost of subscription revenue primarily consists of expenses related to hosting our software suite and providing support. These expenses consist of employee-related costs, including salaries, bonuses, benefits, stock-based compensation and other related costs, associated with our technical infrastructure, customer success and customer support. These expenses also consist of software and maintenance costs, third-party hosting fees, outside services associated with the delivery of our subscription services, amortization expense associated with capitalized internal-use software and acquired intangible assets, credit card processing fees and allocated overhead costs.

Cost of Professional Services and Other Revenue

Cost of professional services and other revenue consists primarily of personnel costs for our professional services delivery team, travel-related costs and allocated overhead costs.

Gross Profit and Gross Margin

Gross profit is total revenue less total cost of revenue. Gross margin is gross profit expressed as a percentage of total revenue. We expect that gross profit and gross margin will continue to be affected by various factors including our pricing, timing and amount of investment to maintain or expand our hosting capability, the growth of our software suite support and professional services team, stock-based compensation expenses, amortization of costs associated with capitalized internal use software and acquired intangible assets and allocated overhead costs.

Operating Expenses

Our operating expenses consist of selling and marketing, research and development and general and administrative expenses.

Selling and Marketing Expense	Selling and marketing expense consists primarily of personnel costs, including sales commissions. These expenses also include expenditures related to advertising, marketing, promotional events and brand awareness activities, as well as allocated overhead costs. We expect selling and marketing expense to continue to increase in absolute dollars as we enhance our product offerings and implement marketing strategies.
Research and Development Expense	Research and development expense consists primarily of personnel costs. These expenses also include non-personnel costs, such as subcontracting, consulting and professional fees for third-party development resources, as well as allocated overhead costs. Our research and development efforts focus on maintaining and enhancing existing functionality and adding new functionality. We expect research and development expense to increase in absolute dollars as we invest in the enhancement of our software suite.
General and Administrative Expense	General and administrative expense consists primarily of employee-related costs for those employees providing administrative services such as legal, human resources, information technology related to internal systems, accounting and finance. These expenses also include certain third-party consulting services, certain facilities costs and allocated overhead costs. We expect general and administrative expense to increase in absolute dollars to support the overall growth of our operations.

Interest Expense

Interest expense consists primarily of contractual interest expense, amortization of discount and amortization of debt issuance costs on our Convertible Senior Notes (the “Notes”).

Interest income and other income, net

Interest income and other income, net, consists primarily of interest earned on our cash, cash equivalents and investments, changes in fair value of our strategic investments and foreign currency transaction gains and losses.

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Provision for income taxes

Our provision for income taxes consists primarily of income taxes in certain foreign jurisdictions where we conduct business, and tax benefits arising from deductions for stock-based compensation. We have a valuation allowance against our U.S. consolidated group and certain foreign deferred tax assets. We expect to maintain this valuation allowance for the foreseeable future or until it becomes more likely than not that the benefit of these U.S. and foreign deferred tax assets will be realized by way of expected future taxable income.

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Discussion of Results of Operations

The following table summarizes our historical consolidated statements of operations data:

	Three Months Ended April 30,
(in thousands)	2021		As % of revenue		2020		As % of revenue
Revenue:
Subscription	$	451,935	96	%	$	280,922	95	%
Professional services and other	17,143		4		16,095		5
Total revenue	469,078		100		297,017		100
Cost of revenue:
Subscription	78,071		17		52,010		18
Professional services and other	27,171		5		22,022		7
Total cost of revenue	105,242		22		74,032		25
Gross profit	363,836		78		222,985		75
Operating expenses:
Sales and marketing	239,119		51		171,793		58
Research and development	85,416		18		54,234		18
General and administrative	50,038		11		38,811		13
Total operating expenses	374,573		80		264,838		89
Loss from operations	(10,737)		(2)		(41,853)		(14)
Interest expense	(1,672)		—		(7,560)		(3)
Interest income and other income, net	6,037		1		3,742		2
Loss before provision for income taxes	(6,372)		(1)		(45,671)		(15)
Provision for income taxes	1,982		1		2,133		1
Net loss	$	(8,354)	(2)	%	$	(47,804)	(16)	%

The following discussion and analysis is for the three months ended April 30, 2021, compared to the same period in 2020, unless otherwise stated.

Revenue

	Three Months Ended April 30,				2021 versus 2020
(in thousands, except for percentages)	2021		2020
Revenue:
Subscription	$	451,935	$	280,922	61	%
Professional services and other	17,143		16,095		7	%
Total revenue	$	469,078	$	297,017	58	%

Subscription revenue increased by $171.0 million, or 61%, in the three months ended April 30, 2021. Due to the COVID-19 pandemic, there has been a shift to remote digital business operations that has led to an increase in demand for our solutions. This resulted in a higher growth in our customer base and a significant increase in customer spending across almost all industries and regions we serve.

We continue to invest in a variety of customer programs and initiatives, which, along with expanded customer use cases, have helped increase our subscription revenue over time. We expect subscription revenue to continue to increase as we offer new functionality, attract new customers and fully realize the potential of our acquisitions in our product offerings. We continue to monitor the COVID-19 pandemic in fiscal 2022 and its impact on the economy, the digital transformation of business and demand for our solutions.

Professional services and other revenue had a slight increase in the three months ended April 30, 2021.

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Cost of Revenue and Gross Margin

	Three Months Ended April 30,						2021 versus 2020
(in thousands, except for percentages)	2021			2020
Cost of revenue:
Subscription	$	78,071		$	52,010		50	%
Professional services and other	27,171			22,022			23	%
Total cost of revenue	$	105,242		$	74,032		42	%
Gross margin:
Subscription	83		%	81		%	2	pts
Professional services and other	(58)		%	(37)		%	(21)	pts
Total gross margin	78		%	75		%	3	pts

Cost of subscription revenue increased $26.1 million, or 50%, in the three months ended April 30, 2021, primarily driven by higher costs to support our growing customer base and the impact of the Seal acquisition. Significant increases consisted of:

▪$9.7 million in personnel costs and $2.2 million in stock-based compensation expense primarily due to higher headcount, including the addition of Seal employees, and annual merit increases;

▪$6.2 million in operating costs to support our platform and the growth in our revenue, including increases in subscription reseller fees, hosting costs and authentication and processing fees; and

▪$5.3 million in depreciation and amortization, which reflects the impact of higher data center and capitalized software assets as well as the higher existing technology intangible assets from the Seal acquisition.

Cost of professional services and other revenue increased $5.1 million, or 23%, in the three months ended April 30, 2021, primarily due to an increase in personnel costs driven by higher headcount, including the addition of Seal employees to our workforce, and annual merit increases.

Sales and Marketing

	Three Months Ended April 30,						2021 versus 2020
(in thousands, except for percentages)	2021			2020
Sales and marketing	$	239,119		$	171,793		39	%
Percentage of revenue	51		%	58		%

Sales and marketing expenses increased $67.3 million, or 39%, in the three months ended April 30, 2021, primarily driven by investments in workforce and technology infrastructure to support the significant increase in demand due to the acceleration of the digital transformation of agreements. Significant increases consisted of:

▪$40.8 million in personnel costs and $13.5 million in stock-based compensation expense due to higher headcount, annual merit increases, the addition of Seal employees to our workforce, higher commissions in line with higher sales and higher taxes on employee stock transactions; and

▪$10.9 million in marketing and advertising expense, primarily due to higher spend on online advertising platforms to help capture the increased market interest in our product offering as a result of the shift to COVID-19 remote work environment.

Research and Development

	Three Months Ended April 30,						2021 versus 2020
(in thousands, except for percentages)	2021			2020
Research and development	$	85,416		$	54,234		57	%
Percentage of revenue	18		%	18		%

Research and development expenses increased $31.2 million, or 57%, in the three months ended April 30, 2021, primarily due to investments in workforce and technology infrastructure to support growth. Personnel costs increased by $19.2 million and stock-based compensation by $8.6 million due to higher headcount, the addition of Seal and Liveoak employees to our workforce and annual merit increases.

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General and Administrative

	Three Months Ended April 30,						2021 versus 2020
(in thousands, except for percentages)	2021			2020
General and administrative	$	50,038		$	38,811		29	%
Percentage of revenue	11		%	13		%

General and administrative expenses increased $11.2 million or 29%, in the three months ended April 30, 2021, primarily due to investments in workforce and technology infrastructure to support growth. Personnel costs increased by $6.3 million and stock-based compensation by $2.0 million due to higher headcount and the impact of annual merit increases.

Other Income and Expense

	Three Months Ended April 30,						2021 versus 2020
(in thousands, except for percentages)	2021			2020
Interest expense	$	1,672		$	7,560		(78)	%
Percentage of revenue	—		%	(3)		%
Interest income	$	1,126		3,381			(67)	%
Foreign currency gain (loss)	266			(545)			NM
Fair value adjustments to strategic investments	5,119			—			100	%
Other	(474)			906			NM
Interest income and other income, net	$	6,037		3,742			61	%
Percentage of revenue	1		%	2		%

Interest expense decreased by $5.9 million in the three months ended April 30, 2021 primarily due to lower amortization expense under ASU 2020-06 effective February 1, 2021.

Interest income and other income, net, for the three months ended April 30, 2021 included $5.1 million adjustments to fair value of certain strategic investments resulting from observable price changes that occurred during the quarter.

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Liquidity and Capital Resources

Our principal sources of liquidity were cash, cash equivalents and investments as well as cash generated from operations. As of April 30, 2021, we had $780.6 million in cash and cash equivalents and short-term investments. We also had $94.9 million in long-term investments that provide additional capital resources. We finance our operations primarily through payments by our customers for use of our product offerings and related services and through debt financings.

In September 2018, we issued and sold $575.0 million in aggregate principal amount of 0.5% Convertible Senior Notes due 2023 ("2023 Notes"). In January 2021, we issued and sold $690.0 million in aggregate principal amount of 0% Convertible Senior Notes due 2024 ("2024 Notes", and together with the 2023 Notes, the “Notes”). A portion of the 2024 Notes proceeds was used to repurchase $460.0 million in aggregate principal amount of the 2023 Notes.

In January 2021 we entered into a $500.0 million credit facility, which may be increased by an additional $250.0 million subject to customary terms and conditions. The credit facility is available until January 11, 2026 to optimize our capital structure and strengthen our balance sheet. There were no outstanding borrowings under the credit facility as of April 30, 2021.

Further details of these transactions are described in Note 7 to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

We were in compliance with all debt covenants at April 30, 2021.

We believe our existing cash, cash equivalents and marketable securities will be sufficient to meet our working capital and capital expenditures needs over at least the next 12 months. While we have generated positive cash flows from operations in recent years, we have generated losses from operations in the past as reflected in our accumulated deficit of $1.4 billion as of April 30, 2021. We may not achieve profitability in the foreseeable future due to the investments we intend to make and may require additional capital resources to execute strategic initiatives to grow our business.

We typically invoice our customers annually in advance. Therefore, a substantial source of our cash is from such invoices, which are included on our consolidated balance sheets in contract liabilities until revenue is recognized or in accounts receivable until cash is collected. Accordingly, collections from our customers have a material impact on our cash flows from operating activities. Our accounts receivable decreased by $73.2 million in the three months ended April 30, 2021, compared to a decrease of $17.2 million in the three months ended April 30, 2020, which resulted in a $56.0 million increase in cash provided by operating activities year over year. Contract liabilities consist of the unearned portion of billed fees for our subscriptions, which is subsequently recognized as revenue in accordance with our revenue recognition policy. Our contract liabilities increased by $51.6 million in the three months ended April 30, 2021, compared to an increase of $44.6 million in the three months ended April 30, 2020. The year over year increase contributed an additional $7.1 million to cash provided by operating activities.

Our future capital requirements will depend on many factors including our growth rate, customer retention and expansion, tax withholding obligations related to settlement of our RSUs, the timing and extent of spending to support our efforts to develop our software suite, the expansion of sales and marketing activities and the continuing market acceptance of our software suite. We may in the future enter into arrangements to acquire or invest in complementary businesses, technologies and intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.

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Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Three Months Ended April 30,
(in thousands)	2021		2020
Net cash provided by (used in):
Operating activities	$	135,597	$	59,144
Investing activities	(70,506)		169,668
Financing activities	(112,954)		(25,498)
Effect of foreign exchange on cash, cash equivalents and restricted cash	779		(2,280)
Net change in cash, cash equivalents and restricted cash	$	(47,084)	$	201,034

Cash Flows from Operating Activities

Cash provided by operating activities was $135.6 million and $59.1 million for the three months ended April 30, 2021 and 2020. The improvement of $76.5 million, as compared to prior year, was primarily the result of increased sales and the related cash collections, partially offset by higher operating costs from increased headcount and to support growth.

Cash Flows from Investing Activities

For the three months ended April 30, 2021, net cash used in investing activities of $70.5 million was primarily driven by $57.4 million net purchases of marketable securities and $12.6 million purchases of property and equipment.

For the three months ended April 30, 2020, cash provided by investing activities of $169.7 million was primarily driven by $199.1 million from maturities and sales of marketable securities, partially offset by $26.4 million purchases of property and equipment.

Cash Flows from Financing Activities

For the three months ended April 30, 2021, cash used in financing activities of $113.0 million was primarily driven by $76.3 million in net payments related to our equity plans, as compared to $25.5 million in the prior year for similar activities. We also used $36.7 million for repayments of our 2023 Notes.

Obligations and Commitments

Our principal contractual obligations and commitments consist of obligations under the Notes (including principal and coupon interest), operating leases, as well as noncancelable contractual commitments that primarily relate to cloud infrastructure support and sales and marketing activities. Refer to Note 7 and Note 8 to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q, for our leases and other commitments.

We do not have any special purpose entities and we do not engage in off-balance sheet financing arrangements.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

The critical accounting estimates, assumptions and judgments that we believe to have the most significant impact on our consolidated financial statements are revenue recognition, deferred contract acquisition costs, stock-based compensation, valuation of acquired intangible assets in business combinations and income taxes.

There have been no material changes to our critical accounting policies and estimates as described in our 2021 Annual Report on Form 10-K.

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Recent Accounting Pronouncements

Refer to Note 1 to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently issued accounting pronouncements not yet adopted as of the date of this report.

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Non-GAAP Financial Measures and Other Key Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We present these non-GAAP measures to assist investors in seeing our financial performance using a management view, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin and non-GAAP net income: We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs, acquisition-related expenses, fair value adjustments to strategic investments and, as applicable, other special items. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business. When evaluating the performance of our business and making operating plans, we do not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder dilution rather than the accounting charges associated with such grants). We believe it is useful to exclude these expenses in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies and over multiple periods.

Free cash flow: We define free cash flow as net cash provided by operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash that is available (if any), after purchases of property and equipment, for operational expenses, investment in our business and to make acquisitions. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in excess of our capital investments in property and equipment. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.

Billings: We define billings as total revenues plus the change in our contract liabilities and refund liability less contract assets and unbilled accounts receivable in a given period. Billings reflects sales to new customers plus subscription renewals and additional sales to existing customers. Only amounts invoiced to a customer in a given period are included in billings. We believe billings is a key metric to measure our periodic performance. Given that most of our customers pay in annual installments one year in advance, but we typically recognize a majority of the related revenue ratably over time, we use billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers.

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Reconciliation of gross profit and gross margin:

	Three Months Ended April 30,
(in thousands)	2021			2020
GAAP gross profit	$	363,836		$	222,985
Add: Stock-based compensation	11,553			7,989
Add: Amortization of acquisition-related intangibles	3,171			1,348
Add: Employer payroll tax on employee stock transactions	2,774			1,036
Non-GAAP gross profit	$	381,334		$	233,358
GAAP gross margin	78		%	75		%
Non-GAAP adjustments	3		%	4		%
Non-GAAP gross margin	81		%	79		%
GAAP subscription gross profit	$	373,864		$	228,912
Add: Stock-based compensation	6,018			3,864
Add: Amortization of acquisition-related intangibles	3,171			1,348
Add: Employer payroll tax on employee stock transactions	1,442			535
Non-GAAP subscription gross profit	$	384,495		$	234,659
GAAP subscription gross margin	83		%	81		%
Non-GAAP adjustments	2		%	3		%
Non-GAAP subscription gross margin	85		%	84		%
GAAP professional services and other gross loss	$	(10,028)		$	(5,927)
Add: Stock-based compensation	5,535			4,125
Add: Employer payroll tax on employee stock transactions	1,332			501
Non-GAAP professional services and other gross loss	$	(3,161)		$	(1,301)
GAAP professional services and other gross margin	(58)		%	(37)		%
Non-GAAP adjustments	40		%	29		%
Non-GAAP professional services and other gross margin	(18)		%	(8)		%

Reconciliation of income (loss) from operations and operating margin:

	Three Months Ended April 30,
(in thousands)	2021			2020
GAAP loss from operations	$	(10,737)		$	(41,853)
Add: Stock-based compensation	81,136			53,551
Add: Amortization of acquisition-related intangibles	6,529			4,259
Add: Employer payroll tax on employee stock transactions	16,283			6,548
Add: Acquisition-related expenses	—			694
Non-GAAP income from operations	$	93,211		$	23,199
GAAP operating margin	(2)		%	(14)		%
Non-GAAP adjustments	22		%	22		%
Non-GAAP operating margin	20		%	8		%

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Reconciliation of net income (loss):

	Three Months Ended April 30,
(in thousands)	2021		2020
GAAP net loss	$	(8,354)	$	(47,804)
Add: Stock-based compensation	81,136		53,551
Add: Amortization of acquisition-related intangibles	6,529		4,259
Add: Employer payroll tax on employee stock transactions	16,283		6,548
Add: Acquisition-related expenses	—		694
Add: Amortization of debt discount and issuance costs	1,319		6,842
Less: Fair value adjustments to strategic investments	(5,119)		—
Non-GAAP net income	$	91,794	$	24,090

Computation of free cash flow:

	Three Months Ended April 30,
(in thousands)	2021		2020
Net cash provided by operating activities	$	135,597	$	59,144
Less: Purchases of property and equipment	(12,596)		(26,389)
Non-GAAP free cash flow	$	123,001	$	32,755
Net cash (used in) provided by investing activities	$	(70,506)	$	169,668
Net cash used in financing activities	$	(112,954)	$	(25,498)

Computation of billings:

	Three Months Ended April 30,
(in thousands)	2021		2020
Revenue	$	469,078	$	297,017
Add: Contract liabilities and refund liability, end of period	857,969		568,544
Less: Contract liabilities and refund liability, beginning of period	(800,940)		(522,201)
Add: Contract assets and unbilled accounts receivable, beginning of period	21,021		15,082
Less: Contract assets and unbilled accounts receivable, end of period	(19,737)		(16,390)
Non-GAAP billings	$	527,391	$	342,052

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ITEM 3. 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 April 30, 2021, we had cash, cash equivalents and investments totaling $875.6 million, which consisted primarily of bank deposits, money market funds, commercial paper, corporate notes and bonds and U.S. Treasury and government agency securities. Interest-earning instruments carry a degree of interest rate risk. Our investment portfolio is comprised 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 approximately $1.9 million decrease of the fair value of our investment portfolio as of April 30, 2021. 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.

We had no exposure to changes in interest rates from debt obligations at April 30, 2021 as our 2023 Notes and 2024 Notes were issued at fixed rates of 0.5% and 0.0%, respectively. The fair value of the Notes changes when the market price of our stock fluctuates or interest rates change. However, we carry the Notes at face value less unamortized discount on our balance sheet and present the fair value for required disclosure purposes only.

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 income” 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 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of April 30, 2021, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified by Securities and Exchange Commission (“SEC”) rules and forms and (b) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding any required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the first quarter of fiscal 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be subject to legal proceedings and claims, including intellectual property, commercial, employment and employee benefits claims, that arise in the ordinary course of business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. We have received, and may in the future continue to receive, claims, including claims from third parties asserting, among other things, infringement of their intellectual property rights, claims concerning employment and employee-related matters, and other various claims and controversies. Future litigation may be necessary to defend ourselves, our partners and our customers by determining the scope, enforceability and validity of claims, including any claims related to third-party proprietary rights, to establish our proprietary rights, or to respond to claims generally. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

ITEM 1A. RISK FACTORS

Risk Factors Summary

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this Risk Factors Summary. These summary risks provide an overview of many of the risks we are exposed to in the normal course of our business. As a result, the following summary risks do not contain all of the information that may be important to you, and you should read them together with the more detailed discussion of risks set forth following this section under the heading “Risk Factors,” and with the other information in this Quarterly Report on Form 10-Q. Additional risks beyond those summary risks discussed below, in “Risk Factors” or elsewhere in this Quarterly Report on Form 10-Q, could have an adverse effect on our business, results of operations, financial condition or prospects, and could cause the trading price of our common stock to decline. Our business, results of operations, financial condition or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. Consistent with the foregoing, we are exposed to a variety of risks, including the following significant risks:

▪We cannot predict the full impact of the COVID-19 pandemic on our business, results of operations and financial condition.

▪We have a history of operating losses and may not achieve or sustain profitability in the future.

▪We derive a majority of our revenue from our e-signature solutions, and slower or declining adoption of our e-signature solutions, without a corresponding increase in the use of our other products and solutions, could cause our operating results to suffer.

▪The market for our products and solutions is relatively new and evolving. If the market does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected.

▪If we are unable to attract new customers and retain and expand sales to existing customers, our revenue growth will be adversely affected.

▪We depend on co-located data centers and third-party cloud providers as well as our own technical operations infrastructure to provide our products and solutions to our customers in a timely manner. Interruptions or delays in performance of our products and solutions could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue.

▪Our systems and security measures have been, and may in the future be, compromised or subject to data breaches, cyberattacks or other malicious activity. Consequently, our products and solutions may be perceived as not being secure. This may result in customers reducing or stopping their use of our products or solutions, our reputation being harmed, our incurring significant liabilities and adverse effects on our operating results and growth prospects.

▪Our recent rapid growth may not be indicative of our future growth, and, if we continue to grow rapidly, we may not be able to manage our growth effectively.

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▪Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales contracts are not immediately reflected in full in our operating results.

▪The market in which we participate is highly competitive, which may negatively affect our ability to add new customers, retain existing customers and grow our business.

▪If our products and solutions fail to perform properly and if we fail to develop enhancements to resolve any defect or other problems, we could lose customers or become subject to service performance or warranty claims and our market share could decline.

▪We have incurred substantial indebtedness that may decrease our business flexibility, access to capital and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.

▪We are subject to laws and regulations affecting our business, including those related to e-signature, marketing, advertising, privacy, data protection and information security. Our actual or perceived failure to comply with laws or regulations could harm our business. Complying with laws and regulations, in particular those related to privacy and data protection, could also result in additional costs and liabilities to us or inhibit sales of our software.

Risk Factors

Our business involves significant risks, some of which are described below. You should carefully consider the following risks, together with all of the other information in this Quarterly Report on Form 10-Q, including in the preceding Risk Factors Summary, our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q.

Risks Related to Our Business and Industry

We cannot predict the full impact of the COVID-19 pandemic on our business, results of operations and financial condition.

The full impact of the continuing COVID-19 pandemic and related public health measures on our business will depend largely on future developments, including the duration and severity of the COVID-19 pandemic, which are highly uncertain and cannot be accurately predicted. The full effects of the COVID-19 pandemic cannot be predicted as a result of uncertainties including the extent and rate of the ongoing spread of the virus, the emergence of potential variants of the virus, the deployment of vaccines worldwide, national, local and state governmental responses to the crisis including restrictions on travel and business activities, and the potential for additional peaks in infection rates in 2021.

The COVID-19 pandemic has created and is likely to continue to create significant uncertainty in global financial markets. To date, due to the widespread shift by businesses to remote, web-enabled operations and digital agreements, we have experienced a substantial increase in overall demand for our products, in particular DocuSign eSignature. Although this has resulted in a significant increase in customer spending across almost all industries and regions we serve, the growth we have experienced may not continue in future periods. In addition,we have experienced slower growth or declining spending in certain industries most impacted by the pandemic, such as travel and hospitality. As the pandemic continues, we may experience volatility in customer demand; increased customer churn; increases in late payment or non-payment by customers; delayed purchasing decisions; and increased pressure on pricing, discounts and payment terms, any of which could materially harm our business, results of operations, and overall financial performance.

We have undertaken measures to mitigate the effect of the COVID-19 pandemic on our business and to protect our employees, partners and customers, including by imposing travel restrictions for our employees, providing almost all employees the opportunity to work remotely until at least October 4, 2021, limiting capacity at any of our offices which have reopened or may reopen during the pandemic’s duration, and shifting customer, partner and investor events to virtual-only formats. However, there can be no assurance that these measures will be effective, or that we can adopt them without adversely affecting our business operations. For example, our management team has been focusing additional time on planning for and mitigating the risks of the COVID-19 pandemic, including plans to reopen our offices, which may reduce the amount of time available for other initiatives. Changes in our operations with respect to COVID-19 or employee illnesses resulting from the COVID-19 pandemic may result in inefficiencies or delays that cannot be fully mitigated through succession planning, employees working remotely or teleconferencing technologies.

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These changes may also lead to inefficiencies of our employees, operational and cybersecurity risks and other circumstances which could have an adverse impact to our results of operations.

Finally, to the extent that the COVID-19 pandemic harms our business and results of operations, many of the other risks described in this “Risk Factors” section will be exacerbated.

We have a history of operating losses and may not achieve or sustain profitability in the future.

We began operations in 2003 and have experienced net losses since inception. We generated a net loss of $8.4 million and $47.8 million in the three months ended April 30, 2021 and 2020, and as of April 30, 2021, we had an accumulated deficit of $1.4 billion. We will need to generate and sustain increased revenue levels in future periods to become profitable and, even if we do, we may not be able to maintain or increase our level of profitability. We intend to continue to incur significant expenses to support growth, further develop and enhance our products and solutions, expand our infrastructure and technology, increase our sales headcount and marketing activities, and grow our international operations and customer base. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications and delays and other unknown events. If we are unable to achieve and sustain profitability, the value of our business and common stock may significantly decrease.

We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors, the price of our common stock could decline.

Our operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance and comparing our operating results on a period-to-period basis may not be meaningful. In addition to the other risks described herein, factors that may affect our operating results include the following:

▪fluctuations in demand for or pricing of our products and solutions, including due to the COVID-19 pandemic;

▪our ability to attract new customers;

▪our ability to renew our subscriptions with, and expand sales of our products and solutions to, our existing customers;

▪timing of revenue recognition;

▪customer delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors;

▪changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions, including cost-cutting measures or other effects of the COVID-19 pandemic;

▪the timing and success of new product and service introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation or new entrants among competitors, customers, or strategic partners;

▪our ability to control costs, including our operating expenses;

▪our ability to continue operating remotely due to the COVID-19 pandemic;

▪potential accelerations of prepaid expenses and deferred costs;

▪the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges;

▪the amount and timing of costs associated with recruiting, training and integrating new employees;

▪issues relating to acquisitions and partnerships with third parties;

▪general economic, market and industry conditions, including resulting from the COVID-19 pandemic;

▪the impact of new accounting pronouncements;

▪changes in laws and regulations that affect our business;

▪significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products and solutions; and

▪awareness of our brand on a global basis.

If our operating results fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class action lawsuits.

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We derive a majority of our revenue from our e-signature solutions, and slower or declining adoption of our e-signature solutions, without a corresponding increase in the use of our other products and solutions, could cause our operating results to suffer.

Sales of subscriptions to our e-signature solutions account for substantially all of our subscription revenue and are the source of substantially all of our professional services revenue. Although we continue to add to our suite of products and solutions for automating the agreement process, we expect that we will be substantially dependent on our e-signature solutions to generate revenue for the foreseeable future. As a result, our operating results could suffer due to:

▪any decline in demand for our e-signature solutions;

▪macro- and micro-economic effects of the COVID-19 pandemic;

▪the failure of our e-signature solutions to maintain market acceptance;

▪the market for electronic signatures failing to grow, or growing more slowly than we expect;

▪new products and technologies that replace or represent an improvement over, our e-signature solutions;

▪new technological innovations or standards that our e-signature solutions do not address;

▪changes in regulations;

▪sensitivity to our current or future pricing; and

▪our inability to release enhanced versions of our e-signature solutions on a timely basis.

If we experience a material decline in sales of subscriptions to our e-signature solutions, without a corresponding increase in subscriptions to our other products and solutions, our revenue and operating results would be harmed.

The market for our products and solutions is relatively new and evolving. If the market does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected.

The market for our products and solutions—including our e-signature solution, which is the core part of our broader DocuSign Agreement Cloud platform for automating the agreement process—is relatively new and evolving, which makes our business and future prospects difficult to evaluate. We have customers in a wide variety of industries, including real estate, financial services, insurance, manufacturing, and healthcare and life sciences. It is difficult to predict customer demand for our products and solutions, customer retention and expansion rates, the size and growth rate of the market for agreement automation, the entry of competitive products or the success of existing competitive products. We expect that we will continue to need intensive sales efforts to educate prospective customers, particularly enterprise and commercial customers, about the uses and benefits of our products and solutions, and such sales efforts could be hindered by the current COVID-19 pandemic. The size and growth of our addressable market depends on a number of factors, including our customers’ desire to differentiate themselves through e-signature solutions and other products and solutions that automate the agreement process, as well as changes in the competitive landscape, technological changes, budgetary constraints of our customers, changes in business practices, changes in regulations and changes in economic conditions. If customers do not accept the value proposition of our offerings, then a viable market for products and solutions may not develop further, or it may develop more slowly than we expect, either of which would adversely affect our business and operating results.

If we are unable to attract new customers and retain and expand sales to existing customers, our revenue growth will be adversely affected.

To increase our revenue, we must continue to grow our customer base. As our market matures, product and service offerings evolve, and competitors introduce lower cost and/or differentiated products or solutions that are perceived to compete with our products and solutions, our ability to attract new customers could be impaired. This may be especially challenging where organizations have already invested significantly in an existing solution. If our pricing is not competitive or we cannot attract new customers and subsequently maintain and expand those customer relationships, our business and operating results may be harmed.

Our ability to increase our revenue also depends on our ability to expand the sales of our products and solutions to, and renew subscriptions with, existing customers and their organizations. Our existing customers, especially our enterprise customers, must increase their use of our products and solutions by purchasing new products, additional subscriptions and our enhanced products and solutions. If our efforts to expand sales to our existing customers are not successful, our business, operating results and financial condition may suffer.

Moreover, a majority of our subscription contracts are for one year. Our customers have no obligation to renew their subscriptions and we cannot guarantee that our customers will renew their subscriptions with us for a similar or greater contract period or on the same or more favorable terms. Our renewal and expansion rates may decline or fluctuate as a result of a number of factors, including customer spending levels, customer dissatisfaction, decreases in the number of

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users at our customers, changes in the type and size of our customers, pricing, competitive conditions, customer attrition and general economic conditions, including as a result of the current COVID-19 pandemic. If our customers do not renew their subscriptions for our products and solutions or if they reduce their subscription amounts at the time of renewal, our revenue will decline, and our business will suffer.

The market in which we participate is highly competitive, which may negatively affect our ability to add new customers, retain existing customers and grow our business.

Our products and solutions address a market that is evolving and highly competitive. The products and solutions in our products and solutions face competition from different companies depending on the product or solution. For example, our primary global e-signature competitor is currently Adobe Systems Incorporated. We also face competition from a select number of specialized vendors that focus on specific industries, geographies or use cases. In addition to competition in the e-signature market, our other products and solutions, such as DocuSign CLM, DocuSign Payments and DocuSign ID Verification separately face competition from companies in the contract lifecycle management, payment processing and identity verification software markets. As we attempt to sell access to our products and solutions to potential customers with existing products and solutions, we must convince them that our products and solutions are superior to the solutions that their organizations have used in the past.

Many of our competitors have longer operating histories than us, significantly greater financial, technical, marketing and other resources, stronger brand and customer recognition, larger intellectual property portfolios and broader global distribution. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements. Further, we could lose customers if our competitors develop new competitive products and solutions, acquire competitive products, reduce prices, form strategic alliances with other companies, are acquired by third parties with greater resources or develop and market new technologies that render our existing or future products less competitive, unmarketable or obsolete. If we are unable to effectively compete, our business, operating results and financial condition would be harmed.

We depend on co-location data centers and third-party cloud providers, as well as our own technical operations infrastructure, to provide our products and solutions to our customers in a timely manner. Interruptions or delays in performance of our products and solutions could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue.

We currently serve our customers from third-party data center hosting facilities. Our customers need to be able to access our products at any time, without interruption or degradation of performance. In some cases, third-party cloud providers run their own platforms that we access, and we are, therefore, vulnerable to their service interruptions. As a result, we depend, in part, on our data center providers’ ability to protect these facilities against damage or interruption, including from natural disasters, power or telecommunications failures, criminal acts and similar events. In the event that our data center arrangements are terminated, or if there are any lapses of service or damage to a data center, we could experience lengthy interruptions in our service as well as delays and additional expenses in arranging new facilities and services. Even with current and planned disaster recovery arrangements, including the existence of secondary data centers that become active during certain lapses of service or damage at a primary data center, our business could be harmed.

In addition to third-party data centers and cloud providers, we also rely on our own technical operations infrastructure to support and serve our rapidly growing customer base. We must maintain sufficient excess capacity in our operations infrastructure to ensure that our products and solutions are accessible within an acceptable load time. Design and mechanical errors, spikes in usage volume and failure to follow system protocols and procedures could cause our systems to fail, resulting in interruptions in our products and solutions. Any interruptions or delays in our service, whether or not caused by our products, whether as a result of third-party error, our own error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with customers and cause our revenue to decrease and/or our expenses to increase. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause customers to fail to renew their subscriptions, any of which could adversely affect our business.

Our systems and security measures have been, and may in the future be, compromised or subject to data breaches, cyberattacks or other malicious activity. Consequently, our products and solutions may be perceived as not being secure. This may result in customers reducing or stopping their use of our products or solutions, our reputation being harmed, our incurring significant liabilities and adverse effects on our operating results and growth prospects.

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Our operations involve the storage and transmission of customer data, personal data and other sensitive information, and our corporate environment contains important company data and/or business records, employee data and data from partner, vendor or other relationships, as well as a wide variety of our own internal company, partner and employee information. Like other organizations providing valuable technology and services, we are subject to cyberattacks from malicious third parties using a wide variety of tactics, including credential stuffing and account takeover attacks, denial or degradation of service attacks, malicious code (e.g., viruses and worms) and many other techniques. While we have security measures in place designed to protect our production, development and other systems, maintain the integrity of customer, company, partner and employee information, and prevent data loss, misappropriation and other security breaches and incidents, we have faced security incidents in the past. For example, in March 2017, a malicious third party used a phishing attack to gain access to a remote employee’s laptop and then accessed a list of email addresses which were uploaded to a third-party website. In addition, in April 2020, a malicious third party used a brute force password attack to gain access to an isolated testing environment, and exfiltrated a portion of our source code. In both cases, upon detection we took immediate action to prevent any additional unauthorized access, put further security controls in place and worked with law enforcement agencies. These efforts may not completely eliminate potential risks from such incidents, however. While these attempts had no impact on our operations, products or services, there can be no assurance that there will be no impact from these or similar incidents in the future.

Despite our prevention and response efforts, any security incident or breach, even if immaterial and properly addressed, could result in negative publicity, loss of customers, damage to our reputation and could impair our sales and harm our business. Moreover, due to the ongoing COVID-19 pandemic, there is an increased risk that we may experience cybersecurity related incidents as a result of our employees, service providers and third parties working remotely on less secure systems during office closures or when access to facilities may be limited, including due to government mandated shelter-in-place orders. Further, we may face additional security incidents in the future, resulting in unauthorized access to, loss of or unauthorized disclosure of sensitive and proprietary information of DocuSign or our customers, partners or employees, and such incidents may in the future result in regulatory enforcement actions, litigation (including a new private right of action under the California Consumer Privacy Act, as described in the risk factor below titled “We are subject to laws and regulations affecting our business, including those related to e-signature, marketing, advertising, privacy, data protection and information security. Our actual or perceived failure to comply with laws or regulations could harm our business. Complying with laws and regulations could also result in additional costs and liabilities to us or inhibit sales of our software.”), indemnity obligations and other possible liabilities, in addition to the potential harms described above.

Additionally, as we rely on third-party and public-cloud infrastructure, we depend in part on third-party security measures to protect against unauthorized access, cyberattacks and the mishandling of customer data. Our ability to monitor our third-party service providers’ data security is limited and any breach of our providers’ security measures may result in unauthorized access to, or misuse, loss or destruction of, our and our customers’ data.

Cyberattacks and other malicious internet-based activity continue to increase, and cloud-based service providers have been and are expected to continue to be targeted. Further, advances in technology and the increasing sophistication of attackers have led to more frequent and effective cyberattacks, including advanced persistent threats by state-sponsored actors, cyberattacks relying on complex social engineering or “phishing” tactics, ransomware attacks and other methods that may lead to the loss, theft or misuse of personal, corporate or financial information, fraudulent payments and identity theft. Despite significant efforts to create security barriers to such threats, it is virtually impossible for us, our service providers, our partners and our customers to entirely mitigate these risks. In addition, as computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks have become more prevalent, we face increased risk from these activities to maintain the performance, reliability, security and availability of our products and technical infrastructure to the satisfaction of our customers. If our security measures, or the security measures of our service providers, partners or customers, are compromised, our reputation could be damaged, our ability to attract and retain customers could be adversely affected and our business may be harmed.

Many U.S. and foreign laws and regulations require companies to provide notice of data security breaches and/or incidents involving certain types of personal data to individuals, the media, government authorities or other third parties. In addition, some of our customers contractually require notification of data security breaches. Security compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity. Any security compromise in our industry, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of our security measures, negatively affect our ability to attract new customers, cause existing customers to elect not to renew their subscriptions or subject us to third-party lawsuits, regulatory fines or other action or liability, which could adversely affect our business and operating results.

There can be no assurance that any limitations of liability provisions in our contracts would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim. We also cannot

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be sure that our existing general liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that insurers will not deny coverage as to any future claim. One or more large, successful claims against us in excess of our available insurance coverage, or changes in our insurance policies, including premium increases or large deductible or co-insurance requirements, could have an adverse effect on our business, operating results and financial condition.

If our products and solutions do not evolve to meet the needs of our customers or fail to achieve sufficient market acceptance, our financial results and competitive position will suffer.

We spend substantial amounts of time and money to research, develop and enhance our existing products, add new offerings, incorporate additional functionality, and solve new use cases to meet our customers’ rapidly evolving demands. Maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the demands of our customers and potential customers is essential to our business. If we are unable to develop products and solutions internally due to a lack of research and development resources, we may be forced to rely on acquisitions to expand into certain markets or technologies, which can be costly. When we develop or acquire new or enhanced products and solutions, we typically incur expenses and expend resources upfront to develop, market, promote and sell them. As a result, when we introduce new or enhanced products and solutions, they must achieve high levels of market acceptance to justify the amount of our investment in developing or acquiring them and bringing them to market. If the release of our new and enhanced products and solutions do not meet customer needs or if our customers do not accept them, our business, operating results and financial conditions would be harmed. The adverse effect on our financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses we will have incurred.

New products and solutions or enhancements to our existing products and solutions could fail to attain sufficient market acceptance for many reasons, including:

▪failure to predict market demand for particular features or functions, or to timely meet demand;

▪defects, errors or failures in our products and solutions;

▪negative publicity about their performance or effectiveness;

▪changes in applicable legal or regulatory requirements, or increased legal or regulatory scrutiny, adversely affecting our products and solutions;

▪delays in releasing our products and solutions to the market; and

▪introduction or anticipated introduction of competing products by our competitors.

Our sales cycle with enterprise and commercial customers can be long and unpredictable, and our sales efforts require considerable time and expense.

Our ability to increase our revenue and grow our business is partially dependent on the widespread acceptance of our products and solutions by large businesses and other commercial organizations. We often need to spend significant time and resources to better educate and familiarize these potential customers with the value proposition of our products and solutions. The length of our sales cycle for these customers from initial evaluation to payment for our offerings is generally three to nine months, but can vary substantially from customer to customer and from offering to offering. Customers frequently require considerable time to evaluate, test and qualify our offerings prior to entering into or expanding a subscription. This is particularly true of DocuSign CLM and our other advanced offerings, where longer evaluation, testing and qualification processes often result in longer sales cycles than for our e-signature solutions. The timing of our sales with our enterprise customers and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for these customers. During the sales cycle, we expend significant time and money on sales and marketing and contract negotiation activities, which may not result in a sale.

Additional factors that may influence the length and variability of our sales cycle include:

▪the effectiveness of our sales force;

▪the discretionary nature of purchasing and budget cycles and decisions;

▪the obstacles placed by customers’ procurement process;

▪economic conditions and other factors impacting customer budgets;

▪the customer’s integration complexity;

▪the customer’s familiarity with e-signature and agreement automation processes;

▪customer evaluation of competing products during the purchasing process; and

▪evolving customer demands.

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Our recent rapid growth may not be indicative of our future growth, and, if we continue to grow rapidly, we may not be able to manage our growth effectively.

Our revenue grew from $974.0 million in the year ended January 31, 2020 to $1.5 billion in the year ended January 31, 2021. We expect that, in the future, as our revenue increases, our revenue growth rate will decline as the scale of our business increases.

We also believe that the COVID-19 pandemic caused many businesses to accelerate the process of shifting to digital agreement processes, contributing to our significant revenue growth during the fiscal year ended January 31, 2021. While we believe that once businesses have shifted to digital agreement processes they will not return to manual ones, we have no way of knowing how much of this growth will be permanent as the COVID-19 pandemic lessens in severity and businesses return to a more normalized, in-person work environment, nor whether demand for our products will remain strong.

We believe that future growth of our revenue depends on a number of factors, including our ability to:

▪price our products and solutions effectively so that we are able to attract and retain customers;

▪attract new customers, increase our existing customers’ use of our products and solutions and provide our customers with excellent customer support;

▪expand our DocuSign Agreement Cloud offerings for our customers;

▪continue to introduce our products and solutions to new markets outside of the United States;

▪hire, maintain and train our employee base including our sales force, research and development teams, and key employees;

▪successfully identify and develop, acquire or invest in businesses, products or technologies that we believe could complement or expand our products and solutions; and

▪increase global awareness of our brand.

We may not successfully accomplish any of these objectives. We expect to continue to expend substantial financial and other resources on:

▪sales and marketing, including a significant expansion of our sales organization, particularly in the United States;

▪our technology infrastructure, including systems architecture, management tools, scalability, availability, performance and security, as well as disaster recovery measures;

▪product development;

▪acquisitions or strategic investments;

▪international expansion; and

▪general administration, including legal and accounting expenses.

In addition to growth in revenue, we have also experienced significant growth in the number of our customers and users, the number and complexity of the transactions we handle, and the amount of data that our infrastructure supports. Our growth has placed and may continue to place significant demands on our management and our operational and financial resources.

Finally, our business is becoming more complex as we increase our product and solution offerings, add additional staff and acquire complementary companies, products and technologies. In connection with this increased complexity, we are working to improve our operational, financial and management controls as well as our reporting systems and procedures, including streamlining or automating manual processes, all of which requires capital expenditures and management attention. Failure to effectively manage our growth could have an adverse effect on our business, operating results and financial condition.

Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales contracts are not immediately reflected in full in our operating results.

We recognize revenue over the term of each of our contracts, which are typically one year in length but may be up to three years or longer. As a result, much of our revenue is generated from the recognition of contract liabilities from contracts entered into during previous periods. Consequently, a shortfall in demand for our products and solutions and professional services or a decline in new or renewed contracts in any one quarter may not significantly reduce our revenue for that quarter but could negatively affect our revenue in future quarters. Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through additional sales contracts in any period, as revenue from new customers is recognized over the applicable term of their contracts.

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If we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected.

Because our recent growth has resulted in the rapid expansion of our business and product offerings, we do not have a long history upon which to base forecasts of future revenues and operating results. Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors. If we do not address these risks successfully, our operating results could differ materially from our estimates and forecasts or the expectations of investors, causing our business to suffer and our stock price to decline.

If we have overestimated the size of our total addressable market, our future growth rate may be limited.

We have estimated the size of our total addressable market based on internally generated data and assumptions, as well as data published by third parties, which we have not independently verified. While we believe our market size estimates are reasonable, such information is inherently imprecise and subject to a high degree of uncertainty. If our third-party or internally generated data prove to be inaccurate or we make errors in our assumptions based on that data, our actual market may be more limited than our estimates. In addition, these inaccuracies or errors may cause us to misallocate capital and other critical business resources, which could harm our business. Even if our total addressable market meets our size estimates and experiences growth, we may not continue to grow our share of the market.

We have in the past, and may in the future, engage in merger and acquisition activities, which could divert the attention of management, disrupt our business, dilute stockholder value and adversely affect our operating results and financial condition.

As part of our business strategy, we continually evaluate opportunities to acquire or invest in businesses, products or technologies that we believe could complement or expand our products and solutions, enhance our technical capabilities or otherwise offer growth opportunities. For example, in September 2018, we acquired SpringCM, a provider of cloud-based document generation and contract lifecycle management software, in May 2020 we acquired Seal Software Group Ltd., a provider of contract analytics software, and in July 2020 we acquired Liveoak Technologies, Inc., a provider of a secure agreement-collaboration and identity verification platform. In the future, we may be unable to identify suitable acquisition candidates and, even if we do, we may not be able to complete desired acquisitions on favorable terms, if at all. If we are unable to complete acquisitions, we may not be able to strengthen our competitive position or achieve our goals. Future acquisitions and investments may result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations, diverting management attention, increasing our expenses, and subjecting us to additional liabilities. An acquisition may also negatively affect our financial results because it may:

▪require us to incur charges or assume substantial debt;

▪cause adverse tax consequences or unfavorable accounting treatment;

▪expose us to claims and disputes by third parties, including intellectual property claims and disputes;

▪not generate sufficient financial return to offset additional costs and expenses related to the acquisition;

▪cause us to incur liabilities for activities of the acquired company before the acquisition;

▪cause us to record impairment charges associated with goodwill and other acquired intangible assets; and

▪cause other unforeseen operating difficulties and expenditures.

Moreover, to pay for an acquisition or investment, we would have to use cash, incur debt and/or issue equity securities, each of which may affect our financial condition or the value of our common stock and (in the case of equity financing) could result in dilution to our stockholders.

In addition, a failure to successfully integrate the operations, personnel or technologies of an acquired business could impact our ability to realize the full benefits of such an acquisition. Our limited experience acquiring companies increases these risks. If we are unable to achieve the anticipated strategic benefits of an acquisition or if the integration or the anticipated financial and strategic benefits, including any anticipated cost savings, revenue opportunities or operational synergies, of such an acquisition are not realized as rapidly as or to the extent anticipated by us, our business, operating results and financial condition could suffer.

Our sales to government entities and highly regulated organizations are subject to a number of challenges and risks.

We sell to U.S. federal, state and local, as well as foreign, government agencies and public sector customers, as well as to customers in highly regulated industries such as financial services, pharmaceuticals, insurance, healthcare and life

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sciences. Sales to such entities are subject to a number of challenges and risks. Selling to such entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. These longer sale cycles make the timing of future revenue from these entities difficult to predict. Further, government certification requirements may change, restricting our ability to sell into the government sector until we have met those revised requirements. Government demand and payment for our offerings are affected by public sector budgetary cycles and funding authorizations, and funding reductions or delays, including as a result of the COVID-19 pandemic, may adversely affect public sector demand for our products and solutions.

In addition, both government agencies and entities in highly regulated industries may demand shorter subscription periods or other contract terms that differ from our standard arrangements, including terms that can lead those customers to obtain broader rights in our offerings than would be standard. Such agencies and entities may have statutory, contractual or other legal rights to terminate contracts with us or our partners due to a default or for other reasons, and any such termination may adversely affect our business, operating results and financial condition.

We may need to reduce or change our pricing model to remain competitive.

We price our subscriptions for e-signature solutions based on the number of users within an organization who use our products and solutions to send agreements digitally for signature or the number of Envelopes that such users are provisioned to send. We expect that we may need to change our pricing from time to time, including in connection with the launch of new or enhanced offerings for automating the agreement process. As new or existing competitors introduce new competitive products or reduce their prices, we may be unable to attract new customers or retain existing customers based on our historical pricing. We also must determine the appropriate price to enable us to compete effectively internationally. Moreover, mid- to large-size enterprises may demand substantial price discounts as part of the negotiation of sales contracts. As a result, we may be required or choose to reduce our prices or otherwise change our pricing model, which could adversely affect our business, operating results and financial condition.

Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and solutions.

Our ability to increase our customer base and achieve broader market acceptance of our products and solutions depends to a significant extent on our ability to expand our marketing and sales operations. We are continuously expanding our sales force and strategic partnerships, both domestically and internationally. We also dedicate significant resources to our sales and marketing efforts by investing in advertising campaigns on a variety of media platforms, including online and social media. The effectiveness of our online advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use and changes in the search algorithms used by major search engines. If we cannot cost-effectively deploy our expanding sales force and use our marketing tools, or if we fail to promote our products and solutions efficiently and effectively, our ability to acquire new customers and our financial condition may suffer.

We may not be able to scale our business quickly enough to meet the growing needs of our customers and if we are not able to grow efficiently, our operating results could be harmed.

As use of our products and solutions grows and as customers use them for more types of transactions, we will need to devote additional resources to improving our application architecture, integrating with third-party systems and maintaining infrastructure performance. In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support and professional services, to serve our growing customer base.

Any failure of or delay in these efforts could cause impaired system performance and reduced customer satisfaction. These issues make our products and solutions less attractive to customers, resulting in decreased sales to new customers, lower renewal rates by existing customers, or the issuance of service credits or refunds, which could hurt our revenue growth and our reputation. Even if we are able to upgrade our systems and expand our staff, any such expansion will be expensive and complex, requiring management time and attention. We could also face inefficiencies or operational failures as a result of our efforts to scale our infrastructure. Moreover, there are inherent risks associated with upgrading, improving and expanding our systems infrastructure. We cannot be sure that the expansion and improvements to our systems infrastructure will be effectively implemented on a timely basis, if at all. These efforts may be costly and could adversely affect our financial results.

If our products and solutions fail to perform properly and if we fail to develop enhancements to resolve any defect or other problems, we could lose customers or become subject to service performance or warranty claims and our market share could decline.

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Our operations are dependent upon our ability to prevent system interruptions and, as we continue to grow, we will need to devote additional resources to improving our infrastructure in order to maintain the performance of our products and solutions. The applications underlying our products and solutions are inherently complex and may contain material defects or errors, which may cause disruptions in availability or other performance problems. We have from time to time found defects in our products and solutions and may discover additional defects in the future that could result in data unavailability or unauthorized access or other harm to, or loss or corruption of, our customers’ data. While we implement bug fixes and upgrades as part of our regularly scheduled system maintenance, we may not be able to detect and correct defects or errors before implementing our products and solutions. Consequently, we or our customers may discover defects or errors after our products and solutions have been employed. If we fail to perform timely maintenance or if customers are otherwise dissatisfied with the frequency and/or duration of our maintenance services and related system outages, our existing customers could elect not to renew their subscriptions, delay or withhold payment to us, or cause us to issue credits, make refunds or pay penalties, potential customers may not adopt our products and solutions and our brand and reputation could be harmed. In addition, the occurrence of any material defects, errors, disruptions in service or other performance problems with our software could result in warranty or other legal claims against us and diversion of our resources. The costs incurred in addressing and correcting any material defects or errors in our software and expanding our infrastructure and architecture in order to accommodate increased demand for our products and solutions may be substantial and could adversely affect our operating results.

If we fail to offer high-quality support, our business and reputation could suffer.

Many of our customers rely on our customer support and professional services personnel to deploy and use our products and solutions successfully. High-quality support is important for the renewal and expansion of our agreements with existing customers. The importance of high-quality support will increase as we expand our business and pursue new customers. If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell our products and solutions to existing and new customers could suffer and our reputation with existing or potential customers could be harmed.

If we are unable to maintain successful relationships with our partners, our business, operating results and financial condition could be harmed.

In addition to our direct sales force and our website, we use strategic partners, such as global system integrators, value-added resellers and independent software vendors, to sell our subscription offerings and solutions. Our agreements with our partners are generally nonexclusive, meaning our partners may offer their customers products and services of several different companies, including products and services that compete with ours, or may themselves be or become competitors. If our partners do not effectively market and sell our subscription offerings and solutions, choose to use greater efforts to market and sell their own products and services or those of our competitors, or fail to meet the needs of our customers, our ability to grow our business and sell our subscription offerings and solutions may be harmed. Our partners may cease marketing our subscription offerings or solutions with limited or no notice and with little or no penalty. In addition, acquisitions of our partners by our competitors could result in a decrease in the number of our current and potential customers, as our partners may no longer facilitate the adoption of our products and solutions by potential customers. The loss of a substantial number of our partners, our possible inability to replace them, or the failure to recruit additional partners could harm our growth objectives and operating results. Even if we are successful in maintaining and recruiting new partners, we cannot assure you that these relationships will result in increased customer usage of our products and solutions or increased revenue. Additionally, as the scale of our partnership efforts increases with our growth, the successful implementation of these relationships may become more time-consuming, difficult and costly to realize, which could negatively impact our business performance or our brand reputation.

Failure to establish and maintain relationships with partners that can provide complementary technology offerings and software integrations could limit our ability to grow our business.

Our products and solutions seamlessly integrate with hundreds of other software applications, including Salesforce, Google and Microsoft. Our growth strategy includes expanding the use of our products and solutions through complementary technology offerings and software integrations, such as third-party APIs. While we have established partnerships with providers of complementary offerings and software integrations, we cannot guarantee that we will be successful in continuing to maintain and scale these partnerships or establishing partnerships with additional providers as we grow. In the future, third-party providers of complementary technology offerings and software integrations may decline to enter into, or may later terminate, relationships with us; change their features or platforms; restrict our access to their applications and platforms; alter the terms governing use of and access to their applications and APIs; or implement other changes that could functionally limit or terminate our ability to use these third-party technology offerings and software integrations with our platform, any of which could negatively impact our offerings and harm our business.

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Further, these third-party providers may experience operational difficulties due to the current COVID-19 pandemic, which could limit or alter our ability to use these third-party technology offerings, which in turn could have an adverse impact on our results of operations.

Unfavorable conditions in our industry or the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect our operating results.

Our operating results may vary based on the impact of changes in our industry or the global economy on us and our existing and prospective customers. The revenue growth and potential profitability of our business depend on demand for our products and solutions. Current or future economic uncertainties or downturns could adversely affect our business and operating results. Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, political turmoil, natural catastrophes, warfare and terrorist attacks on the United States, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including spending on information technology, and negatively affect the growth of our business. In addition, the COVID-19 pandemic has created significant additional uncertainty in the global economy. If the COVID-19 pandemic worsens, or continues for longer than expected, especially in regions in which we have material operations or sales, such as the United States, Canada, the United Kingdom, France, Germany, Ireland, Israel, Australia, Singapore, Japan, Brazil, Egypt or Sweden, our business activities originating from affected areas, including sales-related activities, could be adversely affected. Disruptive activities could include business closures in impacted areas and restrictions in our employees’ and other service providers’ ability to travel. To the extent our products and solutions are perceived by customers and potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in general information technology spending. Also, competitors, many of whom are larger and more established than we are, may respond to market conditions by lowering prices and attempting to lure away our customers. In addition, the increased pace of consolidation in certain industries may result in reduced overall spending on our products and solutions. We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, operating results and financial condition could be adversely affected.

We may require additional capital to support business growth and objectives, and this capital might not be available to us on reasonable terms, if at all, and may result in stockholder dilution.

We fund our operations through payments by our customers for use of our product offerings and related services. In addition, as of April 30, 2021, we had issued and outstanding $78.3 million aggregate principal amount of 0.5% Convertible Senior Notes due 2023 (the “2023 Notes”), $690.0 million aggregate principal amount of 0.0% Convertible Senior Notes due 2024 (the “2024 Notes” and together with the 2023 Notes, the “Notes”) and available borrowing capacity of $500.0 million under our credit facility. We cannot be certain when or if our operations will generate sufficient cash to fund our ongoing operations or the growth of our business.

We intend to continue to make investments to support our business and, in the future, we may require additional funds. Additional financing may not be available on favorable terms, if at all. In addition, in the event that we incur additional debt, including under the credit facility, the debt holders would have rights senior to holders of common stock to make claims on our assets. Additionally, the credit facility restricts our ability to pay dividends on common stock and the terms of any future debt could restrict our operations. Further, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. If adequate funds are not available on acceptable terms when we require it, we may be unable to invest in future growth opportunities, which could harm our business, operating results and financial condition.

We have incurred substantial indebtedness that may decrease our business flexibility, access to capital and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.

As of April 30, 2021, we had $78.3 million principal amount of indebtedness outstanding under our 2023 Notes, $690.0 million principal amount of indebtedness outstanding under our 2024 Notes and available borrowing capacity of $500.0 million under our credit facility . Our indebtedness may:

•limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;

•limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

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•require us to use a substantial portion of our cash flow from operations to make debt service payments;

•limit our flexibility to plan for, or react to, changes in our business and industry;

•place us at a competitive disadvantage compared to our less leveraged competitors; and

•increase our vulnerability to the impact of adverse economic and industry conditions, including as a result of the COVID-19 pandemic.

If we fail to maintain our brand, our ability to expand our customer base will be impaired and our financial condition may suffer.

We believe that maintaining the DocuSign brand is important to supporting continued acceptance of our existing and future solutions, attracting new customers to our products and solutions and retaining existing customers. We also believe that the importance of our brand will increase as competition in our market increases. Successfully maintaining our brand will depend largely on the effectiveness of our marketing efforts, and our ability to provide reliable and useful solutions to meet the needs of our customers at competitive prices, maintain our customers’ trust, continue to develop new functionality and solutions and successfully differentiate our products and solutions from our competitors’. Additionally, the performance of our partners may affect our brand and reputation if customers do not have a positive experience with our partners’ services. Brand promotion activities may not generate customer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand. If we fail to successfully promote and maintain our brand, we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business could suffer.

We could incur substantial costs in protecting or defending our proprietary rights, and any failure to adequately protect our rights could impair our competitive position and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.

Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and contractual provisions in an effort to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. While we have been issued patents in the United States and other countries and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications. In addition, any patents issued in the future may not provide us with competitive advantages or may be successfully challenged by third parties. Any of our patents, trademarks or other intellectual property rights may be challenged or circumvented by others or invalidated through administrative process or litigation. There can be no guarantee that others will not independently develop similar products, duplicate any of our products or design around our patents. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and solutions that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and disclosure of our products may be unenforceable under the laws of jurisdictions outside the United States. To the extent we expand our international activities, our exposure to unauthorized copying and use of our products and proprietary information may increase.

We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information. Further, these agreements do not prevent our competitors or partners from independently developing technologies that are substantially equivalent or superior to our products and solutions.

In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect and enforce these rights, including through litigation. Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and solutions, impair the functionality of our products and solutions, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our products and solutions or injure our reputation. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property may be difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for

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enforcement of intellectual property rights may be weak. If we fail to adequately protect our intellectual property and proprietary rights, our business, operating results and financial condition could be adversely affected.

We may be subject to legal proceedings and litigation for a variety of claims, including labor and employment issues, intellectual property disputes, securities law violations and other matters, which may be costly and may subject us to significant liability and increased costs of doing business. Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others or if the cost and time-commitment of litigation diverts resources from our other business activities.

From time to time, we may be involved as a party or an indemnitor in disputes or regulatory inquiries that arise in the ordinary course of business. These may include alleged claims, lawsuits and proceedings regarding labor and employment issues, commercial disagreements, securities law violations and other matters. In particular, companies in the software industry are often required to defend against litigation claims based on allegations of infringement or other violations of intellectual property rights. Our technologies may not be able to withstand any third-party claims or rights against their use. In addition, many of these companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue and against which our patents may therefore provide little or no deterrence. If a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or develop technology for any infringing aspect of our business, we would be forced to limit or stop sales of our software or cease business activities covered by such intellectual property and may be unable to compete effectively. Any inability to license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete.

We also may be required to redesign our products, delay releases, enter into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling our products and solutions. Requiring us to change one or more aspects of the way we deliver our products and solutions may harm our business. We may also be contractually obligated to indemnify our customers in the event of infringement of a third party’s intellectual property rights. Responding to such claims, including those currently pending, regardless of their merit, can be time consuming and costly to defend in litigation and damage our reputation and brand.

Regardless of the merits or ultimate outcome of any claims that have been or may be brought against us or that we may bring against others, lawsuits are time-consuming and expensive to resolve, divert management’s time and attention, and could harm our reputation. Although we carry general liability insurance, our insurance may not cover potential claims that arise or may not be adequate to indemnify us for all liability that may be imposed. We may also determine that the most cost-effective way to resolve a dispute is to enter into a settlement agreement. Litigation is inherently unpredictable and we cannot predict the timing, nature, controversy or outcome of lawsuits or assure you that the results of any of these actions will not have an adverse effect on our business, operating results or financial condition.

We use open source software in our products, which could subject us to litigation or other actions.

We use open source software in our products and solutions. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our products. In addition, if we were to combine our proprietary software products with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary software products. If we inappropriately use or incorporate open source software subject to certain types of open source licenses that challenge the proprietary nature of our software products, we may be required to re-engineer our products, discontinue the sale of our products and solutions or take other remedial actions.

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection and other losses.

Our agreements with some customers and other third parties include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our offerings, solutions or other contractual obligations. Some of these indemnity agreements provide for uncapped liability for which we would be responsible, and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments could harm our business, operating and financial condition. Although we normally

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contractually limit our liability with respect to such obligations, we may still incur substantial liability related to them and we may be required to cease use of certain functions of our products and solutions as a result of any such claims. In addition, our customer agreements generally include a warranty that the proper use of DocuSign by a customer in accordance with the agreement and applicable law will be sufficient to meet the definition of an “electronic signature” as defined in the ESIGN Act and eIDAS. Any warranty or indemnification claim brought by our customers could result in damage to our reputation and harm our business and operating results.

We rely on the performance of highly skilled personnel, including our management and other key employees, and the loss of one or more of such personnel, or of a significant number of our team members, could harm our business.

Our success and future growth depend upon the continued services of our management team and other key employees. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. For example, on September 8, 2020, Cynthia Gaylor became our Chief Financial Officer and Michael Sheridan, our outgoing Chief Financial Officer, became President of International. Our senior management and key employees are employed on an at-will basis. We may terminate any employee’s employment at any time, with or without cause, and any employee may resign at any time, with or without cause. If we lose one or more of our senior management or other key employees and are unable to find adequate replacements, or if we fail to attract, retain and motivate members of our senior management team and key employees, our business could be harmed.

We also are dependent on the continued service of our existing software engineers because of the complexity of our products and solutions. In particular, we compete with many other companies for software developers with high levels of experience and skilled sales and operations professionals. We also require skilled product development, marketing, sales, and operations professionals, and we may not be successful in attracting and retaining the professionals we need, particularly in our principal U.S. locations in the San Francisco Bay Area and Seattle. Competition for these employees in our industry (and especially in our principal U.S. locations) is intense, and many of the companies we compete with for experienced personnel have greater resources than we do.

Our current operations are international in scope and we plan further geographic expansion, creating a variety of operational challenges.

A component of our growth strategy involves the further expansion of our operations and customer base internationally. In each of the years ended January 31, 2021, 2020 and 2019 total revenue generated from customers outside the U.S. was 20%, 18% and 17% of our total revenue, respectively. As of April 30, 2021, we have offices in 12 countries and approximately 30% of our full-time employees were located outside of the United States. We are continuing to adapt to and develop strategies to address international markets but there is no guarantee that such efforts will have the desired effect. We expect that our international activities will continue to grow as we continue to pursue opportunities in existing and new international markets, which will require significant management attention and financial resources.

Our current international operations and future initiatives involve a variety of risks, including:

▪changes in a specific country’s or region’s political or economic conditions;

▪exposure to regional public health issues, such as the COVID-19 pandemic, and to travel restrictions and other measures undertaken by governments in response to such issues;

▪the need to adapt and localize our products for specific countries, including providing customer support in different languages;

▪greater difficulty collecting accounts receivable and longer payment cycles;

▪potential changes in trade relations arising from U.S. policy initiatives;

▪unexpected changes in laws and regulatory requirements, including but not limited to, taxes or trade laws;

▪more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe;

▪differing labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the U.S., including deemed hourly wage and overtime regulations in these locations;

▪challenges inherent in efficiently managing an increased number of employees;

▪difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;

▪increased travel, real estate, infrastructure and legal compliance costs associated with international operations;

▪currency exchange rate fluctuations;

▪limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;

▪laws and business practices favoring local competitors or general preferences for local vendors;

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▪limited or insufficient intellectual property protection or difficulties enforcing our intellectual property;

▪political instability or terrorist activities;

▪exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the U.K. Bribery Act, and similar laws and regulations in other jurisdictions; and

▪adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.

Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we undertake may not be successful. If we invest substantial time and resources to further expand our international operations and are unable to do so successfully and in a timely manner, our business and operating results will suffer.

Our credit facility provides our lenders with a first-priority lien against substantially all of our assets, and contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition.

Our credit facility restricts our ability to, among other things:

•use our accounts receivable, inventory, trademarks and most of our other assets as security in other borrowings or transactions, unless the value of the assets subject thereto does not exceed a certain threshold;

•incur additional indebtedness;

•incur liens upon our property;

•dispose of certain assets;

•declare dividends or make certain distributions; and

•undergo a merger or consolidation or other transactions.

Our credit facility also requires that our Consolidated Leverage Ratio (as defined in the credit facility) not exceed specified levels, or that our Consolidated Interest Coverage Ratio (as defined in the credit facility) be less than specified levels. Our ability to comply with this and other covenants is dependent upon several factors, some of which are beyond our control.

Our failure to comply with the covenants or payment requirements, or the occurrence of other events specified in our credit facility, could result in an event of default under the credit facility, which would give our lenders the right to terminate their commitments to provide additional loans under the credit facility and to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. In addition, we have granted our lenders first-priority liens against all of our assets as collateral. Failure to comply with the covenants or other restrictions in the credit facility could result in a default. If the debt under our credit facility was to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.

Risks Related to Governmental Regulation including Taxation

The requirements of being a public company, including developing and maintaining proper and effective disclosure controls and procedures and internal control over financial reporting, may strain our resources and divert management’s attention away from other business concerns.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations that impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements and such compliance has increased, and will continue to increase, our legal, accounting and financial costs.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and improve the effectiveness of such controls, we have expended, and anticipate that we will continue to expend, significant resources. For example, since our IPO, we have hired additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to assist in our compliance efforts.

We have incurred and expect to continue to incur significant expenses and devote substantial management effort toward compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. To assist us in

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complying with these requirements we may need to hire more employees in the future, or engage outside consultants, which will increase our operating expenses.

Despite significant investment, our current controls and any new controls that we develop may become inadequate because of changes in business conditions. For example, because we have acquired companies in the past and may continue to do so in the future, we need to effectively expend resources to integrate the controls of these acquired entities with ours. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that are required to be included in the periodic reports that we file with the SEC. If our management team or independent registered public accounting firm were to furnish an adverse report, or if it is determined that we have a material weakness or significant deficiency in our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities or shareholder litigation.

In addition, as a result of the COVID-19 pandemic, most of our employees including those critical to maintaining an effective system of disclosure controls and internal control over financial reporting are working, and are expected to continue to work for the near term, in a remote environment and not in the office environment from which they have historically performed their duties. We have limited experience maintaining effective control systems with our employees working in remote environments, and risks that we have not contemplated may arise and result in our failure to maintain effective disclosure controls or internal control over financial reporting.

We are subject to laws and regulations affecting our business, including those related to e-signature, marketing, advertising, privacy, data protection and information security. Our actual or perceived failure to comply with laws or regulations could harm our business. Complying with laws and regulations, in particular those related to privacy and data protection, could also result in additional costs and liabilities to us or inhibit sales of our software.

We receive, store and process personal information and other data from and about customers, our employees, partners and service providers. In addition, customers use our products and solutions to obtain and store personal information, health information (including protected health information) and personal financial information. Our handling of data is thus subject to a variety of laws and regulations, including regulation by various government agencies, such as the U.S. Federal Trade Commission (the “FTC”), the U.S. Department of Health and Human Services Office for Civil Rights (the “OCR”), and various state, local and foreign agencies and other authorities. Our data handling also is subject to contractual obligations and industry standards.

The U.S. federal government and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use and storage of data relating to individuals and businesses, including the use of contact information and other data for marketing, advertising and other communications with individuals and businesses. In the United States, various laws, and regulations and agency rules and opinions apply to the collection, processing, disclosure and security of certain types of data, including:

▪The Electronic Signatures in Global and National Commerce Act (“ESIGN Act”) in the United States, eIDAS in the EU and similar U.S. state laws, particularly the Uniform Electronic Transactions Act (the “UETA”), which authorize the creation of legally binding and enforceable agreements utilizing electronic signatures and records. We are particularly reliant on the UETA and the ESIGN Act, which together have solidified the legal landscape in the United States for use of electronic signatures and records by providing that electronic signatures and records carry the same weight and have the same legal effect as paper documents and wet ink signatures.

▪The EU General Data Protection Regulation (the “GDPR”) imposes requirements related to processing the personal data of EU citizens and residents. EU data protection authorities have the power to impose administrative fines for repeated violations of the GDPR of up to a maximum of €20 million or 4% of a company’s annual global turnover for the preceding financial year, whichever is higher. Violations of the GDPR may also lead to damages claims by data controllers and data subjects. Such penalties are in addition to any civil litigation claims. The GDPR imposes compliance burdens on us, including by mandating documentation requirements and granting certain privacy rights to individuals to control how we collect, use, disclose, retain and process information about them. Additionally, the United Kingdom (“U.K.”) has implemented the Data Protection Act which is substantially similar to the GDPR and contains provisions, including UK-specific exceptions, for how GDPR is applied in the U.K. The U.K.'s departure in January 2020 from the EU (commonly referred to as Brexit) has created uncertainty with regard to the requirements for data transfers between the U.K. and the EU and other jurisdictions, and it is still unclear how the EU and U.K. will reconcile data transfers from the European Economic Area to the U.K. following “Brexit.” The GDPR also

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imposes strict rules on the transfer of personal data out of the EU to the U.S.. These obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other requirements or our practices. In addition, these rules are consistently under scrutiny.

▪On July 16, 2020, the Court of Justice of the EU (the “Court of Justice”) invalidated the European Union-United States (“EU-U.S.”) Privacy Shield on the grounds that the EU-US Privacy Shield failed to offer adequate protections to EU personal data transferred to the United States, a decision commonly known as “Schrems II”. We rely on approved Binding Corporate Rules as both a data processor and data controller as the basis for EU-U.S. cross-border flows of personal data between DocuSign entities identified in DocuSign’s Binding Corporate Rules, in compliance with GDPR. While the Court of Justice upheld the use of binding corporate rules as a valid data transfer mechanism, it further stated that reliance on binding corporate rules alone may not necessarily be sufficient in all circumstances and that supplemental measures may also be required to ensure an adequate level of protection by the importing jurisdiction. As the EU data protection regulatory landscape continues to evolve following Schrems II, including harmonization of disparate guidance regarding supplemental measures amongst regional EU data protection authorities, we may need to implement additional or different supplemental measures to further enhance the security of data transferred out of the European Economic Area, which could increase our compliance costs, expose us to further regulatory scrutiny and liability, and adversely affect our business. Additional changes to data protection laws or regulations in the EU that limit or prevent transfers of personal data from the EU to the U.S. could cause us to incur penalties under GDPR and could increase the cost and complexity of operating our business.

▪The CCPA took effect on January 1, 2020 and became enforceable by the California Attorney General on July 1, 2020, along with related regulations which came into force on August 14, 2020. Additionally, although not effective until January 1, 2023, the California Privacy Rights Act (the “CPRA”), which expands upon the CCPA, was passed in the November 3, 2020 election. The CCPA gives (and the CPRA will give) California residents expanded privacy rights, including the right to request correction, to access and deletion of their personal information, to opt out of certain personal information sharing, and to receive detailed information about how their personal information is processed. The CCPA and the CPRA provide for unlimited civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability, particularly in the event of a data breach. Additionally, the CCPA has prompted a number of proposals in the United States for new federal and state-level privacy legislation that, if passed, could increase our potential liability, increase our compliance costs, and adversely affect our business.

▪The Health Insurance Portability and Accountability Act (“HIPAA”) in the United States (as amended and supplemented by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) imposes mandatory contractual terms and other obligations with respect to safeguarding the privacy, security and transmission of protected health information. We may function as a HIPAA business associate for certain of our customers and, as such, are subject to applicable privacy and data security requirements. Failure to comply with HIPAA can result in significant civil monetary penalties and, in certain circumstances, criminal penalties and fines.

▪We may be subject to numerous other laws including the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Gramm Leach Bliley Act (“GLBA”), and other state laws relating to privacy. As such, we may be subject to increased liability and compliance costs, and noncompliance with these regulations could adversely affect our business.

In addition, many foreign governments have established or are in the process of establishing privacy and data security legal frameworks with which we, our customers, partners or our vendors must comply, some of which are more restrictive than those in the United States and apply broadly to the collection, use, storage, disclosure and security of various types of data.

We expect that new laws, regulations and industry standards will continue to be proposed and enacted relating to privacy, data protection, marketing, advertising, electronic signatures, consumer communications and information security in the United States, the EU and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards may have on our business. Future laws, regulations, standards and other obligations or any changed interpretation of existing laws or regulations could impair our ability to develop and market new functionality and maintain and grow our customer base and increase revenue. Future restrictions on the collection, use, sharing or disclosure of data or additional requirements for the express or implied consent of our customers, partners or end consumers for the use and disclosure of such information could require us to incur additional costs or modify our products and solutions, possibly in a material manner, and could limit our ability to develop new functionality.

If we are not able to comply with these laws or regulations or if we become liable under these evolving laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain solutions, which would negatively affect our business, operating results and financial condition. In addition, the increased attention focused

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upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business and operating results.

Additionally, any failure or perceived failure by us to comply with laws, regulations, policies, legal or contractual obligations, industry standards, or regulatory guidance relating to privacy or data security, may result in governmental investigations and enforcement actions (including, for example, a ban by EU data protection authorities on the processing of EU personal data under the GDPR), litigation, fines and penalties or adverse publicity, and could cause our customers and partners to lose trust in us, which could have an adverse effect on our reputation and business.

Many of our customers deploy our products and solutions globally, and our products and solutions must comply with certain legal and regulatory requirements in varying countries. If our products and solutions fail to meet these requirements, we could incur significant liabilities and our financial condition may suffer.

Many customers use our products and solutions globally to comply with safe harbors and other legislation in the countries in which they transact business. For example, some of our customers rely on our certifications under the Federal Risk and Authorization Management Program (“FedRAMP”) in the United States and eIDAS in the EU to help satisfy their own legal and regulatory compliance requirements. If a court or regulatory body determines that our products and solutions are inadequate to meet these requirements, documents executed through our products and solutions could, in some instances, be rendered unenforceable, resulting in potential loss of customers, liability under customer contracts, and brand and reputational damage.

Our international operations and updates to tax legislation may subject us to potential adverse tax consequences.

We are expanding our international operations and staff to better support our growth into international markets. Our corporate structure and associated transfer pricing policies contemplate future growth into international markets, and consider the functions, risks and assets of the various entities involved in the intercompany transactions. We may be subject to taxation in international jurisdictions with increasingly complex tax laws and precedents which could have an adverse effect on our liquidity and operating results. The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of those jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. Tax authorities in the jurisdictions in which we operate may challenge our transfer pricing policies and intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Our financial statements could fail to reflect adequate reserves to cover such a contingency. In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or to our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries which could have a material impact on us and the results of our operations.

We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls.

Our products and solutions are subject to U.S. export controls, including the Export Administration Regulations and economic sanctions administered by the Office of Foreign Assets Control, and we incorporate encryption technology into certain of our products and solutions. These encryption products and the underlying technology may be exported outside of the United States only with export authorizations, including by license, a license exception or other appropriate government authorizations, including the filing of an encryption registration.

Furthermore, our activities are subject to U.S. economic sanctions laws and regulations that prohibit the shipment of certain products and services without the required export authorizations, including to countries, governments and persons targeted by U.S. embargoes or sanctions. Obtaining the necessary export license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities even if the export license ultimately may be granted. While we take precautions to prevent our products and solutions from being exported in violation of these laws, including obtaining authorizations for our encryption products, implementing IP address blocking and screenings against U.S. government and international lists of restricted and prohibited persons, we cannot guarantee that the precautions we take will prevent violations of export control and sanctions laws. Violations of U.S.

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sanctions or export control laws can result in significant fines or penalties and possible incarceration for responsible employees and managers could be imposed for criminal violations of these laws.

In addition, if our strategic partners fail to obtain appropriate import, export or re-export licenses or permits, we may also be adversely affected, through reputational harm as well as other negative consequences including government investigations and penalties. We presently incorporate export control compliance requirements to our strategic partner agreements; however, no assurance can be given that our strategic partners will comply with such requirements.

Foreign governments also regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to distribute our products and solutions or could limit our end-customers’ ability to implement our products and solutions in those countries. Changes in our products and solutions or future changes in export and import regulations may create delays in the introduction of our products and solutions in international markets, prevent our end-customers with international operations from deploying our products and solutions globally or, in some cases, prevent the export or import of our products and solutions to certain countries, governments or persons altogether. From time to time, various governmental agencies have proposed additional regulation of encryption technology, including the escrow and government recovery of private encryption keys. Any change in export or import regulations, economic sanctions or related legislation, increased export and import controls or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our products and solutions by, or in our decreased ability to export or sell our products and solutions to, existing or potential end-customers with international operations. Any decreased use of our products and solutions or limitation on our ability to export or sell our products and solutions would adversely affect our business, operating results and prospects.

We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business.

We are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the U.K. Bribery Act, and other anti-bribery and anti-money laundering laws in the countries in which we conduct activities. As we increase our international sales and business and sales to the public sector, we may engage with business partners and third-party intermediaries to market our products and solutions and to obtain necessary permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.

While we have policies and procedures to address compliance with such laws, we cannot assure you that our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international sales and business, our risks under these laws may increase.

Detecting, investigating and resolving actual or alleged violations can require a significant diversion of time, resources and attention from senior management. In addition, noncompliance with anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, operating results and financial condition.

We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our clients would have to pay for our offering and adversely affect our operating results.

A successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. Any imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our future sales, which could have a material adverse impact on our business and operating results.

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Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.

As of January 31, 2021, we had accumulated net operating loss carryforwards and research tax credits in our federal, state and foreign jurisdictions with varying expiration dates.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” An “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state and foreign tax laws. Future issuances of our stock could cause an “ownership change.” It is possible that any future ownership change could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.

Risks Related to Ownership of Our Common Stock

Our stock price may be volatile, and the value of our common stock may decline.

The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including:

▪the current COVID-19 pandemic and any associated economic downturn;

▪actual or anticipated fluctuations in our financial condition and operating results;

▪variance in our financial performance from expectations of securities analysts;

▪issuance of research reports by securities analysts, including publishing unfavorable reports;

▪changes in the prices of subscriptions to our products and solutions;

▪changes in our projected operating and financial results;

▪changes in laws or regulations applicable to our products and solutions;

▪announcements by us or our competitors of significant business developments, acquisitions or new offerings;

▪our involvement in any litigation;

▪future sales of our common stock or other securities by us or our stockholders;

▪changes in senior management or key personnel;

▪the trading volume of our common stock;

▪changes in the anticipated future size and growth rate of our market;

▪changes in the political climate in the United States;

▪terrorist attacks, natural disasters, public health crises (such as the current COVID-19 pandemic) or other such events impacting countries where we have operations; and

▪general economic, regulatory and market conditions.

In addition, broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may negatively impact the market price of our common stock. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management’s attention.

Future sales of our common stock in the public market could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We have a currently effective Registration Statement on Form S-3 registering for sale approximately 247,030 shares of our common stock in connection with our acquisition of Liveoak. We also provide eligible employees with the opportunity to purchase shares of our common stock at a discounted price per share through our ESPP and pursuant to our 2018 Plan, our management is authorized to grant stock options, restricted stock units and other equity awards to our employees, directors and consultants. As of April 30, 2021, 8.1 million shares of our common stock are reserved for issuance under our ESPP and 43.1 million shares of our common stock are reserved and available for issuance under our 2018 Plan. We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.

Under our investors’ rights agreement, certain stockholders can require us to register shares owned by them for public sale in the United States. In addition, we filed a registration statement to register shares reserved for future issuance

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under our equity compensation plans. As a result, subject to the satisfaction of applicable exercise periods and the expiration or waiver of the market standoff agreements and lock-up agreements referred to above, the shares issued upon exercise of outstanding stock options or upon settlement of outstanding RSU awards will be available for immediate resale in the United States in the open market.

Future sales of shares of our common stock may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales also could cause the trading price of our common stock to decline and make it more difficult for you to sell shares of our common stock.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.

The trading market for our common stock depends, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If the number of analysts that cover us declines or if analysts do not publish research or reports about our business, delay publishing reports about our business or publish negative reports about our business, regardless of accuracy, our stock price and trading volume could decline.

Regardless of accuracy, unfavorable interpretations of our financial information and other public disclosures could have a negative impact on our stock price. If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our common stock or change their opinion of our common stock, our stock price would likely decline.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that:

▪authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights and preferences determined by our board of directors that may be senior to our common stock;

▪require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

▪specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer;

▪establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

▪establish that our board of directors is divided into three classes, with each class serving three-year staggered terms;

▪prohibit cumulative voting in the election of directors;

▪provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock;

▪provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and

▪require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder. Any delay or prevention of a change of control transaction or changes in our management could cause the market price of our common stock to decline.

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Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware or the U.S. federal district courts are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim against us arising pursuant to any provisions of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine. If a court were to find any of these exclusive-forum provisions in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our amended and restated certificate of incorporation, however, provides that the U.S. federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. In December 2018, the Delaware Chancery Court issued an opinion invalidating provisions similar to ours limiting to U.S. federal court the forum in which a stockholder is able to bring a claim under the Securities Act (“Federal Forum Provision”). On March 18, 2020, however, the Delaware Supreme Court reversed the decision of the Delaware Chancery Court and held that such provisions are facially valid. In light of that recent decision, we announced that we may in the future enforce our Federal Forum Provision. While there can be no assurance that federal courts or other state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision generally means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court. While the Federal Forum Provision does not apply to suits brought to enforce any duty or liability created by the Exchange Act, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder also must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.

Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholder’s ability to bring a claim in a judicial forum of the stockholder's choosing for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees.

Risks Related to Our Notes

Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow or cash on hand to pay our debt, to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the amounts payable under the Notes, any borrowings including under our credit facility or other future indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

Subject to certain conditions, holders of the Notes may require us to repurchase for cash all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the respective indentures governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid regular or special interest, if any, to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change (as defined in the respective indentures for the Notes) occurs prior to the respective maturity

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dates of the Notes, we will in some cases be required to increase the conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change. Upon a conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with respect to Notes being converted.

In addition, our credit facility prohibits us from making any cash payments on the conversion or repurchase of the Notes if an event of default exists under the credit facility or if, after giving effect to such conversion or repurchase (and any additional indebtedness incurred in connection with such conversion or a repurchase), we would not be in pro forma compliance with our financial covenants under the credit facility. Further, our ability to repurchase or to pay cash upon conversion of the Notes may be limited by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase the Notes at a time when the repurchase is required by the indenture governing the Notes or to pay cash upon conversion of the Notes as required by the indenture would constitute a default under the indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or to pay cash upon conversion of the Notes.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than by paying cash in lieu of delivering any fractional share), we may settle all or a portion of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

General Risk Factors

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.

We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.

Our sales contracts are primarily denominated in U.S. dollars, and therefore substantially all of our revenue is not subject to foreign currency risk. However, a strengthening of the U.S. dollar could increase the real cost of our offerings to our customers outside of the United States, which could adversely affect our operating results. In addition, an increasing portion of our operating revenues and operating expenses are earned or incurred outside of the United States, and an increasing portion of our assets is held outside of the United States. These operating revenues, expenses and assets are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully hedge against the risks associated with currency fluctuations, our operating results could be adversely affected.

Natural catastrophic events and man-made problems such as power disruptions, computer viruses, data security breaches, and terrorism may disrupt our business.

We rely heavily on our network infrastructure and information technology systems for our business operations. A disruption or failure of these systems in the event of online attack, earthquake, fire, terrorist attack, public health crisis (such as the COVID-19 pandemic), power loss, telecommunications failure or other similar catastrophic event could cause system interruptions, delays in accessing our service, reputational harm and loss of critical data or could prevent

62

us from providing our products and solutions to our customers. A catastrophic event that results in the destruction or disruption of our data centers, or our network infrastructure or information technology systems, including any errors, defects or failures in third-party hardware, could affect our ability to conduct normal business operations and adversely affect our operating results.

ITEMS 2, 3, 4 and 5 are not applicable and have been omitted.

ITEM 6. Exhibits

The documents listed in the Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

63

EXHIBIT INDEX

Exhibit Number	Description	Form	File No.	Incorporated by Reference Exhibit	Filing Date
10.1#	Amended and Restated Non-Employee Director Compensation Policy			Filed herewith
31.1	Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

#	Indicates management contract or compensatory plan, contract or agreement
*	The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

64

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: June 4, 2021

DOCUSIGN, INC.
By:	/s/ Daniel D. Springer
	Daniel D. Springer
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Cynthia Gaylor
	Cynthia Gaylor
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

65

EX-10.1

Exhibit 10.1

DOCUSIGN, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

(Amended & Restated as of May 28, 2021)

Each member of the Board of Directors (the “Board”) of DocuSign, Inc. (the “Company”) who is a non-employee director of the Company (each such member, a “Non-Employee Director”) will receive the compensation described in this Amended and Restated Non-Employee Director Compensation Policy (the “Director Compensation Policy”) for his or her Board service.

The Director Compensation Policy may be amended or terminated at any time in the sole discretion of the Board.

A Non-Employee Director may decline all or any portion of his or her compensation by giving notice to the Company prior to the date cash is to be paid or equity awards are to be granted, as the case may be.1

Annual Cash Compensation

Each Non-Employee Director will receive the cash compensation set forth below for service on the Board. The annual cash compensation amounts will be payable in equal quarterly installments, in arrears following the end of each fiscal quarter in which the service occurred, pro-rated for any partial months of service. All annual cash fees are vested upon payment.

1.Annual Board Service Retainer:

a.All Eligible Directors: $40,000

b.Chairman or Lead Independent Director: $90,000 (in lieu of above)

2.Annual Committee Member Service Retainer:

a.Member of the Audit Committee: $12,500

b.Member of the Compensation Committee: $9,000

c.Member of the Nominating and Corporate Governance Committee: $5,000

3.Annual Committee Chair Service Retainer (in lieu of Committee Member Service Retainer):

a.Chairman of the Audit Committee: $25,000

b.Chairman of the Compensation Committee: $18,000

c.Chairman of the Nominating and Corporate Governance Committee: $10,00

Equity Compensation

Equity awards will be granted under the Company’s 2018 Equity Incentive Plan or any successor equity incentive plan (the “Plan”). All stock options granted under this policy will be Nonstatutory Stock Options (as defined in the Plan), with a term of ten years from the date of grant and an exercise price per share equal to 100% of the Fair Market Value (as defined in the Plan) of the underlying common stock of the Company on the date of grant.

1 This is included to allow a director who works for a fund to forfeit payments and avoid being deemed to have “constructively received” the payment for tax purposes (and be required to recognize the value as income for tax purposes) in a scenario where the director is obligated under a contractual obligation with the fund to disgorge such payments to the fund.

1.Automatic Equity Grants:

a.Initial Grant for New Directors. Without any further action of the Board, each person who is elected or appointed for the first time to be a Non-Employee Director will automatically, upon the date of his or her initial election or appointment to be a Non-Employee Director, be granted a Restricted Stock Unit for a number of shares of common stock having a value of $450,000 (the “Initial Grant”). Each Initial Grant will vest in a series of 12 equal quarterly installments over the 3-year period measured from the date of grant.

b.Annual Grant. Without any further action of the Board, commencing in fiscal 2022 and each fiscal year thereafter at the close of business on the date of each annual meeting of the Company’s stockholders (each, an “Annual Meeting”), each person who is then a Non-Employee Director will automatically be granted a Restricted Stock Unit to purchase a number of shares of common stock having a value of $225,000 (the “Annual Grant”). Notwithstanding the foregoing, a director who is elected or appointed for the first time less than nine (9) months prior to the date such grants are made to executive officers or the date of such Annual Meeting shall not be eligible to receive such Annual Grant. Each Annual Grant (including, for the avoidance of doubt, the Annual Grants awarded in fiscal 2022) will vest in a series of four successive equal quarterly installments over the one-year period measured from the date of grant; provided that the fourth quarterly installment shall vest in full on the earlier of (i) the date of the Annual Meeting following the date of grant and (ii) the date that is one year following the date of grant of the Annual Grant, in each case, so long as the Non-Employee Director remains in Continuous Service (as defined below) through such date. If a Non-Employee Director’s Continuous Service ends on the date of vesting, then the vesting shall be deemed to have occurred.

2.Vesting; Change of Control. All vesting is subject to the Non-Employee Director’s “Continuous Service” (as defined in the Plan) on each applicable vesting date. Notwithstanding the foregoing vesting schedules, for each Non-Employee Director who remains in Continuous Service with the Company until immediately prior to the closing of a “Change of Control” (as defined in the Plan), the shares subject to his or her then-outstanding equity awards that were granted pursuant to this policy will become fully vested immediately prior to the closing of such Change of Control.

3.Calculation Value of a Restricted Stock Unit Award. The value of a restricted stock unit award to be granted under this policy will be determined based on the Fair Market Value per share on the grant date (as defined in the Plan).

4.Remaining Terms. The remaining terms and conditions of each Restricted Stock Unit, including transferability, will be as set forth in the Company’s standard Restricted Stock Agreement, in the form adopted from time to time by the Board or Compensation Committee.

Expenses

The Company will reimburse Non-Employee Director for ordinary, necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in Board and committee meetings; provided, that the Non-Employee Director timely submit to the Company appropriate documentation substantiating such expenses in accordance with the Company’s travel and expense policy, as in effect from time to time.

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel D. Springer, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of DocuSign, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 4, 2021

By:	/s/ Daniel D. Springer
	Daniel D. Springer
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Cynthia Gaylor, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of DocuSign, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 4, 2021

By:	/s/ Cynthia Gaylor
	Cynthia Gaylor
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel D. Springer, the Chief Executive Officer of DocuSign, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of DocuSign, Inc. for the fiscal quarter ended April 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of DocuSign, Inc. 

Date: June 4, 2021

By:	/s/ Daniel D. Springer
	Daniel D. Springer
	Chief Executive Officer
	(Principal Executive Officer)

I, Cynthia Gaylor, the Chief Financial Officer of DocuSign, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of DocuSign, Inc. for the fiscal quarter ended April 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of DocuSign, Inc.  

Date: June 4, 2021

By:	/s/ Cynthia Gaylor
	Cynthia Gaylor
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

XML

Cover Page - shares	3 Months Ended
	Apr. 30, 2021	May 28, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 30, 2021
Document Transition Report	false
Entity File Number	001-38465
Entity Registrant Name	DOCUSIGN, INC.
Entity Central Index Key	0001261333
Current Fiscal Year End Date	--01-31
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	91-2183967
Entity Address, Address Line One	221 Main St.
Entity Address, Address Line Two	Suite 1550
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94105
City Area Code	415
Local Phone Number	489-4940
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	DOCU
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		194,835,125

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Current assets
Cash and cash equivalents	$ 518,972	$ 566,055
Investments—current	261,660	207,450
Accounts receivable, net of allowance for doubtful accounts of $5,393 and $5,362 as of April 30, 2021 and January 31, 2021	250,365	323,570
Contract assets—current	15,267	16,883
Prepaid expenses and other current assets	65,172	48,390
Total current assets	1,111,436	1,162,348
Investments—noncurrent	94,930	92,717
Property and equipment, net	164,128	165,039
Operating lease right-of-use assets	152,185	159,352
Goodwill	351,511	350,151
Intangible assets, net	115,009	121,828
Deferred contract acquisition costs—noncurrent	274,039	260,130
Other assets—noncurrent	33,882	24,942
Total assets	2,297,120	2,336,507
Current liabilities
Accounts payable	14,870	37,367
Accrued expenses and other current liabilities	75,438	66,566
Accrued compensation	129,640	156,158
Convertible senior notes—current	13,343	20,469
Contract liabilities—current	829,844	779,642
Operating lease liabilities—current	34,777	32,971
Total current liabilities	1,097,912	1,093,173
Convertible senior notes, net—noncurrent	742,577	693,219
Contract liabilities—noncurrent	17,938	16,492
Operating lease liabilities—noncurrent	155,998	165,704
Deferred tax liability—noncurrent	6,484	6,464
Other liabilities—noncurrent	32,974	32,328
Total liabilities	2,053,883	2,007,380
Commitments and contingencies (Note 8)
Convertible senior notes (Note 7)	0	3,390
Stockholders’ equity
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding as of April 30, 2021 and January 31, 2021	0	0
Common stock, $0.0001 par value; 500,000 shares authorized, 194,734 shares outstanding as of April 30, 2021; 500,000 shares authorized, 192,807 shares outstanding as of January 31, 2021	19	19
Treasury stock, at cost: 5 shares as of April 30, 2021 and 5 shares as of January 31, 2021	(1,219)	(1,048)
Additional paid-in capital	1,615,646	1,702,254
Accumulated other comprehensive income	5,358	4,964
Accumulated deficit	(1,376,567)	(1,380,452)
Total stockholders’ equity	243,237	325,737
Total liabilities and equity	$ 2,297,120	$ 2,336,507

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Statement of Financial Position [Abstract]
Accounts receivable, allowance for credit loss	$ (5,362)	$ (5,393)
Preferred stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares outstanding (in shares)	194,734,000	192,807,000
Treasury stock, shares (in shares)	5,000	5,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Revenue:
Total revenue	$ 469,078	$ 297,017
Cost of revenue:
Total cost of revenue	105,242	74,032
Gross profit	363,836	222,985
Operating expenses:
Sales and marketing	239,119	171,793
Research and development	85,416	54,234
General and administrative	50,038	38,811
Total operating expenses	374,573	264,838
Loss from operations	(10,737)	(41,853)
Interest expense	(1,672)	(7,560)
Interest income and other income, net	6,037	3,742
Loss before provision for income taxes	(6,372)	(45,671)
Provision for income taxes	1,982	2,133
Net loss	$ (8,354)	$ (47,804)
Net loss per share attributable to common stockholders, basic (in usd per share)	$ (0.04)	$ (0.26)
Net loss per share attributable to common stockholders, diluted (in usd per share)	$ (0.04)	$ (0.26)
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic (in shares)	194,342,000	182,978,000
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, diluted (in shares)	194,342,000	182,978,000
Other comprehensive income (loss):
Foreign currency translation gain (loss), net of tax	$ 636	$ (5,189)
Unrealized gains (losses) on investments, net of tax	(242)	159
Other comprehensive income (loss)	394	(5,030)
Comprehensive loss	(7,960)	(52,834)
Stock-based compensation expense included in costs and expenses:
Stock-based compensation expense	81,637	53,551
Sales and marketing
Stock-based compensation expense included in costs and expenses:
Stock-based compensation expense	38,135	24,665
Research and development
Stock-based compensation expense included in costs and expenses:
Stock-based compensation expense	20,462	11,885
General and administrative
Stock-based compensation expense included in costs and expenses:
Stock-based compensation expense	10,986	9,012
Subscription
Revenue:
Total revenue	451,935	280,922
Cost of revenue:
Total cost of revenue	78,071	52,010
Subscription | Cost of revenue
Stock-based compensation expense included in costs and expenses:
Stock-based compensation expense	6,018	3,864
Professional services and other
Revenue:
Total revenue	17,143	16,095
Cost of revenue:
Total cost of revenue	27,171	22,022
Professional services and other | Cost of revenue
Stock-based compensation expense included in costs and expenses:
Stock-based compensation expense	$ 5,535	$ 4,125

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Adjustment	Common Stock	Additional Paid-In Capital	Additional Paid-In Capital Cumulative Adjustment	Treasury Stock	Accumulated Other Comprehensive Income	Accumulated Deficit	Accumulated Deficit Cumulative Adjustment
Beginning balance (in shares) at Jan. 31, 2020			181,254
Beginning balance at Jan. 31, 2020	$ 546,327		$ 18	$ 1,685,167			$ (1,673)	$ (1,137,185)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)			840
Exercise of stock options	7,635			7,635
Settlement of restricted stock units (in shares)			1,078
Tax withholding on net share settlement of restricted stock units and employee stock purchase plans	(46,723)			(46,723)
Employee stock purchase plan (in shares)			256
Employee stock purchase plan	13,590			13,590
Employee stock-based compensation expense	54,793			54,793
Net loss	(47,804)							(47,804)
Other comprehensive loss, net	(5,030)						(5,030)
Ending balance (in shares) at Apr. 30, 2020			183,428
Ending balance at Apr. 30, 2020	522,788		$ 18	1,714,462			(6,703)	(1,184,989)
Beginning balance (in shares) at Jan. 31, 2021			192,807
Beginning balance at Jan. 31, 2021	$ 325,737	$ (73,905)	$ 19	1,702,254	$ (86,144)	$ (1,048)	4,964	(1,380,452)	$ 12,239
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Settlement of convertible senior notes due 2023 (in shares)	400		352
Settlement of convertible senior notes due in 2023	$ (446)			(446)
Exercise of stock options (in shares)	488		488
Exercise of stock options	$ 6,616			6,616
Settlement of restricted stock units (in shares)			955
Tax withholding on net share settlement of restricted stock units and employee stock purchase plans	(113,583)			(113,412)		(171)
Employee stock purchase plan (in shares)			132
Employee stock purchase plan	23,167			23,167
Employee stock-based compensation expense	83,611			83,611
Net loss	(8,354)							(8,354)
Other comprehensive loss, net	394						394
Ending balance (in shares) at Apr. 30, 2021			194,734
Ending balance at Apr. 30, 2021	$ 243,237		$ 19	$ 1,615,646		$ (1,219)	$ 5,358	$ (1,376,567)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands		3 Months Ended
		Apr. 30, 2021	Apr. 30, 2020
Cash flows from operating activities:
Net loss		$ (8,354)	$ (47,804)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		20,037	14,039
Amortization of deferred contract acquisition and fulfillment costs		30,933	21,360
Amortization of debt discount and transaction costs		1,319	6,842
Fair value adjustments to strategic investments		(5,119)	0
Non-cash operating lease costs		6,943	6,324
Stock-based compensation expense		81,637	53,551
Deferred income taxes		264	(104)
Other		(1,240)	504
Changes in operating assets and liabilities
Accounts receivable		73,205	17,239
Contract assets		1,607	(740)
Prepaid expenses and other current assets		(15,670)	(9,660)
Deferred contract acquisition and fulfillment costs		(46,154)	(41,037)
Other assets		(3,167)	(1,364)
Accounts payable		(21,593)	(2,554)
Accrued expenses and other liabilities		11,080	(916)
Accrued compensation		(34,048)	(1,536)
Contract liabilities		51,648	44,594
Operating lease liabilities		(7,731)	406
Net cash provided by operating activities		135,597	59,144
Cash flows from investing activities:
Purchases of marketable securities		(96,925)	0
Sales of marketable securities		2,002	28,986
Maturities of marketable securities		37,513	170,071
Purchases of strategic investments		(500)	0
Purchases of other investments		0	(3,000)
Purchases of property and equipment		(12,596)	(26,389)
Net cash (used in) provided by investing activities		(70,506)	169,668
Cash flows from financing activities:
Repayments of convertible senior notes		(36,684)	0
Payment of tax withholding obligation on net share settlement of restricted stock units		(106,053)	(46,723)
Proceeds from exercise of stock options		6,616	7,635
Proceeds from employee stock purchase plan		23,167	13,590
Net cash used in financing activities		(112,954)	(25,498)
Effect of foreign exchange on cash, cash equivalents and restricted cash		779	(2,280)
Net increase (decrease) in cash, cash equivalents and restricted cash		(47,084)	201,034
Cash, cash equivalents and restricted cash at beginning of period	[1]	566,336	241,483
Cash, cash equivalents and restricted cash at end of period	[1]	519,252	442,517
Supplemental disclosure:
Cash paid for interest		212	1,438
Cash paid for operating lease liabilities		9,888	6,389
Cash paid for income taxes		2,507	416
Non-cash investing and financing activities:
Property and equipment in accounts payable and accrued expenses and other current liabilities		1,275	3,445
Operating lease right-of-use assets exchanged for lease obligations		0	18,745
Fair value of shares issued as part of the repayments of convertible senior notes		$ 74,657	$ 0

[1] (1) $0.3 million of restricted cash was included in Other assets—noncurrent at April 30, 2021, and January 31, 2021.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($) $ in Millions	Apr. 30, 2021	Jan. 31, 2021
Statement of Cash Flows [Abstract]
Restricted cash	$ 0.3	$ 0.3

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Summary of Significant Accounting Policies

3 Months Ended

Apr. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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.

We provide a platform that enables businesses of all sizes to digitally prepare, sign, act on and manage agreements, thereby simplifying and accelerating the process of doing business.

Basis of Presentation and Principles of Consolidation

Our condensed consolidated financial statements include those of DocuSign, Inc. and our subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our fiscal 2021 Annual Report on Form 10-K.

Our condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and, in our opinion, include all adjustments of a normal recurring nature necessary for the fair statement of our financial position, results of operations and cash flows. Our condensed consolidated balance sheet as of January 31, 2021 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the three months ended April 30, 2021 are not necessarily indicative of the results to be expected for the year ending January 31, 2022.

Our fiscal year ends on January 31. References to fiscal 2022, for example, are to the fiscal year ending January 31, 2022.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the condensed 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 assets acquired and liabilities assumed in business combinations;

•the average period of benefit associated with deferred contract acquisition costs and fulfillment costs;

•the valuation of strategic investments;

•the fair value of certain stock awards issued;

•the fair value of the liability and equity components of convertible notes;

•the useful life and recoverability of long-lived assets;

•the discount rate used for operating leases; and

•the recognition, measurement and valuation of deferred income taxes.

Since the emergence of the COVID-19 pandemic, we have undertaken measures to protect our employees, partners and customers, including providing the majority of our employees the option to work remotely until at least October 4, 2021. However, there can be no assurance that these measures will be effective, that we will be able to adopt new measures as needed, or that we will be able to discontinue these measures without adversely affecting our business operations. In addition, the COVID-19 pandemic and related recent developments (including, for example, vaccine deployments, national and regional outbreaks, and the emergence of disease variants) have created and may continue to create significant uncertainty in global financial markets, which may decrease technology spending, depress demand for our products and harm our business and results of operations. As of the date of issuance of the financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they

become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

Significant Accounting Policies

Other than as described below, there have been no changes to our significant accounting policies described in our fiscal 2021 Annual Report on Form 10-K that have had a material impact on our consolidated financial statements and related notes.

Convertible Debt

On February 1, 2021, we early adopted Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) using the modified retrospective approach.

Effective February 1, 2021, 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.

Refer to Note 1 of our 2021 Annual Report on Form 10-K for our convertible debt policy prior to the adoption of ASU 2020-06.

Recently Adopted Accounting Pronouncements

On February 1, 2021, we early adopted ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU removes separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. Such convertible debt is accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. The ASU also requires the if-converted method to be used for convertible instruments and the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares. The adoption of the ASU using the modified retrospective method resulted in:

•an increase of $77.3 million to the total carrying value of our convertible senior notes to reflect the full principal amount of the convertible notes outstanding net of issuance costs,

•reductions of $86.1 million to additional paid-in capital and $3.4 million to mezzanine equity to remove the equity component separately recorded for the conversion features associated with the convertible notes, and

•a cumulative-effect adjustment of $12.2 million to the beginning balance of accumulated deficit as of February 1, 2021.

Other Recent Accounting Pronouncements

Other recently issued accounting pronouncements are not expected to have a material impact on our consolidated financial statements.

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Revenue

3 Months Ended

Apr. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Subscription revenue is recognized over time and accounted for approximately 96% and 95% of our revenue for the three months ended April 30, 2021 and 2020.

Performance Obligations

As of April 30, 2021, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $1.2 billion. We expect to recognize 53% of the transaction price allocated to remaining performance obligations within the 12 months following April 30, 2021 in our consolidated statement of operations and comprehensive 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 fully invoiced to our customers where there remains a performance obligation, typically for our multi-year arrangements. Total contract assets were $15.9 million and $17.5 million as of April 30, 2021 and January 31, 2021, of which $0.6 million and $0.6 million were noncurrent and included within “Other assets—noncurrent” on our condensed consolidated balance sheets. The change in contract assets reflects the difference in timing between the satisfaction of our remaining performance obligations and our contractual right to bill our customers.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are generally recognized as revenue over the contractual period. For the three months ended April 30, 2021 and 2020, we recognized revenue of $357.8 million and $224.7 million 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.

Deferred Contract Acquisition and Fulfillment CostsThe following table represents a rollforward of our deferred contract acquisition and fulfillment costs:

	Three Months Ended April 30,
(in thousands)	2021		2020
Deferred Contract Acquisition Costs
Beginning balance	$	262,519	$	155,697
Additions to deferred contract acquisition costs	39,700		34,158
Amortization of deferred contract acquisition costs	(25,842)		(16,941)
Cumulative translation adjustment	240		(1,533)
Ending balance	$	276,617	$	171,381
Deferred Contract Fulfillment Costs
Beginning balance	$	12,506	$	8,218
Additions to deferred contract fulfillment costs	6,454		6,879
Amortization of deferred contract fulfillment costs	(5,091)		(4,419)
Ending balance	$	13,869	$	10,678

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Fair Value Measurements

3 Months Ended

Apr. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The following table summarizes our financial assets that are measured at fair value on a recurring basis:

	April 30, 2021
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Level 1:
Cash equivalents(1)
Money market funds	$	147,875	$	—	$	—	$	147,875
Level 2:
Available-for-sale securities
Commercial paper	100,804		2		(22)		100,784
Corporate notes and bonds	199,701		164		(95)		199,770
U.S. Treasury securities	4,999		1		—		5,000
U.S. government agency securities	50,535		8		(7)		50,536
Level 2 total	356,039		175		(124)		356,090
Level 3:
Available-for-sale securities
Corporate notes and bonds	500		—		—		500
Total	$	504,414	$	175	$	(124)	$	504,465
	January 31, 2021
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Level 1:
Cash equivalents(1)
Money market funds	$	284,312	$	—	$	—	$	284,312
Level 2:
Available-for-sale securities
Commercial paper	42,048		1		(23)		42,026
Corporate notes and bonds	199,277		375		(67)		199,585
U.S. Treasury securities	4,998		—		—		4,998
U.S. government agency securities	53,052		12		(6)		53,058
Level 2 total	299,375		388		(96)		299,667
Level 3:
Available-for-sale securities
Corporate notes and bonds	500		—		—		500
Total	$	584,187	$	388	$	(96)	$	584,479

(1)    Included in “cash and cash equivalents” in our consolidated balance sheets as of April 30, 2021, and January 31, 2021, in addition to cash of $371.1 million and $281.7 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 Level 3 investments is determined based on an income approach using unobservable inputs.

The fair value of our available-for-sale securities as of April 30, 2021, by remaining contractual maturities, were as follows (in thousands):

Due in one year or less	$	261,660
Due in one to two years	94,930
	$	356,590

As of April 30, 2021 and January 31, 2021, 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 the issuers' high credit ratings and consistent payment history.

We had no liabilities measured at fair value on a recurring basis as of April 30, 2021 and January 31, 2021.

Strategic Investments

During the three months ended April 30, 2021, investments in equity securities without readily determinable fair values increased by $5.1 million due to adjustments related to observable price changes. Such investments are recorded in “Other assets—noncurrent” on our condensed consolidated balance sheets.

Convertible Senior Notes

We estimated the fair value of the Notes based on the quoted market prices in an inactive market on the last trading day of the reporting period (Level 2). The Notes are recorded at face value less unamortized debt discount and transaction costs as “Convertible senior notes—current” and “Convertible senior notes, net—noncurrent” on our condensed consolidated balance sheets. Refer to Note 7 for further information.

(in thousands)	April 30, 2021		January 31, 2021
0.5% Convertible Senior Notes due in 2023
Aggregate principal amount	$	78,318	$	115,000
Fair value amount	245,245		373,928
0% Convertible Senior Notes due in 2024
Aggregate principal amount	$	690,000	$	690,000
Fair value amount	684,825		725,100

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Property and Equipment, Net

3 Months Ended

Apr. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment consisted of the following:

(in thousands)	April 30, 2021		January 31, 2021
Computer and network equipment	$	104,017	$	102,163
Software, including capitalized software development costs	66,282		56,858
Furniture and office equipment	21,575		21,682
Leasehold improvements	79,749		79,892
	271,623		260,595
Less: Accumulated depreciation	(131,924)		(121,029)
	139,699		139,566
Work in progress	24,429		25,473
	$	164,128	$	165,039

Depreciation and amortization expense associated with property and equipment was $13.5 million and $9.8 million for the three months ended April 30, 2021 and 2020.

For the three months ended April 30, 2021 and 2020, we capitalized $7.8 million and $5.1 million of internally developed software.

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Intangible Assets, Net

3 Months Ended

Apr. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets,Net

Intangible Assets, Net

Intangible assets consisted of the following:

	As of April 30, 2021							As of January 31, 2021
(in thousands, except years)	Weighted-average Remaining Useful Life (Years)	Estimated Fair Value		Accumulated Amortization		Acquisition-related Intangibles, Net		Estimated Fair Value		Accumulated Amortization		Acquisition-related Intangibles, Net
Existing technology	3.7	$	72,994	$	(38,808)	$	34,186	$	72,994	$	(35,613)	$	37,381
Customer contracts & related relationships	7.7	110,082		(32,022)		78,060		110,082		(29,393)		80,689
Other	1.0	22,534		(20,107)		2,427		22,534		(19,356)		3,178
	6.4	$	205,610	$	(90,937)	114,673		$	205,610	$	(84,362)	121,248
Cumulative translation adjustment						336						580
Total						$	115,009					$	121,828

Amortization of finite-lived intangible assets was as follows:

	Three Months Ended April 30,
(in thousands)	2021		2020
Cost of subscription revenue	$	3,171	$	1,348
Sales and marketing	3,358		2,911
Total	$	6,529	$	4,259

As of April 30, 2021, future amortization of finite-lived intangibles that will be recorded is estimated as follows, excluding cumulative translation adjustment:

Fiscal Period:	Amount (in thousands)
2022, remainder	$	17,707
2023	19,906
2024	18,575
2025	17,998
2026	12,388
Thereafter	28,099
Total	$	114,673

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Deferred Contract Acquisition and Fulfillment Costs

3 Months Ended

Apr. 30, 2021

Revenue from Contract with Customer [Abstract]

Deferred Contract Acquisition and Fulfillment Costs

Revenue

Subscription revenue is recognized over time and accounted for approximately 96% and 95% of our revenue for the three months ended April 30, 2021 and 2020.

Performance Obligations

As of April 30, 2021, the amount of the transaction price allocated to remaining performance obligations for contracts greater than one year was $1.2 billion. We expect to recognize 53% of the transaction price allocated to remaining performance obligations within the 12 months following April 30, 2021 in our consolidated statement of operations and comprehensive 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 fully invoiced to our customers where there remains a performance obligation, typically for our multi-year arrangements. Total contract assets were $15.9 million and $17.5 million as of April 30, 2021 and January 31, 2021, of which $0.6 million and $0.6 million were noncurrent and included within “Other assets—noncurrent” on our condensed consolidated balance sheets. The change in contract assets reflects the difference in timing between the satisfaction of our remaining performance obligations and our contractual right to bill our customers.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are generally recognized as revenue over the contractual period. For the three months ended April 30, 2021 and 2020, we recognized revenue of $357.8 million and $224.7 million 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.

Deferred Contract Acquisition and Fulfillment CostsThe following table represents a rollforward of our deferred contract acquisition and fulfillment costs:

	Three Months Ended April 30,
(in thousands)	2021		2020
Deferred Contract Acquisition Costs
Beginning balance	$	262,519	$	155,697
Additions to deferred contract acquisition costs	39,700		34,158
Amortization of deferred contract acquisition costs	(25,842)		(16,941)
Cumulative translation adjustment	240		(1,533)
Ending balance	$	276,617	$	171,381
Deferred Contract Fulfillment Costs
Beginning balance	$	12,506	$	8,218
Additions to deferred contract fulfillment costs	6,454		6,879
Amortization of deferred contract fulfillment costs	(5,091)		(4,419)
Ending balance	$	13,869	$	10,678

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Debt

3 Months Ended

Apr. 30, 2021

Debt Disclosure [Abstract]

Debt

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 (“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 each fiscal quarter since the quarter ended July 31, 2020, the last reported sales price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on, and including, the last trading day was greater than or equal to 130% of the conversion price of the 2023 Notes. The 2023 Notes therefore became convertible on August 1, 2020 and continue to be convertible through April 30, 2021.

In January 2021, we issued $690.0 million in aggregate principal amount of the 0% Convertible Senior Notes due in 2024 (“2024 Notes,” and together with the 2023 Notes, the “Notes”). The net proceeds from the issuance of the 2024 Notes were $677.3 million after deducting the initial purchasers’ discounts and transaction costs. As of April 30, 2021, the conversion conditions for the 2024 Notes described in our 2021 Annual Report on Form 10-K were not met.

Conversions of the 2023 Notes

Early conversions and settlements of the Notes during the three months ended April 30, 2021 were accounted for under ASU 2020-06. Refer to Note 1 for further discussion of early adoption.

During the three months ended April 30, 2021, we settled $36.7 million aggregate amount of the principal of 2023 Notes, including $23.9 million elected for conversion as of January 31, 2021, for aggregate consideration of $111.3 million, consisting of $36.7 million in cash and 0.4 million shares of our common stock with a value of $74.7 million. The $0.4 million excess of the cash consideration over the corresponding carrying value was recorded as a reduction to additional paid-in capital.

Additionally, as of April 30, 2021, we had received conversion notices on our 2023 Notes for $13.5 million in aggregate principal amount to be settled in the following quarter. The corresponding carrying value is reflected in Convertible senior notes—current on our condensed consolidated balance sheet.

From May 1, 2021 through June 3, 2021, we received conversion notices on our 2023 Notes for $10.0 million in aggregate principal amount, for which we elected to settle the principal amount in cash during the three months ended July 31, 2021.

The net carrying amounts of the liability and equity components of the Notes were as follows:

(in thousands)	April 30, 2021		January 31, 2021
2023 Notes:
Principal	$	78,318	$	115,000
Less: unamortized debt discount (1)	—		(15,116)
Less: unamortized transaction costs	(928)		(1,224)
Net carrying value of current and noncurrent liability component	$	77,390	$	98,660
Proceeds allocated to the conversion option (debt discount) (1)			$	134,667
Less: extinguishment or conversion			(31,933)
Less: transaction costs			(3,336)
Net carrying value of mezzanine and permanent equity component			$	99,398
2024 Notes:
Principal	$	690,000	$	690,000
Less: unamortized debt discount (1)	—		(63,619)
Less: unamortized transaction costs	(11,464)		(11,353)
Net carrying value of noncurrent liability component	$	678,536	$	615,028
Proceeds allocated to the conversion option (debt discount) (1)			$	64,453
Less: transaction costs			(1,185)
Net carrying value of permanent equity component			$	63,268

(1) Not applicable under ASU 2020-06

The effective interest rate on the liability component of the 2023 Notes was 5.9% prior to the adoption of ASU 2020-06 and 1.0% after adoption. The effective interest rate on the liability component of the 2024 notes was 3.8% prior to the adoption of ASU 2020-06 and 0.6% after adoption. Interest expense recognized related to the Notes was as follows:

	Three Months Ended April 30,
(in thousands)	2021		2020
Contractual interest expense	$	36	$	718
Amortization of debt discount	—		6,329
Amortization of transaction costs	1,181		513
Total	$	1,217	$	7,560

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.

The material terms of the capped call transactions were as follows:

(in thousands, except per share amounts)	2023 Notes		2024 Notes
Aggregate cost of capped calls	$	67,563	$	31,395
Initial strike price per share (1)	$	71.50	$	420.24
Initial cap price per share (1)	$	110.00	$	525.30
Shares of our common stock covered by the capped calls (1)	8,042		1,642

(1) Subject to adjustments for certain events, such as merger events and tender offers, and anti-dilution adjustments

Impact on Loss Per Share

After February 1, 2021, the date of the adoption of ASU 2020-06, 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. As of the beginning of the fourth quarter of 2021, share settlement was presumed, and shares subject to the Notes would have been included under the if-converted method. In periods prior to that, cash settlement was presumed and shares subject to the Notes would have been included under the treasury stock method. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive.

Upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the cap prices listed above in the Capped Calls section, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price. As of April 30, 2021, the market price of our common stock exceeded the $110.00 per share cap price associated with the 2023 Notes but not the $525.30 cap price associated with the 2024 Notes; therefore, the 2023 Notes would have caused economic dilution if converted.

Revolving Credit Facility

In January 2021, we entered into a credit agreement with a syndicate of banks. The credit agreement extended a senior secured revolving credit facility (the “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 Credit 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 April 30, 2021. As of April 30, 2021, there were no outstanding borrowings under the Credit Facility. The Credit 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.

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Commitments and Contingencies

3 Months Ended

Apr. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

As of April 30, 2021, we had unused letters of credit outstanding associated with our various operating leases totaling $7.7 million.

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 April 30, 2021, the 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)
2022, remainder	$	15,698
2023	33,368
2024	19,091
2025	9,783
2026	8,178
Thereafter	3,145
Total	$	89,263

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 April 30, 2021, and January 31, 2021. 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 and litigation made against us in the ordinary course of business. We believe the final outcome of these matters will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.

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Stockholders' Equity

3 Months Ended

Apr. 30, 2021

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

Equity Incentive Plans

We maintain three stock-based compensation plans: the 2018 Equity Incentive Plan (the “2018 Plan”), the Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”) and the Amended and Restated 2003 Stock Plan (the “2003 Plan”).

The 2018 Plan serves as a successor to the 2011 Plan and 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 these two plans continue to be subject to the terms and conditions of the respective plans.

As of April 30, 2021, 43.1 million shares of our common stock were available for issuance under the 2018 Plan.

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 9.6 million shares occurred on February 1, 2021.

Restricted Stock Units

Restricted stock units (“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. The majority of RSUs vest upon the satisfaction of a service-based vesting condition. From time to time, we also grant RSUs that are subject to either a performance-based or market-based vesting condition. 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.

RSU activity for the three months ended April 30, 2021 was as follows:

(in thousands, except per share data)	Number of Units	Weighted-Average Grant Date Fair Value
Unvested at January 31, 2021	10,586	$	83.98
Granted	436	227.30
Vested	(1,375)	60.04
Canceled	(453)	$	85.88
Unvested at April 30, 2021	9,194	$	94.26

As of April 30, 2021, our total unrecognized compensation cost related to RSUs was $671.2 million. We expect to recognize this expense over the remaining weighted-average period of approximately 2.2 years.

Stock Options

Option activity for the three months ended April 30, 2021 was as follows:

(in thousands, except years and per share data)	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at January 31, 2021	4,798	$	15.55	5.0	$	1,042,879
Exercised	(488)	13.48
Outstanding at April 30, 2021, all vested and exercisable	4,310	$	15.78	4.9	$	892,949

As of April 30, 2021, there was no remaining unrecognized compensation cost related to stock option grants.

2018 Employee Stock Purchase Plan

The Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of our common stock at a discounted price, normally through payroll deductions, of up to 15% of their earnings, subject to the terms of the ESPP and applicable law. 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. In the three months ended April 30, 2021, 0.1 million shares of our common stock were purchased under the ESPP. Compensation expense related to the ESPP was $4.3 million and $1.9 million for the three months ended April 30, 2021 and 2020.

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 April 30, 2021, 8.1 million shares of our common stock were reserved for issuance under the ESPP.

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Net Loss per Share Attributable to Common Stockholders

3 Months Ended

Apr. 30, 2021

Earnings Per Share [Abstract]

Net Loss per Share Attributable to Common Stockholders

Net Loss per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for periods presented:

	Three Months Ended April 30,
(in thousands, except per share data)	2021		2020
Numerator:
Net loss attributable to common stockholders	$	(8,354)	$	(47,804)
Denominator:
Weighted-average common shares outstanding	194,342		182,978
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.04)	$	(0.26)

Outstanding potentially dilutive securities that were excluded from the diluted per share calculations because they would have been antidilutive are as follows:

	April 30,
(in thousands)	2021	2020
RSUs	9,194	12,550
Stock options	4,310	6,030
ESPP	158	227
Convertible senior notes	2,737	2,553
Total antidilutive securities	16,399	21,360

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Income Taxes

3 Months Ended

Apr. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. There were no material discrete items in the quarter.

Our income tax provision was $2.0 million and $2.1 million for the three months ended April 30, 2021 and 2020.

We review the likelihood that we will realize the benefit of our deferred tax assets and, therefore, the need for valuation allowances, on a quarterly basis. We maintain a valuation allowance against certain deferred tax assets, including all U.S. consolidated group deferred tax assets and certain foreign deferred tax assets as a result of our history of losses in the United States and certain foreign jurisdictions, and the variability and uncertainty of our operating results. In the event we determine our deferred tax assets are realizable based on our assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made.

As of April 30, 2021, our gross unrecognized tax benefits totaled $35.7 million, excluding related accrued interest and penalties, of which $16.3 million would impact the effective tax rate if recognized. Our policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

We are subject to taxation in the United States and various foreign jurisdictions. Our tax years from inception in 2003 through April 30, 2021 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 under examination by the Israel Tax Authority for tax years 2016 through 2019. We are not under examination in any other material jurisdiction. We believe that adequate amounts have been reserved in all jurisdictions.

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Geographic Information

3 Months Ended

Apr. 30, 2021

Segment Reporting [Abstract]

Geographic Information

Geographic InformationWe operate in one operating segment and one reportable segment as we only report financial information on an aggregate and consolidated basis to the Chief Executive Officer, who is our chief operating decision maker.

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:

	Three Months Ended April 30,
(in thousands)	2021		2020
U.S.	$	368,423	$	242,168
International	100,655		54,849
Total revenue	$	469,078	$	297,017

No single country other than the U.S. had revenue greater than 10% of total revenue in the three months ended April 30, 2021 and 2020.

Our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows:

(in thousands)	April 30, 2021		January 31, 2021
U.S.	$	216,952	$	221,549
Ireland	64,842		66,670
International	34,519		36,172
Total long-lived assets	$	316,313	$	324,391

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Apr. 30, 2021

Accounting Policies [Abstract]

Principles of Consolidation

Basis of Presentation and Principles of Consolidation

Our condensed consolidated financial statements include those of DocuSign, Inc. and our subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our fiscal 2021 Annual Report on Form 10-K.

Basis of Presentation

Our condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and, in our opinion, include all adjustments of a normal recurring nature necessary for the fair statement of our financial position, results of operations and cash flows. Our condensed consolidated balance sheet as of January 31, 2021 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the three months ended April 30, 2021 are not necessarily indicative of the results to be expected for the year ending January 31, 2022.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2022, for example, are to the fiscal year ending January 31, 2022.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the condensed 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 assets acquired and liabilities assumed in business combinations;

•the average period of benefit associated with deferred contract acquisition costs and fulfillment costs;

•the valuation of strategic investments;

•the fair value of certain stock awards issued;

•the fair value of the liability and equity components of convertible notes;

•the useful life and recoverability of long-lived assets;

•the discount rate used for operating leases; and

•the recognition, measurement and valuation of deferred income taxes.

Convertible Debt

Convertible Debt

On February 1, 2021, we early adopted Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) using the modified retrospective approach.

Effective February 1, 2021, 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.

Refer to Note 1 of our 2021 Annual Report on Form 10-K for our convertible debt policy prior to the adoption of ASU 2020-06.

Recently Adopted Accounting Pronouncements and Other Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

On February 1, 2021, we early adopted ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU removes separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. Such convertible debt is accounted for as a single liability measured at its amortized cost and convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. The ASU also requires the if-converted method to be used for convertible instruments and the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares. The adoption of the ASU using the modified retrospective method resulted in:

•an increase of $77.3 million to the total carrying value of our convertible senior notes to reflect the full principal amount of the convertible notes outstanding net of issuance costs,

•reductions of $86.1 million to additional paid-in capital and $3.4 million to mezzanine equity to remove the equity component separately recorded for the conversion features associated with the convertible notes, and

•a cumulative-effect adjustment of $12.2 million to the beginning balance of accumulated deficit as of February 1, 2021.

Other Recent Accounting Pronouncements

Other recently issued accounting pronouncements are not expected to have a material impact on our consolidated financial statements.

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Fair Value Measurements (Tables)

3 Months Ended

Apr. 30, 2021

Fair Value Disclosures [Abstract]

Summary of assets and liabilities measured at fair value on a recurring basis

The following table summarizes our financial assets that are measured at fair value on a recurring basis:

	April 30, 2021
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Level 1:
Cash equivalents(1)
Money market funds	$	147,875	$	—	$	—	$	147,875
Level 2:
Available-for-sale securities
Commercial paper	100,804		2		(22)		100,784
Corporate notes and bonds	199,701		164		(95)		199,770
U.S. Treasury securities	4,999		1		—		5,000
U.S. government agency securities	50,535		8		(7)		50,536
Level 2 total	356,039		175		(124)		356,090
Level 3:
Available-for-sale securities
Corporate notes and bonds	500		—		—		500
Total	$	504,414	$	175	$	(124)	$	504,465
	January 31, 2021
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Level 1:
Cash equivalents(1)
Money market funds	$	284,312	$	—	$	—	$	284,312
Level 2:
Available-for-sale securities
Commercial paper	42,048		1		(23)		42,026
Corporate notes and bonds	199,277		375		(67)		199,585
U.S. Treasury securities	4,998		—		—		4,998
U.S. government agency securities	53,052		12		(6)		53,058
Level 2 total	299,375		388		(96)		299,667
Level 3:
Available-for-sale securities
Corporate notes and bonds	500		—		—		500
Total	$	584,187	$	388	$	(96)	$	584,479

(1)    Included in “cash and cash equivalents” in our consolidated balance sheets as of April 30, 2021, and January 31, 2021, in addition to cash of $371.1 million and $281.7 million.

Fair value of available-for-sale marketable securities by remaining contractual maturities

The fair value of our available-for-sale securities as of April 30, 2021, by remaining contractual maturities, were as follows (in thousands):

Due in one year or less	$	261,660
Due in one to two years	94,930
	$	356,590

Schedule of Convertible Senior Notes

(in thousands)	April 30, 2021		January 31, 2021
0.5% Convertible Senior Notes due in 2023
Aggregate principal amount	$	78,318	$	115,000
Fair value amount	245,245		373,928
0% Convertible Senior Notes due in 2024
Aggregate principal amount	$	690,000	$	690,000
Fair value amount	684,825		725,100

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Property and Equipment, Net (Tables)

3 Months Ended

Apr. 30, 2021

Property, Plant and Equipment [Abstract]

Property and equipment

Property and equipment consisted of the following:

(in thousands)	April 30, 2021		January 31, 2021
Computer and network equipment	$	104,017	$	102,163
Software, including capitalized software development costs	66,282		56,858
Furniture and office equipment	21,575		21,682
Leasehold improvements	79,749		79,892
	271,623		260,595
Less: Accumulated depreciation	(131,924)		(121,029)
	139,699		139,566
Work in progress	24,429		25,473
	$	164,128	$	165,039

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Intangible Assets, Net (Tables)

3 Months Ended

Apr. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

Intangible assets consisted of the following:

	As of April 30, 2021							As of January 31, 2021
(in thousands, except years)	Weighted-average Remaining Useful Life (Years)	Estimated Fair Value		Accumulated Amortization		Acquisition-related Intangibles, Net		Estimated Fair Value		Accumulated Amortization		Acquisition-related Intangibles, Net
Existing technology	3.7	$	72,994	$	(38,808)	$	34,186	$	72,994	$	(35,613)	$	37,381
Customer contracts & related relationships	7.7	110,082		(32,022)		78,060		110,082		(29,393)		80,689
Other	1.0	22,534		(20,107)		2,427		22,534		(19,356)		3,178
	6.4	$	205,610	$	(90,937)	114,673		$	205,610	$	(84,362)	121,248
Cumulative translation adjustment						336						580
Total						$	115,009					$	121,828

Schedule of amortization of finite-lived intangible assets

Amortization of finite-lived intangible assets was as follows:

	Three Months Ended April 30,
(in thousands)	2021		2020
Cost of subscription revenue	$	3,171	$	1,348
Sales and marketing	3,358		2,911
Total	$	6,529	$	4,259

Schedule of future amortization of finite-lived intangibles

As of April 30, 2021, future amortization of finite-lived intangibles that will be recorded is estimated as follows, excluding cumulative translation adjustment:

Fiscal Period:	Amount (in thousands)
2022, remainder	$	17,707
2023	19,906
2024	18,575
2025	17,998
2026	12,388
Thereafter	28,099
Total	$	114,673

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Deferred Contract Acquisition and Fulfillment Costs (Tables)

3 Months Ended

Apr. 30, 2021

Revenue from Contract with Customer [Abstract]

Deferred contract costs

The following table represents a rollforward of our deferred contract acquisition and fulfillment costs:

	Three Months Ended April 30,
(in thousands)	2021		2020
Deferred Contract Acquisition Costs
Beginning balance	$	262,519	$	155,697
Additions to deferred contract acquisition costs	39,700		34,158
Amortization of deferred contract acquisition costs	(25,842)		(16,941)
Cumulative translation adjustment	240		(1,533)
Ending balance	$	276,617	$	171,381
Deferred Contract Fulfillment Costs
Beginning balance	$	12,506	$	8,218
Additions to deferred contract fulfillment costs	6,454		6,879
Amortization of deferred contract fulfillment costs	(5,091)		(4,419)
Ending balance	$	13,869	$	10,678

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Debt (Tables)

3 Months Ended

Apr. 30, 2021

Debt Disclosure [Abstract]

Schedule of convertible debt

The net carrying amounts of the liability and equity components of the Notes were as follows:

(in thousands)	April 30, 2021		January 31, 2021
2023 Notes:
Principal	$	78,318	$	115,000
Less: unamortized debt discount (1)	—		(15,116)
Less: unamortized transaction costs	(928)		(1,224)
Net carrying value of current and noncurrent liability component	$	77,390	$	98,660
Proceeds allocated to the conversion option (debt discount) (1)			$	134,667
Less: extinguishment or conversion			(31,933)
Less: transaction costs			(3,336)
Net carrying value of mezzanine and permanent equity component			$	99,398
2024 Notes:
Principal	$	690,000	$	690,000
Less: unamortized debt discount (1)	—		(63,619)
Less: unamortized transaction costs	(11,464)		(11,353)
Net carrying value of noncurrent liability component	$	678,536	$	615,028
Proceeds allocated to the conversion option (debt discount) (1)			$	64,453
Less: transaction costs			(1,185)
Net carrying value of permanent equity component			$	63,268

(1) Not applicable under ASU 2020-06

Interest expense recognized related to the Notes was as follows:

	Three Months Ended April 30,
(in thousands)	2021		2020
Contractual interest expense	$	36	$	718
Amortization of debt discount	—		6,329
Amortization of transaction costs	1,181		513
Total	$	1,217	$	7,560

Schedule of capped calls

The material terms of the capped call transactions were as follows:

(in thousands, except per share amounts)	2023 Notes		2024 Notes
Aggregate cost of capped calls	$	67,563	$	31,395
Initial strike price per share (1)	$	71.50	$	420.24
Initial cap price per share (1)	$	110.00	$	525.30
Shares of our common stock covered by the capped calls (1)	8,042		1,642

(1) Subject to adjustments for certain events, such as merger events and tender offers, and anti-dilution adjustments

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Commitments and Contingencies (Tables)

3 Months Ended

Apr. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Schedule of noncancelable contractual obligations

As of April 30, 2021, the 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)
2022, remainder	$	15,698
2023	33,368
2024	19,091
2025	9,783
2026	8,178
Thereafter	3,145
Total	$	89,263

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Stockholders' Equity (Tables)

3 Months Ended

Apr. 30, 2021

Equity [Abstract]

Schedule of RSU activity

RSU activity for the three months ended April 30, 2021 was as follows:

(in thousands, except per share data)	Number of Units	Weighted-Average Grant Date Fair Value
Unvested at January 31, 2021	10,586	$	83.98
Granted	436	227.30
Vested	(1,375)	60.04
Canceled	(453)	$	85.88
Unvested at April 30, 2021	9,194	$	94.26

Schedule of stock option activity

Option activity for the three months ended April 30, 2021 was as follows:

(in thousands, except years and per share data)	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at January 31, 2021	4,798	$	15.55	5.0	$	1,042,879
Exercised	(488)	13.48
Outstanding at April 30, 2021, all vested and exercisable	4,310	$	15.78	4.9	$	892,949

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Net Loss per Share Attributable to Common Stockholders (Tables)

3 Months Ended

Apr. 30, 2021

Earnings Per Share [Abstract]

Schedule of calculation of basic and diluted loss per share

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for periods presented:

	Three Months Ended April 30,
(in thousands, except per share data)	2021		2020
Numerator:
Net loss attributable to common stockholders	$	(8,354)	$	(47,804)
Denominator:
Weighted-average common shares outstanding	194,342		182,978
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.04)	$	(0.26)

Schedule of antidilutive securities

Outstanding potentially dilutive securities that were excluded from the diluted per share calculations because they would have been antidilutive are as follows:

	April 30,
(in thousands)	2021	2020
RSUs	9,194	12,550
Stock options	4,310	6,030
ESPP	158	227
Convertible senior notes	2,737	2,553
Total antidilutive securities	16,399	21,360

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Geographic Information (Tables)

3 Months Ended

Apr. 30, 2021

Segment Reporting [Abstract]

Revenues by geographic area

Revenue by geographic area was as follows:

	Three Months Ended April 30,
(in thousands)	2021		2020
U.S.	$	368,423	$	242,168
International	100,655		54,849
Total revenue	$	469,078	$	297,017

Property and equipment by geographic area

Our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows:

(in thousands)	April 30, 2021		January 31, 2021
U.S.	$	216,952	$	221,549
Ireland	64,842		66,670
International	34,519		36,172
Total long-lived assets	$	316,313	$	324,391

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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021	Apr. 30, 2020	Jan. 31, 2020
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholder's equity	$ 243,237	$ 325,737	$ 522,788	$ 546,327
Additional Paid-In Capital
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholder's equity	1,615,646	1,702,254	1,714,462	1,685,167
Accumulated Deficit
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholder's equity	$ (1,376,567)	(1,380,452)	$ (1,184,989)	$ (1,137,185)
Cumulative Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholder's equity		(73,905)
Cumulative Adjustment | Additional Paid-In Capital
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholder's equity		(86,144)
Cumulative Adjustment | Accumulated Deficit
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholder's equity		12,239
Cumulative Adjustment | Convertible Debt
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Carrying value of debt		77,300
Carrying amount of equity component		$ (3,400)

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Revenue (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Jan. 31, 2021
Disaggregation of Revenue [Line Items]
Remaining performance obligations	$ 1,200.0
Contract assets	15.9		$ 17.5
Contract assets, noncurrent	0.6		$ 0.6
Revenue recognized that was included in contract liability balance at the beginning of the period	$ 357.8	$ 224.7
Payment term	30 days
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-05-01
Disaggregation of Revenue [Line Items]
Remaining performance obligation, percentage	53.00%
Remaining performance obligations, period of recognition	12 months
Product concentration risk | Revenue | Subscription
Disaggregation of Revenue [Line Items]
Concentration risk percentage	96.00%	95.00%

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Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Available-for-sale securities
Amortized Cost	$ 504,414	$ 584,187
Gross Unrealized Gains	175	388
Gross Unrealized Losses	(124)	(96)
Estimated Fair Value	504,465	584,479
Cash	371,100	281,700
Short-term Investments
Available-for-sale securities
Estimated Fair Value	356,590
Level 2 | Short-term Investments
Available-for-sale securities
Amortized Cost	356,039	299,375
Gross Unrealized Gains	175	388
Gross Unrealized Losses	(124)	(96)
Estimated Fair Value	356,090	299,667
Commercial paper | Level 2 | Short-term Investments
Available-for-sale securities
Amortized Cost	100,804	42,048
Gross Unrealized Gains	2	1
Gross Unrealized Losses	(22)	(23)
Estimated Fair Value	100,784	42,026
Corporate notes and bonds | Level 2 | Short-term Investments
Available-for-sale securities
Amortized Cost	199,701	199,277
Gross Unrealized Gains	164	375
Gross Unrealized Losses	(95)	(67)
Estimated Fair Value	199,770	199,585
Corporate notes and bonds | Level 3 | Short-term Investments
Available-for-sale securities
Amortized Cost	500	500
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	500	500
U.S. Treasury securities | Level 2 | Short-term Investments
Available-for-sale securities
Amortized Cost	4,999	4,998
Gross Unrealized Gains	1	0
Gross Unrealized Losses	0	0
Estimated Fair Value	5,000	4,998
U.S. government agency securities | Level 2 | Short-term Investments
Available-for-sale securities
Amortized Cost	50,535	53,052
Gross Unrealized Gains	8	12
Gross Unrealized Losses	(7)	(6)
Estimated Fair Value	50,536	53,058
Money market funds | Level 1 | Cash and Cash Equivalents
Available-for-sale securities
Amortized Cost	147,875	284,312
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 147,875	$ 284,312

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Fair Value Measurements - Fair Value of Available-for-Sale Marketable Securities by Remaining Contractual Maturities (Details) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total available-for-sale securities	$ 504,465	$ 584,479
Short-term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Due in one year or less	261,660
Due in one to two years	94,930
Total available-for-sale securities	$ 356,590

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Fair Value Measurements - Narrative (Details) $ in Millions	3 Months Ended
	Apr. 30, 2021 USD ($)
Fair Value Disclosures [Abstract]
Equity securities without readily determinable fair value, upward price adjustment	$ 5.1

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Fair Value Measurements - Fair Value of Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Convertible Senior Notes Due 2023
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Principal	$ 78,318	$ 115,000
Fair value amount	$ 245,245	373,928
Debt interest rate percentage	0.50%
Convertible Senior Notes Due 2024
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Principal	$ 690,000	690,000
Fair value amount	$ 684,825	$ 725,100
Debt interest rate percentage	0.00%

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Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Jan. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 164,128		$ 165,039
Depreciation expense	13,500	$ 9,800
Capitalized software costs	7,800	$ 5,100
Computer and network equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	104,017		102,163
Software, including capitalized software development costs
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	66,282		56,858
Furniture and office equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	21,575		21,682
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	79,749		79,892
Property and equipment, excluding work in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	271,623		260,595
Less: Accumulated depreciation	(131,924)		(121,029)
Property and equipment, net	139,699		139,566
Work in progress
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 24,429		$ 25,473

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Intangible Assets, Net - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Jan. 31, 2021
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-average Remaining Useful Life (Years)	6 years 4 months 24 days
Estimated Fair Value	$ 205,610	$ 205,610
Accumulated Amortization	(90,937)	(84,362)
Total	114,673	121,248
Cumulative translation adjustment	336	580
Acquisition-related Intangibles, Net	$ 115,009	121,828
Existing technology
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-average Remaining Useful Life (Years)	3 years 8 months 12 days
Estimated Fair Value	$ 72,994	72,994
Accumulated Amortization	(38,808)	(35,613)
Total	$ 34,186	37,381
Customer contracts & related relationships
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-average Remaining Useful Life (Years)	7 years 8 months 12 days
Estimated Fair Value	$ 110,082	110,082
Accumulated Amortization	(32,022)	(29,393)
Total	$ 78,060	80,689
Other
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-average Remaining Useful Life (Years)	1 year
Estimated Fair Value	$ 22,534	22,534
Accumulated Amortization	(20,107)	(19,356)
Total	$ 2,427	$ 3,178

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Intangible Assets, Net - Amortization (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Amortization of finite-lived intangible assets	$ 6,529	$ 4,259
Cost of subscription revenue
Finite-Lived Intangible Assets [Line Items]
Amortization of finite-lived intangible assets	3,171	1,348
Sales and marketing
Finite-Lived Intangible Assets [Line Items]
Amortization of finite-lived intangible assets	$ 3,358	$ 2,911

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Intangible Assets, Net - Future Amortization (Details) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
2022, remainder	$ 17,707
2023	19,906
2024	18,575
2025	17,998
2026	12,388
Thereafter	28,099
Total	$ 114,673	$ 121,248

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Deferred Contract Acquisition and Fulfillment Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Capitalized Contract Cost, Net [Roll Forward]
Amortization of deferred contract acquisition costs	$ (30,933)	$ (21,360)
Deferred Contract Acquisition Costs
Capitalized Contract Cost, Net [Roll Forward]
Beginning balance	262,519	155,697
Additions to deferred contract acquisition costs	39,700	34,158
Amortization of deferred contract acquisition costs	(25,842)	(16,941)
Cumulative translation adjustment	240	(1,533)
Ending balance	276,617	171,381
Deferred Contract Fulfillment Costs
Capitalized Contract Cost, Net [Roll Forward]
Beginning balance	12,506	8,218
Additions to deferred contract acquisition costs	6,454	6,879
Amortization of deferred contract acquisition costs	(5,091)	(4,419)
Ending balance	$ 13,869	$ 10,678

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Debt - Narrative (Details) $ / shares in Units, shares in Thousands	1 Months Ended		3 Months Ended
	Jan. 31, 2021 USD ($)	Sep. 30, 2018 USD ($)	Apr. 30, 2021 USD ($) trading_day $ / shares shares	Apr. 30, 2020 USD ($)	Jun. 03, 2021 USD ($)	Feb. 01, 2021
Debt Conversion [Line Items]
Threshold trading days | trading_day			20
Threshold consecutive trading days | trading_day			30
Threshold percentage of convertible stock price trigger			130.00%
Debt instrument, amount elected for conversion	$ 23,900,000
Debt conversion, consideration transferred			$ 111,300,000
Repayments of convertible senior notes			$ 36,684,000	$ 0
Shares issued upon conversion (in shares) | shares			400
Fair value of shares issued as part of the repayments of convertible senior notes			$ 74,700,000
Settlement of convertible senior notes due in 2023			(446,000)
Additional Paid-In Capital
Debt Conversion [Line Items]
Settlement of convertible senior notes due in 2023			$ (446,000)
Convertible Senior Notes Due 2023 | Convertible Debt
Debt Conversion [Line Items]
Principle on face amount of debt		$ 575,000,000.0
Proceeds from issuance of debt		$ 560,800,000
Debt interest rate percentage			0.50%
Aggregate amount of principle settled			$ 36,700,000
Debt instrument, conversion notice on principle, amount not yet settled			$ 13,500,000
Carrying amount of equity component	$ 99,398,000
Debt instrument, effective interest rate	5.90%					1.00%
Convertible Senior Notes Due 2023 | Convertible Debt | Subsequent Event
Debt Conversion [Line Items]
Debt instrument, conversion notice on principle, amount not yet settled					$ 10,000,000.0
Convertible Senior Notes Due 2024 | Convertible Debt
Debt Conversion [Line Items]
Principle on face amount of debt	$ 690,000,000.0
Proceeds from issuance of debt	677,300,000
Debt interest rate percentage			0.00%
Carrying amount of equity component	$ 63,268,000
Debt instrument, effective interest rate	3.80%					0.60%
Credit Facility | Revolving Credit Facility
Debt Conversion [Line Items]
Line of credit, maximum borrowing capacity	$ 500,000,000.0
Line of credit, additional borrowing amount	$ 250,000,000.0
Credit Facility | Revolving Credit Facility | Minimum
Debt Conversion [Line Items]
Line of credit, commitment fee percentage on undrawn balance			0.25%
Credit Facility | Revolving Credit Facility | Maximum
Debt Conversion [Line Items]
Line of credit, commitment fee percentage on undrawn balance			0.30%
Capped Calls | Convertible Senior Notes Due 2023
Debt Conversion [Line Items]
Initial cap price (in usd per share) | $ / shares			$ 110.00
Capped Calls | Convertible Senior Notes Due 2023 | Convertible Debt
Debt Conversion [Line Items]
Conversion price (in usd per share) | $ / shares			71.50
Initial cap price (in usd per share) | $ / shares			$ 110.00
Shares covered by capped calls (in shares) | shares			8,042
Capped Calls | Convertible Senior Notes Due 2024
Debt Conversion [Line Items]
Initial cap price (in usd per share) | $ / shares			$ 525.30
Capped Calls | Convertible Senior Notes Due 2024 | Convertible Debt
Debt Conversion [Line Items]
Conversion price (in usd per share) | $ / shares			420.24
Initial cap price (in usd per share) | $ / shares			$ 525.30
Shares covered by capped calls (in shares) | shares			1,642

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Debt - Carrying Value of Liability Component (Details) - Convertible Debt - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Convertible Senior Notes Due 2023
Debt Instrument [Line Items]
Principal	$ 78,318	$ 115,000
Less: unamortized debt discount	0	(15,116)
Less: unamortized transaction costs	(928)	(1,224)
Net carrying value of current and noncurrent liability component	77,390	98,660
Proceeds allocated to the conversion option (debt discount)		134,667
Less: extinguishment or conversion		(31,933)
Less: transaction costs		(3,336)
Carrying amount of equity component		99,398
Convertible Senior Notes Due 2024
Debt Instrument [Line Items]
Principal	690,000	690,000
Less: unamortized debt discount	0	(63,619)
Less: unamortized transaction costs	(11,464)	(11,353)
Net carrying value of current and noncurrent liability component	$ 678,536	615,028
Proceeds allocated to the conversion option (debt discount)		64,453
Less: transaction costs		(1,185)
Carrying amount of equity component		$ 63,268

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Debt - Carrying Amount of Equity Component (Details) $ in Thousands	Jan. 31, 2021 USD ($)
Convertible Debt | Convertible Senior Notes Due 2023
Debt Instrument [Line Items]
Less: transaction costs	$ (3,336)

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Debt - Interest Expense (Details) - Convertible Debt - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Debt Instrument [Line Items]
Contractual interest expense	$ 36	$ 718
Amortization of debt discount	0	6,329
Amortization of transaction costs	1,181	513
Total	$ 1,217	$ 7,560

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Debt - Schedule of Capped Calls (Details) - Capped Calls $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 30, 2021 USD ($) $ / shares shares
Convertible Senior Notes Due 2023
Option Indexed to Issuer's Equity [Line Items]
Initial cap price (in usd per share)	$ 110.00
Convertible Senior Notes Due 2024
Option Indexed to Issuer's Equity [Line Items]
Initial cap price (in usd per share)	$ 525.30
Convertible Debt | Convertible Senior Notes Due 2023
Option Indexed to Issuer's Equity [Line Items]
Aggregate cost of capped calls | $	$ 67,563
Conversion price (in usd per share)	$ 71.50
Initial cap price (in usd per share)	$ 110.00
Shares covered by capped calls (in shares) | shares	8,042
Convertible Debt | Convertible Senior Notes Due 2024
Option Indexed to Issuer's Equity [Line Items]
Aggregate cost of capped calls | $	$ 31,395
Conversion price (in usd per share)	$ 420.24
Initial cap price (in usd per share)	$ 525.30
Shares covered by capped calls (in shares) | shares	1,642

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Commitments and Contingencies - Narrative (Details) $ in Millions	Apr. 30, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Letters of credit outstanding	$ 7.7

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Commitments and Contingencies - Future Purchase Obligations (Details) $ in Thousands	Apr. 30, 2021 USD ($)
Purchase Obligation, Fiscal Year Maturity [Abstract]
2022, remainder	$ 15,698
2023	33,368
2024	19,091
2025	9,783
2026	8,178
Thereafter	3,145
Total	$ 89,263

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Stockholders' Equity - Narrative (Details) $ in Thousands, shares in Millions	3 Months Ended
	Apr. 30, 2021 USD ($) plan shares	Apr. 30, 2020 USD ($)	Feb. 01, 2021 shares	Jan. 31, 2021 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation plans | plan	3
Unrecognized compensation cost, options | $	$ 0
Employee stock purchase plan, compensation expense | $	$ 81,637	$ 53,551
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service period	4 years
Unrecognized compensation cost, RSUs | $	$ 671,200
Unrecognized compensation cost, remaining weighted-average period for recognition	2 years 2 months 12 days
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Consecutive offering period, term	6 months
Employee stock purchase plan, shares purchased (in shares) | shares	0.1
Employee stock purchase plan, compensation expense | $	$ 4,300	$ 1,900
2018 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for future issuance (in shares) | shares	43.1
Annual increase in shares reserved, percentage of total shares	5.00%
Number of shares reserved for future issuance | shares			9.6
2018 Plan | RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service period	1 year
Vesting percentage	25.00%
2018 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for future issuance (in shares) | shares	8.1			3.8
Annual increase in shares reserved, percentage of total shares	1.00%
Employee contribution, maximum percentage of earnings				15.00%
Employee stock purchase plan, purchase price of common stock, percent of market price	85.00%

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Stockholders' Equity - RSU Activity (Details) - RSUs shares in Thousands	3 Months Ended
	Apr. 30, 2021 $ / shares shares
Number of Units
Unvested at beginning of period (in shares) | shares	10,586
Granted (in shares) | shares	436
Vested (in shares) | shares	(1,375)
Canceled (in shares) | shares	(453)
Unvested at end of period (in shares) | shares	9,194
Weighted-Average Grant Date Fair Value
Unvested at beginning of period (in usd per share) | $ / shares	$ 83.98
Granted (in usd per share) | $ / shares	227.30
Vested (in usd per share) | $ / shares	60.04
Canceled (in usd per share) | $ / shares	85.88
Unvested at end of period (in usd per share) | $ / shares	$ 94.26

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Stockholders' Equity - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	12 Months Ended
	Apr. 30, 2021	Jan. 31, 2021
Number of Options
Beginning balance (in shares)	4,798
Options exercised (in shares)	(488)
Ending balance (in shares)	4,310	4,798
Weighted-Average Exercise Price Per Share
Beginning balance (in usd per share)	$ 15.55
Options exercised (in usd per share)	13.48
Ending balance (in usd per share)	$ 15.78	$ 15.55
Weighted-Average Remaining Contractual Term
Balance	4 years 10 months 24 days	5 years
Aggregate Intrinsic Value
Balance	$ 892,949	$ 1,042,879

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Net Loss per Share Attributable to Common Stockholders - Calculation of basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Numerator:
Net loss attributable to common stockholders	$ (8,354)	$ (47,804)
Denominator:
Weighted-average common shares outstanding, basic (in shares)	194,342,000	182,978,000
Weighted-average common shares outstanding, diluted (in shares)	194,342,000	182,978,000
Net loss per share attributable to common stockholders:
Basic (in usd per share)	$ (0.04)	$ (0.26)
Diluted (in usd per share)	$ (0.04)	$ (0.26)

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Net Loss per Share Attributable to Common Stockholders - Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	16,399	21,360
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	9,194	12,550
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	4,310	6,030
ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	158	227
Convertible senior notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	2,737	2,553

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 1,982	$ 2,133
Unrecognized tax benefits	35,700
Unrecognized tax benefits that would impact effective tax rate	$ 16,300

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Geographic Information (Details) $ in Thousands	3 Months Ended
	Apr. 30, 2021 USD ($) segment	Apr. 30, 2020 USD ($)	Jan. 31, 2021 USD ($)
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of operating segments | segment	1
Number of reportable segments | segment	1
Total revenue	$ 469,078	$ 297,017
Total long-lived assets	316,313		$ 324,391
U.S.
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	368,423	242,168
Total long-lived assets	216,952		221,549
Ireland
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	64,842		66,670
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	100,655	$ 54,849
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 34,519		$ 36,172

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Label	Element	Value
Accounting Standards Update [Extensible List]	us-gaap_AccountingStandardsUpdateExtensibleList	docu:AccountingStandardsUpdate202006Member