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.

12

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)