DocuSign (DOCU) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue grew 8% year-over-year to $764M, driven by accelerated IAM platform adoption, digital revenue growth, and strong performance across commercial, enterprise, and digital channels.

• Operating margin improved to 29.5%, with free cash flow margin at 30%, supporting an additional $1B share buyback authorization, bringing total available to $1.4B.

• Over 1.7M customers globally, including over 10,000 IAM customers and 1,123 large customers ($300K+ spend); IAM adoption is strong across all segments and geographies.

• Strategic go-to-market changes led to lower early renewal billings in Q1, resulting in 4% billings growth, slightly below guidance due to timing, not demand.

• Continued innovation with new AI-powered IAM features, global expansion, and the acquisition of Lexion to enhance product capabilities.

Financial highlights

• Total revenue: $764M (+8% YoY); subscription revenue: $746M (+8% YoY, 98% of total); professional services revenue declined 4%.

• Billings: $740M (+4% YoY), slightly below guidance due to early renewal timing.

• Non-GAAP gross margin: 82.3% (up YoY); non-GAAP operating margin: 29.5% (up 100bps YoY); GAAP gross margin: 79%.

• Free cash flow: $228M (30% margin); cash and investments: $1.1B; no debt.

• Non-GAAP diluted EPS: $0.90 (up from $0.82 YoY); GAAP diluted EPS: $0.34 (up from $0.16 YoY).

Outlook and guidance

• Q2 FY26 revenue guidance: $777M–$781M; FY26 revenue: $3.151B–$3.163B; billings: $3.285B–$3.339B (+6.5% YoY).

• Non-GAAP gross margin guidance: 80.5%–81.5% for Q2; 80.7%–81.7% for FY26; non-GAAP operating margin: 26.5%–27.5% for Q2, 27.8%–28.8% for FY26.

• Guidance reflects Q1 strength, neutral FX, and conservative assumptions on early renewals and bookings; billings growth expected to accelerate in 2H FY26.

• Cloud migration expected to be a 1% headwind to gross margin for FY26, with margin pressure easing in FY27.

• Liquidity and credit facilities are sufficient to meet foreseeable capital and operational needs.