DocuSign Announces Third Quarter Fiscal 2019 Financial Results
SAN FRANCISCO, Dec. 6, 2018 /PRNewswire/ -- DocuSign (NASDAQ: DOCU), which offers the world's #1 eSignature solution as part of its broader platform for automating the agreement process, today announced results for its fiscal quarter ended October 31, 2018.
"With year-over-year growth of 37% in revenue and 40% in billings, DocuSign's business continued to excel in the third quarter. We added another 25,000 customers, bringing our total to 454,000 worldwide. Expansions within existing customers, traction around our System of Agreement vision, and our strategic partner ecosystem all contributed to our strong results," said Dan Springer, CEO of DocuSign.
Third Quarter Financial Highlights
- Total revenue was $178.4 million, an increase of 37% year-over-year. Subscription revenue was $169.4 million, an increase of 38% year-over-year. Professional services and other revenue was $9.0 million, an increase of 17% year-over-year.
- Billings were $198.0 million, an increase of 40% year-over-year.
- GAAP gross margin was 75%, compared to 76% in the same period last year. Non-GAAP gross margin was 79% compared to 78% in the same period last year.
- GAAP net loss per basic and diluted share was $0.31 in the third quarter of fiscal 2019 on 168 million shares outstanding compared to GAAP net loss per share of $0.45 in the third quarter of fiscal 2018 on 33 million shares outstanding.
- Non-GAAP net income per diluted share was $0.00 in the third quarter of fiscal 2019 based on 192 million shares outstanding compared to a non-GAAP net loss per share of $0.17 in the third quarter of fiscal 2018 based on 33 million shares outstanding.
- Net cash provided by operating activities was $4.3 million, compared to $11.6 million in the same period last year.
- Free cash flow was negative $4.3 million in the third quarter of fiscal 2019 compared to free cash flow of $7.0 million in the same period last year.
- Cash, cash equivalents and restricted cash was $1.1 billion at the end of the quarter. Our cash balance reflects the addition of $560.8 million of proceeds net of offering expenses from the issuance of Convertible Senior Notes on September 18, 2018.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures and Other Key Metrics."
Operational and Other Financial Highlights
- SpringCM Inc. Acquisition. The company completed the acquisition of SpringCM Inc., a leading cloud-based document generation and contract lifecycle management software company, on September 4, 2018 for $218.8 million in cash, subject to adjustment. With SpringCM, DocuSign will accelerate customers' ability to modernize their Systems of Agreement all the way from preparing to signing, acting-on, and managing agreements.
- Convertible Senior Notes Offering. The company issued $575.0 million in 0.5% Convertible Senior Notes due 2023. The offering generated net proceeds of $560.8 million. DocuSign used $67.6 million of the net proceeds to enter into capped call transactions to offset potential dilution upon conversion or any cash payments. DocuSign intends to use the remainder of the net proceeds for working capital, other general corporate purposes and potential acquisitions.
Outlook
The company currently expects:
• | Quarter ending January 31, 2019 (in millions, except percentages): | |||
Total revenue | $192 | to | $194 | |
Billings | $245 | to | $255 | |
Non-GAAP gross margin | 78% | to | 81% | |
Non-GAAP sales and marketing | 50% | to | 52% | |
Non-GAAP research and development | 16% | to | 18% | |
Non-GAAP general and administrative | 11% | to | 13% | |
Interest and other income (expense) | $3 | to | $4 | |
Provision for income taxes | $0.75 | |||
Non-GAAP diluted weighted-average shares outstanding | 185 | to | 190 | |
• | Year ending January 31, 2019 (in millions, except percentages): | |||
Total revenue | $693 | to | $695 | |
Billings | $795 | to | $805 | |
Non-GAAP gross margin | 78% | to | 81% | |
Non-GAAP sales and marketing | 50% | to | 52% | |
Non-GAAP research and development | 16% | to | 18% | |
Non-GAAP general and administrative | 11% | to | 13% | |
Provision for income taxes | $2 | to | $4 | |
Non-GAAP diluted weighted-average shares outstanding | 155 | to | 160 | |
The company has not reconciled its expectations of non-GAAP financial measures to the corresponding GAAP measures because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.
Webcast Conference Call Information
The company will host a conference call on December 6, 2018 at 1:30 p.m. PT (4:30 p.m. ET) to discuss its financial results. A live webcast of the event will be available on the DocuSign Investor Relations website at docusign.com/investors. A live dial-in will be available domestically at 877-407-0784 or internationally at 201-689-8560. A replay will be available domestically at 844-512-2921 or internationally at 412-317-6671 until midnight (ET) December 20, 2018 using the passcode 13685199.
About DocuSign
DocuSign (Nasdaq: DOCU) helps organizations connect and automate how they prepare, sign, act on, and manage agreements. As part of its cloud-based System of Agreement Platform, DocuSign offers eSignature-the world's #1 way to sign electronically on practically any device, from almost anywhere, at any time. Today, over 450,000 customers and hundreds of millions of users in over 180 countries use DocuSign to accelerate the process of doing business and simplify people's lives.
Investor Relations:
Annie Leschin
VP Investor Relations
investors@docusign.com
Media Relations:
Adrian Wainwright
Head of Communications
media@docusign.com
Forward-Looking Statements
This press release contains "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include statements about expected financial metrics, such as revenue, billings, non-GAAP gross margin, non-GAAP diluted weighted-average shares outstanding, and non-financial metrics, such as customer growth, as well as statements related to the benefits of the acquisition of SpringCM and our ability to develop our System of Agreement platform and deliver product innovation. They also include statements about our possible or assumed business strategies, potential growth opportunities, new products and potential market opportunities.
Forward-looking statements include all statements that are not historical facts and can be identified by terms such as "believe," "could," "potential," "will," "would" or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: our ability to successfully integrate SpringCM's operations; our ability to implement our plans, forecasts and other expectations with respect to SpringCM's business; our ability to realize the anticipated benefits of acquisition of SpringCM, including the possibility that the expected benefits from the acquisition will not be realized or will not be realized within the expected time period; disruption from the acquisition making it more difficult to maintain business and operational relationships; the negative effects of consummation of the acquisition on the market price of our common stock or on our operating results; unknown liabilities from the acquisition; our ability to sustain and manage our growth and future expenses, achieve and maintain future profitability, attract new customers and maintain and expand our existing customer base; our ability to scale and update our platform to respond to customers' needs and rapid technological change, increased competition on our market and our ability to compete effectively, and expansion of our operations and increased adoption of our platform internationally. Additional risks and uncertainties that could affect our financial results are included in the section titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our quarterly report on Form 10-Q for the quarter ended July 31, 2018 and other filings that we make from time to time with the SEC. In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
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 are presenting 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 operating expenses, non-GAAP income (loss) from operations, non-GAAP operating margin, non-GAAP net income (loss) and non-GAAP net income (loss) per share: We define these non-GAAP financial measures as the respective GAAP measures, excluding expenses related to stock-based compensation, amortization of acquisition-related intangibles, amortization of debt discount and issuance costs from our convertible senior notes issued in September 2018, acquisition-related expenses, partial releases of valuation allowance due to acquisition, and, as applicable, other special items. Costs associated with acquisitions include legal, accounting, other professional fees and other non-recurring costs.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 flows: We define free cash flow as net cash provided by (used in) operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, 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.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
DOCUSIGN, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenue: | |||||||||||||||
Subscription | $ | 169,426 | $ | 122,905 | $ | 476,085 | $ | 347,305 | |||||||
Professional services and other | 8,959 | 7,684 | 25,152 | 22,325 | |||||||||||
Total revenue | 178,385 | 130,589 | 501,237 | 369,630 | |||||||||||
Cost of revenue: | |||||||||||||||
Subscription | 28,709 | 22,335 | 84,204 | 61,668 | |||||||||||
Professional services and other | 16,364 | 8,881 | 55,524 | 25,130 | |||||||||||
Total cost of revenue | 45,073 | 31,216 | 139,728 | 86,798 | |||||||||||
Gross profit | 133,312 | 99,373 | 361,509 | 282,832 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 117,051 | 69,666 | 411,915 | 203,300 | |||||||||||
Research and development | 38,404 | 22,522 | 143,047 | 68,997 | |||||||||||
General and administrative | 36,274 | 19,528 | 170,242 | 55,923 | |||||||||||
Total expenses | 191,729 | 111,716 | 725,204 | 328,220 | |||||||||||
Loss from operations | (58,417) | (12,343) | (363,695) | (45,388) | |||||||||||
Interest expense | (3,503) | (154) | (3,743) | (474) | |||||||||||
Interest income and other income (expense), net | 3,395 | (1,225) | 4,165 | 699 | |||||||||||
Loss before provision for (benefit from) income taxes | (58,525) | (13,722) | (363,273) | (45,163) | |||||||||||
Provision for (benefit from) income taxes | (5,712) | 783 | (3,059) | 761 | |||||||||||
Net loss | $ | (52,813) | $ | (14,505) | $ | (360,214) | $ | (45,924) | |||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.31) | $ | (0.45) | $ | (2.90) | $ | (1.49) | |||||||
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted | 167,736 | 33,353 | 124,343 | 31,604 | |||||||||||
Stock-based compensation expense included in costs and expenses: | |||||||||||||||
Cost of revenue—subscription | $ | 2,398 | $ | 228 | $ | 13,941 | $ | 697 | |||||||
Cost of revenue—professional services | 3,578 | 253 | 22,445 | 742 | |||||||||||
Sales and marketing | 22,338 | 1,959 | 151,610 | 7,547 | |||||||||||
Research and development | 9,919 | 1,042 | 64,546 | 3,721 | |||||||||||
General and administrative | 13,515 | 3,113 | 109,165 | 10,806 | |||||||||||
DOCUSIGN, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(in thousands, except share and per share data) | October 31, 2018 | January 31, 2018 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 1,094,133 | $ | 256,867 | |||
Restricted cash | 367 | 569 | |||||
Accounts receivable | 130,611 | 123,750 | |||||
Contract assets—current | 12,056 | 14,260 | |||||
Prepaid expense and other current assets | 28,344 | 23,349 | |||||
Total current assets | 1,265,511 | 418,795 | |||||
Property and equipment, net | 73,965 | 63,019 | |||||
Goodwill | 194,533 | 37,306 | |||||
Intangible assets, net | 79,161 | 14,148 | |||||
Deferred contract acquisition costs—noncurrent | 97,091 | 75,535 | |||||
Other assets—noncurrent | 9,175 | 11,170 | |||||
Total assets | $ | 1,719,436 | $ | 619,973 | |||
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) | |||||||
Current liabilities | |||||||
Accounts payable | $ | 22,059 | $ | 23,713 | |||
Accrued expenses | 22,669 | 15,734 | |||||
Accrued compensation | 53,686 | 50,852 | |||||
Contract liabilities—current | 316,619 | 270,188 | |||||
Deferred rent—current | 2,029 | 1,758 | |||||
Other liabilities—current | 17,574 | 11,574 | |||||
Total current liabilities | 434,636 | 373,819 | |||||
Convertible senior notes, net | 432,572 | — | |||||
Contract liabilities—noncurrent | 7,135 | 7,736 | |||||
Deferred rent—noncurrent | 23,050 | 23,044 | |||||
Deferred tax liability—noncurrent | 2,500 | 2,511 | |||||
Other liabilities—noncurrent | 9,374 | 4,010 | |||||
Total liabilities | 909,267 | 411,120 | |||||
Redeemable convertible preferred stock | — | 547,501 | |||||
Stockholders' equity (deficit) | |||||||
Preferred stock | — | — | |||||
Common stock | 16 | 4 | |||||
Additional paid-in capital | 1,676,180 | 160,265 | |||||
Accumulated other comprehensive (loss) income | (3,493) | 3,403 | |||||
Accumulated deficit | (862,534) | (502,320) | |||||
Total stockholders' equity (deficit) | 810,169 | (338,648) | |||||
Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit) | $ | 1,719,436 | $ | 619,973 | |||
DOCUSIGN, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (52,813) | $ | (14,505) | $ | (360,214) | $ | (45,924) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||||||
Depreciation and amortization | 10,343 | 8,318 | 26,024 | 23,703 | |||||||||||
Amortization of deferred contract acquisition and fulfillment costs | 10,743 | 7,731 | 29,889 | 22,022 | |||||||||||
Amortization of debt discount and transaction costs | 3,147 | — | 3,147 | — | |||||||||||
Stock-based compensation expense | 51,748 | 6,595 | 361,707 | 23,513 | |||||||||||
Deferred income taxes | (7,335) | 58 | (7,347) | 58 | |||||||||||
Other | (1,204) | 1,805 | (2,079) | (21) | |||||||||||
Changes in operating assets and liabilities | |||||||||||||||
Accounts receivable | (14,019) | (146) | 1,366 | 12,962 | |||||||||||
Contract assets | 1,625 | (1,338) | 2,774 | (2,313) | |||||||||||
Prepaid expenses and other current assets | 1,023 | (3,472) | (2,383) | (4,128) | |||||||||||
Deferred contract acquisition and fulfillment costs | (22,206) | (12,023) | (52,545) | (32,222) | |||||||||||
Other assets | 667 | (165) | 2,002 | (333) | |||||||||||
Accounts payable | (956) | 726 | (5,990) | (5,545) | |||||||||||
Accrued expenses | 1,304 | 1,735 | 3,610 | 1,218 | |||||||||||
Accrued compensation | 1,811 | 3,227 | 2,171 | (1,753) | |||||||||||
Contract liabilities | 16,353 | 11,309 | 35,856 | 30,445 | |||||||||||
Deferred rent | 574 | (110) | 277 | (174) | |||||||||||
Other liabilities | 3,456 | 1,873 | 3,684 | 1,511 | |||||||||||
Net cash provided by operating activities | 4,261 | 11,618 | 41,949 | 23,019 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Cash paid for acquisition, net of acquired cash | (218,779) | — | (218,779) | — | |||||||||||
Purchases of property and equipment | (8,576) | (4,603) | (19,096) | (15,692) | |||||||||||
Proceeds from sale of business held for sale | — | — | — | 467 | |||||||||||
Net cash used in investing activities | (227,355) | (4,603) | (237,875) | (15,225) | |||||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from issuance of convertible senior notes, net of initial purchasers' discounts and transaction costs | 560,756 | — | 560,756 | — | |||||||||||
Purchase of capped calls related to issuance of convertible senior notes | (67,563) | — | (67,563) | — | |||||||||||
Proceeds from issuance of common stock in initial public offering, net of underwriting commissions | — | — | 529,305 | — | |||||||||||
Proceeds from the exercise of stock options | 5,047 | 8,437 | 15,365 | 21,946 | |||||||||||
Payment of deferred offering costs | (170) | — | (3,692) | — | |||||||||||
Payment of holdback on prior acquisition | — | (390) | — | (390) | |||||||||||
Net cash provided by financing activities | 498,070 | 8,047 | 1,034,171 | 21,556 | |||||||||||
Effect of foreign exchange on cash, cash equivalents and restricted cash | 362 | (571) | (1,181) | 1,572 | |||||||||||
Net increase in cash, cash equivalents and restricted cash | 275,338 | 14,491 | 837,064 | 30,922 | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 819,162 | 207,675 | 257,436 | 191,244 | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,094,500 | $ | 222,166 | $ | 1,094,500 | $ | 222,166 | |||||||
DOCUSIGN, INC. | |||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||
(Unaudited) | |||||||||||||||
Reconciliation of gross profit and gross margin: | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP gross profit | $ | 133,312 | $ | 99,373 | $ | 361,509 | $ | 282,832 | |||||||
Add: Stock-based compensation | 5,976 | 481 | 36,386 | 1,439 | |||||||||||
Add: Amortization of acquisition-related intangibles | 1,632 | 1,691 | 4,303 | 5,079 | |||||||||||
Add: Acquisition-related expenses | 108 | — | 108 | — | |||||||||||
Non-GAAP gross profit | $ | 141,028 | $ | 101,545 | $ | 402,306 | $ | 289,350 | |||||||
GAAP gross margin | 75 | % | 76 | % | 72 | % | 77 | % | |||||||
Non-GAAP adjustments | 4 | % | 2 | % | 8 | % | 1 | % | |||||||
Non-GAAP gross margin | 79 | % | 78 | % | 80 | % | 78 | % | |||||||
GAAP subscription gross profit | $ | 140,717 | $ | 100,570 | $ | 391,881 | $ | 285,637 | |||||||
Add: Stock-based compensation | 2,398 | 228 | 13,941 | 697 | |||||||||||
Add: Amortization of acquisition-related intangibles | 1,632 | 1,691 | 4,303 | 5,079 | |||||||||||
Non-GAAP subscription gross profit | $ | 144,747 | $ | 102,489 | $ | 410,125 | $ | 291,413 | |||||||
GAAP subscription gross margin | 83 | % | 82 | % | 82 | % | 82 | % | |||||||
Non-GAAP adjustments | 2 | % | 1 | % | 4 | % | 2 | % | |||||||
Non-GAAP subscription gross margin | 85 | % | 83 | % | 86 | % | 84 | % | |||||||
GAAP professional services and other gross loss | $ | (7,405) | $ | (1,197) | $ | (30,372) | $ | (2,805) | |||||||
Add: Stock-based compensation | 3,578 | 253 | 22,445 | 742 | |||||||||||
Add: Acquisition-related expenses | 108 | — | 108 | — | |||||||||||
Non-GAAP professional services and other gross loss | $ | (3,719) | $ | (944) | $ | (7,819) | $ | (2,063) | |||||||
GAAP professional services and other gross loss | (83) | % | (16) | % | (121) | % | (13) | % | |||||||
Non-GAAP adjustments | 41 | % | 4 | % | 90 | % | 4 | % | |||||||
Non-GAAP professional services and other gross loss | (42) | % | (12) | % | (31) | % | (9) | % | |||||||
Reconciliation of operating expenses: | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP sales and marketing | $ | 117,051 | $ | 69,666 | $ | 411,915 | $ | 203,300 | |||||||
Less: Stock-based compensation | (22,338) | (1,959) | (151,610) | (7,547) | |||||||||||
Less: Amortization of acquisition-related intangibles | (2,257) | (1,015) | (3,787) | (2,520) | |||||||||||
Less: Acquisition-related expenses | (68) | — | (68) | — | |||||||||||
Non-GAAP sales and marketing | $ | 92,388 | $ | 66,692 | $ | 256,450 | $ | 193,233 | |||||||
GAAP sales and marketing as a percentage of revenue | 66 | % | 53 | % | 82 | % | 55 | % | |||||||
Non-GAAP sales and marketing as a percentage of revenue | 52 | % | 51 | % | 51 | % | 52 | % | |||||||
GAAP research and development | $ | 38,404 | $ | 22,522 | $ | 143,047 | $ | 68,997 | |||||||
Less: Stock-based compensation | (9,919) | (1,042) | (64,546) | (3,721) | |||||||||||
Less: Acquisition-related expenses | (302) | — | (302) | — | |||||||||||
Non-GAAP research and development | $ | 28,183 | $ | 21,480 | $ | 78,199 | $ | 65,276 | |||||||
GAAP research and development as a percentage of revenue | 22 | % | 17 | % | 29 | % | 19 | % | |||||||
Non-GAAP research and development as a percentage of revenue | 16 | % | 16 | % | 16 | % | 18 | % | |||||||
GAAP general and administrative | $ | 36,274 | $ | 19,528 | $ | 170,242 | $ | 55,923 | |||||||
Less: Stock-based compensation | (13,515) | (3,113) | (109,165) | (10,806) | |||||||||||
Less: Acquisition-related expenses | (1,290) | — | (1,290) | — | |||||||||||
Non-GAAP general and administrative | $ | 21,469 | $ | 16,415 | $ | 59,787 | $ | 45,117 | |||||||
GAAP general and administrative as a percentage of revenue | 20 | % | 15 | % | 34 | % | 15 | % | |||||||
Non-GAAP general and administrative as a percentage of revenue | 12 | % | 13 | % | 12 | % | 12 | % | |||||||
Reconciliation of income (loss) from operations and operating margin: | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP operating loss | $ | (58,417) | $ | (12,343) | $ | (363,695) | $ | (45,388) | |||||||
Add: Stock-based compensation | 51,748 | 6,595 | 361,707 | 23,513 | |||||||||||
Add: Amortization of acquisition-related intangibles | 3,889 | 2,706 | 8,090 | 7,599 | |||||||||||
Add: Acquisition-related expenses | 1,768 | — | 1,768 | — | |||||||||||
Non-GAAP operating income (loss) | $ | (1,012) | $ | (3,042) | $ | 7,870 | $ | (14,276) | |||||||
GAAP operating margin | (33) | % | (9) | % | (73) | % | (12) | % | |||||||
Non-GAAP adjustments | 32 | % | 7 | % | 75 | % | 8 | % | |||||||
Non-GAAP operating margin (loss) | (1) | % | (2) | % | 2 | % | (4) | % | |||||||
Reconciliation of net income (loss) and net income (loss) per share, basic and diluted: | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP net loss | $ | (52,813) | $ | (14,505) | $ | (360,214) | $ | (45,924) | |||||||
Add: Stock-based compensation | 51,748 | 6,595 | 361,707 | 23,513 | |||||||||||
Add: Amortization of acquisition-related intangibles | 3,889 | 2,706 | 8,090 | 7,599 | |||||||||||
Add: Acquisition-related expenses | 1,839 | — | 1,839 | — | |||||||||||
Add: Amortization of debt discount and issuance costs | 3,147 | — | 3,147 | — | |||||||||||
Less: Tax benefit from SpringCM acquisition(1) | (7,369) | — | (7,369) | — | |||||||||||
Non-GAAP net income (loss) | $ | 441 | $ | (5,204) | $ | 7,200 | $ | (14,812) | |||||||
Numerator: | |||||||||||||||
Non-GAAP net income (loss) | $ | 441 | $ | (5,204) | $ | 7,200 | $ | (14,812) | |||||||
Less: preferred stock accretion | — | (376) | (353) | (1,097) | |||||||||||
Less: net income allocated to participating securities | — | — | (1,427) | — | |||||||||||
Non-GAAP net income (loss) attributable to common stockholders | $ | 441 | $ | (5,580) | $ | 5,420 | $ | (15,909) | |||||||
Denominator: | |||||||||||||||
Weighted-average common shares outstanding, basic | 167,736 | 33,353 | 124,343 | 31,604 | |||||||||||
Effect of dilutive securities | 24,490 | — | 24,554 | — | |||||||||||
Non-GAAP weighted-average common shares outstanding, diluted | 192,226 | 33,353 | 148,897 | 31,604 | |||||||||||
GAAP net loss per share, basic and diluted | $ | (0.31) | $ | (0.45) | $ | (2.90) | $ | (1.49) | |||||||
Non-GAAP net income (loss) per share, basic | 0.00 | (0.17) | 0.04 | (0.50) | |||||||||||
Non-GAAP net income (loss) per share, diluted | 0.00 | (0.17) | 0.04 | (0.50) | |||||||||||
(1) | Represents a tax benefit related to the release of a portion of our deferred tax asset valuation allowance resulting from the SpringCM Acquisition. |
Computation of free cash flow: | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net cash provided by operating activities | $ | 4,261 | $ | 11,618 | $ | 41,949 | $ | 23,019 | |||||||
Less: purchase of property and equipment | (8,576) | (4,603) | (19,096) | (15,692) | |||||||||||
Non-GAAP free cash flow | $ | (4,315) | $ | 7,015 | $ | 22,853 | $ | 7,327 | |||||||
Computation of billings: | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenue | $ | 178,385 | $ | 130,589 | $ | 501,237 | $ | 369,630 | |||||||
Add: Contract liabilities and refund liability, end of period | 330,060 | 226,836 | 330,060 | 226,836 | |||||||||||
Less: Contract liabilities and refund liability, beginning of period | (300,426) | (214,405) | (282,943) | (195,501) | |||||||||||
Add: Contract assets and unbilled accounts receivable, beginning of period | 16,196 | 11,381 | 16,899 | 10,095 | |||||||||||
Less: Contract assets and unbilled accounts receivable, end of period | (15,229) | (12,678) | (15,229) | (12,678) | |||||||||||
Less: Contract liabilities and refund liability contributed by the acquisition of SpringCM | (11,002) | — | (11,002) | — | |||||||||||
Non-GAAP billings | $ | 197,984 | $ | 141,723 | $ | 539,022 | $ | 398,382 | |||||||
SOURCE DocuSign, Inc.
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