DocuSign's revenue in the second quarter reached 801 million dollars.

DocuSign (NASDAQ:DOCU) reported its fiscal second quarter 2026 results on September 4, 2025, with revenues of $801 million, a 9% year-over-year increase, and billings of $818 million, a 13% rise. Additionally, it achieved a non-GAAP operating margin of 30%. The quarter showed notable advancements in Intelligent Agreement Management (IAM) with AI technology, greater international and enterprise traction, while management maintains its focus on profitable growth and capital return to shareholders.

The acceleration of billing drives business momentum

While accelerating revenue growth to 13% year-over-year, the company also achieved a net dollar retention of 102% and an increase in the average deal size, driven by improvements in gross retention and strong early renewals. International revenue accounted for 29% of the total, growing 13% year-over-year.

“The commercial results for the second quarter exceeded our expectations. Revenue was $801 million, up 9% from the previous year, and billing was $818 million, up 13%. The second quarter revenue performance accelerated and represented one of our highest growth quarters in the last two years, with improved fundamentals in eSignature and CLM customers, and a growing contribution from IAM demand.”

– Allan C. Thygesen, CEO

This combination of revenue growth and profitability, along with a disciplined return of capital through stock buybacks, demonstrates strength in execution and signals higher returns for investors.

The adoption of IAM is accelerating along with business and AI leadership

IAM is expected to reach a low double-digit percentage of the company's subscription book by year-end, with over 50% of enterprise account representatives closing at least one IAM deal. Fortune 1000 clients such as Sensata Technologies and T-Mobile are adopting advanced contract lifecycle management (CLM) and AI-driven analytics. The recent launch of AI-powered features like DocuSign Navigator reinforces product differentiation.

“Although we are still in the early stages, over 50% of our enterprise account representatives closed at least one IAM deal. Notably, the overall average deal size also increased in the second quarter, with IAM gaining traction in large organizations like Sensata Technologies, which has accelerated its workflows and is beginning to utilize the DocuSign Iris AI engine.”

– Allan C. Thygesen, CEO

The momentum of IAM in the upper market and its growing penetration in enterprise accounts, along with advanced AI integration, create significant competitive differentiation and expand market opportunity.

Operational discipline maintains high margins during cloud migration

The non-GAAP gross margin remained stable at 82%, despite ongoing cloud migration costs representing approximately a 100 basis point year-over-year hurdle. The company maintained a strong cash position with $1.1 billion and no debt, continuing with measured hiring and investing in commercial excellence and R&D for IAM scalability.

“As a reminder, we anticipated that the second quarter would have the most challenging year-over-year operating margin comparison of any quarter in fiscal year 2026 due to several factors, including the shift to cash from equity for some employees. The second quarter of fiscal year 2025 also had a unique operating margin benefit of approximately 150 basis points associated with insurance refunds. Our migration to the cloud also continues to provide a year-over-year headwind for margins.”

– Blake Jeffrey Grayson, CFO

The high sustained profitability even in the face of margin obstacles highlights the resilience of DocuSign's business model.

Perspectives

The guidance projects revenues of $804 to $808 million for the third quarter of fiscal year 2026 (average growth of 7% year-over-year) and annual revenues of $3.189 to $3.201 billion for fiscal year 2026, with expected billings of $3.325 to $3.355 billion. The non-GAAP operating margin is estimated to be between 28% and 29% for the third quarter and between 28.6% and 29.6% for the full year. The company reiterated that IAM customers are on track to contribute a low double-digit percentage of the subscription book by year-end and emphasized its continued focus on capital returns through opportunistic stock buybacks.

I am surprised that with all the competition in the digital space, DocuSign continues to maintain such high margins. How much longer will they be able to sustain this privileged position before the competition erodes their advantages?