DocuSign 2026 Q3 Earnings Beats Expectations with 34.1% Net Income Growth

DocuSign (DOCU) reported fiscal 2026 Q3 earnings on Dec 4, 2025, exceeding revenue and EPS estimates. The company raised full-year revenue guidance and highlighted strong IAM adoption, operational efficiency, and record share repurchases.

Revenue

DocuSign’s total revenue grew 8.4% year-over-year to $818.35 million in Q3 2026, driven by robust subscription revenue of $800.96 million, which accounted for 97.9% of total revenue. Professional services and other revenue contributed $17.39 million, reflecting a 13.6% decline compared to the prior year. The subscription segment’s 9% growth underscored the company’s focus on recurring revenue streams, while the professional services segment faced margin pressures.

Earnings/Net Income

Earnings per share (EPS) surged 32.3% to $0.41 in Q3 2026, outpacing the $0.31 reported in the same period in 2025. Net income reached $83.72 million, a 34.1% year-over-year increase, marking the highest Q3 net income in nine years. The company’s profitability improvements were attributed to operational efficiency and cost discipline.

Price Action

Post-earnings, DOCU shares edged down 0.14% in the latest trading day but gained 3.24% for the week. Month-to-date, the stock declined 2.66%, reflecting mixed investor sentiment.

Post-Earnings Price Action Review

The strategy of buying DOCU shares after the revenue beat and selling 30 days later yielded a CAGR of 5.04%, underperforming the market by 57.56%. With a maximum drawdown of 0.00% and a Sharpe ratio of 0.17, the strategy offered minimal risk but conservative returns, suitable for stability-focused investors.

CEO Commentary

CEO Allan Thygesen highlighted Q3 as a “standout quarter,” with 8% revenue growth and 10% billings growth driven by IAM adoption. The company achieved a 31% non-GAAP operating margin and $263 million in free cash flow, enabling a $215 million share repurchase. Strategic priorities included scaling IAM to 25,000+ customers, enhancing AI-driven capabilities, and expanding international markets.

Guidance

CFO Blake Grayson guided Q4 2026 revenue to $825–$829 million (7% YoY growth) and full-year revenue to $3.208–$3.212 billion (8% YoY growth). Subscription revenue is projected at $808–$812 million in Q4 and $3.140–$3.144 billion annually. The company will transition to annual recurring revenue (ARR) reporting in Q4 2026, phasing out billings as a metric.

Additional News

DocuSign advanced its Intelligent Agreement Management (IAM) platform, achieving 25,000+ customers and integrating with AI tools like ChatGPT and Anthropic Claude. The company secured FedRAMP Moderate and GovRAMP authorizations, enhancing enterprise credibility. Additionally, DocuSign executed its largest quarterly share buyback of $215 million, funded by $263 million in free cash flow.