DocuSign 2026 Q3 Earnings Beats Expectations, Net Income Surges 34.1%

DocuSign (DOCU) reported third-quarter fiscal 2026 results that exceeded expectations, with revenue growing 8.4% to $818.35 million and earnings per share (EPS) rising 32.3% to $0.41. The company raised full-year revenue guidance to $3.208–$3.212 billion, reflecting confidence in its IAM platform’s adoption and operational efficiency.

Revenue

Subscription revenue led the charge with $800.96 million, while professional services and other segments contributed $17.39 million. The total revenue of $818.35 million marked a significant year-over-year increase, driven by sustained demand for digital agreement solutions.

Earnings/Net Income

DocuSign’s EPS surged 32.3% to $0.41, with net income hitting $83.72 million—a 34.1% year-over-year jump. This represents a new nine-year high for Q3 net income, underscoring the company’s profitability momentum. The 32.3% EPS increase underscores strong profitability and continued earnings growth.

Price Action

The stock edged down 0.14% in the latest trading day but gained 3.24% for the week. Month-to-date, shares fell 2.66%, reflecting mixed investor sentiment ahead of the earnings release.

Post-Earnings Price Action Review

The strategy of buying DocuSign shares after its revenue beat expectations and selling 30 days later yielded moderate returns but underperformed the market. With a CAGR of 5.04%, the approach trailed the benchmark by 57.56%, while a Sharpe ratio of 0.17 highlighted its low-risk, conservative nature. Despite minimal drawdowns, the strategy’s limited returns suggest it may appeal only to risk-averse investors.

CEO Commentary

CEO Allan Thygesen hailed Q3 as a “standout quarter,” emphasizing 8% revenue growth and 10% billings growth driven by IAM adoption. He highlighted IAM’s role in boosting customer retention and usage, with strategic priorities including AI innovation and international expansion.

Guidance

CFO Blake Grayson provided Q4 2026 revenue guidance of $825–$829 million (7% YoY growth) and full-year revenue of $3.208–$3.212 billion (8% YoY). Subscription revenue is projected to reach $808–$812 million in Q4, with non-GAAP operating margins expected to range 28.3%–28.7%.

Additional News

DocuSign announced its largest quarterly share repurchase of $215 million, funded by $263 million in free cash flow. The company also transitioned from billings to ARR reporting, aiming to provide clearer long-term growth visibility. Additionally, IAM integration with AI platforms like ChatGPT and Anthropic Claude was highlighted, enhancing contract automation capabilities.

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