DocuSign Inc (NASDAQ:DOCU) reported second-quarter revenue and profit that beat Wall Street estimates and raised its full-year revenue guidance, as the company's newer AI-driven contract management products continue to gain share of its overall business.
Revenue for the fiscal second quarter came in at $875.7 million, above the $867 million analysts had estimated and up 9% from a year earlier. Adjusted earnings per share of $1.16 topped the $1.09 estimate, a 26% increase year-over-year. Free cash flow reached $295.8 million, well ahead of the $234 million forecast.
The company's Intelligent Agreement Management (IAM) offering accounted for 15.1% of total annual recurring revenue in the quarter.
For fiscal 2027, DocuSign now expects revenue of $3.5 billion to $3.51 billion, roughly in line with the $3.5 billion analyst estimate. The company raised its annual recurring revenue growth outlook to a range of 8.5% to 9% and said it expects IAM to represent approximately 18% to 19% of total ARR by the end of the fourth quarter. Non-GAAP operating margin for the year is now guided at 31% to 31.5%.
For the third quarter, DocuSign guided revenue of $886 million to $890 million, slightly below the $889 million estimate, with non-GAAP operating margin expected between 31.3% and 31.7%.
Other second-quarter metrics included non-GAAP gross margin of 81.7%, down 30 basis points from a year earlier, and net cash from operations of $334.5 million.
Analysts at UBS described the results as another "fine/in-line" quarter, noting constant-currency revenue growth of 8% matched expectations and that the raised full-year guidance was a modest step up rather than a re-rating catalyst. The bank said DocuSign's IAM push has yet to meaningfully accelerate overall revenue growth, which remains similar to the 8-10% pace reported in each of the past three fiscal years, even as the AI-driven offering now makes up 15% of ARR.
Shares of Docusign added around 2.7% on Friday morning.
