The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes included elsewhere in this Quarterly
Report on Form 10-Q and with our audited consolidated financial statements
included in our 2021 Annual Report on Form 10-K. As discussed in the section
titled "Note Regarding Forward-Looking Statements," the following discussion and
analysis contains forward-looking statements that involve risks and
uncertainties, as well as assumptions that, if they never materialize or prove
incorrect, could cause our results to differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause or
contribute to these differences include, but are not limited to, those
identified below and those discussed in the section titled "Risk Factors" under
Part II, Item 1A in this Quarterly Report on Form 10-Q and in our 2021 Annual
Report on Form 10-K. Our fiscal year ends January 31.

Executive Overview of Third Quarter Results

Overview

DocuSign accelerates the process of doing business for companies and simplifies
life for their customers and employees. We accomplish this by transforming the
foundational element of business: the agreement.

We offer the world's #1 e-signature solution as the core part of our broader
software suite for automating the agreement process, which we call the DocuSign
Agreement Cloud. It is designed to allow companies of all sizes and across all
industries to quickly and easily make nearly every agreement, approval process
or transaction digital. It provides comprehensive functionality across
e-signature and addresses the broader agreement process. As a result, over one
million customers and one billion users worldwide utilize DocuSign to create,
upload and send documents for multiple parties to sign electronically. The
DocuSign Agreement Cloud allows users to complete approvals, agreements and
transactions faster by building end-to-end processes. DocuSign eSignature
integrates with popular business apps, and our functionality can also be
embedded using our API. Finally, the DocuSign Agreement Cloud allows our
customers to automate and streamline their business-critical workflows to save
time and money, while staying secure and legally compliant.

We generally offer access to our platform on a subscription basis with prices
based on the functionality our customers require and the quantity of Envelopes
provisioned. Similar to the physical envelopes historically used to mail paper
documents, an Envelope is a digital container used to send one or more documents
for signature or approval to one or more recipients. Our customers have the
flexibility to put a large number of documents in an Envelope. For a number of
use cases, such as buying a home, multiple Envelopes are used over the course of
the process. To drive customer reach and adoption, we also offer for free
certain limited-time or feature-constrained versions of our platform.

                      DocuSign, Inc. | 2022 Form 10Q | 22
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We generate substantially all our revenue from sales of subscriptions, which
accounted for 97% and 96% of our revenue in the three months ended October 31,
2021 and 2020 and 97% and 95% in the nine months ended October 31, 2021 and
2020. Our subscription fees include the use of our software suite and access to
customer support. Subscriptions generally range from one to three years, and
substantially all our multi-year customers pay in annual installments, one year
in advance.

We also generate revenue from professional and other non-subscription services,
which consists primarily of fees associated with providing new customers
deployment and integration services. Other revenue includes amounts derived from
sales of on-premises solutions. Professional services and other revenue
accounted for the remainder of total revenue in the three and the nine months
ended October 31, 2021 and 2020. We anticipate continuing to invest in customer
success through our professional services offerings as we believe it plays an
important role in accelerating our customers' deployment of our software suite,
which helps drive customer retention and expansion of the use of the DocuSign
Agreement Cloud.

We offer subscriptions to our software suite to enterprise businesses,
commercial businesses and very small businesses ("VSBs"), which we define as
companies with fewer than 10 employees and includes professionals, sole
proprietorships and individuals. We sell to customers through multiple channels.
Our go-to-market strategy relies on our direct sales force and partnerships to
sell to enterprises and commercial businesses and our web-based self-service
channel to sell to VSBs, which we believe is the most cost-effective way to
reach our smallest customers. We offer more than 350 off-the-shelf, prebuilt
integrations with the applications that many of our customers already
use-including those offered by Google, Microsoft, NetSuite, Oracle, Salesforce,
SAP, SAP SuccessFactors and Workday-so that they can create, sign, send and
manage agreements from directly within these applications. We have a diverse
customer base spanning various industries and countries with no significant
customer concentration. No single customer accounted for more than 10% of total
revenue in any of the periods presented.

We focused initially on selling our e-signature solutions to commercial
businesses and VSBs, and later expanded our focus to target enterprise
customers. To demonstrate this growth over time, the number of our customers
with greater than $300,000 in annual contract value (measured in billings) has
increased from approximately 30 customers as of January 31, 2013 to 785
customers as of October 31, 2021. Each of our customer types has a different
purchasing pattern. VSBs tend to become customers quickly with very little to no
direct sales or customer support interaction and generate smaller average
contract values, while commercial and enterprise customers typically involve
longer sales cycles, larger contract values and greater expansion opportunities
for us.

COVID-19 Update

The COVID-19 pandemic continues to have large-scale, rapidly shifting effects on
workforces, organizations, customers, economies and financial markets globally,
contributing to increased market volatility. We are continuing to monitor the
effects of the pandemic across our business. These effects are dependent on
highly uncertain future developments, including the duration, spread and
severity of the pandemic, the emergence of coronavirus variants, the actions
undertaken to contain the virus or mitigate its impacts, including actions
mandated by governments and health authorities and changing public health
directives or restrictions, the speed and breadth of vaccination progress,
vaccine efficacy against COVID-19 variants, current or future travel
restrictions and how quickly and to what extent normal global economic and
operating conditions can or will resume, all of which are highly uncertain and
cannot be accurately predicted. The effects of the COVID-19 pandemic may not be
fully reflected in our results of operations until future periods as a result of
our subscription-based business model.

During the pandemic, we have taken a number of precautionary measures to ensure
the health and safety of our employees, partners and customers, including by
shifting to a largely remote work environment, imposing work-related travel
restrictions for all employees and shifting most planned customer, partner and
investor events to virtual-only formats. We have incurred expenses to support
our employees working from home, including reimbursements for home office
equipment and a stipend for other qualifying expenses, as well as expenses
associated with planning and risk mitigation for reopening of our offices and
resumption of in-person business activities, and may incur similar expenses in
the future. The impact of these and any other operational changes we may
implement is uncertain, but as of the date of this filing they have not
materially affected our ability to maintain operations. We have experienced a
substantial increase in overall demand for our products, particularly DocuSign
eSignature, since the beginning of the pandemic as the shift to remote, digital
business operations caused more organizations to adopt or expand their use of
digital agreements. This acceleration of the digital transformation of
agreements contributed to growth in our customer base and increases in customer
spending across industries and regions.

While we have experienced a significant increase in paying customers and revenue
due to the pandemic, there is no assurance that we will experience a continued
increase in paying customers or that new or existing customers will continue to
utilize our products at similar levels after the COVID-19 pandemic has tapered
globally. As vaccinations
                      DocuSign, Inc. | 2022 Form 10Q | 23
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become widely available and the pandemic wanes, this may result in a decline in
paying customers once individuals are no longer working or attending school from
home and/or their priorities change.

As the pandemic continued in 2021, the rate of vaccinations, emerging COVID-19
variants, and shifting governmental policies on vaccination mandates and other
pandemic restrictions have had variable impacts on different regions of the
world and areas of the economy. This has caused and may continue to cause new,
existing and potential customers to experience rapidly changing conditions and
disruptions to their businesses. This may result in differing levels of demand
for our products as our customers' priorities, resources, financial conditions
and economic outlook change, which could adversely affect or increase the
volatility of our financial results. Additionally, as a service provider to U.S.
state and federal government agencies, we are subject to a variety of COVID-19
vaccination, testing, and related health and safety requirements, including the
requirement that our U.S.-based employees be fully vaccinated against COVID-19
by January 4, 2022, absent a medical or religious exemption. We are not able to
currently predict the full impact this requirement may have on our business. See
the section below titled "  Risk Factors"   for further discussion of the
potential impact of the COVID-19 pandemic, including the conclusion or tapering
of the pandemic, on our business, financial condition and results of operations.

Financial Results for the Three and Nine Months Ended October 31, 2021 and 2020



                                             Three Months Ended October 31,             Nine Months Ended October 31,
(in thousands)                                  2021                2020                  2021                    2020
Total revenue                               $  545,463          $ 382,923          $      1,526,385          $ 1,022,149
Total costs and expenses                       548,821            431,393                 1,563,091            1,171,107
Total stock-based compensation expense         109,440             80,920                   290,536              203,238
Loss from operations                            (3,358)           (48,470)                  (36,706)            (148,958)
Net loss                                        (5,676)           (58,491)                  (39,531)            (170,855)
Net cash provided by operating activities      105,411             57,443                   418,675              234,721
Purchases of property and equipment            (15,392)           (19,393)                  (43,926)             (64,144)



Cash, cash equivalents, restricted cash and investments were $908.2 million as of October 31, 2021.

Key Factors Affecting Our Performance

We believe that our future performance will depend on many factors, including the following:



Growing Customer Base

We are highly focused on continuing to acquire new customers to support our
long-term growth. We have invested, and expect to continue to invest, heavily in
our sales and marketing efforts to drive customer acquisition. As of October 31,
2021, we had a total of over 1.1 million customers, including over 159,000
enterprise and commercial customers, compared to almost 820,000 customers and
over 110,000 enterprise and commercial customers as of October 31, 2020. We
define a customer as a separate and distinct buying entity, such as a company,
an educational or government institution or a distinct business unit of a large
company that has an active contract to access our software suite. We define
enterprise customers as companies generally included in the Global 2000. We
define commercial customers to include both mid-market companies, which includes
companies outside the Global 2000 that have greater than 250 employees, and
small-to-medium-sized businesses, which are companies with between 10 and 249
employees, in each case excluding any enterprise customers. We refer to total
customers as all enterprises, commercial businesses and VSBs.

We believe that our ability to increase the number of customers using our
software suite, particularly the number of enterprise and commercial customers,
is an indicator of our market penetration, the growth of our business and our
potential future business opportunities. By increasing awareness of our software
suite, further developing our sales and marketing expertise and continuing to
build features tuned to different industry needs, we have expanded the diversity
of our customer base to include organizations of all sizes across nearly every
industry.

                      DocuSign, Inc. | 2022 Form 10Q | 24
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Retaining and Expanding Contracts with Existing Enterprise and Commercial Customers



Many of our customers have increased spend with us as they have expanded their
use of our offerings in both existing and new use cases across their front or
back office operations. Our enterprise and commercial customers may start with
just one use case and gradually implement additional use cases across their
organization once they see the benefits of our software suite. Several of our
largest enterprise customers have deployed our software suite for hundreds of
use cases across their organizations. We believe there is significant expansion
opportunity with our customers following their initial adoption of our software
suite.

Increasing International Revenue



Our international revenue represented 23% and 20% of our total revenue in the
three months ended October 31, 2021 and 2020 and 22% and 19% in the nine months
ended October 31, 2021 and 2020.

We started our international selling efforts in English-speaking common law
countries, such as Canada, the United Kingdom and Australia, where we were able
to leverage our core technologies due to similar approaches to e-signature in
these jurisdictions and the United States ("U.S."). We have since made
significant investments to be able to offer our products in select civil law
countries. For example, in Europe, we have Standards-Based Signature ("SBS")
technology tailored for electronic IDentification, Authentication and
trust Services ("eIDAS"). SBS supports signatures that involve digital
certificates, including those specified in the European Union's ("EU") eIDAS
regulations for advanced and qualified electronic signatures. In addition, to
follow longstanding tradition in Japan, we enable signers to upload and apply
their personal eHanko stamp to represent their signatures on an agreement.

We plan to increase our international revenue by leveraging and continuing to
expand the investments we have already made in our technology, direct sales
force and strategic partnerships, as well as helping existing U.S.-based
customers manage agreements across their international businesses. We have
experienced increased demand across multiple regions and are expanding our sales
and marketing resources to capitalize on the potential growth of these markets.
Additionally, we expect to continue to develop and enhance our strategic
partnerships in key international markets as we grow internationally.

Investing for Growth



We believe that our market opportunity is large, and we plan to invest to
continue to support further growth. This includes expanding our sales headcount
and increasing our marketing initiatives. We also plan to continue to invest in
expanding the functionality of our software suite and underlying infrastructure
and technology to meet the needs of our customers across industries. Our
acquisitions of Seal Software and Liveoak Technologies, intended to bring
additional functionality to our DocuSign Agreement Cloud and further expand our
eNotary offerings, as well as the continuous development of new features
internally, are examples of our commitment to investing for ongoing growth.

Components of Results of Operations

Revenue

We derive revenue primarily from the sale of subscriptions and, to a lesser extent, professional services.



Subscription Revenue          Subscription revenue consists of fees for the use of our software
                              suite and our technical infrastructure and access to customer support,
                              which includes phone or email support. We typically invoice customers
                              in advance on an annual basis. We recognize subscription revenue
                              ratably over the term of the contract

subscription period beginning on


                              the date access to our software suite is provided.
Professional Services and     Professional services revenue includes fees associated with new
Other Revenue                 customers requesting deployment and

integration services. We price


                              professional services on a time and materials basis and on a fixed fee
                              basis. We generally have standalone value for our professional
                              services and recognize revenue based on standalone selling price as
                              services are performed or upon completion of services for fixed fee
                              contracts. Other revenue includes amounts derived from sales of
                              on-premises solutions.

DocuSign, Inc. | 2022 Form 10Q | 25
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Overhead Allocation



We allocate shared overhead costs, such as facilities (including rent, utilities
and depreciation on equipment shared by all departments), information
technology, information security and recruiting costs to all departments based
on headcount. As such, these allocated overhead costs are reflected in each cost
of revenue and operating expense category.

Cost of Revenue

Cost of Subscription Revenue Cost of subscription revenue primarily consists of expenses related to


                              hosting our software suite and providing 

support. These expenses consist


                              of employee-related costs, including salaries, bonuses, benefits,
                              stock-based compensation and other related costs, associated with our
                              technical infrastructure, customer success and customer support. These
                              expenses also consist of software and

maintenance costs, third-party


                              hosting fees, outside services associated with the delivery of our
                              subscription services, amortization expense associated with capitalized
                              internal-use software and acquired intangible assets, credit card
                              processing fees and allocated overhead costs.
Cost of Professional Services Cost of professional services and other revenue consists primarily of
and Other Revenue             personnel costs for our professional services delivery team,
                              travel-related costs and allocated overhead costs.


Gross Profit and Gross Margin



Gross profit is total revenue less total cost of revenue. Gross margin is gross
profit expressed as a percentage of total revenue. We expect that gross profit
and gross margin will continue to be affected by various factors including our
pricing, timing and amount of investment to maintain or expand our hosting
capability, the growth of our software suite support and professional services
team, stock-based compensation expenses, amortization of costs associated with
capitalized internal use software and acquired intangible assets and allocated
overhead costs.

Operating Expenses

Our operating expenses consist of selling and marketing, research and
development and general and administrative expenses. As our revenues continue to
increase, our operating expenses as a percentage of revenue may increase or
decrease at different rates, driven by the timing of revenue recognition, our
investments in growth and other factors.

Selling and Marketing Expense  Selling and marketing expense consists primarily of personnel costs,
                               including sales commissions. These expenses also include expenditures
                               related to advertising, marketing, promotional events and brand
                               awareness activities, as well as allocated overhead costs. We expect
                               selling and marketing expense to continue to increase in absolute
                               dollars as we enhance our product offerings and implement marketing
                               strategies.
Research and Development       Research and development expense consists primarily of personnel costs.
Expense                        These expenses also include non-personnel costs, such as
                               subcontracting, consulting and professional fees for third-party
                               development resources, as well as allocated overhead costs. Our
                               research and development efforts focus on maintaining and enhancing
                               existing functionality and adding new

functionality. We expect research


                               and development expense to increase in 

absolute dollars as we invest in


                               the enhancement of our software suite.
General and Administrative     General and administrative expense consists primarily of
Expense                        employee-related costs for those employees providing administrative
                               services such as legal, human resources,

information technology related


                               to internal systems, accounting and finance. 

These expenses also


                               include certain third-party consulting 

services, certain facilities


                               costs, allocated overhead costs, and 

impairment of operating lease


                               right-of-use assets. We expect general and administrative expense to
                               increase in absolute dollars to support the overall growth of our
                               operations.



Interest Expense

Interest expense consists primarily of contractual interest expense, amortization of discount and amortization of debt issuance costs on our Convertible Senior Notes (the "Notes").

DocuSign, Inc. | 2022 Form 10Q | 26
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Interest income and other income (expense), net



Interest income and other income (expense), net, consists primarily of interest
earned on our cash, cash equivalents and investments, changes in fair value of
our strategic investments and foreign currency transaction gains and losses.

Provision for (benefit from) income taxes



Our provision for (benefit from) income taxes consists primarily of income taxes
in certain foreign jurisdictions where we conduct business, and tax benefits
arising from deductions for stock-based compensation. We have a valuation
allowance against our U.S. consolidated group and certain foreign deferred tax
assets. We expect to maintain this valuation allowance for the foreseeable
future or until it becomes more likely than not that the benefit of these U.S.
and foreign deferred tax assets will be realized by way of expected future
taxable income.

                      DocuSign, Inc. | 2022 Form 10Q | 27
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Discussion of Results of Operations

The following table summarizes our historical consolidated statements of operations data:


                                                    Three Months Ended October 31,                                                       Nine Months Ended October 31,
(in thousands, except                                   As % of                               As % of                                          As % of                                As % of
percentages)                        2021                revenue              2020             revenue                   2021                   revenue              2020              revenue
Revenue:
Subscription                  $      528,573                 97  %       $ 366,617                 96  %       $     1,473,266                      97  %       $  971,182                 95  %
Professional services and
other                                 16,890                  3             16,306                  4                   53,119                       3              50,967                  5
Total revenue                        545,463                100            382,923                100                1,526,385                     100           1,022,149                100
Cost of revenue:
Subscription                          84,579                 16             69,905                 18                  247,105                      16             186,645                 18
Professional services and
other                                 31,396                  5             27,926                  8                   87,892                       6              75,833                  8
Total cost of revenue                115,975                 21             97,831                 26                  334,997                      22             262,478                 26
Gross profit                         429,488                 79            285,092                 74                1,191,388                      78             759,671                 74
Operating expenses:
Sales and marketing                  275,619                 51            209,944                 55                  777,110                      51             576,729                 56
Research and development             102,603                 19             73,362                 19                  282,670                      19             191,387                 19
General and administrative            54,624                  9             50,256                 13                  168,314                      10             140,513                 14
Total operating expenses             432,846                 79            333,562                 87                1,228,094                      80             908,629                 89
Loss from operations                  (3,358)                (1)           (48,470)               (13)                 (36,706)                     (2)           (148,958)               (15)
Interest expense                      (1,485)                 -             (7,769)                (2)                  (4,826)                      -             (23,013)                (2)
Interest income and other
income (expense), net                   (940)                 -               (311)                 -                    4,034                       -               6,032                  1
Loss before provision for
(benefit from) income taxes           (5,783)                (1)           (56,550)               (15)                 (37,498)                     (2)           (165,939)               (16)
Provision for (benefit from)
income taxes                            (107)                 -              1,941                  -                    2,033                       1               4,916                  1
Net loss                      $       (5,676)                (1) %       $ (58,491)               (15) %       $       (39,531)                     (3) %       $ (170,855)               (17) %



The following discussion and analysis is for the three and nine months ended October 31, 2021, compared to the same period in 2020, unless otherwise stated.



Revenue
                                  Three Months Ended October 31,                                  Nine Months Ended October 31,
(in thousands, except for                                                2021 versus                                                         2021 versus
percentages)                         2021                2020                2020                   2021                    2020                 2020
Revenue:
Subscription                     $  528,573          $ 366,617                   44  %       $      1,473,266          $   971,182                   52  %
Professional services and other      16,890             16,306                    4  %                 53,119               50,967                    4  %
Total revenue                    $  545,463          $ 382,923                   42  %       $      1,526,385          $ 1,022,149                   49  %



Subscription revenue increased by $162.0 million, or 44%, in the three months
ended October 31, 2021 and by $502.1 million, or 52%, in the nine months ended
October 31, 2021. The increase was primarily due to a combination of the
acquisition of new customers and upsells to our existing customer base. This
growth was mainly driven by an increase in sales to our mid-market and
enterprise customers through our direct and indirect sales channels.

We continue to invest in a variety of customer programs and initiatives, which,
along with expanded customer use cases, have helped increase our subscription
revenue over time. We expect subscription revenue to continue to increase as
existing customers increase their usage across their organizations while we
offer new functionality, attract new customers and fully realize the potential
of our acquisitions in our product offerings.

                      DocuSign, Inc. | 2022 Form 10Q | 28
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Cost of Revenue and Gross Margin


                                     Three Months Ended October 31,                                     Nine Months Ended October 31,
(in thousands, except for                                                       2021 versus                                                        2021 versus
percentages)                           2021                  2020                  2020                   2021                  2020                  2020
Cost of revenue:
Subscription                              $84,579               $69,905               21    %               $247,105              $186,645               32    %
Professional services and other            31,396                27,926               12    %                 87,892                75,833               16    %
Total cost of revenue                    $115,975               $97,831               19    %               $334,997              $262,478               28    %
Gross margin:
Subscription                                84  %                 81  %                3  pts                  83  %                 81  %                2  pts
Professional services and other            (86) %                (71) %              (15) pts                 (65) %                (49) %              (16) pts
Total gross margin                          79  %                 74  %                5  pts                  78  %                 74  %                4  pts


Cost of subscription revenue increased $14.7 million, or 21%, in the three months ended October 31, 2021 and $60.5 million, or 32%, in the nine months ended October 31, 2021, primarily driven by higher costs to support our growing customer base.



Increases in the three months ended October 31, 2021 primarily consisted of:
?$4.3 million in personnel costs and $2.3 million in stock-based compensation
driven by higher headcount and annual salary increases; and
?$4.0 million in operating costs to support our platform and the growth in our
revenue, including increases in hosting costs and processing fees.

Increases in the nine months ended October 31, 2021 primarily consisted of:
?$19.6 million in personnel costs and $7.0 million in stock-based compensation
driven by higher headcount and annual salary increases;
?$15.5 million in operating costs to support our platform and the growth in our
revenue, including increases in hosting costs, authentication and processing
fees and subscription reseller fees; and
?$13.3 million in depreciation and amortization, which reflects the impact of
higher data center and capitalized software assets as well as the higher
existing technology intangible assets from acquisitions.

Cost of professional services and other revenue increased $3.5 million, or 12%,
in the three months ended October 31, 2021 and $12.1 million, or 16%, in the
nine months ended October 31, 2021, primarily due to an increase in personnel
costs driven by higher headcount, annual salary increases and stock-based
compensation.

Sales and Marketing
                                     Three Months Ended October 31,                                    Nine Months Ended October 31,
(in thousands, except for                                                      2021 versus                                                       2021 versus
percentages)                           2021                  2020                  2020                  2021                  2020                  2020
Sales and marketing                      $275,619              $209,944                31  %               $777,110              $576,729                35  %
Percentage of revenue                       51  %                 55  %                                       51  %                 56  %



Sales and marketing expenses increased $65.7 million, or 31%, in the three
months ended October 31, 2021 and $200.4 million, or 35%, in the nine months
ended October 31, 2021 primarily driven by investments in workforce and
technology support to accommodate demand for our products and increased interest
in digital transformation of agreements.

Increases in the three months ended October 31, 2021 primarily consisted of:
?$38.9 million in personnel costs and $12.8 million in stock-based compensation
due to higher headcount, annual salary increases, higher commissions in line
with higher sales and higher payroll taxes; and
?$8.7 million in marketing and advertising expense due to higher spend on online
advertising platforms to help capture the continued market interest in our
product offering.

Increases in the nine months ended October 31, 2021 primarily consisted of:
?$113.5 million in personnel costs and $40.9 million in stock-based compensation
due to higher headcount, annual salary increases, higher commissions in line
with higher sales and higher payroll taxes; and
                      DocuSign, Inc. | 2022 Form 10Q | 29
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?$32.4 million in marketing and advertising expense due to higher spend on
online advertising platforms to help capture the continued market interest in
our product offering; and
?$12.2 million due to higher information technology costs.

Research and Development
                                     Three Months Ended October 31,                                    Nine Months Ended October 31,
(in thousands, except for                                                      2021 versus                                                       2021 versus
percentages)                           2021                  2020                  2020                  2021                  2020                  2020
Research and development                 $102,603               $73,362                40  %               $282,670              $191,387                48  %
Percentage of revenue                       19  %                 19  %                                       19  %                 19  %



Research and development expenses increased $29.2 million, or 40%, in the three
months ended October 31, 2021 and $91.3 million, or 48%, in the nine months
ended October 31, 2021, primarily due to investments in workforce and technology
support to accommodate growth. Personnel costs and stock-based compensation
increased $15.6 million and $11.2 million in the three months ended October 31,
2021 and $50.3 million and $31.2 million in the nine months ended October 31,
2021, due to higher headcount and annual salary increases, which also reflects
the impact of the addition of Seal and Liveoak employees to our workforce.
Additionally, the increase in the nine months ended October 31, 2021 includes
$7.2 million due to higher information technology costs.

General and Administrative


                                      Three Months Ended October 31,                                    Nine Months Ended October 31,
(in thousands, except for                                                       2021 versus                                                       2021 versus
percentages)                            2021                  2020                  2020                  2021                  2020                  2020
General and administrative                 $54,624               $50,256                 9  %               $168,314              $140,513                20  %
Percentage of revenue                         9  %                 13  %                                       10  %                 14  %



General and administrative expenses increased $4.4 million, or 9%, in the three
months ended October 31, 2021 and $27.8 million, or 20%, in the nine months
ended October 31, 2021, primarily due to investments in workforce and technology
support to accommodate growth. Personnel costs and stock-based compensation
increased $1.4 million and $1.5 million in the three months ended October 31,
2021 and $10.0 million and $5.3 million in the nine months ended October 31,
2021, due to higher headcount and the impact of annual salary increases. The
expense for the nine months ended October 31, 2021 also includes $3.9 million
impairment of operating lease right-of-use assets.

Other Income and Expense


                                   Three Months Ended October 31,                                  Nine Months Ended October 31,
(in thousands, except for                                                   2021 versus                                                     2021 versus
percentages)                          2021                 2020                 2020                 2021                 2020                  2020
Interest expense                         $1,485               $7,769               (81) %               $4,826               $23,013               (79) %
Percentage of revenue                      -  %                 2  %                                      -  %                  2  %

Interest income and other income
(expense), net                           $(940)               $(311)               202  %               $4,034                $6,032               (33) %
Percentage of revenue                      -  %                 -  %                                      -  %                  1  %



Interest expense decreased by $6.3 million in the three months ended October 31,
2021 and $18.2 million in the nine months ended October 31, 2021, primarily due
to lower amortization expense under ASU 2020-06 effective February 1, 2021.

Interest income and other income, net, for the nine months ended October 31,
2021 included $4.8 million adjustments to fair value of certain strategic
investments resulting from observable price changes that occurred during the
quarter ended April 30, 2021.
                      DocuSign, Inc. | 2022 Form 10Q | 30
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Liquidity and Capital Resources



Our principal sources of liquidity were cash, cash equivalents and investments
as well as cash generated from operations. As of October 31, 2021, we had $818.5
million in cash and cash equivalents and short-term investments. We also had
$89.5 million in long-term investments that provide additional capital
resources. We finance our operations primarily through payments by our customers
for use of our product offerings and related services and through debt
financings.

In September 2018, we issued and sold $575.0 million in aggregate principal
amount of 0.5% Convertible Senior Notes due 2023, of which $524.8 million has
been settled as of October 31, 2021. In January 2021, we issued and sold $690.0
million in aggregate principal amount of 0% Convertible Senior Notes due 2024.

In January 2021 we entered into a $500.0 million credit facility, which may be
increased by an additional $250.0 million subject to customary terms and
conditions. The credit facility is available until January 11, 2026, to optimize
our capital structure and strengthen our balance sheet. There were no
outstanding borrowings under the credit facility as of October 31, 2021.

Further details of these transactions are described in Note 6 to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

We were in compliance with all debt covenants at October 31, 2021.



We believe our existing cash, cash equivalents and marketable securities will be
sufficient to meet our working capital and capital expenditures needs over at
least the next 12 months. While we have generated positive cash flows from
operations in recent years, we have generated losses from operations in the past
as reflected in our accumulated deficit of $1.4 billion as of October 31, 2021.
We may not achieve profitability in the foreseeable future due to the
investments we intend to make and may require additional capital resources to
execute strategic initiatives to grow our business.

We typically invoice our direct customers annually in advance. Therefore, a
substantial source of our cash is from such invoices, which are included on our
consolidated balance sheets in contract liabilities until revenue is recognized
or in accounts receivable until cash is collected. Accordingly, collections from
our customers have a material impact on our cash flows from operating
activities. Our accounts receivable decreased by $18.0 million in the nine
months ended October 31, 2021, compared to an increase of $11.4 million in the
nine months ended October 31, 2020, which resulted in a $29.4 million increase
in cash provided by operating activities year over year. Contract liabilities
consist of the unearned portion of billed fees for our subscriptions, which is
subsequently recognized as revenue in accordance with our revenue recognition
policy. Our contract liabilities increased by $161.0 million in the nine months
ended October 31, 2021, compared to an increase of $172.5 million in the nine
months ended October 31, 2020, which resulted in an $11.5 million decrease in
cash provided by operating activities.

Our future capital requirements will depend on many factors including our growth
rate, customer retention and expansion, tax withholding obligations related to
settlement of our RSUs, the timing and extent of spending to support our efforts
to develop our software suite, the expansion of sales and marketing activities
and the continuing market acceptance of our software suite. We may in the future
enter into arrangements to acquire or invest in complementary businesses,
technologies and intellectual property rights. We may be required to seek
additional equity or debt financing. In the event that additional financing is
required from outside sources, we may not be able to raise it on terms
acceptable to us or at all. If we are unable to raise additional capital when
desired, our business, operating results and financial condition would be
adversely affected.

                      DocuSign, Inc. | 2022 Form 10Q | 31
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Cash Flows

The following table summarizes our cash flows for the periods indicated:


                                                                   Nine Months Ended October 31,
(in thousands)                                                       2021                   2020
Net cash provided by (used in):
Operating activities                                          $       418,675          $   234,721
Investing activities                                                 (157,685)             100,064
Financing activities                                                 (320,691)            (202,435)

Effect of foreign exchange on cash, cash equivalents and restricted cash

                                                        (2,472)               1,432

Net change in cash, cash equivalents and restricted cash $ (62,173) $ 133,782

Cash Flows from Operating Activities



Cash provided by operating activities was $418.7 million and $234.7 million for
the nine months ended October 31, 2021 and 2020. The improvement of $184.0
million compared to the prior year, was primarily the result of increased sales
and the related cash collections, partially offset by higher operating costs to
support growth and increased headcount.

Cash Flows from Investing Activities

For the nine months ended October 31, 2021, net cash used in investing activities of $157.7 million was primarily driven by $106.6 million net purchases of marketable securities, $43.9 million purchases of property and equipment, and $6.4 million cash paid for acquisitions.

For the nine months ended October 31, 2020, cash provided by investing activities of $100.1 million was primarily driven by $353.1 million from maturities and sales of marketable securities, partially offset by $180.4 million paid for acquisitions, net of cash acquired, $64.1 million purchases of property and equipment and $8.5 million purchases of strategic and other investments.

Cash Flows from Financing Activities



For the nine months ended October 31, 2021, cash used in financing activities of
$320.7 million was primarily driven by $255.9 million in net payments related to
our equity plans, as compared to $202.4 million in the prior year for similar
activities. We also used $64.8 million for repayments of our 2023 Notes.

Obligations and Commitments



Our principal contractual obligations and commitments consist of obligations
under the Notes (including principal and coupon interest), operating leases, as
well as noncancellable contractual commitments that primarily relate to cloud
infrastructure support and sales and marketing activities. Refer to   Note 6
and   Note 7   to the Condensed Consolidated Financial Statements, included in

Part I, Item 1 of this Form 10-Q.

We do not have any special purpose entities and we do not engage in off-balance sheet financing arrangements.

DocuSign, Inc. | 2022 Form 10Q | 32
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Critical Accounting Policies and Estimates



We prepare our financial statements in accordance with U.S. generally accepted
accounting principles ("GAAP"). Preparing these financial statements requires us
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, expenses and related disclosures. We evaluate our
estimates and assumptions on an ongoing basis. Our estimates are based on
historical experience and various other assumptions that we believe to be
reasonable under the circumstances. Our actual results could differ from these
estimates.
The critical accounting estimates, assumptions and judgments that we believe to
have the most significant impact on our consolidated financial statements are
revenue recognition, deferred contract acquisition costs, stock-based
compensation, valuation of acquired intangible assets in business combinations
and income taxes.

There have been no material changes to our critical accounting policies and estimates as described in our 2021 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Refer to Note 1 to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

DocuSign, Inc. | 2022 Form 10Q | 33
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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 present 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 income from operations,
non-GAAP operating margin and non-GAAP net income: We define these non-GAAP
financial measures as the respective GAAP measures, excluding expenses related
to stock-based compensation, employer payroll tax on employee stock
transactions, amortization of acquisition-related intangibles, amortization of
debt discount and issuance costs, acquisition-related expenses, fair value
adjustments to strategic investments, impairment of operating lease right-of-use
assets, and, as applicable, other special items. The amount of employer payroll
tax-related items on employee stock transactions is dependent on our stock price
and other factors that are beyond our control and do not correlate to the
operation of the business. When evaluating the performance of our business and
making operating plans, we do not consider these items (for example, when
considering the impact of equity award grants, we place a greater emphasis on
overall stockholder dilution rather than the accounting charges associated with
such grants). 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 flow: We define free cash flow as net cash provided by operating
activities less purchases of property and equipment. We believe free cash flow
is an important liquidity measure of the cash that is available (if any), 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.

                      DocuSign, Inc. | 2022 Form 10Q | 34
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Reconciliation of gross profit and gross margin:


                                                          Three Months Ended October 31,                   Nine Months Ended October 31,
(in thousands)                                              2021                    2020                    2021                     2020
GAAP gross profit                                              $429,488               $285,092                $1,191,388               $759,671
Add: Stock-based compensation                                    15,365                 11,782                    40,902                 30,010
Add: Amortization of acquisition-related intangibles              2,766                  3,376                     9,266                  7,856
Add: Employer payroll tax on employee stock
transactions                                                      1,800                  1,676                     6,695                  4,450

Non-GAAP gross profit                                          $449,419               $301,926                $1,248,251               $801,987
GAAP gross margin                                                 79  %                  74  %                     78  %                  74  %
Non-GAAP adjustments                                               3  %                   5  %                      4  %                   4  %
Non-GAAP gross margin                                             82  %                  79  %                     82  %                  78  %

GAAP subscription gross profit                                 $443,994               $296,712                $1,226,161               $784,537
Add: Stock-based compensation                                     8,095                  5,777                    21,652                 14,655
Add: Amortization of acquisition-related intangibles              2,766                  3,376                     9,266                  7,856
Add: Employer payroll tax on employee stock
transactions                                                        873                    722                     3,286                  2,183

Non-GAAP subscription gross profit                             $455,728               $306,587                $1,260,365               $809,231
GAAP subscription gross margin                                    84  %                  81  %                     83  %                  81  %
Non-GAAP adjustments                                               2  %                   3  %                      3  %                   2  %
Non-GAAP subscription gross margin                                86  %                  84  %                     86  %                  83  %

GAAP professional services and other gross loss               $(14,506)              $(11,620)                 $(34,773)              $(24,866)
Add: Stock-based compensation                                     7,270                  6,005                    19,250                 15,355
Add: Employer payroll tax on employee stock
transactions                                                        927                    954                     3,409                  2,267

Non-GAAP professional services and other gross loss            $(6,309)               $(4,661)                 $(12,114)               $(7,244)
GAAP professional services and other gross margin                (86) %                 (71) %                    (65) %                 (49) %
Non-GAAP adjustments                                              49  %                  42  %                     42  %                  35  %
Non-GAAP professional services and other gross
margin                                                           (37) %                 (29) %                    (23) %                 (14) %


Reconciliation of income (loss) from operations and operating margin:


                                                         Three Months Ended October 31,                    Nine Months Ended October 31,
(in thousands)                                            2021                    2020                     2021                     2020
GAAP loss from operations                                    $(3,358)               $(48,470)                $(36,706)               $(148,958)
Add: Stock-based compensation                                 109,440                  80,920                  290,536                  203,238
Add: Amortization of acquisition-related
intangibles                                                     5,971                   7,357                   19,162                   19,032
Add: Employer payroll tax on employee stock
transactions                                                   10,104                   8,959                   37,972                   24,766
Add: Acquisition-related expenses                                   -                     336                      387                    7,962
Add: Impairment of operating lease right-of-use
assets                                                              -                       -                    3,892                        -
Non-GAAP income from operations                              $122,157                 $49,102                 $315,243                 $106,040
GAAP operating margin                                           (1) %                  (13) %                    (2) %                   (15) %
Non-GAAP adjustments                                            23  %                   26  %                    23  %                    25  %
Non-GAAP operating margin                                       22  %                   13  %                    21  %                    10  %



                      DocuSign, Inc. | 2022 Form 10Q | 35
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Reconciliation of net income (loss):


                                                     Three Months Ended October 31,            Nine Months Ended October 31,
(in thousands)                                          2021                2020                  2021                  2020
GAAP net loss                                       $   (5,676)         $

(58,491) $ (39,531) $ (170,855) Add: Stock-based compensation

                          109,440             80,920                  290,536             203,238
Add: Amortization of acquisition-related
intangibles                                              5,971              7,357                   19,162              19,032
Add: Employer payroll tax on employee stock
transactions                                            10,104              8,959                   37,972              24,766
Add: Acquisition-related expenses                            -                336                      387               7,962
Add: Amortization of debt discount and issuance
costs                                                    1,255              7,044                    3,848              20,828
Less: Fair value adjustments to strategic
investments                                                  -                  -                   (5,270)                  -
Add: Impairment of operating lease right-of-use
assets                                                       -                  -                    3,892                   -
Non-GAAP net income                                 $  121,094          $  46,125          $       310,996          $  104,971

Computation of free cash flow:


                                               Three Months Ended October 31,             Nine Months Ended October 31,
(in thousands)                                    2021                2020                  2021                   2020

Net cash provided by operating activities $ 105,411 $ 57,443

$ 418,675 $ 234,721 Less: Purchases of property and equipment (15,392) (19,393)

                  (43,926)            (64,144)
Non-GAAP free cash flow                       $   90,019          $  38,050          $        374,749          $  170,577
Net cash (used in) provided by investing
activities                                    $  (52,808)         $   9,691

$ (157,685) $ 100,064 Net cash used in financing activities $ (65,387) $ (95,203) $ (320,691) $ (202,435)

Computation of billings:


                                               Three Months Ended October 31,             Nine Months Ended October 31,
(in thousands)                                    2021                2020                  2021                    2020
Revenue                                       $  545,463          $ 382,923          $      1,526,385          $ 1,022,149
Add: Contract liabilities and refund
liability, end of period                         961,243            702,691                   961,243              702,691
Less: Contract liabilities and refund
liability, beginning of period                  (939,826)          (638,790)                 (800,940)            (522,201)
Add: Contract assets and unbilled accounts
receivable, beginning of period                   18,067             20,395                    21,020               15,082
Less: Contract assets and unbilled accounts
receivable, end of period                        (19,708)           (26,808)                  (19,708)             (26,808)
Add: Contract assets and unbilled accounts
receivable by acquisitions                             -                  -                         -                6,589
Less: Contract liabilities and refund
liability contributed by acquisitions                  -                  -                         -               (9,344)
Non-GAAP billings                             $  565,239          $ 440,411          $      1,688,000          $ 1,188,158



                      DocuSign, Inc. | 2022 Form 10Q | 36

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