Exhibit 10.1
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (the “Agreement”) is made and entered into as of [___________], between DocuSign, Inc., a Delaware corporation (the “Company”), and [___________] (“Indemnitee”).
RECITALS
A. Highly competent persons have become more reluctant to serve corporations as directors or officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;
B. Although the furnishing of liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Amended and Restated Bylaws (the “Bylaws”) and Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) of the Company as each is in effect from time to time require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”). The Bylaws and Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;
C. The uncertainties relating to liability insurance and to indemnification have increased the difficulty of attracting and retaining such persons;
D. The Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
E. It is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;
F. This Agreement is a supplement to and in furtherance of the Bylaws and Certificate of Incorporation of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee G.
Indemnitee does not regard the protection available under the Company's Bylaws and Certificate of Incorporation and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified; and
H. Indemnitee may have certain rights to indemnification and/or insurance provided by other entities and/or organizations which Indemnitee and such other entities and/or organizations intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board.
I. This Agreement supersedes and replaces in its entirety any previous Indemnification Agreement entered into between the Company and the Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as an officer or a director from and after the date hereof, the parties hereto agree as follows:
1. Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:
(a) Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of Indemnitee’s Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on Indemnitee’s behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.
(b) Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of Indemnitee’s Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good
faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.
(c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on Indemnitee’s behalf in connection therewith. The Company shall also indemnify Indemnitee if he or she is not successful in any Proceeding to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred on Indemnitee’s behalf in connection therewith if the Indemnitee nonetheless meets the applicable standard of conduct for indemnification. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter, or unsuccessfully resolved claim, issue or matter where the Indemnitee nonetheless meets the applicable standard of conduct for indemnification. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
2. Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on Indemnitee’s behalf if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.
3. Contribution.
(a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, or in Sections 1 or 2, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.
(c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits
received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
4. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked to) respond to discovery requests, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on Indemnitee’s behalf in connection therewith.
5. Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within 30 days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. For avoidance of doubt, Indemnitee’s entitlement to advancement of expenses in this Section 5 is not dependent upon the completion of the procedures for determination of entitlement to indemnification set forth in Section 6.
6. Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:
(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.
(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board: (i) unless a Change in Control has occurred: (1) by a
majority vote of the Disinterested Directors, even though less than a quorum, (2) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum, (3) if there are no Disinterested Directors or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board, by the stockholders of the Company; and (ii) if a Change in Control has occurred, then by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee. For purposes hereof, Disinterested Directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.
(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by the Board. Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.
(d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company (including by its Board or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its Board or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(f) If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within 60 days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within 15 days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made thereat.
(g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(i) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
7. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within 10 days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within 10 days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication.
(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).
(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of Indemnitee’s rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on Indemnitee’s behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.
(e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within 10 days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.
(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
8. Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.
(a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-laws, any agreement, a vote of stockholders, a resolution of Board or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate of Incorporation, By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(c) The Company hereby acknowledges that Indemnitee has or may have in the future certain rights to indemnification, advancement of expenses and/or insurance provided by other entities and/or organizations (collectively, the “Secondary Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Secondary Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Certificate of Incorporation or Bylaws of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Secondary Indemnitors, and, (iii) that it irrevocably waives, relinquishes and releases the Secondary Indemnitors from any and all claims against the Secondary Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Secondary Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Secondary Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Secondary Indemnitors are express third party beneficiaries of the terms of this Section 8(c).
(d) Except as provided in paragraph (c) above, in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (other than against the Secondary Indemnitors), who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(e) Except as provided in paragraph (c) above, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(f) Except as provided in paragraph (c) above, the Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by Except as provided in paragraph (c) above, the Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.
9. Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing shall not affect the rights of Indemnitee or the Secondary Indemnitors set forth in Section 8(c) above;
(b) in any suit in which a final judgment (or other final adjudication not subject to further appeal) is made against Indemnitee for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act, or similar provisions of state statutory law or common law;
(c) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law;
(d) with respect to remuneration paid to Indemnitee if it is determined by final judgment or other final adjudication not subject to further appeal that such remuneration was in violation of law (and, in this respect, both the Company and Indemnitee have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication, as indicated in the last paragraph of this Section 9 below);
(e) a final judgment or other final adjudication not subject to further appeal is made that Indemnitee’s conduct was in bad faith, knowingly fraudulent or deliberately dishonest or constituted willful misconduct (but only to the extent of such specific determination);
(f) if Indemnitee is held liable therefor (including pursuant to any settlement), in connection with any claim for reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or
(g) on account of conduct that is established by a final judgment as constituting a breach of Indemnitee’s duty of loyalty to the Company or resulting in any personal profit or advantage to which Indemnitee is not legally entitled.
For purposes of this Section 9, a final judgment or other adjudication not subject to further appeal may be reached in either the underlying proceeding or action in connection with which indemnification is sought or a separate proceeding or action to establish rights and liabilities under this Agreement.
Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee or otherwise act in violation of any undertaking appearing in and required by the rules and regulations promulgated under the Securities Act, or in any registration statement filed with the SEC under the Securities Act. Indemnitee acknowledges that paragraph (h) of Item 512 of Regulation S-K currently generally requires the Company to undertake in connection with any registration statement filed under the Securities Act to submit the issue of the enforceability of Indemnitee’s rights under this Agreement in connection with any liability under the Securities Act on public policy grounds to a court of appropriate jurisdiction and to be governed by any final adjudication of such issue. Indemnitee specifically agrees that any such undertaking shall supersede the provisions of this Agreement and to be bound by any such undertaking.
10. Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise)
and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.
11. Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.
12. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
11. Definitions. For purposes of this Agreement:
(a) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.
(b) “Board” means the Board of Directors of the Company.
(c) “Change in Control” means the earliest to occur after the date of this Agreement of any of the following events:
(i) Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner (as defined above), directly or indirectly, of securities of the Company representing twenty five percent (25%) or more of the combined voting power of the Company's then outstanding securities (excluding any changes in the voting power solely resulting from any conversion of Class B Common Stock into Class A Common Stock);
(ii) Change in Board. During any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (ii) or (iv) of this definition of Change in control) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;
(iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the Board or other governing body of such surviving entity;
(iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; and
(v) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement.
(d) “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.
(e) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(f) “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.
(g) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(h) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(i) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(j) “Person” for purposes of the definition of Beneficial Owner and Change in Control set forth above, shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
(k) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on Indemnitee’s part while acting as an officer or director of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership,
joint venture, trust or other Enterprise; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce Indemnitee’s rights under this Agreement.
(l) “Securities Act” shall mean the Securities Act of 1933, as amended.
14. Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.
15. Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
16. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.
17. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:
(a) To Indemnitee at the address set forth below Indemnitee signature hereto.
(b) To the Company at:
DocuSign, Inc.
221 Main Street, Suite 1550
San Francisco, CA 94105
Attention: General Counsel
or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g. www.docusign.com) or other transmission, and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
19. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
20. Governing Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably Corporation Service Company as its agent in the State of Delaware as such party's agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.
COMPANY
DocuSign, Inc.
By: ___________________________________
Name:
Title:
INDEMNITEE
______________________________________
Name:
Address:
______________________________________
______________________________________
Exhibit 99.1
DocuSign Announces Third Quarter Fiscal 2021 Financial Results
San Francisco – December 3, 2020 – DocuSign, Inc. (NASDAQ: DOCU), which offers the world’s #1 eSignature solution as part of the DocuSign Agreement Cloud, today announced results for its fiscal quarter ended October 31, 2020.
“As companies accelerate the digital transformation of their business and agreement processes, DocuSign’s role as an essential cloud platform continues to grow,” said Dan Springer, DocuSign CEO. “Our Q3 results reflect that tailwind, as well as the immediate and long-term value that customers see from eSignature and our broader Agreement Cloud.”
Third Quarter Financial Highlights
▪Total revenue was $382.9 million, an increase of 53% year-over-year. Subscription revenue was $366.6 million, an increase of 54% year-over-year. Professional services and other revenue was $16.3 million, an increase of 43% year-over-year.
▪Billings were $440.4 million, an increase of 63% year-over-year.
▪GAAP gross margin was 74% compared to 75% in the same period last year. Non-GAAP gross margin was 79% in both comparative periods.
▪GAAP net loss per basic and diluted share was $0.31 on 186 million shares outstanding compared to $0.26 on 178 million shares outstanding in the same period last year.
▪Non-GAAP net income per diluted share was $0.22 on 206 million shares outstanding compared to $0.11 on 191 million shares outstanding in the same period last year.
▪Net cash provided by operating activities was $57.4 million compared to $1.9 million net cash used in operating activities in the same period last year.
▪Free cash flow was $38.1 million compared to negative $14.1 million in the same period last year.
▪Cash, cash equivalents, restricted cash and investments were $675.6 million at the end of the quarter.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures and Other Key Metrics.”
Operational and Other Financial Highlights
▪DocuSign Agreement Cloud 2020 Product Release 3. DocuSign announced more than a dozen new product capabilities to help customers get remote work done faster and easier. This includes:
•eSignature for Slack which enables users to send and sign important documents from directly within Slack;
•Drawing which streamlines processes by enabling a sender or signer to upload an image and leave free-form markups on the image;
•Agreement Actions which allow admins to easily configure rules to automate common post-signature actions; and
•iOS App Updates which includes an improved user experience and new features (including drag-and-drop tagging) for DocuSign’s eSignature app for iOS.
▪New Products. DocuSign continues to expand the Agreement Cloud with new products that make agreement processes smarter, faster, and more secure.
•DocuSign Analyzer helps customers negotiate better agreements, faster. It applies the AI-powered advanced contract analytics of DocuSign Insight to incoming contracts, accelerating contract review and negotiation while helping to manage risk.
•DocuSign CLM+ adds AI-driven analytics from DocuSign Analyzer and Insight to DocuSign’s market-leading CLM solution. This combination empowers organizations to automate manual tasks, orchestrate
complex workflows and eliminate unnecessary risks intelligently by embedding analytics and machine learning across every stage of the agreement lifecycle.
•DocuSign Monitor helps protect agreements with round-the-clock activity tracking. It uses advanced analytics to provide near real-time alerts—empowering security teams to detect unusual account activity, investigate incidents and respond to verified threats.
•DocuSign Quote Gen for Salesforce CPQ+ allows Salesforce CPQ customers to leverage Gen for Salesforce as their document-generation solution within CPQ+.
Outlook
The company currently expects the following guidance:
▪Quarter ending January 31, 2021 (in millions, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
$404
|
to
|
$408
|
|
Subscription revenue
|
$384
|
to
|
$388
|
|
Billings
|
$512
|
to
|
$522
|
|
Non-GAAP gross margin
|
78%
|
to
|
80%
|
|
Non-GAAP sales and marketing
|
42%
|
to
|
44%
|
|
Non-GAAP research and development
|
14%
|
to
|
16%
|
|
Non-GAAP general and administrative
|
9%
|
to
|
11%
|
|
Non-GAAP interest and other income (expense)
|
$(1)
|
to
|
$1
|
|
Provision for income taxes
|
$2
|
to
|
$3
|
|
Non-GAAP diluted weighted-average shares outstanding
|
205
|
to
|
210
|
▪Year ending January 31, 2021 (in millions, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
$1,426
|
to
|
$1,430
|
|
Subscription revenue
|
$1,355
|
to
|
$1,359
|
|
Billings
|
$1,700
|
to
|
$1,710
|
|
Non-GAAP gross margin
|
78%
|
to
|
80%
|
|
Non-GAAP sales and marketing
|
44%
|
to
|
46%
|
|
Non-GAAP research and development
|
13%
|
to
|
15%
|
|
Non-GAAP general and administrative
|
9%
|
to
|
11%
|
|
Non-GAAP interest and other income
|
$3
|
to
|
$5
|
|
Provision for income taxes
|
$7
|
to
|
$8
|
|
Non-GAAP diluted weighted-average shares outstanding
|
200
|
to
|
205
|
The company has not reconciled its expectations of non-GAAP financial measures to the corresponding GAAP measures because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.
Webcast Conference Call Information
The company will host a conference call on December 3, 2020 at 1:30 p.m. PT (4:30 p.m. ET) to discuss its financial results. A live webcast of the event will be available on the DocuSign Investor Relations website at investor.docusign.com. A live dial-in will be available domestically at 877-407-0784 or internationally at 201-689-8560. A replay will be available domestically at 844-512-2921 or internationally at 412-317-6671 until midnight (ET) December 17, 2020 using the passcode 13713254.
About DocuSign
DocuSign helps organizations connect and automate how they prepare, sign, act on, and manage agreements. As part of the DocuSign Agreement Cloud, DocuSign offers eSignature, the world's #1 way to sign electronically on practically any device, from almost anywhere, at any time. Today, over 820,000 customers and hundreds of millions of users in over 180 countries use DocuSign to accelerate the process of doing business and to simplify people’s lives.
For more information, visit www.docusign.com, call +1-877-720-2040, or follow @DocuSign on Twitter, LinkedIn, Facebook and Instagram.
Copyright 2020. DocuSign, Inc. is the owner of DOCUSIGN® and all its other marks (www.docusign.com/IP).
Investor Relations:
Annie Leschin
VP Investor Relations
investors@docusign.com
Media Relations:
Adrian Wainwright
Head of Communications
media@docusign.com
Forward-Looking Statements
This press release contains “forward-looking” statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements in this press release include, among other things, statements under “Outlook” above and any other statements about expected financial metrics, such as revenue, billings, non-GAAP gross margin, non-GAAP diluted weighted-average shares outstanding, and non-financial metrics, such as customer growth, as well as statements related to our expectations regarding the benefits of the DocuSign Agreement Cloud and enhancements to it, additions to the Agreement Cloud suite of products, and the anticipated benefits of the acquisition and integration of Seal Software and Liveoak Technologies. They also include statements about our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations. These statements are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.
These risks include, among other things, risks related to the impact of the COVID-19 pandemic on our business, financial condition and results of operations as well as the businesses of our customers and partners and the economy as a whole; our ability to estimate the size of our total addressable market; our ability to effectively sustain and manage our growth and future expenses, achieve and maintain future profitability, attract new customers and maintain and expand our existing customer base; our ability to scale and update our platform to respond to customers' needs and rapid technological change; the effects of increased competition in our market and our ability to compete effectively; our ability to expand use cases within existing customers and vertical solutions; our ability to expand our operations and increase adoption of our platform internationally; our ability to strengthen and foster our relationship with developers; our ability to expand our direct sales force, customer success team and strategic partnerships around the world; our ability to identify targets for, execute on, integrate the operations of and realize the anticipated benefits of potential acquisitions; our ability to maintain, protect and enhance our brand; the sufficiency of our cash and cash equivalents to satisfy our liquidity needs; our failure or the failure of our software to comply with applicable industry standards, laws and regulations; our ability to maintain, protect and enhance our
intellectual property; our ability to successfully defend litigation against us; our ability to attract large organizations as users; our ability to maintain our corporate culture; our ability to offer high-quality customer support; our ability to hire, retain and motivate qualified personnel; and our ability to maintain proper and effective internal controls. Additional risks and uncertainties that could affect our financial results are included in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the fiscal year ended January 31, 2020 filed on March 27, 2020, our quarterly report on Form 10-Q for the quarter ended July 31, 2020 filed on September 4, 2020, and other filings that we make from time to time with the with the Securities and Exchange Commission (the “SEC”). In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
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 are presenting 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 operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share: 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 from our convertible senior notes issued in September 2018, acquisition-related expenses, 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 that 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 flows: 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.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
DOCUSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands, except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Subscription
|
$
|
366,617
|
|
|
$
|
238,072
|
|
|
$
|
971,182
|
|
|
$
|
660,341
|
|
|
Professional services and other
|
16,306
|
|
|
11,430
|
|
|
50,967
|
|
|
38,735
|
|
|
Total revenue
|
382,923
|
|
|
249,502
|
|
|
1,022,149
|
|
|
699,076
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Subscription
|
69,905
|
|
|
43,178
|
|
|
186,645
|
|
|
115,769
|
|
|
Professional services and other
|
27,926
|
|
|
18,786
|
|
|
75,833
|
|
|
59,390
|
|
|
Total cost of revenue
|
97,831
|
|
|
61,964
|
|
|
262,478
|
|
|
175,159
|
|
|
Gross profit
|
285,092
|
|
|
187,538
|
|
|
759,671
|
|
|
523,917
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing
|
209,944
|
|
|
149,231
|
|
|
576,729
|
|
|
430,053
|
|
|
Research and development
|
73,362
|
|
|
48,758
|
|
|
191,387
|
|
|
133,458
|
|
|
General and administrative
|
50,256
|
|
|
33,546
|
|
|
140,513
|
|
|
111,562
|
|
|
Total operating expenses
|
333,562
|
|
|
231,535
|
|
|
908,629
|
|
|
675,073
|
|
|
Loss from operations
|
(48,470)
|
|
|
(43,997)
|
|
|
(148,958)
|
|
|
(151,156)
|
|
|
Interest expense
|
(7,769)
|
|
|
(7,364)
|
|
|
(23,013)
|
|
|
(21,793)
|
|
|
Interest income and other income (expense), net
|
(311)
|
|
|
5,801
|
|
|
6,032
|
|
|
15,549
|
|
|
Loss before provision for income taxes
|
(56,550)
|
|
|
(45,560)
|
|
|
(165,939)
|
|
|
(157,400)
|
|
|
Provision for income taxes
|
1,941
|
|
|
1,038
|
|
|
4,916
|
|
|
3,552
|
|
|
Net loss
|
$
|
(58,491)
|
|
|
$
|
(46,598)
|
|
|
$
|
(170,855)
|
|
|
$
|
(160,952)
|
|
|
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.31)
|
|
|
$
|
(0.26)
|
|
|
$
|
(0.92)
|
|
|
$
|
(0.92)
|
|
|
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
186,423
|
|
|
178,314
|
|
|
184,767
|
|
|
175,303
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense included in costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of revenue—subscription
|
$
|
5,777
|
|
|
$
|
3,534
|
|
|
$
|
14,655
|
|
|
$
|
8,931
|
|
|
Cost of revenue—professional services and other
|
6,005
|
|
|
3,616
|
|
|
15,355
|
|
|
11,877
|
|
|
Sales and marketing
|
36,881
|
|
|
24,649
|
|
|
93,851
|
|
|
68,693
|
|
|
Research and development
|
18,896
|
|
|
11,679
|
|
|
45,562
|
|
|
30,959
|
|
|
General and administrative
|
13,361
|
|
|
9,258
|
|
|
33,815
|
|
|
30,339
|
|
DOCUSIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
October 31, 2020
|
|
January 31, 2020
|
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
$
|
374,984
|
|
|
$
|
241,203
|
|
|
Investments—current
|
223,590
|
|
|
414,939
|
|
|
Restricted cash
|
281
|
|
|
280
|
|
|
Accounts receivable, net
|
261,085
|
|
|
237,841
|
|
|
Contract assets—current
|
22,477
|
|
|
12,502
|
|
|
Prepaid expenses and other current assets
|
47,343
|
|
|
37,125
|
|
|
Total current assets
|
929,760
|
|
|
943,890
|
|
|
Investments—noncurrent
|
76,782
|
|
|
239,729
|
|
|
Property and equipment, net
|
159,652
|
|
|
128,293
|
|
|
Operating lease right-of-use assets
|
160,362
|
|
|
149,833
|
|
|
Goodwill
|
348,504
|
|
|
194,882
|
|
|
Intangible assets, net
|
128,414
|
|
|
56,500
|
|
|
Deferred contract acquisition costs—noncurrent
|
225,115
|
|
|
153,333
|
|
|
Other assets—noncurrent
|
22,530
|
|
|
24,678
|
|
|
Total assets
|
$
|
2,051,119
|
|
|
$
|
1,891,138
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
$
|
32,309
|
|
|
$
|
28,144
|
|
|
Accrued expenses and other current liabilities
|
59,752
|
|
|
54,344
|
|
|
Accrued compensation
|
114,221
|
|
|
83,189
|
|
|
Contract liabilities—current
|
686,185
|
|
|
507,560
|
|
|
Operating lease liabilities—current
|
30,633
|
|
|
20,728
|
|
|
Total current liabilities
|
923,100
|
|
|
693,965
|
|
|
Convertible senior notes, net
|
486,149
|
|
|
465,321
|
|
|
Contract liabilities—noncurrent
|
14,717
|
|
|
11,478
|
|
|
Operating lease liabilities—noncurrent
|
169,078
|
|
|
162,432
|
|
|
Deferred tax liability—noncurrent
|
7,974
|
|
|
4,920
|
|
|
Other liabilities—noncurrent
|
24,069
|
|
|
6,695
|
|
|
Total liabilities
|
1,625,087
|
|
|
1,344,811
|
|
|
Stockholders’ equity
|
|
|
|
|
Common stock
|
19
|
|
|
18
|
|
|
Treasury stock
|
(1,048)
|
|
|
—
|
|
|
Additional paid-in capital
|
1,736,241
|
|
|
1,685,167
|
|
|
Accumulated other comprehensive loss
|
(1,140)
|
|
|
(1,673)
|
|
|
Accumulated deficit
|
(1,308,040)
|
|
|
(1,137,185)
|
|
|
Total stockholders’ equity
|
426,032
|
|
|
546,327
|
|
|
Total liabilities and stockholders’ equity
|
$
|
2,051,119
|
|
|
$
|
1,891,138
|
|
DOCUSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(58,491)
|
|
|
$
|
(46,598)
|
|
|
$
|
(170,855)
|
|
|
$
|
(160,952)
|
|
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
19,479
|
|
|
12,655
|
|
|
51,455
|
|
|
36,916
|
|
|
Amortization of deferred contract acquisition and fulfillment costs
|
25,593
|
|
|
18,211
|
|
|
70,787
|
|
|
49,360
|
|
|
Amortization of debt discount and transaction costs
|
7,044
|
|
|
6,645
|
|
|
20,828
|
|
|
19,647
|
|
|
Non-cash operating lease costs
|
6,963
|
|
|
4,980
|
|
|
20,082
|
|
|
13,843
|
|
|
Stock-based compensation expense
|
80,920
|
|
|
52,736
|
|
|
203,238
|
|
|
150,799
|
|
|
Deferred income taxes
|
(766)
|
|
|
14
|
|
|
(1,050)
|
|
|
42
|
|
|
Other
|
1,699
|
|
|
229
|
|
|
1,206
|
|
|
(2,142)
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts receivable
|
(36,583)
|
|
|
(20,812)
|
|
|
(11,429)
|
|
|
15,084
|
|
|
Contract assets
|
(5,460)
|
|
|
(2,318)
|
|
|
(3,890)
|
|
|
(7,223)
|
|
|
Prepaid expenses and other current assets
|
3,553
|
|
|
(341)
|
|
|
(1,835)
|
|
|
(2,036)
|
|
|
Deferred contract acquisition and fulfillment costs
|
(52,225)
|
|
|
(27,899)
|
|
|
(144,639)
|
|
|
(77,800)
|
|
|
Other assets
|
(331)
|
|
|
(33)
|
|
|
(6,463)
|
|
|
926
|
|
|
Accounts payable
|
(2,620)
|
|
|
718
|
|
|
3,655
|
|
|
2,306
|
|
|
Accrued expenses and other liabilities
|
10,242
|
|
|
(9,811)
|
|
|
21,952
|
|
|
4,691
|
|
|
Accrued compensation
|
688
|
|
|
(9,120)
|
|
|
23,553
|
|
|
(6,693)
|
|
|
Contract liabilities
|
65,034
|
|
|
22,563
|
|
|
172,520
|
|
|
44,309
|
|
|
Operating lease liabilities
|
(7,296)
|
|
|
(3,688)
|
|
|
(14,394)
|
|
|
(10,886)
|
|
|
Net cash provided by (used in) operating activities
|
57,443
|
|
|
(1,869)
|
|
|
234,721
|
|
|
70,191
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Cash paid for acquisition, net of acquired cash
|
—
|
|
|
—
|
|
|
(180,370)
|
|
|
—
|
|
|
Purchases of marketable securities
|
(68,982)
|
|
|
(223,048)
|
|
|
(80,649)
|
|
|
(753,934)
|
|
|
Sales of marketable securities
|
—
|
|
|
—
|
|
|
28,986
|
|
|
—
|
|
|
Maturities of marketable securities
|
103,366
|
|
|
216,261
|
|
|
404,782
|
|
|
460,710
|
|
|
Purchases of strategic investments
|
(5,300)
|
|
|
—
|
|
|
(5,300)
|
|
|
(15,500)
|
|
|
Purchases of other investments
|
—
|
|
|
—
|
|
|
(3,241)
|
|
|
—
|
|
|
Purchases of property and equipment
|
(19,393)
|
|
|
(12,280)
|
|
|
(64,144)
|
|
|
(42,071)
|
|
|
Net cash provided by (used in) investing activities
|
9,691
|
|
|
(19,067)
|
|
|
100,064
|
|
|
(350,795)
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Payment of tax withholding obligation on RSU settlement
|
(113,417)
|
|
|
(39,310)
|
|
|
(247,277)
|
|
|
(125,288)
|
|
|
Proceeds from exercise of stock options
|
1,945
|
|
|
19,815
|
|
|
14,983
|
|
|
62,263
|
|
|
Proceeds from employee stock purchase plan
|
16,269
|
|
|
13,309
|
|
|
29,859
|
|
|
23,872
|
|
|
Net cash used in financing activities
|
(95,203)
|
|
|
(6,186)
|
|
|
(202,435)
|
|
|
(39,153)
|
|
|
Effect of foreign exchange on cash, cash equivalents and restricted cash
|
(1,208)
|
|
|
810
|
|
|
1,432
|
|
|
(310)
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(29,277)
|
|
|
(26,312)
|
|
|
133,782
|
|
|
(320,067)
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
404,542
|
|
|
224,423
|
|
|
241,483
|
|
|
518,178
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
375,265
|
|
|
$
|
198,111
|
|
|
$
|
375,265
|
|
|
$
|
198,111
|
|
DOCUSIGN, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Reconciliation of gross profit and gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
GAAP gross profit
|
$
|
285,092
|
|
|
$
|
187,538
|
|
|
$
|
759,671
|
|
|
$
|
523,917
|
|
|
Add: Stock-based compensation
|
11,782
|
|
|
7,150
|
|
|
30,010
|
|
|
20,808
|
|
|
Add: Amortization of acquisition-related intangibles
|
3,376
|
|
|
1,348
|
|
|
7,856
|
|
|
4,356
|
|
|
|
|
|
|
|
|
|
|
|
Add: Employer payroll tax on employee stock transactions
|
1,676
|
|
|
715
|
|
|
4,450
|
|
|
1,908
|
|
|
Non-GAAP gross profit
|
$
|
301,926
|
|
|
$
|
196,751
|
|
|
$
|
801,987
|
|
|
$
|
550,989
|
|
|
GAAP gross margin
|
74
|
%
|
|
75
|
%
|
|
74
|
%
|
|
75
|
%
|
|
Non-GAAP adjustments
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
Non-GAAP gross margin
|
79
|
%
|
|
79
|
%
|
|
78
|
%
|
|
79
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP subscription gross profit
|
$
|
296,712
|
|
|
$
|
194,894
|
|
|
$
|
784,537
|
|
|
$
|
544,572
|
|
|
Add: Stock-based compensation
|
5,777
|
|
|
3,534
|
|
|
14,655
|
|
|
8,931
|
|
|
Add: Amortization of acquisition-related intangibles
|
3,376
|
|
|
1,348
|
|
|
7,856
|
|
|
4,356
|
|
|
|
|
|
|
|
|
|
|
|
Add: Employer payroll tax on employee stock transactions
|
722
|
|
|
337
|
|
|
2,183
|
|
|
769
|
|
|
Non-GAAP subscription gross profit
|
$
|
306,587
|
|
|
$
|
200,113
|
|
|
$
|
809,231
|
|
|
$
|
558,628
|
|
|
GAAP subscription gross margin
|
81
|
%
|
|
82
|
%
|
|
81
|
%
|
|
82
|
%
|
|
Non-GAAP adjustments
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
|
3
|
%
|
|
Non-GAAP subscription gross margin
|
84
|
%
|
|
84
|
%
|
|
83
|
%
|
|
85
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP professional services and other gross loss
|
$
|
(11,620)
|
|
|
$
|
(7,356)
|
|
|
$
|
(24,866)
|
|
|
$
|
(20,655)
|
|
|
Add: Stock-based compensation
|
6,005
|
|
|
3,616
|
|
|
15,355
|
|
|
11,877
|
|
|
|
|
|
|
|
|
|
|
|
Add: Employer payroll tax on employee stock transactions
|
954
|
|
|
378
|
|
|
2,267
|
|
|
1,139
|
|
|
Non-GAAP professional services and other gross loss
|
$
|
(4,661)
|
|
|
$
|
(3,362)
|
|
|
$
|
(7,244)
|
|
|
$
|
(7,639)
|
|
|
GAAP professional services and other gross margin
|
(71)
|
%
|
|
(64)
|
%
|
|
(49)
|
%
|
|
(53)
|
%
|
|
Non-GAAP adjustments
|
42
|
%
|
|
35
|
%
|
|
35
|
%
|
|
33
|
%
|
|
Non-GAAP professional services and other gross margin
|
(29)
|
%
|
|
(29)
|
%
|
|
(14)
|
%
|
|
(20)
|
%
|
Reconciliation of operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
GAAP sales and marketing
|
$
|
209,944
|
|
|
$
|
149,231
|
|
|
$
|
576,729
|
|
|
$
|
430,053
|
|
|
Less: Stock-based compensation
|
(36,881)
|
|
|
(24,649)
|
|
|
(93,851)
|
|
|
(68,693)
|
|
|
Less: Amortization of acquisition-related intangibles
|
(3,981)
|
|
|
(2,957)
|
|
|
(11,176)
|
|
|
(9,102)
|
|
|
Less: Acquisition-related expenses
|
—
|
|
|
—
|
|
|
(186)
|
|
|
—
|
|
|
Less: Employer payroll tax on employee stock transactions
|
(4,125)
|
|
|
(1,682)
|
|
|
(10,992)
|
|
|
(5,610)
|
|
|
Non-GAAP sales and marketing
|
$
|
164,957
|
|
|
$
|
119,943
|
|
|
$
|
460,524
|
|
|
$
|
346,648
|
|
|
GAAP sales and marketing as a percentage of revenue
|
55
|
%
|
|
60
|
%
|
|
56
|
%
|
|
62
|
%
|
|
Non-GAAP sales and marketing as a percentage of revenue
|
43
|
%
|
|
48
|
%
|
|
45
|
%
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development
|
$
|
73,362
|
|
|
$
|
48,758
|
|
|
$
|
191,387
|
|
|
$
|
133,458
|
|
|
Less: Stock-based compensation
|
(18,896)
|
|
|
(11,679)
|
|
|
(45,562)
|
|
|
(30,959)
|
|
|
|
|
|
|
|
|
|
|
|
Less: Employer payroll tax on employee stock transactions
|
(1,752)
|
|
|
(712)
|
|
|
(5,317)
|
|
|
(2,888)
|
|
|
Non-GAAP research and development
|
$
|
52,714
|
|
|
$
|
36,367
|
|
|
$
|
140,508
|
|
|
$
|
99,611
|
|
|
GAAP research and development as a percentage of revenue
|
19
|
%
|
|
20
|
%
|
|
19
|
%
|
|
19
|
%
|
|
Non-GAAP research and development as a percentage of revenue
|
14
|
%
|
|
15
|
%
|
|
14
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative
|
$
|
50,256
|
|
|
$
|
33,546
|
|
|
$
|
140,513
|
|
|
$
|
111,562
|
|
|
Less: Stock-based compensation
|
(13,361)
|
|
|
(9,258)
|
|
|
(33,815)
|
|
|
(30,339)
|
|
|
Less: Acquisition-related expenses
|
(336)
|
|
|
—
|
|
|
(7,776)
|
|
|
—
|
|
|
Less: Employer payroll tax on employee stock transactions
|
(1,406)
|
|
|
(735)
|
|
|
(4,007)
|
|
|
(3,057)
|
|
|
Non-GAAP general and administrative
|
$
|
35,153
|
|
|
$
|
23,553
|
|
|
$
|
94,915
|
|
|
$
|
78,166
|
|
|
GAAP general and administrative as a percentage of revenue
|
13
|
%
|
|
13
|
%
|
|
14
|
%
|
|
16
|
%
|
|
Non-GAAP general and administrative as a percentage of revenue
|
9
|
%
|
|
9
|
%
|
|
9
|
%
|
|
11
|
%
|
Reconciliation of income (loss) from operations and operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
GAAP loss from operations
|
$
|
(48,470)
|
|
|
$
|
(43,997)
|
|
|
$
|
(148,958)
|
|
|
$
|
(151,156)
|
|
|
Add: Stock-based compensation
|
80,920
|
|
|
52,736
|
|
|
203,238
|
|
|
150,799
|
|
|
Add: Amortization of acquisition-related intangibles
|
7,357
|
|
|
4,305
|
|
|
19,032
|
|
|
13,458
|
|
|
Add: Acquisition-related expenses
|
336
|
|
|
—
|
|
|
7,962
|
|
|
—
|
|
|
Add: Employer payroll tax on employee stock transactions
|
8,959
|
|
|
3,844
|
|
|
24,766
|
|
|
13,463
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income from operations
|
$
|
49,102
|
|
|
$
|
16,888
|
|
|
$
|
106,040
|
|
|
$
|
26,564
|
|
|
GAAP operating margin
|
(13)
|
%
|
|
(18)
|
%
|
|
(15)
|
%
|
|
(22)
|
%
|
|
Non-GAAP adjustments
|
26
|
%
|
|
25
|
%
|
|
25
|
%
|
|
26
|
%
|
|
Non-GAAP operating margin
|
13
|
%
|
|
7
|
%
|
|
10
|
%
|
|
4
|
%
|
Reconciliation of net income (loss) and net income (loss) per share, basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands, except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
GAAP net loss
|
$
|
(58,491)
|
|
|
$
|
(46,598)
|
|
|
$
|
(170,855)
|
|
|
$
|
(160,952)
|
|
|
Add: Stock-based compensation
|
80,920
|
|
|
52,736
|
|
|
203,238
|
|
|
150,799
|
|
|
Add: Amortization of acquisition-related intangibles
|
7,357
|
|
|
4,305
|
|
|
19,032
|
|
|
13,458
|
|
|
Add: Acquisition-related expenses
|
336
|
|
|
—
|
|
|
7,962
|
|
|
—
|
|
|
Add: Employer payroll tax on employee stock transactions
|
8,959
|
|
|
3,844
|
|
|
24,766
|
|
|
13,463
|
|
|
Add: Amortization of debt discount and issuance costs
|
7,044
|
|
|
6,645
|
|
|
20,828
|
|
|
19,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
|
$
|
46,125
|
|
|
$
|
20,932
|
|
|
$
|
104,971
|
|
|
$
|
36,415
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Non-GAAP net income
|
$
|
46,125
|
|
|
$
|
20,932
|
|
|
$
|
104,971
|
|
|
$
|
36,415
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic
|
186,423
|
|
|
178,314
|
|
|
184,767
|
|
|
175,303
|
|
|
Effect of dilutive securities
|
19,425
|
|
|
12,478
|
|
|
17,623
|
|
|
14,503
|
|
|
Non-GAAP weighted-average common shares outstanding, diluted
|
205,848
|
|
|
190,792
|
|
|
202,390
|
|
|
189,806
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share, basic and diluted
|
$
|
(0.31)
|
|
|
$
|
(0.26)
|
|
|
$
|
(0.92)
|
|
|
$
|
(0.92)
|
|
|
Non-GAAP net income per share, basic
|
0.25
|
|
|
0.12
|
|
|
0.57
|
|
|
0.21
|
|
|
Non-GAAP net income per share, diluted
|
0.22
|
|
|
0.11
|
|
|
0.52
|
|
|
0.19
|
|
Computation of free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net cash provided by operating activities
|
$
|
57,443
|
|
|
$
|
(1,869)
|
|
|
$
|
234,721
|
|
|
$
|
70,191
|
|
|
Less: Purchases of property and equipment
|
(19,393)
|
|
|
(12,280)
|
|
|
(64,144)
|
|
|
(42,071)
|
|
|
Non-GAAP free cash flow
|
$
|
38,050
|
|
|
$
|
(14,149)
|
|
|
$
|
170,577
|
|
|
$
|
28,120
|
|
|
Net cash provided by (used in) investing activities
|
$
|
9,691
|
|
|
$
|
(19,067)
|
|
|
$
|
100,064
|
|
|
$
|
(350,795)
|
|
|
Net cash used in financing activities
|
$
|
(95,203)
|
|
|
$
|
(6,186)
|
|
|
$
|
(202,435)
|
|
|
$
|
(39,153)
|
|
Computation of billings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
(in thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenue
|
$
|
382,923
|
|
|
$
|
249,502
|
|
|
$
|
1,022,149
|
|
|
$
|
699,076
|
|
|
Add: Contract liabilities and refund liability, end of period
|
702,691
|
|
|
435,898
|
|
|
702,691
|
|
|
435,898
|
|
|
Less: Contract liabilities and refund liability, beginning of period
|
(638,790)
|
|
|
(412,953)
|
|
|
(522,201)
|
|
|
(390,887)
|
|
|
Add: Contract assets and unbilled accounts receivable, beginning of period
|
20,395
|
|
|
17,757
|
|
|
15,082
|
|
|
13,436
|
|
|
Less: Contract assets and unbilled accounts receivable, end of period
|
(26,808)
|
|
|
(20,805)
|
|
|
(26,808)
|
|
|
(20,805)
|
|
|
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
|
$
|
440,411
|
|
|
$
|
269,399
|
|
|
$
|
1,188,158
|
|
|
$
|
736,718
|
|