Expectations were high going into DocuSign's (DOCU -2.98%) fiscal 2021 first-quarter financial report. The stock was up 89% year-to-date headed into the company's earnings release on Thursday, and the results showed that the e-signature technology provider had continued to gain converts as people around the globe sheltered at home to stem the spread of the COVID-19 pandemic.
For the quarter that ended April 30, DocuSign reported revenue of $297 million, up 39% year over year, easily surpassing analysts' consensus estimates of $281 million. It also eclipsed management's forecast for about 32% growth, while accelerating slightly from 38% revenue growth last quarter. This translated to a bottom-line performance that was also better than expected. Non-GAAP (adjusted) earnings per share grew 71% year over year to $0.12, exceeding expectations of $0.10.
The company also generated net cash from operations of $59.1 million and free cash flow of $32.8 million, up 29% and 8%, respectively.
Plenty to like
There were a number of other metrics that illustrated DocuSign's dominant and growing position in the remote signature space. Subscription revenue kept pace with overall growth, increasing 39% to $281 million. Billings, which includes sales that have not yet been recognized as revenue, grew 59% year over year to $342 million.
The company saw broad-based customer additions, which fueled its robust growth. DocuSign added 10,000 net new direct customers and 58,000 self-service customers, bringing its total to nearly 661,000. Additionally, organizations with annual contract values of greater than $300,000 grew by 46% year over year to a total of 473. At the same time, the number of enterprise and commercial customers grew by 49%. Expanding relationships with current clients helped push DocuSign's dollar-based net retention rate -- which measures the level of spending by existing customers -- to 119%. Put another way, existing customers spent 19% more over the previous 12 months than they did in the prior year.
One of the new headline customers was the Department of Labor "in one of the largest U.S. states." The company was brought in to help simplify its lengthy and complex process for handling emergency unemployment benefits. Using DocuSign eSignature, it was able to disburse more than $500 million to 500,000 recipients in less than one week. Another example involved helping a "large" bank with Small Business Administration (SBA) loans, facilitating 0.5 million loan applications, with 75% of those signed within 24 hours.
During the conference call to discuss the results, CEO Dan Springer pointed out that the surge in the need for e-signatures is good news, as using that DocuSign service is normally how longer-term relationships with the company begin. "Typically, eSignature is the first step that many customers take on their broader digital transformation journey with us," Springer said. "So from a financial point of view, we believe this surge in eSignature adoption bodes well for future agreement cloud expansion."
What many investors fail to grasp is the massive opportunity presented by DocuSign's agreement cloud, a suite of more than a dozen applications that allow businesses to prepare, sign, act on, and manage contracts. The platform integrates with more than 350 existing systems to cover the entire life cycle of the agreement process. This moved the company beyond just remote signatures and expanded it into the realm of business contracts.
Strong performance results in increased guidance
As a result of its strong results last quarter, DocuSign raised its full-year forecast. The e-signature technology company is now expecting revenue of $1.315 billion at the midpoint of its guidance, which would represent year-over-year growth of about 35%.
DocuSign was already experiencing solid growth before the pandemic, but was able to expand its business in the resulting remote work-at-home environment. Once customers experience the ease and convenience of the company's e-signature and remote contract applications, they'll likely stick around long after the pandemic is a distant memory.