DocuSign delivered a stronger-than-expected second quarter as artificial intelligence increasingly becomes integrated into enterprise contract management. The results show a company moving beyond its traditional electronic-signature franchise toward Intelligent Agreement Management, while maintaining substantial cash generation and improving profitability.

Revenue Growth Holds Above Expectations

DocuSign generated $875.7 million in Q2 FY27 revenue, representing 9% year-over-year growth and exceeding the $867 million analyst estimate shown in the earnings data. The company said approximately 1.3 percentage points of the reported growth benefited from foreign-exchange movements, making the underlying expansion somewhat more moderate than the headline figure suggests.

Adjusted diluted earnings per share increased 26% to $1.16, compared with $0.92 a year earlier and the $1.09 consensus estimate. The improvement reflects continued operating leverage, while net cash provided by operating activities increased to $334.5 million from $246.1 million a year earlier.

Free cash flow was particularly strong at $295.8 million, equivalent to a 34% margin, compared with $217.6 million and a 27% margin in the prior-year period. DocuSign also repurchased $306.5 million of its common stock during the quarter, highlighting the company’s substantial cash-generation capacity.

IAM Is Becoming a Larger Part of DocuSign’s Business

The most strategically important metric was the acceleration of Intelligent Agreement Management. IAM represented 15.1% of total annual recurring revenue as of July 31, up from 12.6% at the end of April. That represents a 250-basis-point increase in just one quarter and indicates that customers are increasingly adopting DocuSign’s broader agreement-management capabilities.

The platform is being built around Iris, DocuSign’s agreement-focused AI engine, which can analyze contract terms, review and redline agreements, generate language and initiate workflows. The company has also introduced pre-built agents for areas such as agreement intake and vendor renewals, alongside Agent Studio for customers developing specialized agents.

DocuSign has expanded the platform through its Model Context Protocol server and integrations with major AI and enterprise ecosystems, including Anthropic, OpenAI, Google Gemini, Microsoft Copilot, Slack and Perplexity. The strategy is designed to allow AI systems to interact with agreement data while maintaining enterprise security, permissions and governance.

Higher Guidance Reflects AI and Enterprise Momentum

DocuSign raised its FY27 revenue outlook to $3.499 billion to $3.507 billion, compared with its previous range of $3.490 billion to $3.502 billion. The company now expects ARR growth of 8.5% to 9.0%, while IAM is projected to reach approximately 18% to 19% of total ARR by the end of the fiscal year.

Non-GAAP operating margin is expected at 31.0% to 31.5%, while third-quarter revenue is forecast at $886 million to $890 million and non-GAAP operating margin at 31.3% to 31.7%. The outlook suggests that management is prioritizing profitable growth while increasing investment in AI-driven products.

The next phase of DocuSign’s transformation will depend on whether IAM can grow quickly enough to materially change the company’s overall growth profile. Investors will be watching IAM adoption, ARR expansion, enterprise demand, AI-agent usage and free-cash-flow generation as the company attempts to turn its large agreement repository and established customer base into a broader AI-powered workflow platform. The key risk is that AI adoption may increase product complexity and investment requirements without producing a proportionate acceleration in revenue growth.