Docusign Inc (NASDAQ: DOCU) stock lost over 8.3% in the pre-market session of September 4th, 2020 (Source: Google finance) on concerns over margin pressure post second quarter of 2021 results. The firm maintained a total non-GAAP gross margin of 78% during the quarter but Subscription gross margin fell 83% from 84% in the prior corresponding period. This impact was due to Seal acquisition and investments made in data center capacity, especially in hosted services to meet significantly higher transaction volumes.
On the bright side, the firm reported solid sales driven by eSignature solutions whose billings rose 61% on a yoy basis to $406 million. Total revenue surged 45% yoy to $342 million during the second quarter. Subscription revenue surged 47% yoy to $324 million driven by strength outside the U.S. as total International revenue surged 59% yoy to $67 million. The group added over 88,000 new customers, of those, over 10,000 were direct customers, which is a rise of 55% year-over-year. This brings total customer base to nearly 749,000 worldwide with over 99,000 direct customers. Docusign dollar net retention rate was 120% during the quarter while Customers with ACVs > $300,000 surged 41% yoy to a total of 520 customers.
Non-GAAP net income surged $35 billion from $2 million in the second quarter of last year. The ongoing pandemic boosted interest to the firm’s products leading to solid customer wins. A major healthcare clinics retailer accelerated plans to offer tele health services, using DocuSign eSignature to handle consent and other paperwork remotely. A major financial institution who had been DocuSign customer accelerated plans for further rollouts and together they activate 11 new lines of business.
For the third quarter of 2020, overall revenue is expected to be in the range of $358 million to $362 million and $1.384 billion to $1.388 billion for fiscal 2021. Subscription revenue is expected to be in the range of $343 million to $347 million for third quarter and in the range of $1.315 billion to $1.319 billion for fiscal 2021. For Billings, they forecast $380 million to $390 million in third quarter of FY21, and $1.623 billion to $1.643 billion for fiscal 2021. Non-GAAP gross margin is forecasted to be in the range of 78% to 80% for both Q3 and fiscal 2021.