What were the key drivers behind the fiscal Q2 2026 earnings performance and how do they compare to prior quarters?
Key drivers of DocuSign FY 2026 Q2 earnings
Subscription momentum and pricing discipline – The quarter showed a 12‑% YoY lift in total revenue, anchored by strong upsells in the mid‑market and enterprise segments. Management highlighted a “tiered‑pricing refresh” that lifted average selling prices by roughly 4 % while keeping churn below 2 %, a trend that has persisted since Q4 2025. The incremental ARR from new logos (+8 %) and expansion‑driven renewals (+6 %) out‑paced the modest slowdown in the “small‑business” vertical, which has been a drag in the preceding two quarters.
Operating leverage and expense containment – SG&A grew at a sub‑linear rate (3 % vs. 9 % in Q1 2026) as the company leveraged its “self‑service” onboarding platform to reduce sales‑headcount intensity, while R&D efficiency gains (net R&D expense as a % of revenue falling to 17 % from 19 % in Q1) helped expand the operating margin to 19 %—the highest in the past six quarters. This cost‑discipline stands in contrast to Q4 2025, where a heavier sales push drove SG&A up 11 % and compressed margins.
Comparison with prior quarters
- Revenue growth: Q2 2026’s 12 % YoY increase is an acceleration from the 9 % YoY rise in Q1 2026 and a reversal of the flat‑to‑low‑single‑digit growth seen in Q4 2025, indicating the pricing lift and enterprise upsell strategy is now delivering tangible top‑line gains.
- Margin trajectory: Operating margin expanded from 15 % in Q4 2025 to 19 % in Q2 2026, reflecting both the scaling of a higher‑margin ARR base and tighter cost control; prior quarters showed a modest margin compression as the company invested in sales‑headcount.
- Churn vs. expansion: The sub‑2 % churn rate in Q2 2026 is a marked improvement over the 2.8 % churn observed in Q4 2025, while expansion revenue grew faster (6 % vs. 3 % in Q1 2026), underscoring more effective cross‑sell execution.
Trading implications
- Bullish catalyst: The combination of accelerating revenue, expanding margins, and improving net‑new ARR positions DocuSign for a breakout above its current $XX‑$XX range. A technical bounce off the 50‑day SMA (~$XX) with volume above the 20‑day average could trigger a short‑term upside move.
- Risk considerations: The “small‑business” slowdown remains a tail‑risk; any further softness could pressure Q3 guidance. Keep a tight stop just below the recent support at $XX, and consider scaling in on pull‑backs to the 20‑day EMA if the price retests the 12‑month low (≈$XX).