XML 22 R12.htm IDEA: XBRL DOCUMENT
v3.24.3

Acquisitions | 9 Months Ended
--- | ---
Oct. 31, 2024
Business Combinations [Abstract] |
Acquisitions | Acquisitions Acquisition of DocuSmart, Inc. d/b/a Lexion On May 31, 2024 (“Acquisition Date”), we acquired 100% of the outstanding equity interests of DocuSmart, Inc. (“Lexion”), an AI-powered contract management platform which features intelligent contract repository and agreement workflow automation and reporting. We expect to integrate Lexion’s technology and capabilities comprehensively across Docusign solutions, including advanced document understanding for contract reviews, negotiations, insights and analysis, to better enable organizations to create, commit to, and manage agreements. The results of Lexion’s operations have been included in the accompanying consolidated financial statements since the Acquisition Date. The acquisition purchase consideration, in accordance with ASC 805, totaled $154.0 million and was paid in cash. The Company paid $17.4 million of the consideration to an escrow account held for 18 months by a third party for post-closing indemnification obligations. We accounted for the transaction as a business combination using the acquisition method of accounting. We allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the Acquisition Date. Fair values were determined using the replacement cost method. Excess purchase price consideration was recorded as goodwill and is primarily attributable to the assembled workforce and expanded market opportunities when integrating Lexion’s intelligent contract repository and agreement workflow automation capabilities within Docusign’s IAM platform. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Quarterly Report on Form 10-Q. We continue to collect information with regards to our estimates and assumptions, including potential liabilities, contingencies, and the allocation of the purchase price. We will record adjustments to the fair value of the net assets acquired, liabilities assumed and goodwill within the measurement period, if necessary. The following table summarizes preliminary allocation of purchase consideration to assets acquired and liabilities assumed based on their respective estimated fair values as of the date of acquisition:
(in thousands) | May 31, 2024
Cash and cash equivalents | $ | 10,409 |
Accounts receivable, net | 1,741 |
Goodwill | 103,352 |
Intangible assets, net | 50,200 |
Contract liabilities — current | (5,071) |
Deferred tax liability | (5,862) |
Accrued expenses and other current liabilities | (749) |
Total purchase consideration | $ | 154,020 |
None of the goodwill recognized upon acquisition is deductible for U.S. federal income tax purposes. The estimated useful lives of intangible assets, primarily based on the expected period of benefit to us, and fair values of the identifiable intangible assets at Acquisition Date were as follows:
(in thousands, except years) | Estimated Fair Value |  | Expected Useful Life
Existing technology | $ | 29,900 |  |  | 5.0 years
Customer relationships—subscription | 20,300 |  |  | 7.0 years
Total intangible assets | $ | 50,200 |  |  | 5.8 years
Additionally, the purchase agreement provides for $19.1 million of deferred compensation for key employees for which post acquisition employment service is required. The deferred compensation was paid into an escrow account at closing and recorded as prepaid asset that will amortize into compensation expense on a straight-line basis over the three year term of the arrangement. We granted certain continuing employees and founders of Lexion restricted stock units (“RSUs”) with an aggregate grant date fair value of $34.8 million that will be accounted for as a post-acquisition compensation expense over the vesting period. During the nine months ended October 31, 2024, we incurred acquisition related expenses of $4.3 million which are recognized within general and administrative expenses in the consolidated statement of operations. The following unaudited pro forma information has been prepared for illustrative purposes only and assumes the acquisition occurred on February 1, 2023. It includes pro forma adjustments related to the amortization of acquired intangible assets, share-based compensation expense, deferred compensation, and transaction related expenses. The impact of pro forma adjustments during the three and nine months ended October 31, 2024 is not material. For the purpose of computing the pro forma tax effects of the acquisition, we applied the historical annual effective tax rate for the three and nine months ended October 31, 2023 to the combined entity results. The unaudited pro forma results have been prepared based on estimates and assumptions, which we believe are reasonable, however, they are not necessarily indicative of the consolidated results of operations had the acquisition occurred on February 1, 2023, or of future results of operations:
(in thousands) (unaudited) |  |  | Three Months Ended October 31, |  |  |  | Nine Months Ended October 31,
|  | 2023 |  |  |  | 2023
Net income/(loss) |  |  | 21,799 |  |  |  |  | 23,916 |

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration