DocuSign, the American software company which provides electronic agreements for firms, posted strong first quarter results, based on the acquisition of Lexion (an agreement workflow platform), and continued product innovation.

Allan Thygesen, CEO, said core business revenue in Q1 was up 7% to $710m and non-GAAP operating margin had increased by nearly 2% from 26.6% to 28.%% compared to the previous year.

Free cashflow had remained strong, improving by 8% to $232m, giving a free cashflow margin of 33%, which would help to fund a $1bn share buyback.

Thygesen said the firm would focus on product innovation and the continued development of DocuSign Intelligent Agreement Management (IAM) for future revenue.

Business expansion hinged on the further development of the DocuSign IAM product, which allows customers to create, commit to, and manage agreements all in one place, was released to small and mid-market customers in the USA.

Thygesen also provided an update on DocuSign Navigator, a document management system which would “leverage artificial intelligence (AI) to transform unstructured agreements into structured data, making it easier to access vital information,” he said.

With the purchase of Lexion, Thygesen wishes to harness their AI based agreement technology to accelerate the growth of the IAM product. 

Thygesen saw this as opportunity to expand into the legal sector, as AI analysis of existing agreements and the detection of deviations from standard contract terms could increase productivity for law firms.

To substantiate the potential benefits, Thygesen drew on the efficiencies achieved by existing DocuSign customers.

He said: “Santander in the UK had transformed its lending fulfilment process in its corporate and commercial bank including reformatting its facility agreements through automation.”

Blake Grayson, CFO, said net dollar net retention (which measures business retention from existing customers), “had improved to 99% in Q1 from 98% in Q4,” but was expected to be flat in Q2.

Grayson was more upbeat on larger accounts. He said: “The number of customers spending at least $300,000 annually remained stable at 1,059 in Q1. Bookings from customers with total contract value over $1 million continued to increase by double digit year-over-year rates in Q1.”

New customer acquisition growth remained strong in Q1, with total customers increasing by 11% year on year for the third consecutive quarter to 1.56m, with net additions of 50,000.