DocuSign lays off 6% of staff; third wave in last two years

Gabby Jones/Bloomberg

DocuSign, the San Francisco-based electronic signature company, is laying off roughly 6% of its workforce — its third round in the last two years.

As part of a plan to reduce operating costs across the company for the 2025 fiscal year, DocuSign chief executive Allan Thygesen and other members of the executive leadership team cut back on program spending, professional fees, non-critical open roles and more.

"We are making early progress, as evidenced by last month's major beta releases, but it will take time for our new products to make a material impact on key metrics including bookings, billings and revenue. … This reality makes it critical for us to manage our business to improve profitability and focus investment on initiatives that provide the strongest foundation for long-term growth," Thygesen said in a message sent to employees on Tuesday.

He stated that the non-staff reductions weren't enough, requiring further cuts that affect 400 employees mostly in the organization's sales and marketing divisions. The employee layoffs and other changes will cost roughly $28 to $32 million in "non-recurring" charges consisting of "cash expenditures for employee transition, notice period and severance payments, employee benefits and related costs as well as non-cash expenses related to vesting of share-based awards," according to a press release issued Tuesday.

"Of course, I am most concerned for our colleagues who will be leaving, but I am also aware that layoffs are disruptive and hard on company culture, especially when they happen more than once," Thygesen said.

Fintech

Major fintech layoffs in 2023

December 12, 2023 4:57 PM

In September 2022, DocuSign leadership executed a similar plan for "improving operating margins and supporting the company's growth, scale and profitability objectives," laying off 9% of staff. This was followed in February of last year by another layoff where a further 10% were dismissed. Roughly one third of the company's full-time staff are located outside the U.S., according to recent quarterly data filed with the Securities and Exchange Commission. 

Share prices peaked at $64.70 in early January, according to data from Yahoo Finance, but have continued to decline since late last month with a closing price of $51.31 as of Wednesday. The company has been public since 2018.

Regulatory scrutiny and rising rates put earnings performance under significant pressure in what was a tumultuous 2023 for fintechs, driving companies like LendingClub, Sofi, Upstart and others to execute mass layoffs. With this trend extending into 2024, one question looming on the horizon is what this could mean for partnerships with financial institutions.

Data from Cornerstone Advisors' annual "What's Going on in Banking" report showed a combined $2.28 million drop in venture fintech investments from both banks and credit unions going into 2023. However, that number is expected to rebound slightly in 2024 by roughly $490,000.

"Financial institutions aren't simply partnering with fintechs, they're investing in them. … Banks and credit unions have become the new venture capitalists," Ron Shevlin, chief research officer for Cornerstone, said in the report.

The majority of the charges generated as a result of DocuSign's restructuring are expected to occur in the first quarter of 2025 fiscal year, with changes to be finalized before the end of the following quarter.