The Irish subsidiary of global e-signature software company Docusign has reported pre-tax losses of €127.5 million for the financial year ending January 2023—almost three times the €44.65 million recorded the previous year.

As reported in newly filed accounts for Docusign International EMEA Ltd, the losses stemmed from a series of structural and financial changes, including a shift in operating model, rising costs, and two successive rounds of job cuts that cost the company €1.35 million in severance, benefits, and associated charges.

The company, which is headquartered in Dublin, saw revenues decline by 5%, falling from €107 million to €102.6 million. Meanwhile, operating expenses surged by 50%, jumping from €152.69 million to €229.1 million over the same period, contributing significantly to the widened losses.

One of the key factors behind the financial downturn was a fundamental change in Docusign’s commercial operations in the region. The company transitioned from a cost-plus entity—a model in which it was reimbursed for costs plus a fixed margin—to a hybrid cost-plus/full risk distributor model. This move involved taking on more direct market exposure, including the responsibilities of sales and customer relationships.

Although Docusign International EMEA Ltd only began direct sales to third-party customers on 1 September 2022, it had already invested heavily in sales, marketing, and customer support during the earlier part of the year in preparation for the shift. These forward-looking investments included absorbing the costs of other EMEA entities that supported the broader regional sales and service efforts.

The company's workforce shrank notably during the year, with employee numbers dropping from 914 to 842. Yet despite this decline, staff costs increased substantially—from €103.94 million to €128.36 million.

A substantial portion of the increased staff-related expense was linked to share-based compensation, which rose to €31.19 million. Additionally, non-cash amortisation costs of €7.28 million related to intellectual property rights from Seal Software Ltd further exacerbated the losses.

The directors also disclosed that the company undertook two rounds of restructuring—first in February 2023, and then again in February 2024—both involving reductions in workforce. The total cost of these job cuts, including severance pay, notice periods, taxes, and professional services, amounted to €1.35 million.

Despite the challenging financial picture, the company’s balance sheet was bolstered during the year with a capital injection of €109.2 million. Additionally, its share-based payment reserve increased from €72 million to €104.08 million, indicating continued investment in long-term talent retention mechanisms, despite the workforce reductions.

In their statement, the directors attributed the year’s losses primarily to the strategic overhaul in the company’s revenue model and the operational ramp-up tied to future sales activities. They emphasised that while the revenue dip and surging costs had led to a sharp increase in losses, many of the expenses were tied to one-time transitions and non-cash charges.

The directors stopped short of offering forward guidance, but the ongoing restructuring and the February 2024 layoffs indicate that the company continues to realign its European operations in response to market conditions and internal performance metrics.