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DocuSign (DOCU)
NASDAQ:DOCU
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DocuSign
(NASDAQ:DOCU)79Outperform
Positive Factors
Customer Base and Brand Strength
DocuSign has the dominant e-signature franchise, with 1.6M customers, a strong brand, and very high net promoter scores.
Market Opportunity
DocuSign addresses a $50B total addressable market, with $25B from e-signature and $25B from contract lifecycle management.
Negative Factors
Operating Margin
Lowering the operating margin estimate due to increased investment and one-time Cloud migration costs.
DocuSign (DOCU) vs. S&P 500 (SPY)
Market Cap
$16.80B
Dividend YieldN/A
Average Volume (3M)1.98M
Price to Earnings (P/E)16.8
Beta (1Y)1.74
Revenue Growth7.52%
EPS Growth1855.81%
CountryUS
Employees6,840
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)4.85
Shares Outstanding202,023,150
10 Day Avg. Volume1,940,497
30 Day Avg. Volume1,980,870
Financial Highlights & Ratios
PEG Ratio0.00907
Price to Book (P/B)N/A
Price to Sales (P/S)5.77
Price to Cash Flow (P/CF)17.90
P/FCF Ratio19.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$100.14Price Target Upside22.03% Upside
Rating ConsensusHold
Number of Analyst Covering13
DocuSign Business Overview & Revenue Model
Company DescriptionDocuSign, Inc. (DOCU) is a leading provider of electronic signature technology and digital transaction management services. Headquartered in San Francisco, California, the company operates in the software and technology sector, offering cloud-based solutions that facilitate the signing and management of agreements and other digital documents. DocuSign's core products include eSignature, which enables secure digital signing, and the broader DocuSign Agreement Cloud, a suite of services designed to automate and manage the entire agreement process across various industries.
How the Company Makes MoneyDocuSign generates revenue primarily through a subscription-based model. The company's key revenue streams include subscriptions for its eSignature services and the broader DocuSign Agreement Cloud. Customers, ranging from individual professionals to large enterprises, pay recurring fees for access to these digital transaction management solutions. DocuSign also earns revenue from professional services, which include training and support tailored to help customers implement and optimize their use of DocuSign products. Additionally, strategic partnerships with major technology companies and integrations with popular business applications contribute to its market presence and financial performance, although these are not direct revenue streams.
DocuSign Financial Statement Overview
Summary
DocuSign exhibits strong financial health with impressive revenue growth, profitability, and a solid balance sheet. The company has effectively managed its debt levels and maintained high returns on equity. Cash flow generation is healthy, but there is potential to enhance cash conversion from net income. DocuSign is well-positioned in the software industry with a strong financial foundation.Income Statement
DocuSign has demonstrated a robust revenue growth trajectory with a TTM revenue growth rate of approximately 5.5% compared to the previous year. The gross profit margin is strong at 79%, indicating efficient cost management. Net profit margin has significantly improved to 34.7% in the TTM period, reflecting enhanced profitability. EBIT and EBITDA margins have also improved, showcasing operational strength.85
Very Positive
Balance Sheet
The company has a healthy balance sheet with a low debt-to-equity ratio of 0.07, indicating low leverage. Return on equity is exceptionally high at 50.9%, reflecting efficient utilization of equity. The equity ratio is 52.8%, indicating a strong equity base, which enhances financial stability.82
Very Positive
Cash Flow
DocuSign's cash flow statement reveals positive free cash flow growth of 3.1% in the TTM period. The operating cash flow to net income ratio is favorable at 0.99. However, the free cash flow to net income ratio is slightly lower at 0.90, indicating some room for improvement in converting net income to cash.78
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.91B | 2.76B | 2.52B | 2.11B | 1.45B | 973.97M | Gross Profit |
| 2.30B | 2.19B | 1.98B | 1.64B | 1.09B | 730.74M | EBIT |
| 178.52M | 31.63M | -55.16M | -60.47M | -173.85M | -193.51M | EBITDA |
| 330.40M | 195.59M | 2.76M | 21.44M | -127.60M | -124.12M | Net Income Common Stockholders |
| 1.01B | 73.98M | -97.45M | -69.98M | -243.27M | -208.36M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.05B | 1.05B | 1.03B | 802.82M | 773.50M | 656.14M | Total Assets |
| 2.97B | 2.97B | 3.01B | 2.54B | 2.34B | 1.89B | Total Debt |
| 143.05M | 143.05M | 888.29M | 882.23M | 915.75M | 648.48M | Net Debt |
| -654.01M | -654.01M | 166.40M | 373.17M | 349.70M | 407.28M | Total Liabilities |
| 1.84B | 1.84B | 2.40B | 2.27B | 2.01B | 1.34B | Stockholders Equity |
| 1.13B | 1.13B | 617.29M | 275.50M | 325.74M | 546.33M |
| Cash Flow | Free Cash Flow | ||||
| 914.58M | 887.13M | 429.11M | 445.07M | 214.56M | 43.65M | Operating Cash Flow |
| 1.01B | 979.53M | 506.76M | 506.47M | 296.95M | 115.70M | Investing Cash Flow |
| -213.35M | 44.61M | -191.20M | -162.91M | 81.23M | -321.49M | Financing Cash Flow |
| -1.37B | -946.04M | -98.26M | -394.62M | -58.98M | -70.45M |
DocuSign Technical Analysis
Negative
82.06
Price Trends
90.30
Negative
84.70
Negative
70.30
Positive
Market Momentum
-2.68
Positive
34.37
Neutral
44.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DOCU, the sentiment is Negative. The current price of 82.06 is below the 20-day moving average (MA) of 87.04, below the 50-day MA of 90.30, and above the 200-day MA of 70.30, indicating a neutral trend. The MACD of -2.68 indicates Positive momentum. The RSI at 34.37 is Neutral, neither overbought nor oversold. The STOCH value of 44.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DOCU.
DocuSign Risk Analysis
DocuSign disclosed 51 risk factors in its most recent earnings report. DocuSign reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
DocuSign Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $16.80B | 16.83 | 50.85% | ― | 7.52% | 1855.81% | |
79 Outperform | $171.61B | 57.36 | 16.92% | 0.65% | 13.73% | 9.93% | |
78 Outperform | $193.98B | 35.94 | 39.42% | ― | 11.02% | 4.96% | |
73 Outperform | $22.64B | 23.40 | 11.31% | ― | 3.05% | 55.96% | |
69 Neutral | $4.70B | 40.89 | 1086.23% | ― | 4.09% | 299.27% | |
68 Neutral | $7.82B | 18.77 | -60.11% | ― | 1.86% | 6.21% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
DOCU
DocuSign
82.06
30.28
58.48%
ADBE
Adobe
446.03
-98.81
-18.14%
INTU
Intuit
598.07
-37.76
-5.94%
BOX
Box
33.47
6.22
22.83%
DBX
Dropbox
26.32
2.42
10.13%
ZM
Zoom Video Communications
74.93
8.44
12.69%
DocuSign Earnings Call Summary
Earnings Call Date: Dec 5, 2024 | % Change Since: -1.94% | Next Earnings Date: Mar 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and customer growth, improved retention rates, and profitability. While there are some concerns about gross margin pressures and temporary cost increases, the overall sentiment reflects optimism due to significant achievements in innovation and strategic investment in the IAM platform.Highlights
Revenue and Customer Growth
Q3 revenue was $755 million, up 8% year-over-year. Customer growth continued with a 11% year-over-year increase to 1.6 million customers.
Improved Dollar Net Retention
Dollar net retention increased to 100% in Q3, up from 98% in Q4 of fiscal 2024, driven by increases in customer usage and utilization.
Strong Profitability
Non-GAAP operating margins improved to 29.6%, up from 26.8% in Q3 fiscal 2024, showing a commitment to improving efficiency and profitability.
Innovation in IAM Platform
Launched new capabilities and expanded IAM platform availability to more regions, showing strong initial steps towards sustainable long-term growth.
Stock Buybacks and Cash Flow
Repurchased $173 million of stock, maintaining financial stability with $1.1 billion in cash and no debt, alongside $211 million in free cash flow.
Lowlights
Gross Margin Pressure
Non-GAAP gross margin for Q3 was slightly lower at 82.5% compared to 83.0% the previous year, due to additional cloud migration costs.
Temporary Cost Increases
Cloud transition costs and changes in compensation structure expected to pressure margins in fiscal year 2026.
Company Guidance
During the DocuSign Q3 Fiscal 2025 earnings call, the company provided guidance reflecting strong performance and strategic advancement. DocuSign reported a total revenue of $755 million, marking an 8% year-over-year increase, with subscription revenue contributing $735 million. The dollar net retention rate improved to 100% from 98% in Q4 of fiscal 2024, driven by enhanced customer usage and gross retention. The company also achieved a non-GAAP operating margin of 29.6%, up from 26.8% the previous year. Looking ahead to Q4, DocuSign anticipates total revenue to range between $758 million and $762 million, with subscription revenue expected to be between $741 million and $745 million, both representing a 7% year-over-year growth. Billings for Q4 are projected to be between $870 million and $880 million, a 5% growth rate year-over-year. The non-GAAP gross margin is expected to be between 81.0% and 82.0%, while the non-GAAP operating margin is projected at 27.5% to 28.5%. DocuSign's strategic focus on increasing operating efficiency, accelerating product innovation, and strengthening its omnichannel go-to-market capabilities is expected to continue driving growth into fiscal 2026.DocuSign Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
DocuSign Amends Executive Severance Agreements
Neutral
Jan 17, 2025
On January 15, 2025, DocuSign’s Board of Directors approved amendments to the Executive Severance and Change in Control Agreements for key executives, including the CFO, President, and Chief Legal Officer. These restated agreements make permanent certain enhancements for qualifying terminations outside and during a change in control period, impacting severance benefits including salary, bonus, COBRA coverage, and equity award vesting.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.