Core Viewpoint - Docusign, Inc. (DOCU) has demonstrated significant stock performance, with a 67% increase over the past six months, outperforming the internet software industry and the S&P 500 composite [1] Financial Performance - Earnings for fiscal years 2025 and 2026 are projected to grow by 18.5% and 4.3% year over year, respectively, with a long-term expected earnings growth rate of 9.4% over three to five years [2] Revenue Growth Drivers - Docusign's revenue growth is primarily driven by strong customer demand for its eSignature solution, with a growing customer base from 1.1 million in 2022 to a projected 1.5 million in 2024, indicating substantial future growth potential [3] - Approximately 97% of Docusign's total revenue comes from subscription fees, which provide stable revenue streams and enhance cash flow visibility [4] - Subscription revenues increased by 10% in fiscal 2024, fueled by revenue expansion from existing customers and the acquisition of new clients [5] Strategic Partnerships - Docusign has strengthened partnerships with technology leaders such as Salesforce and Microsoft, enhancing its market reach and customer base through integrated solutions [6] Concerns - Docusign has never declared dividends and lacks a payout plan, meaning returns for investors rely solely on share price appreciation [7] - The company's current ratio is 0.84, indicating potential challenges in meeting short-term obligations and raising concerns about financial flexibility [8] Market Position - Docusign currently holds a Zacks Rank of 3 (Hold), reflecting its market position [9]

Group 1 - DocuSign has experienced a significant stock price increase of approximately 75% over the past six months, indicating strong market performance [1] - The stock was previously considered undervalued but is now assessed to be in fair valuation territory based on a reversed cash flow analysis [1] Group 2 - The investment strategy discussed involves a long-only approach that combines dual momentum with stock picking, aiming for targeted annual returns of 12% [2] - The strategy includes a comparison against the QQQ index to ensure long-term performance, allowing for aggressive purchasing of quality companies during bond phases [2]

Group 1 - The company provides streamlined agreements that enhance convenience for both parties involved [1]

Core Insights - DocuSign is expected to experience slow and steady growth rather than explosive growth [1] Company Summary - The stock prices referenced were from the afternoon of December 19, 2024, indicating a specific timeframe for the analysis [1] - The video discussing these insights was published on December 21, 2024, providing context for the timing of the information [1]

Core Insights - DocuSign's shares surged following accelerated revenue and billings growth in the latest quarter, with the stock up over 55% year-to-date [1] Financial Performance - For the fiscal third quarter, DocuSign reported revenue of $754.8 million, an 8% increase year-over-year, with subscription revenue also rising 8% to $734.7 million and professional service revenue increasing 11% to $20.1 million [3] - Billings growth accelerated to 9%, reaching $752.3 million, significantly exceeding the company's guidance of $710 million to $720 million [4] - The company ended the quarter with 1.63 million customers, an 11% increase from the previous year, and achieved a dollar-net retention rate of 100% [5] Cash Flow and Debt Position - DocuSign generated $234.3 million in operating cash flow and $210.7 million in free cash flow during the quarter, with cash and investments totaling $1.1 billion and zero debt [6] Guidance and Projections - The company raised its full-year revenue guidance to a range of $2.959 billion to $2.963 billion, with subscription revenue expected between $2.885 billion and $2.889 billion, and billings projected between $3.056 billion and $3.066 billion [7][8] - For the fourth quarter, revenue is projected to be between $758 million and $762 million, indicating nearly 7% growth, while billings are forecasted to be between $870 million and $880 million, representing about 5% growth at the midpoint [9] Valuation Metrics - DocuSign's stock now trades at a forward price-to-earnings (P/E) ratio of just over 29 times next year's analyst estimates and about 7 times price-to-sales (P/S), reflecting a significant increase in valuation compared to earlier in the year [11]

Core Viewpoint - DocuSign (DOCU) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][3]. Estimate Revisions - The rising trend in earnings estimate revisions reflects growing analyst optimism regarding DocuSign's earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, DocuSign is projected to earn $0.84 per share, indicating a year-over-year increase of +10.53%. Over the last 30 days, three estimates have increased while two have decreased, leading to a 24.75% rise in the Zacks Consensus Estimate [4]. - For the full year, the earnings estimate stands at $3.52 per share, representing an +18.12% change from the previous year. In the past month, seven estimates have been revised upward with no negative revisions, resulting in an 11.39% increase in the consensus estimate [5]. Zacks Rank - DocuSign has achieved a Zacks Rank 2 (Buy) due to favorable estimate revisions, indicating strong potential for outperformance compared to the S&P 500 [6]. - Historically, stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have significantly outperformed the S&P 500, suggesting a positive outlook for DocuSign [6]. Stock Performance - DocuSign shares have increased by 16.2% over the past four weeks, indicating investor confidence in the company's earnings growth prospects [7].

Core Insights - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps identify stocks with strong momentum, addressing the challenges in defining momentum [2] Company Overview: DocuSign (DOCU) - DocuSign currently holds a Momentum Style Score of A, indicating strong momentum potential [3] - The company has a Zacks Rank of 2 (Buy), which is associated with outperformance in the market [4] Price Performance - Over the past week, DocuSign shares have increased by 34.26%, significantly outperforming the Zacks Internet - Software industry, which rose by 1.93% [7] - In a longer timeframe, shares have risen by 72.11% over the past quarter and 71.16% over the past year, compared to the S&P 500's gains of 10.27% and 32.66%, respectively [8] Trading Volume - DocuSign's average 20-day trading volume is 3,872,210 shares, which serves as a bullish indicator when combined with rising stock prices [9] Earnings Outlook - In the last two months, 7 earnings estimates for DocuSign have been revised upwards, increasing the consensus estimate from $3.45 to $3.52 [11] - For the next fiscal year, there have been 2 upward revisions and 5 downward revisions in earnings estimates [11] Conclusion - Given the strong momentum indicators and positive earnings outlook, DocuSign is positioned as a solid momentum pick with a 2 (Buy) rating and a Momentum Score of A [12]

Revenue and Financial Performance - Docusign's total revenue for the three months ended October 31, 2024, was $754.8 million, compared to $700.4 million for the same period in 2023[129] - Total revenue grew by 8% in Q3 2024 to $754.8 million and by 7% in the nine months ended October 31, 2024 to $2.2 billion[155] - Revenue for the three months ended October 31, 2024, was $754.8 million, compared to $700.4 million in the same period in 2023[204] - Subscription revenue accounted for 97% of total revenue for the three and nine months ended October 31, 2024 and 2023[122] - Subscription revenue increased by $52.3 million (8%) in Q3 2024 and $152.5 million (8%) in the nine months ended October 31, 2024, driven by customer expansion and new customer acquisition[155] - International revenue represented 28% of total revenue for the three and nine months ended October 31, 2024, up from 26% in the same periods in 2023[137] - Professional services revenue decreased by 3% in the nine months ended October 31, 2024, while related costs decreased by 20% due to lower headcount and stock-based compensation[155][159] Net Income and Profitability - The company's net income for the three months ended October 31, 2024, was $62.4 million, up from $38.8 million in the same period in 2023[129] - Net income increased significantly to $984.4 million (45% of revenue) in the nine months ended October 31, 2024, compared to $46.7 million (2% of revenue) in the same period of 2023[153] - GAAP net income for the three months ended October 31, 2024, was $62.4 million, compared to $38.8 million in the same period in 2023[204] - Non-GAAP net income for the three months ended October 31, 2024, was $188.5 million, compared to $163.8 million in the same period in 2023[204] - The company released an $831.4 million valuation allowance related to U.S. deferred tax assets, contributing to a $804.3 million income tax benefit in the nine months ended October 31, 2024[151] - The company released $831.4 million of its valuation allowance related to U.S. deferred tax assets, reflecting sustained profitability and anticipated future earnings[173] Customer Base and Contract Value - Docusign had over 1.6 million customers as of October 31, 2024, including approximately 256,000 enterprise and commercial customers, compared to 1.4 million customers and 233,000 enterprise and commercial customers as of October 31, 2023[125] - The number of customers with greater than $300,000 in annualized contract value was 1,075 as of October 31, 2024, compared to 1,051 as of October 31, 2023[128] Expenses and Costs - Cost of subscription revenue increased by $20.4 million (18%) in Q3 2024 and $54.2 million (16%) in the nine months ended October 31, 2024, primarily due to higher IT and personnel costs[156][157][158] - Gross margin for subscription revenue decreased by 1 percentage point to 82% in Q3 2024 and remained at 82% for the nine months ended October 31, 2024[156] - Sales and marketing expenses decreased by 1% in both Q3 2024 and the nine months ended October 31, 2024, representing 38% and 39% of revenue respectively[161] - Research and development expenses increased by 11% in Q3 2024 and 12% in the nine months ended October 31, 2024, representing 20% of revenue in both periods[162] - Sales and marketing expenses decreased by $1.9 million (1%) in the three months ended October 31, 2024, and by $8.2 million (1%) in the nine months ended October 31, 2024, primarily due to reduced marketing and advertising costs[163] - Research and development expenses increased by $14.5 million (11%) in the three months ended October 31, 2024, and by $45.0 million (12%) in the nine months ended October 31, 2024, driven by workforce investments for product innovation[166] - General and administrative expenses decreased by $10.7 million (10%) in the three months ended October 31, 2024, and by $39.7 million (13%) in the nine months ended October 31, 2024, primarily due to reduced professional fees and stock-based compensation[170] - The company transitioned from co-located data centers to public cloud infrastructure, resulting in $24 million increased hosting costs in the nine months ended October 31, 2024[158] Cash Flow and Investments - Cash, cash equivalents, restricted cash, and investments were $1.1 billion as of October 31, 2024[129] - The company had $942.4 million in cash and cash equivalents and short-term investments as of October 31, 2024, along with $112.8 million in long-term investments[174] - Cash provided by operating activities was $709.4 million in the nine months ended October 31, 2024, driven by billings, cash collections, and interest income[183] - Net cash used in investing activities was $280.6 million in the nine months ended October 31, 2024, primarily due to the $143.6 million acquisition of Lexion and $68.6 million in property and equipment purchases[185] - Net cash used in financing activities was $607.3 million in the nine months ended October 31, 2024, mainly due to $521.8 million spent on stock repurchases and $85.5 million for tax withholding on share settlements[188] - The company repurchased 9.2 million shares of common stock for $523.7 million during the nine months ended October 31, 2024, under its stock repurchase program[181] - Non-GAAP free cash flow for the three months ended October 31, 2024, was $210.7 million, compared to $240.3 million in the same period in 2023[204] - Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment[199] Non-GAAP Metrics - Non-GAAP gross profit for Q3 2024 was $622.37 million, compared to $581.43 million in Q3 2023[202] - Non-GAAP gross margin for Q3 2024 was 82.5%, up from 83.0% in Q3 2023[202] - Non-GAAP subscription gross profit for Q3 2024 was $619.11 million, compared to $584.20 million in Q3 2023[202] - Non-GAAP subscription gross margin for Q3 2024 was 84.3%, down from 85.6% in Q3 2023[202] - Non-GAAP income from operations for Q3 2024 was $223.08 million, compared to $187.41 million in Q3 2023[202] - Non-GAAP operating margin for Q3 2024 was 29.6%, up from 26.8% in Q3 2023[202] - Non-GAAP billings for the three months ended October 31, 2024, were $752.3 million, compared to $691.8 million in the same period in 2023[204] - The projected non-GAAP tax rate for fiscal 2024 and 2025 is 20%[198] GAAP Metrics - GAAP gross profit for Q3 2024 was $598.28 million, compared to $557.78 million in Q3 2023[202] - GAAP net income for the three months ended October 31, 2024, was $62.4 million, compared to $38.8 million in the same period in 2023[204] Strategic Initiatives and Investments - The company plans to invest in product innovation, omnichannel go-to-market strategies, and operational efficiency to drive long-term growth[130][131][132] - Docusign's IAM platform is now offered on a user-based subscription basis in specific customer segments and geographies, with multiple pricing tiers and specialized packages[121] - Docusign has over 900 active partner integrations, enabling customers to manage agreements directly within their existing applications[127] Risk Factors - The company is exposed to foreign currency exchange risk, with potential impacts on operating results due to fluctuations in exchange rates[207] - The company has not engaged in hedging foreign currency transactions but may choose to do so in the future[207] - A 10% increase or decrease in the relative value of the U.S. dollar to other currencies is not expected to have a material effect on the company's operating results[207] - A hypothetical 100 basis point increase in interest rates would result in an approximate $3.0 million decrease in the fair value of the company's investment portfolio[206] Credit Facility and Borrowing Capacity - The company's credit facility, amended in May 2023, provides $500.0 million in borrowing capacity, with an option to increase by an additional $250.0 million, and remains unused as of October 31, 2024[175] Billings and Sales Metrics - Billings reflect sales to new customers plus subscription renewals and additional sales to existing customers[200]

DocuSign, Inc. (NASDAQ:DOCU) Q3 2025 Earnings Conference Call December 5, 2024 5:00 PM ET Company Participants Heather Harwood - Head of Investor Relations Allan Thygesen - Chief Executive Officer Blake Grayson - Chief Financial Officer Conference Call Participants Jake Roberge - William Blair Tyler Radke - Citi Brent Thill - Jefferies Austin Cole - Citizens JMP Joshua Baer - Morgan Stanley Sonak Kolar - JPMorgan Michael Berg - Wells Fargo Securities Arsenije Matovic - Wolfe Research Ian Black - Needham & C ...

For the quarter ended October 2024, DocuSign (DOCU) reported revenue of $754.82 million, up 7.8% over the same period last year. EPS came in at $0.90, compared to $0.79 in the year-ago quarter.The reported revenue represents a surprise of +1.41% over the Zacks Consensus Estimate of $744.31 million. With the consensus EPS estimate being $0.86, the EPS surprise was +4.65%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street exp ...