DocuSign Shares Surge After Strong Outlook. Is It Too Late to Buy the Stock?

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]