Global Markets Comment
We believe DOCU can capitalize on the secular shift to e-signatures that have been accelerated by COVID-19. With IT budgets recovering from the recession in 2020 and greater emphasis on digitalization, we foresee DOCU benefiting from increased IT spending. Going forward, we are optimistic that DOCU would be able to leverage on their existing large client base and upsell them on its contract lifecycle management service under the Agreement Cloud to provides another avenue for growth. We forecast a revenue CAGR of 30% for the next 4 years, with the Agreement Cloud segment increasing its revenue share from 5% to 12%.
Performance since inception*
DocuSign offers a range of cloud-based software solutions designed to address the agreement process. DocuSign launched with its eSignature product, seeking to displace outdated, in-person signature requirements for contracts, offer letters, mortgages and other files. DocuSign has since expanded its product offerings to streamline the pre- and post-agreement processes. This opportunity, known as contract lifecycle management, allows customers to integrate agreements with CRM systems or other workflow tools, and adds features such as identity checks, payment collections, and management controls
Price History 1 year
DocuSign reported impressive 3QF21 results that exceeded analysts' expectations in terms of billings, revenues and RPO. We believe that this is a clear indication of strong momentum even after COVID-19. Management have also updated guidance for 4QF21/FY21 with an implied growth of 48%/47% (above consensus of 41%/42%). Heading into 2021, we expect DOCU to upsell its Agreement Cloud service which is expected to grow with a CAGR of 50% for the next 3 years.
Price History 5 years
Risk in Investment Case
Risks to DocuSign include: 1) Premium historical valuation embeds high investor expectations for growth, 2) Sustainability of the current demand for e-signature, which has benefited from the pandemic's remote work environment 3) Recently announcement management changes.
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