DocuSign: Enterprise Kicking In

DocuSign has become the e-signature industry's defining brand, with ~67% market share in a category where it is replacing paper signatures as the friction removal has a very high value in both time and money.

Enterprise expansion is just taking off, as is international growth. 

• Increasing enterprise and large commercial customer penetration gives confidence that growth will remain high.

• DocuSign is moving from the landing to expanding phase

• This should be a high visibility, high growth phase as use cases expand within companies. 

• Growth in Europe positioned to benefit from standardisation in law. (eIDAS)

The bottom line is we think DocuSign can easily beat street revenue growth estimates of ~22% a few quarters out.

Frustratingly, there is lack of data / the market is too new to have a lot of data to analyse, the key bet is on demand for eSignature growing. Anecdotal evidence is overwhelmingly positive, but backing up some of managements claims is impossible. 

Potential Upside: $85 (+65%): DCF based, fully expensing SBC. Subscription revenue grows at 30% for the next 4 years

Sensible Downside: $41 (-21%): Rapidly slowing growth, but operating margin expansion to 30%.

Link To Research Report