DocuSign: Shows Signs of Growth
With pandemic restrictions, companies signed documents online rather than physically. DocuSign dominates the digital signature space, with a 70% market share. Its TAM (total addressable market) is estimated at a whopping $50 billion.
DocuSign already integrates with leading software providers like Oracle, Microsoft, and Google. While the company has been toeing the profitability line, its GAAP consistent earnings are in the red, which is consistent with a young tech firm rapidly expanding its services. Per-share losses contracted by 63% in the second quarter, while revenues grew 50% year-on-year. Its subscription model provides a recurring revenue stream and the company witnessed improved customer retention.
The stock has taken a hit recently, with investors shifting their attention to cyclical growth stocks, amid the reopening of the economy. However, DocuSign’s financial performance shows a company that has captured a strategic advantage and whose value addition in terms of cost-saving is something clients are aware of. Unlike home décor and exercise equipment, digital signing is not just a pandemic play. Instead, the pandemic highlighted the savings in both cost and time of the process. DocuSign Agreement Cloud extends the signing process to agreement terms and renewals, helping clients rapidly manage and renew agreements throughout their lifecycle.
The stock has remained broadly flat over the past month and seems ready for a good run ahead.