What is the DocuSign revenue

DocuSign Stock: Cornerstone of the Anywhere Economy

The DocuSign share we first introduced it here on our blog almost exactly two years ago as an investment story. In June 2019, we then built up an initial position at rates of less than $ 50. As early as September 2019, DocuSign surprised with a surge in growth. Shortly thereafter, the pandemic began, the acceleration of digitization and with it the share price rush with prices well over $ 200.

The DocuSign share has been consolidating at a high level since summer 2020. We want to use the just presented figures for FY21, which ended at the end of January, as an opportunity to put our DocuSign investment to the test.

DocuSign share figures for fiscal year 2020/2021

DocuSign revenue rose 49 percent to $ 1.45 billion in the past fiscal year. Of this, $ 1.38 billion was allocated to subscriptions, which grew by as much as 59 percent in Q4.

Billings rose even faster than sales in FY21 by 56 percent to $ 1.7 billion, although their growth slowed somewhat in Q4 to +46 percent.

The already astonishingly fast, almost exclusively organic growth of the company accelerated from just under 40 percent to around 50 percent during the pandemic.

Outstanding growth figures were reported especially internationally: starting from a relatively low starting level, sales outside the USA grew by over 67 percent in FY21, and an impressive 83 percent in Q4. For the first time, foreign sales account for more than 20 percent of total sales at DocuSign.

Gross margins were unchanged from the previous year, at 79 percent (non-GAAP) and 75 percent (GAAP), respectively. The gross margins are even better if you factor out the non-subscription sales. With its subscriptions, DocuSign has a gross margin of almost 85 percent.

The operating margin (non-GAAP) increased significantly to 12 percent in FY21, and reached a record 17 percent in Q4.

DocuSign also made a big leap in FY21 in terms of cash flow development. The free cash flow margin was 15 percent, down from 4 percent in FY20. Together with the sales growth in the amount of 49 percent results in an outstanding rule-of-40 score of over 60 percent, which proves how efficiently DocuSign can grow.

With a huge customer base in the "Anywhere Economy"

DocuSign has been extremely successful in acquiring new customers for years, both with enterprise customers and with the vast majority of small businesses.

DocuSign has a total of almost 900,000 customers, almost twice as many as two years ago. The number of direct corporate customers who not only “docusign” through one of the numerous partnerships such as SAP or Salesforce increased even more significantly to 125,000 in the same period.

The number of large customers paying more than $ 300,000 for DocuSign services also increased significantly to over 600 in FY21.

Together with a rising net dollar retention rate of 123 percent most recently, this impressive customer base is an excellent starting position for rapid growth even in the post-Corona era.

People will not want to do without the added value of a digital signature - just like working at least partially from home or the option of a virtual doctor's visit without overcrowded waiting rooms - in the future either. The paper-based signature is a thing of the past.

The CEO Dan Springer put it very aptly: “DocuSign went from a crisis response solution last year to a business as usual solution today… Ultimately, over the coming years, we think the trend will continue towards the option of doing anything from anywhere. We call the products and services supporting this trend, the ‘anywhere economy’. "

The DocuSign Guidance for the FY22

DocuSign management expects sales of approximately $ 1.97 billion in FY22, an increase of 35 percent. In the current first quarter, an increase of 46 percent is even expected. Billings are set to advance at least 32 percent to $ 2.27 billion in FY22.

The (non-GAAP) operating margin is expected to land at 14 percent, an increase of two percentage points compared to FY21.

The guidance regarding the number of shares issued contains an important message: these should not increase any further and amount to a maximum of 210 million. The DocuSign shareholders must (in contrast to many other high-growth stocks) b.a.w. do not expect any further dilution of their shares.

The lure of cheap money

At the end of FY21, DocuSign had cash reserves of $ 867 million. Like many other SaaS companies, DocuSign has seized the opportunity and secured a large amount of additional capital. A three-year convertible bond (with 0 percent interest) brought $ 690 million into the coffers, and an additional credit line of up to 750 million was agreed.

In view of the positive cash flow, this capital is not required for operational activities. Investors can therefore assume that these recent capital raisings will be needed for possible acquisitions.

We can only hope that the DocuSign management, as with the successful acquisition of SpringCM, will show a sense of proportion and limit itself to technology acquisitions instead of acquiring an overpriced stream of sales.

The evaluation of the DocuSign share

DocuSign stock, like most other SaaS stocks, is still expensive after the correction. Very expensive, in fact, given an EV / Sales ratio of 23 based on the expected figures for the current financial year.

Does that mean that DocuSign shares are overvalued? In any case, the future growth of the coming years is already fully priced in with a company value of currently well over $ 40 billion. We therefore currently only hold a small remaining position in the DocuSign share in The Digital Leaders Fund's portfolio.

We would very much like to be a permanent part of this real digital leader. With its digital signature solutions, DocuSign will have a decisive influence on the way in which we conclude contracts in the future.

But not every digitally leading company is a good investment. As with classic value investing, the purchase price also matters when investing in the digital business leader. And that doesn't seem particularly attractive to us at the moment.
If you would like to wait with us for a more interesting entry-level price at DocuSign and other digital leaders, you can subscribe to our free newsletter here now.


The Digital Leaders Fund and / or the author and / or affiliates or companies own shares in DocuSign. This post represents an expression of opinion and not investment advice. Please note the legal notices.