DocuSign Stock Remains Bullish, More Gains Coming
Despite concerns about the economic impact of the coronavirus, DocuSign Inc (NASDAQ:DOCU) continues to trade near record highs. Currently priced at $86.42, DOCU stock is up approximately 60% year-over-year and 20% since the start of 2020.
Thanks to three consecutive quarters of strong revenue growth and guidance, DocuSign Inc continues to have excellent long-term growth potential.
Back in October, when DOCU stock was trading at $66.50, I provided a 12-month forecast of $95.00. That was quite aggressive, compared to what Wall Street was calling for.
At the time, that represented a roughly 40% gain. That $95.00 mark is still within striking distance. DocuSign stock could hit that milestone if the company reports strong fourth-quarter and year-end results after the markets close on March 12.
Right now, the highest 12-month analyst estimate for DOCU stock is $93.00, more than a seven-percent gain from the price as of this writing. Even with mounting evidence that the coronavirus will put a big dent in the global economy, there is every evidence that DocuSign will continue to do well.
A new 12-month forecast for DocuSign stock of $115.00 seems more justified.
DOCU Stock Overview
The San Francisco-based DocuSign Inc helps its customers sign their names and prepare documents online. That’s something a notorious germaphobe like President Donald Trump could get behind.
DocuSign pioneered the e-signature and is the leader in automating the entire agreement process. The company’s proprietary technology helps its customers connect and automate how they prepare, sign, and manage agreements.
The company’s “DocuSign Agreement Cloud” allows anyone to sign documents electronically, from virtually any device, anywhere, at any time. (Source: “About DocuSign,” DocuSign Inc, last accessed March 6, 2020.)
DocuSign has more than 500,000 paying customers and hundreds of millions of users in more than 180 countries. Its customers include:
- 70% of the top 10 global technology companies.
- 90% of global pharmaceutical companies.
- 67% of the largest global financial services companies.
- 800 U.S. federal, state, and local government agencies.
DocuSign Stock Information
|Market Cap||$15.4 Billion|
|Shares Outstanding||179.5 Million|
|50-Day Moving Average||$82.42|
|200-Day Moving Average||$69.51|
(Source: “DocuSign, Inc. (DOCU),” Yahoo! Finance, last accessed March 6, 2020.)
DocuSign Reports Another Strong Quarter
In December 2019, DocuSign announced the financial results for its third quarter of fiscal 2020 (ended October 31, 2019). Third-quarter revenue increased 40% year-over-year to $249.5 million. (Source: “DocuSign Announces Third Quarter Fiscal 2020 Financial Results,” DocuSign Inc, December 5, 2019.)
Subscription revenue was up 41% at $238.1 million, while professional services and other revenue advanced 28% to $11.4 million. Billings were up 36% year-over-year at $269.4 million.
DocuSign reported a third-quarter net loss of $46.6 million ($0.26 per share), a big improvement from the third-quarter 2019 net loss of $52.8 million ($0.31 per share).
Adjusted net income was $0.11 per share, compared to third-quarter 2019 adjusted net income of $0.00 per share.
The company ended the third quarter of fiscal 2020 with cash, cash equivalents, restricted cash, and investments of $912.0 million.
“We delivered another quarter of strong growth in billings and revenue, a significant expansion of our global customer base, and our eighth quarter of non-[generally accepted accounting principles] profitability,” said DocuSign CEO Dan Springer.
“Customers and partners alike are seeing the benefits of having a single platform that connects and automates the entire agreement process. As we continue to expand our suite of Agreement Cloud products, we believe DocuSign is poised to lead the next big category of cloud platforms.”
Q4 and 2020 Outlook
For the fourth quarter of fiscal 2020, DocuSign Inc expects to report:
- Total revenue in the range of $263.0 to $267.0 million. At the midpoint, that represents a 32.5% increase from the fourth quarter of fiscal 2019.
- Billings in the range of $346.0 to $356.0 million. At the midpoint, that’s a 33% increase from the fourth quarter of fiscal 2019.
For full-year fiscal 2020, DocuSign expects:
- Revenue to be in the range of $962.0 to $966.0 million. At the midpoint, that’s a 37.5% increase from full-year fiscal 2019.
- Billings in the range of $1.08 to $1.09 billion. At the midpoint, that’s a 35% increase from full-year fiscal 2019.
Chart courtesy of StockCharts.com
As mentioned earlier, DOCU stock is up approximately 20% in 2020 and is trading near its all-time highs. That’s pretty impressive when you consider that the stock market has plunged into correction territory on coronavirus fears.
While investors remain skittish about how the markets will respond to economic data over the coming months, DocuSign stock investors are optimistic that the company will continue to report strong results.
The fact is, the coronavirus outbreak could actually make DocuSign Inc one of the biggest tech winners of 2020.