DocuSign Focuses on Integrations

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According to a recent report, the global digital signature market size was estimated to grow at 28% CAGR from $4.4 billion in 2021 to $42 billion by 2030. DocuSign (Nasdaq: DOCU) recently announced its second quarter results that surpassed market expectations, but the company’s outlook was not too impressive.

DocuSign’s Financials

Revenues for the second quarter grew 22% to $622.2 million. Non GAAP net income was $0.44 per share, in line with the market’s estimates. The market was looking for revenues of $602 million and an EPS of $0.42.

Subscription revenues grew 23% to $605.2 million, while professional services revenue declined 11% to $17 million. Billings for the quarter grew 9% to $647.7 million.

For the quarter, DocuSign forecast revenues of $624-$628 million and billings of $584-$594 million, compared with the Street’s forecast of revenues of $625 million and billings of $593.4 million. DocuSign expects to end the year with revenues of $2.470-$2.482 billion compared with the market’s forecast of $2.47 billion.

DocuSign’s Growth

During the quarter, DocuSign continued to add newer capabilities to its offerings. It recently introduced Shared Access for its eSignature that allows a user to be granted permission to send or manage envelopes on another user’s behalf. It also added enhancements to Bulk Send and Agreement Actions.

It is also expanding its integration partners. Recently, it launched a new integration with Stripe that allows accounts, finance, and support teams to view eSignature agreements and Stripe payments side-by-side and launch new agreements right from their Stripe dashboards. Stripe users no longer need to go between the two platforms to complete transactions, support customers, or review transactions.

It introduced a new CLM Integration within Slack that enables customers to collaborate and move their agreements forward in a more streamlined way. CLM for Slack allows users to navigate the full agreement processes from redlining, to reviews and approvals, using its CLM solution without leaving the Slack platform. Other CLM enhancements include CLM AI-assisted data capture and a new integration with DocuSign CLM Connector for Coupa. DocuSign now has over 400 integrations where users can access its solutions without requiring to leave the partner environment.

DocuSign continued to build on its notary services and added two additional US states, New Jersey and Oregon, to its portfolio. Now DocuSign Notary supports 25 states in the US.

Overall, DocuSign had a rather lackluster quarter. While the company did reveal better than expected second quarter results, it provided a very modest 5% increase in billing outlook for the second half of the year. The current economic pressures are expected to continue in the coming years, causing lack of growth visibility. However, the company remains committed to an expense review to ensure that it drives profitability.

Its stock is trading at $54 with a market capitalization of $10.8 billion. It has fallen from the 52-week high of $288.50 that it was trading at in October last year. Earlier this month, the stock had fallen to a 52-week low of $53.25.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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