DocuSign (DOCU) is Benefiting From Demand for eSignatures

DocuSign, Inc. DOCU gains from the continued demand for its main product, eSignatures. The company has a huge untapped market, which provides it with an opportunity to explore and expand. A strong relationship with partners and continued efforts to win new customers bode well for the company. However, the company strives in a competitive market with low liquidity.

DOCU has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

DocuSign, Inc. presented impressive first-quarter fiscal 2024 (ended Apr 30) results with both earnings and revenues beating the Zacks Consensus Estimate and growing year over year. Non-GAAP earnings per share (excluding 72 cents from non-recurring items) of 72 cents beat the consensus mark by 35.9% and grew 89.5% from the year-ago fiscal quarter’s reported figure. Revenues of $661.4 million also surpassed the consensus estimate by 3.2% and increased 12.4% from the year-ago fiscal quarter’s reported figure.

Factors in Favor

DocuSign’s core product, eSignature, facilitates secure virtual agreement signing and sending on various devices from anywhere globally. The company’s revenues are notably boosted by sustained customer demand for eSignature. Despite this increasing demand, the eSignature market remains largely unexplored, positioning DocuSign to extend eSignature usage to businesses worldwide.

DocuSign Revenue (TTM)

DocuSign revenue-ttm | DocuSign Quote

DocuSign’s growth strategies encompass continuous eSignature customer acquisition, expanding use cases for existing customers, enhancing offerings, promoting Agreement Cloud products, and international expansion. The company invests in sales, marketing, and technical expertise across diverse industry verticals

Docusign’s global presence is profitable, with international revenues at 25%, 23%, and 20% of total revenues, respectively, in 2023, 2022, and 2021. The company began in English-speaking common law countries, and then invested in expanding to civil law nations. Investing in tech, sales, and global partnerships along with aiding U.S. clients with global agreements have led to the solid growth potential of the company.

Factors Against

DocuSign’s current ratio stood at 0.82 at the end of first-quarter fiscal 2024, lower than 1.01 recorded at the end of the prior year quarter. It indicates that the company may have problems meeting its short-term debt obligations.

DocuSign faces fierce competition in its global e-signature market, primarily from Adobe, and contends with other specialized vendors in areas like payments, ID verification, and contract lifecycle management. This competition exerts ongoing pressure on DocuSign in terms of product quality, pricing, and technology.

Zacks Rank and Other Stocks to Consider

DOCU currently sports a Zacks Rank #1 (Strong Buy).

Investors interested in Zacks Business Services sector can consider the following stocks:

Aptiv APTV holds a Zacks Rank #2(Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Clean Harbors CLH holds a Zacks Rank of 2. Earnings for 2023 are expected to be in-line with the year-ago quarter while revenues are anticipated go up 5.3% year over year. CLH has an impressive earnings surprise of 13% in the past four quarters, having beaten the Zacks Consensus Estimate in all four trailing quarters. CLH carries a VGM Score of B.

Verisk Analytics VRSK holds a Zacks Rank of 2. Earnings for 2023 are expected to grow 14% while revenues are anticipated to fall 8.3% from the year-ago figure. VRSK has an impressive earnings surprise of 9.85% in the past four quarters, having beaten the Zacks Consensus Estimate in three of the four trailing quarters and matching on one instance.

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