DocuSign, Inc. (NASDAQ:DOCU) provides cloud based software in the United States and internationally. The company provides e-signature solution that enables businesses to digitally prepare, sign, act on, and manage agreements. It also offers CLM, which automates workflows across the entire agreement process; Insights that use artificial intelligence (AI) to search and analyze agreements by legal concepts and clauses; Gen for Salesforce, which allows sales representatives to automatically generate agreements with a few clicks from within Salesforce; Negotiate for Salesforce that supports for approvals, document comparisons, and version control; Analyzer, which helps customers understand what they’re signing before they sign it; and CLM+ that provide AI-driven contract lifecycle management. The company provides Guided Forms, which enable complex forms to be filled via an interactive and step-by-step process; Click that supports no-signature-required agreements for standard terms and consents; Identify, a signer-identification option for checking government-issued IDs; Standards-Based Signatures, which support signatures that involve digital certificates; Payments that enables customers to collect signatures and payment; and eNotary, which offers the ability to execute electronic notarial acts. It offers industry-specific cloud offerings, including Rooms for Real Estate that provides a way for brokers and agents to manage the entire real estate transaction digitally; Rooms for Mortgage, which offers digital workspace to create and close mortgages; FedRAMP, an authorized version of DocuSign eSignature for U.S. federal government agencies; and life sciences modules that support compliance with the electronic signature practices. The company sells its products through direct, partner-assisted, and Web-based sales. It serves enterprise, commercial, and small businesses. The company was incorporated in 2003 and is headquartered in San Francisco, California.
DocuSign is a first-mover and industry leader in e-signatures, which streamline the traditionally cumbersome process of signing agreements manually. In recent years, DocuSign has moved beyond e-signatures, developing technology and acquiring companies to build its Agreement Cloud, a suite of tools that automate the entire document process, saving businesses time and increasing efficiency.
DocuSign controls about 70% of the e-signature market. It serves roughly 892,000 paying customers worldwide, including 18 of the world’s top 20 pharmaceutical companies, seven of its top ten tech companies, and ten of the top 15 financial companies. Hundreds of millions of people use its services.
To widen its moat against those more diversified rivals, DocuSign bundled together its web, email, and mobile app signature services into the DocuSign Agreement Cloud in 2019. It also added its contract lifecycle management services from SpringCM, which it bought the previous year, to that ecosystem.
DocuSign’s number of paying customers jumped 51% in 2021, and it ended the year with a net retention rate of 123%. That metric, which measures its year-over-year revenue growth per existing customer, grew from 117% in 2020, and has remained comfortably above 100% since the company’s IPO.
Those growth rates indicate DocuSign’s ecosystem is sticky and it isn’t losing many customers to Adobe, Dropbox, or other competitors. Furthermore, DocuSign’s Agreement Cloud can be integrated into other cloud-based enterprise software platforms — including Salesforce, Microsoft‘s Office 365, and Alphabet‘s Google Drive — which should shore up its defenses against its diversified competitors.
DocuSign expected revenue to rise 35%-36% for the full year, and for its non-GAAP gross margin to expand to 79%-81%. Analysts expect its full-year revenue and non-GAAP earnings to grow 36% and 46%, respectively.
Therefore, investors searching for sustainable growth and low volatility should consider DocuSign for their portfolios.