DocuSign (NASDAQ: DOCU)
DocuSign offers customers a full suite of digital document tools designed to help assess, negotiate, and close deals in real time, even if the parties are on opposite sides of the world. The DocuSign Agreement Cloud is the company's flagship platform. This cloud technology allows customers to access DocuSign from anywhere, and it's the driving force behind the collaborative features in digital documents. Customers can also leverage the power of artificial intelligence (AI) with DocuSign Insight, which can analyze a document and flag potential risks based on problematic clauses, or even opportunities. Having recently announced its first quarter earnings, DocuSign has seen an increase in mentions by 133% over the last day, encouraging investors to wonder what gave the stock such hype. Currently, DocuSign is trading for $60.55 per share.
There are numerous reasons that DocuSign has come to gain this much positive hype, here are some of them.
DocuSign's current price-to-sales ratio is 5.5, and it's trading for 26 times free cash flow, both of which are at or near all-time lows. If you’re looking to pick the stock up, this would be the perfect time.
DocuSign has seen a big increase in revenue. It grew revenue 25% from a year ago with an increase of 43% internationally. It's a full-on subscription business that was up 26% from a year ago. Despite the onset of a recession, this seems like it will continue.
The e-signature and contract management services provider reported revenue growth of 25% year over year to $588.7 million, which beat analysts' expectations by $6.8 million, and seem to continue to do so.
DocuSign's profits should grow faster than revenues -- and that the company will outperform analysts' predictions of only 16.5% earnings growth.
They continue to bring big customers, and I think what the customers with greater than $300,000 annualized contract value, that grew 32% from a year ago, there are now 886 of those customers.
One of the most encouraging signs for investors is DocuSign's cash generation. The company posted $196 million of operating cash flow and $175 million of free cash flow last quarter.These metrics were up from $136 million and $123 million, respectively, in the year-ago period. As DocuSign piles up cash, its enterprise value gets even cheaper.
Long-term targets are intact, E-signature solutions save time and money for companies and clients. it removes a high-friction point where many sales are lost.
No investment is free from negatives, and DocuSign isn’t the exception. It important to consider the downsides of an investment before making it, here are a couple of them.
Analysts were expecting non-GAAP earnings per share (EPS) of $0.46, but the company only reported $0.38. GAAP loss per share for the quarter was $0.14, compared to the year-ago quarter's loss of $0.04.
DocuSign reported the first-quarter fiscal year 2023 earnings on June 9. The international e-signature solutions provider disappointed investors with the results, and its stock has been down 36% since the announcement.
The company recently issued its billings guidance, which despite being decent for the next quarter, is showing a significant slowdown heading into the next year, and that translates directly into top-line growth, this has caused analysts to lower their expectations for the stock as well.
The growth rate was a considerable slowdown from the 57.9% revenue growth rate it reported in the year-ago quarter. However, it must be acknowledged that this was when world economies were under stringent restrictions during the same time as vaccinations against COVID-19 were much lower.
Considering the inherent convenience that DocuSign provides dealmakers, there is no doubt that the company will be in business for the long-run. However, due to the shift back to traditional ways of doing business and the current financial situation that the world is in as well, DocuSign has seen a large fall in share prices. For investors looking to get in, now’s your chance. If you want to learn about more trending stocks, before anyone else, check out our premium plans. Or alternatively, head over to our FAQ page to learn more about the services offered by HypeIndex.
HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.