Laggard Or Loser? ( DocuSign Q1 FY1/25 Earnings Review)

Laggard Or Loser? ( DocuSign Q1 FY1/25 Earnings Review)
“DOCU Shareholders Be Like …. “ Photo by Varun Gaba / Unsplash

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Its All Over For Software, Season III, Episode 2

by Alex King

DocuSign is neither as good of a business as its 2020-21 stock price would suggest, nor as bad of a business as its present dismal trend would suggest. It’s a perfectly reasonable business. It’s just that nobody wants to buy the stock, as can be seen from the valuation:

At a time when a lot of software names with ho-hum fundamentals are trading at >50-100x cashflow, here’s DocuSign at 19x. Yep, there’s only 9% TTM revenue growth, it’s nobody’s idea of an exciting company, but there’s some comfort in the multiples, whether you are thinking of buying the stock at present (because the entry price looks OK) or because you already hold it (because those multiples look like they could trend up over time).

Headline Numbers

Cashflow margins remain strong, dropped a touch this quarter but still good. Balance sheet record high levels of net cash at $1.3bn; the company has authorized a large ($1bn) buyback facility. The revenue line is key now. It looks like the company might arrest the decline in its growth rate in 1-2 quarters’ time. That will be a watershed moment if so.

For our paying subscribers we now dig into the full fundamentals, the stock price performance and our rating.

Financial Fundamentals