I don’t remember hearing about this, but I was reading a recent Barron’s article on DocuSign (link below) and they mentioned the Integrated Digital Experience Act (IDEA) signed into law last year which mandates all federal agencies adopt digital signatures over the next two years. I feel like this is a pretty big market and according to the article DocuSign has a pretty big advantage over Adobe with compliance in over 80% of federal agencies.
How much could this add to growth over the next two years? The majority of their revenues are generated by a small percentage of commercial/enterprise clients. Unless I’m thinking about this completely wrong, wouldn’t signing the majority of federal agencies completely dwarf any of their current largest customers? According to their website, the federal government spends nearly $40B annually managing paperwork. Obviously not all of that would equate to e signature business, but still, that number alone is more than double the current estimated e signature TAM.
Another point that stood out to me, and has already been discussed on here, is the fact that DOCU has only penetrated a small fraction of its TAM, with competitors, mainly Adobe, penetrating even less. So you have a market that is growing as more companies switch to digital signatures, with the vast majority yet untapped, and out of only two big players one is the clear first mover and is much more competitive. This is at a TAM of $20-$25B. Compare that to some of our favorite stocks, such as ZS with a TAM of $18B or AYX with a TAM of $23.5B, both of which have more competition.