Just read over the Docusign conference call transcripts. This company is firing on all cylinders.

One Q&A I found interesting and was some information not brought up yet on the boards was this:

Alex Zukin

Hey, guys, thanks for that. Dan, one of the fears, I think, people have had historically on DocuSign is that it’s just a COVID stock, you are going to start decelerating as you start seeing these tough comps. But I think some people forget that you are a capacity-based model. And therefore, if you are seeing these cohorts that you added last year grow at or above previous rates, which it seems like you are with the expanding dollar-based net expansion, you’re very well positioned to actually, grow right through this and be even better positioned on the other side. So, just talk through that, what you saw this quarter around the growth rate of those cohorts and kind of how you’re positioned going forward?

Dan Springer

Yes, Alex, to your point, I don’t know how people are missing it. You write about it in every report I see you make that point, which I appreciate by the way. So hopefully, people will start to listen more to your insight. But I think you nailed it. I think that’s exactly what we’re seeing.

We’re seeing that the phenomenon of that strong customer growth is why you see the net retention rate so high. It’s why you see to the last question from Karl, Cynthia was able to talk about such a strong guide at rates we had not achieved previously for COVID, from a billing standpoint and a revenue standpoint, because we have seen that underlying demand is so strong for the customers.

And I really think the key to it is it’s what we talked about at the beginning of the call. So, the phenomenon that people, once they see the benefits of the digital transformation, particularly, around the agreement cloud from having an opportunity to grow their business with us, they don’t go back. In fact, they look for additional opportunities to expand.

And so, I don’t think we don’t talk about the Q1 pull forward like it was some fixed amounts of pull forward that pays Peter and takes in Paul. We look at it as it’s just an increasing demand, and it really goes back as you and I have talked about in the past. So, the TAM, we are still in the early days, even of just with eSignature business, our penetration is so low, but it’s a very, very large ocean from which we’re pulling forward that continued strong customer demand. So that’s how we look at it. I think it’s fairly straightforward.

My company started to use Docusign during the pandemic and our use continues to accelerate as it has become essential to operating our business. No more running into the office to sign documents. It is allowing us to conduct business faster and more efficiently. We will not be going back to the “old way”.

It reminds me of filling up gas at the pump with a credit card. I never go into the gas station to pay for gas anymore (unless the card reader does not work). Convenience is a game changer on any business.


Agree with you Retirementdough. My only apprehension with DocuSign is their continual insistence on earnings calls that Agreement Cloud is “right around the corner.” I am glad the CFO finally stepped up and said: “So I would expect it to be a few years before it’s really a meaningful contributor.”. I still see a large runway with eSignature but this might lose hypergrowth status sooner rather than later. Doesn’t mean it will be a bad investment, just might not be a topic on this board anymore.

A bullish note though. On their last earnings call (Q4), they mentioned that billings sees fluctuations and recommended looking at it on a TTM average. Some might look at this most recent quarter and see that billings dropped -1.4% QoQ but see below with the TTM avg (note calendar quarters, not fiscal):

	        Q1-2021	Q4-2020	Q3-2020	Q2-2020	Q1-2020	Q4-2019	Q3-2019	Q2-2019	Q1-2019
Total Rev (M)	$469.1	$430.9	$382.9	$342.2	$297.0	$274.9	$249.5	$235.6	$214.0
Billings (M)	$527.4	$534.9	$440.4	$405.7	$342.1	$366.9	$269.4	$252.4	$215.0
Bill_Avg (M)	$477.1	$430.8	$388.8	$346.0	$307.7	$275.9	$249.8	$232.0	$211.9
Revenue QoQ	8.9%	12.5%	11.9%	15.2%	8.0%	10.2%	5.9%	10.1%	7.2%
Revenue YoY	57.9%	56.7%	53.5%	45.2%	38.8%	37.7%	39.9%	41.1%	37.4%
Billings QoQ	-1.4%	21.5%	8.6%	18.6%	-6.8%	36.2%	6.7%	17.4%	-18.1%
Billings YoY	54.2%	45.8%	63.5%	60.7%	59.1%	39.8%	36.1%	46.6%	27.3%
Bill_Avg QoQ	10.8%	10.8%	12.4%	12.5%	11.5%	10.5%	7.7%	9.5%	5.8%
Bill_Avg YoY	55.1%	56.1%	55.6%	49.2%	45.2%	37.7%	35.1%	35.9%	32.2%

I left revenue in there for the heck of it just to compare. I think this is a good sign of a healthy business as the TTM avg billings QoQ is just steadily plodding along at ~10% even after emerging from the pandemic deluge. I view DocuSign as my lower risk, steady grower that I don’t have to worry too much about. Agreement Cloud success will turn them from a great company to a monster.