DOCU's underappreciated acceleration

Investment Analysis Clubs Saul’s Investing Discussions
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Updating my numbers from this post: https://discussion.fool.com/thanks-for-bringing-it-up-jason-i-ha…

Percentage Revenue Growth YoY:

37 33 37 34
37 41 40 38
39 45 53

Percentage Billings Growth YoY:

33 32 40 31
27 47 36 40
59 61 63

I could stare at that for a while. They are really crushing it! I really can’t find much fault…the only slight negative is they said there was a little pull forward this Q on billings, but revenue has started to climb in line with billings, and that looks really nice. To be fair, they added fewer customers…

Customers added per quarter (in thousands):

31 29 25 27
68 88 73

(*side note: they said 68,000 in Fiscal 2021 Q1, but the total went from 589,000 to 661,000 which would be 72,000 added…so far I haven’t figured this out)

…but it’s still at a very nice level compared to pre-covid. I don’t expect it to grow much from the 70k/quarter level long term, and I wouldn’t be crazy worried if it dipped a little. I don’t really care if they’re adding thousands of tiny customers or dozens of huge customers. I’m following the dollars. (The narrative version: They’ve been landing and expanding…the expand becomes more important now, and the dollars show that it’s working.)

Bear

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My only question with the numbers is if the company is seeing strength outside of the eSignature business? From their most recent earnings call, seemed like they saw Agreement Cloud “interest” and “growth” pre-COVID, then companies decided to not jump into more of the Agreement Cloud yet because of COVID, and then now they are seeing that “interest” come back. CEO even said the revenue from offerings outside of eSignature are not notable enough to break out into its own category. My takeaway was that the current expansion comes from more use of eSig within a specific company, not the use of other offerings. I would certainly agree that the growth numbers are very impressive, and I own a smallish position, but I wonder about the 2-5 year growth strategy. Is COVID an excuse for lack of non-eSig revenue? Is the Agreement Cloud all hype? Is this company really just an eSig company and won’t break outside of that? Questions still to be answered.

  • Junomean2
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With regards to the Agreement Cloud (CLM) they mentioned on the call that pre-covid it was accelerating.

When covid came around, CLM slowed as e-signatures accelerated. This was because getting e-signatures was essential and the priority for businesses.

This past quarter they said CLM is coming back and returning to pre-covid levels. They mentioned agreement cloud is top of mind and it is the first thing mentioned on nearly every sales call.

An estimate was given for a 50B TAM on the agreement cloud, totally green field here.

It was a very good quarter overall and I am surprised to see the price lower than before earnings. It is a good opportunity to add in my opinion.

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