I want to start by saying thank you to Saul and others for generously sharing your time and effort in teaching us on this board about investing. In the 2 plus years I’ve been following the board I’ve learned so much and it’s had a life changing effect for me. Thanks so much Saul.
I’m trying to contribute a bit more, and it sure is humbling trying to put together coherent and informational posts, hats off to all who do so. Anyway, here are my thoughts on Docusign:
I have a ~3% position in DOCU and am pondering whether to add, hold, or sell. Any feedback anyone has is much appreciated.
Revenue:
37 33 37 34
37 41 40 38
39
Billings:
33 32 40 31
27 47 36 40
59
In the call when asked to explain the spike in billings the CFO suggested focusing on TTM billings rather than on an outlying Q.
TTM billings growth% = 45.5%
We generated $23 million in non-GAAP operating profit or an 8% operating margin in the quarter. This compares with $10 million or 5% operating margin in the first quarter of last year.
This quarter, we added almost 68,000 new customers, of those, approximately 10,000 were direct customers, an increase of 43% year-over-year.
Strong eSignature expansions and upsells into our existing customer base led to dollar net retention of 119% in the quarter. (this was referred to as an acceleration though I couldn’t find the previous numbers)
We engaged a new public sector customer, the Department of Labor in one of the largest U.S. states to help transform its previously complex and lengthy process for handling emergency unemployment benefit. Supported by DocuSign eSignature, the department distributed over $500 million in benefits to more than 500,000 residents in less than one week. We enabled hundreds of U.S. national and regional financial institutions to accept applications for Small Business Administration loans more efficiently. In one of those large banks, we were involved with over 0.5 million loan applications, 75% of which were signed in less than 24 hours.
Remote work is here to stay. Core business processes will only become more digital and agreements will need to be completed from anywhere, at any time on almost any device. As a result, for organizations that hadn’t already embraced DocuSign for eSignature, that were only using us for a few select use cases, the pandemic has been a catalyst for the greater digital transformation of their end-to-end agreement processes. We always believed this transformation will happen and that a unifying platform for agreements will be needed. COVID-19 is just happening faster.
Rob Owens – Piper Sandler – Analyst
Yeah, good afternoon and thanks for taking my question. I was hoping you could expand a little bit around the federal sector and I know you’ve been building up the data center for a couple of quarters, which is cost capex, but in terms of where it ranks now in terms of verticals and really where this opportunity could go over the next couple of years.
Dan Springer – Chief Executive Officer
Yeah, absolutely. And I think government overall is an important vertical for us, although, as I mentioned before, it’s no one vertical is a dramatic portion of our revenue and we don’t see government overall in the top couple, but it is an important and growing segment nonetheless. I mentioned some of the examples I gave around government, if you think about the state and local segments in the state example I gave around the health and human services side and people doing processing of emergency needs to get unemployment benefits of folks, we saw that as a very strong quarter for us and we’ve had a lot of momentum there. Federal have been newer for us and because part of that was getting the FedRAMP certification that was required to serve a lot of folks, and now we’re building the dedicated data center as you referred to, which will unlock another set of opportunities for us with different federal agencies.
But we also – have also mentioned before and we see this as well that even in a COVID-19 situation, we may see that some aspects of the federal government still moves a little bit more slowly than some of the other private sector in terms of adoption of digital technologies. So we will be a patient provider to them as a customer. And I think from a long term perspective, we continue to see this as a dramatic growth opportunity.
My take:
Revenue guidance for the year was raised from 31% at the high end last quarter to 35%. Guidance for the next quarter was raised to 36% versus 33% guided for the quarter just reported. This leads me to believe we should see 40%+ revenue growth next quarter and likely for the year. An acceleration at larger scale (albeit not a huge one) from prior years.
DOCU has 1.05B in TTM revenue and growth is accelerating. To me that suggests they are likely to become a much bigger company, and TAM is huge. Think about it, just about every business(and individual) is a potential customer(user) for them.
Also a question for Saul and others is how do you view ~40% consistent and slightly increasing at larger scale growth of a company like Docusign vs companies like DDOG and CRWD with 80%+ growth at smaller scale.
I can’t help but think what will the growth rate be for DDOG and CRWD at this run rate? Do others expect it will still be 60-70% plus at that point? Or investing wise do you just focus on the current growth, and worry about the slowing growth if/when it happens?
This seems like something you do very well, Saul. Block out the noise (what if? etc) that other investors get caught up in and that causes them to sell rather than sticking with promising companies. Focus on the results and don’t get too caught up with the what ifs. Is that accurate?
Kyle
