Docusign Q2 results

Another great quarter for Docusign, revenue growth of 45% up from 39% last quarter. Expect continued acceleration of growth rate throughout the next quarters as billings were up 61% (and 59% in Q1). The stock is up 218% YTD, 2020 EV/S is 31 which is lower than Coupa, Okta,… despite the stronger growth from Docusign. Point is that I don’t see Docusign as overvalued (compared to SaaS peers), they were a “value growth play” earlier this year and finally seem to be getting the love they deserve. For those interested in DOCU, there is a good write-up here:…

Key numbers:
Total revenue was $342.2 million, an increase of 45% year-over-year. Subscription revenue was $323.6 million, an increase of 47% year-over-year. Professional services and other revenue was $18.6 million, an increase of 25% year-over-year.
Billings were $405.7 million, an increase of 61% year-over-year.
GAAP gross margin was 74% in both comparative periods. Non-GAAP gross margin was 78% in both comparative periods.
GAAP net loss per basic and diluted share was $0.35 on 185 million shares outstanding compared to $0.39 on 175 million shares outstanding in the same period last year.
Non-GAAP net income per diluted share was $0.17 on 203 million shares outstanding compared to $0.01 on 189 million shares outstanding in the same period last year.
Net cash provided by operating activities was $118.1 million compared to $26.4 million in the same period last year.
Free cash flow was $99.8 million compared to $11.9 million in the same period last year. 29% FCF margin vs 5% in PY!
Enterprise & commercial customer growth of 55%!

Disclosure: Long DOCU 5%


I read the results positively too. The billing growth being significantly more than the revenue growth is nice to see.

At the midpoints of the revenue guidance for Q3 and Q4, would suggest 44% and 41% in the next two quarters, and I would bet there is some sandbagging in there, so the odds are good that we’ll see accelerating revenue growth for the last two quarters of the year, even as we (hopefully) come out of the pandemic.

I listened to the analyst call which just ended and just a couple quick takeaways:

  • they still sound very bullish on the Agreement Cloud and like how it is trending

  • An analyst asked where the NRR could rise to, as they sell Agreement Cloud and other new offerings to customers that originally just had esignature. Interestingly, management said that, near term NRR is going to be driven by esignature expanding at customers. They said to expect impact from other products to be a longer term future impact and Agreement Cloud etc won’t have a meaningful impact on NRR in the next few quarters. That’s surprising so I’m not sure how to react to this (positively or negatively). I think their contracts are 2-3 years in length so maybe there is a lag before they really get a good opportunity to sell up the Agreement Cloud etc?

  • One of their comments was how doctor offices have, at least temporarily, shifted to telehealth calls recently, and are using docusign esignature to sign off on the release forms and things like that, but they think that, even as more medical visits return to being live in person, they feel that most of the forms will continue to be done online/mobile using Docusign in advance of the visits, instead of returning to filling out with pen and paper in the waiting room. Management something along the lines “once you go from paper electronic, we don’t see people go back to paper”, which makes sense

Despite holding all of my DOCU in a taxable account with a low cost basis, I had contemplated selling a portion of it at Wednesday’s open when the price got way up there to about $280, but that price didn’t last and it came down quickly before I decided to make any moves. Right now, I think Docusign is a solid hold, although I probably wouldn’t be buying it if I didn’t already own it. I think they’ll continue to have years of solid growth ahead of them and it’s probably priced pretty fairly right now.

The only move I made today was to sell another small chunk of my old AMZN shares and boost my stake in Datadog. DDOG dropping from the mid $90’s to the $70’s seems like a good opportunity, especially given that management had some really positive things to say about the beginning of the current quarter on their last earnings call.